SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A-2
(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, 1995
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the Transition Period From ___________to ______________.
Commission file number 1-7155.
The Dun & Bradstreet Corporation
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(Exact name of registrant as specified in its charter)
Delaware 13-2740040
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(State of incorporation) (I.R.S. Employer Identification No.)
200 Nyala Farms Road, Westport, Connecticut 06880
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203)222-4200.
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Securities registered pursuant to Section 12(b) of
the Act:
Title of each class Name of each exchange
on which registered
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Common Stock, par value $1 per share New York Stock Exchange
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
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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
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As of January 31, 1996, 169,578,948 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 $11,023 million.
(Continued)
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The Dun & Bradstreet Corporation
The undersigned registrant hereby amends Item 7 and Item 8 to the Form 10-K
for the year ended December 31, 1995, as set forth below.
Index to Form 10-K/A-2
PART II
ITEM 7 -Management's Discussion F-1
and Analysis of Financial
Condition and Results of
Operations
ITEM 8 -Financial Statements and F-31
Supplementary Data
Signatures F-60
Exhibit Index F-61
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Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
Dun & Bradstreet Business Segments
Marketing Information Services
Dollar amounts in millions 1995 1994 % change
Operating Revenue $ 2,388.1 $ 2,042.9 +16.9
Operating Income Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* $ 337.2 $ 277.1 +21.7
Operating Income $ 125.6 $ 285.3 -56.0
Operating Margin % Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* +14.1 +13.6 +3.7
Operating Margin % +5.3 +14.0 -62.1
* Excluding the impact of gains related to divestitures and charges related to
restructuring and other non-recurring actions.
Segment Performance
Reported revenue for the segment rose 16.9 percent to $2.39 billion from $2.04
billion in 1994. Excluding the impact of a weaker U.S. dollar, acquisitions and
timing factors, revenue growth for the segment was 9 percent. Excluding the
impact of gains related to divestitures and charges related to restructuring and
other non-recurring actions, operating income increased by 21.7 percent to
$337.2 million from $277.1 million in 1994, primarily reflecting strong
performance at IMS. Reported operating income declined 56.0 percent to $125.6
million from $285.3 million, reflecting the impact of gains and charges.
Business Descriptions A.C. Nielsen markets retail measurement services; modeling
and analytical services; consumer panel services; marketing and sales
application software; information delivery services; merchandising services;
customized research; and retailer services. With operations in 88 countries,
A.C. Nielsen is by far the leading global provider of business information,
analysis and insights to the worldwide consumer products and services industry.
A.C. Nielsen's revenue was $1.29 billion, up 17 percent on a reported basis and
up 6 percent on an underlying basis. IMS International is the world's leading
provider of marketing, sales-management and medical information and
decision-support services for the pharmaceutical and healthcare industries.
IMS's revenue was $819 million, up 18 percent on a reported basis and 11 percent
on an underlying basis.
F-1
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Nielsen Media Research is the leading U.S. provider of
audience measurement services for broadcast and cable television and online
electronic media. Its national and local television information services are
used by networks and affiliates, independent stations, syndicators, cable
networks and systems, advertisers and advertising agencies. Nielsen Media
achieved strong underlying revenue growth.
Risk-Management and Business Marketing Information Services
Dollar amounts in millions 1995 1994 % change
Operating Revenue $ 1,734.1 $ 1,605.7 +8.0
Operating Income Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* $ 405.1 $ 445.2 -9.0
Operating Income $ 449.5 $ 447.0 +.6
Operating Margin % Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* +23.4 +27.7 -15.5
Operating Margin % +25.9 +27.8 -6.8
* Excluding the impact of gains related to divestitures and charges related to
restructuring and other non-recurring actions.
Segment Performance
Reported revenue for the segment rose 8.0 percent to $1.73 billion from $1.61
billion in 1994. Excluding the impact of the weaker dollar, acquisitions and
divestitures, segment revenue increased by 6 percent. Excluding the impact of
gains related to divestitures and charges related to restructuring and other
non-recurring actions, operating income decreased by 9.0 percent to $405.1
million from $445.2 million a year ago, due in part to major insolvencies that
resulted in increased incurred losses of about $28 million at American Credit
Indemnity, the credit insurance business slated for divestiture in 1996. Profits
also were dampened by weakness in DBIS's international operations, including the
impact of integrating certain acquisitions and the effects of economic
conditions in Latin America. Reported operating income increased 0.6 percent to
$449.5 million from $447.0 million, reflecting in part the gain on the sale of
Interactive Data Corporation. Business Descriptions Dun & Bradstreet Information
Services (DBIS) is the world's leading provider of business information and
decision- support services that help customers in marketing, commercial credit
and collections reduce risk, improve cash flow, increase sales and revenues and
speed payments. DBIS gathers and manages information on more than 40 million
businesses worldwide and markets its products in more than 120 countries.
Revenue was $1.39 billion, up 11 percent on a reported basis and 6 percent on an
underlying basis. Revenue at DBIS-U.S. increased 6 percent to $766 million.
DBIS-Europe reported 20 percent growth in revenue for the year, with underlying
revenue up modestly due to weakness in several countries. Moody's Investors
Service is a leading global provider of financial analysis, opinion, research
and information. Moody's rates debt securities issued by corporate and
government entities, and publishes financial information in print and electronic
formats. Moody's reported a moderate increase in 1995 revenue. While the first
half of the year reflected weakness in corporate-bond volumes and public-debt
refundings, Moody's performance improved sharply in the second half due to
increased volume in the corporate bond market.
F-2
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Software Services
Dollar amounts in millions 1995 1994 % change
Operating Revenue $ 457.4 $ 405.9 +12.7
Operating Income Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* $ 30.3 $ -0.8 -
Operating Loss $ -10.3 $ -3.6 -186.1
Operating Margin % Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* +6.6 -.2 -
Operating Margin % -2.3 -.9 -155.6
* Excluding the impact of gains related to divestitures and charges related to
restructuring and other non-recurring actions.
Segment Performance
Reported revenue rose 12.7 percent to $457.4 million from $405.9 million in
1994. Excluding the impact of the dollar and the acquisition of Pilot Software,
underlying revenue growth was 5 percent.
Excluding the impact of charges related to restructuring
and other non-recurring actions, operating income was $30.3 million, compared
with a slight loss in 1994. The reported operating loss increased to $10.3
million from $3.6 million in 1994 reflecting restructuring actions and the
impact of the non-recurring charge. Business Descriptions Dun & Bradstreet
Software is a leading enterprise software provider. It markets integrated
financial, human resources, procurement, manufacturing, distribution and
decision-support application suites, as well as maintenance and support services
for client/server and mainframe customers. Its SmartStream for the Distributed
Enterprise (DE) is the first suite of integrated client/server software to
distribute information, workflow and business processes across an enterprise.
The company has almost 4,000 customers in 50 countries. D&B Software posted
gains in revenues and customer retention, reflecting strong sales of
client/server software. Client/server revenue increased by 150 percent,
exceeding $100 million for the year. Erisco provides software and services for
managed healthcare administration. Revenue was up in 1995. Pilot Software
markets open, online analytical processing (OLAP) software, including visual
desktop analysis tools, scalable multi-dimensional servers, data-mining servers
and related products. Pilot's underlying revenue rose solidly in 1995, led by 46
percent growth in its client/server product line.
F-3
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Directory Information Services
Dollar amounts in millions 1995 1994 % change
Operating Revenue $ 423.7 $ 440.1 -3.7
Operating Income Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* $ 204.0 $ 214.2 -4.7
Operating Income $ 186.3 $ 248.0 -24.8
Operating Margin % Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* +48.1 +48.7 -1.2
Operating Margin % +44.0 +56.4 -22.0
* Excluding the impact of gains related to divestitures and charges related to
restructuring and other non-recurring actions.
Segment Performance
Reported revenue decreased 3.7 percent to $423.7 million from $440.1 million in
1994 as a result of previously disclosed contractual changes. Underlying sales
grew 3.5 percent, with Donnelley's telephone company operations delivering the
strongest gains. Excluding the impact of gains related to divestitures and
charges related to restructuring and other non-recurring actions, operating
income decreased 4.7 percent to $204.0 million. Reported operating income
declined 24.9 percent to $186.3 million from $248.0 million, reflecting the
impact of the non-recurring charge. Business Description Reuben H. Donnelley is
a leading provider of marketing, sales and publishing services for yellow pages
advertising directories. Donnelley serves as sales and marketing representative
for directories published by NYNEX, and publishes and sells directory
advertising on behalf of Cincinnati Bell and Sprint. Donnelley also is a
proprietary publisher in the mid-Atlantic region and southern California.
DonTech, a partnership with Ameritech, serves Chicago and other markets in
Illinois and northwestern Indiana.
F-4
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Other Business Services
Dollar amounts in millions 1995 1994 % change
Operating Revenue $ 411.8 $ 401.1 +2.7
Operating Income Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* $ 63.8 $ 52.3 +22.0
Operating Income $ 61.2 $ 110.0 -44.4
Operating Margin % Before
Restructuring Income/Expense - Net
And Other Non-Recurring Charges* +15.5 +13.0 +19.2
Operating Margin % +14.9 +27.4 -45.6
* Excluding the impact of gains related to divestitures and charges related to
restructuring and other non-recurring actions.
Segment Performance
Reported revenue rose 2.7 percent to $411.8 million from $401.1 million in 1994.
Underlying segment revenue increased by 25 percent. Excluding the impact of
gains related to divestitures and charges related to restructuring and other
non-recurring actions, operating income increased by 22.0 percent to $63.8
million. Reported operating income declined 44.4 percent to $61.2 million from
$110.0 million in 1994, reflecting primarily the impact of the 1994 gain on the
sale of the assets of DunsNet. Business Descriptions Gartner Group is a leading
provider of research, analysis and advisory services for information technology
users, vendors and suppliers, with offices or representatives in more than 30
countries worldwide. D&B holds more than 50 percent of Gartner stock, which is
traded over the counter on the NASDAQ national market system (GART). Late in
1995, Gartner acquired Dataquest, formerly a unit of The Dun & Bradstreet
Corporation. Gartner Group reported excellent growth in revenue. NCH Promotional
Services provides cents-off coupon redemption, processing and financial
management services to retailers, and promotion analysis and information
management services to manufacturers. NCH reported a slight decrease in revenue
reflecting a decline in worldwide coupon redemptions and competitive pricing in
the industry.
F-5
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FINANCIAL REVIEW
On January 9, 1996, the Company announced a plan to reorganize into three
public independent companies by spinning off two of its businesses to
shareholders. The three companies will be: Cognizant Corporation, consisting of
IMS International, Gartner Group, Nielsen Media Research, Pilot Software and
ERISCO; The Dun and Bradstreet Corporation, consisting of Dun & Bradstreet
Information Services, Moody's Investors Service and Reuben H. Donnelley; and
A.C. Nielsen. The companies will be focused on high-growth information markets;
financial-information services; and marketing information to the worldwide
consumer-products and services industry. In connection with the new strategy,
Dun & Bradstreet Software and American Credit Indemnity (ACI) were slated for
divestiture. (See Notes 2 and 19 to the Consolidated Financial Statements.)
The Company's earnings per share in 1995 was $3.80, up 2.7% from $3.70 a
year ago, excluding a non-recurring after-tax charge of $324.2 million (or $1.91
per share) in the fourth quarter of 1995. Including the non-recurring charge of
$448.4 million, the Company reported 1995 earnings per share of $1.89. Net
income in 1995 increased by 2.5% to $645.0 million from $629.5 million in 1994,
excluding the charge cited above. Including the charge, the Company reported
1995 net income of $320.8 million.
The following discusses the fourth quarter 1995 non-recurring charge:
In the fourth quarter of 1995, the Company recorded within operating
costs a charge of $448.4 million. This charge primarily reflected an
impairment loss in connection with the adoption of the provisions of SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ($218.1 million),
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a provision for postemployment benefits ($79.8 million) under the Company's
severance plan, an accrual for contractual obligations that have no
future economic benefits and penalties to cancel certain contracts
($100.7 million) and other asset revaluations ($49.8 million).
SFAS No.121 requires that long-lived assets and certain intangibles be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
In connection with this review, the Company recorded an impairment loss
of $218.1 million, reflecting the revaluation of certain fixed assets,
administrative and production systems and other intangibles that will
be replaced or will no longer be used at A.C. Nielsen, IMS, Dun &
Bradstreet Information Services (DBIS) and Dun & Bradstreet Corporate
headquarters.
The provision for postemployment benefits of $79.8 million, represents
the cost of workforce reductions. The accrual for contractual obligations
that have no future economic benefits of $100.7 million principally relates
to the acquisition of certain information and services that are no longer
used by the Company. In addition, the Company recognized a charge of
$49.8 million principally related to the write-off of certain computer
software product lines that were discontinued.
This non-recurring charge evolved from the Company's annual budget and
strategic planning process in the fall of 1995, which indicated, based
on preliminary results, the Company's consolidated long-term
profitability objectives would not be achieved.
F-7
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Accordingly, a more comprehensive review was undertaken to review the
Company's underlying cost structure, products and services and assets
used in the business. Based upon such analysis, management having the
authority to approve such business decisions committed in December 1995 to
a plan to discontinue certain product lines and dispose of certain other
assets, resulting in the charge. These decisions were not reversed or
modified as a result of the Company's reorganization plan, which
reorganization plan was reviewed and, subject to certain conditions,
approved by the Board of Directors on January 9, 1996.
Revenue increased 10.6% in 1995 to $5,415.1 million from $4,895.7 million
in 1994, driven by strong revenue performances at IMS International (IMS),
Nielsen Media Research (Nielsen Media), Gartner Group Inc. (Gartner Group), A.C.
Nielsen and Dun & Bradstreet Information Services (DBIS). Excluding the effects
of acquisitions and divestitures, timing factors affecting the Marketing
Information Services segment described below, and a weaker U.S. dollar, revenue
grew 7.5%.
Operating income in 1995 increased by 4.8% to $970.2 million from $925.5
million in 1994, excluding the non-recurring charge of $448.4 million. Included
in operating income in 1995 was a $28 million gain related to the sale of
warrants received in connection with the divestiture of Donnelley Marketing and
gains totaling $105.1 million relating to the sale of Interactive Data and other
divestitures. The Company also recorded a $12.8 million restructuring provision
primarily to write off software for product lines that were discontinued at
Sales Technologies, and a provision of $77.2 million for postemployment benefits
expense. In the fourth quarter, the Company also recognized a $24 million
one-time decline in employee medical costs.
F-8
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Operating costs and selling and administrative expenses, excluding the
effect of acquisitions and divestitures, the non-recurring charge, restructuring
expense-net and the effect of the weaker dollar increased 7.4% in 1995 compared
with 1994, reflecting the Company's aggressive investments in new revenue growth
initiatives, the costs of integrating certain acquisitions made in 1994, the
impact of inflation in Latin America and an increase in incurred losses at
American Credit Indemnity (ACI) due to several major insolvencies.
Excluding the fourth quarter 1995 charge, operating margin was
17.9% for 1995 compared with 18.9% for 1994.
The Company reported 1995 non-operating expense-net of $78.1 million
compared with non-operating expense-net of $46.3 million in 1994. The increase
in non-operating expense-net in 1995 was due, in part, to higher U.S. interest
expense from higher average borrowings and higher rates and higher minority
interest expense related to Gartner Group and a limited partnership (see Note 11
to the Consolidated Financial Statements). Other expense-net included benefits
from tax sharing agreements with an Alaska Native Corporation of $6.0 million
and $9.8 million in 1995 and 1994, respectively.
The Company's effective tax rates were 27.7%, 28.4% and 29.5% in 1995, 1994
and 1993, respectively, excluding the effect of a net restructuring charge in
1993. The declines in the effective rates in 1994 and 1995 were a result of the
continuing favorable effects of global tax-planning actions.
Return on average shareholders' equity was 48.6%, 55.6% and 34.6% in 1995,
1994 and 1993, respectively, excluding in 1995 the non-recurring fourth quarter
charge and in 1993 restructuring expense-net of $277.5 million, a $21.0 million
F-9
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gain from Gartner Group's sale of stock and the cumulative effect of accounting
changes.
Marketing Information Services reported a 16.9% increase in 1995 revenue to
$2,388.1 million from $2,042.9 million in 1994. Excluding the impact of a weaker
U.S. dollar, acquisitions and the positive effect on 1994's revenues of contract
changes with pharmaceutical customers by IMS, and new contracts for secondary
market coverage by Nielsen Media due to Arbitron's decision to exit the
television audience measurement business, revenue growth for the segment was 9%.
IMS reported 1995 revenue of $819 million, up 18% on a reported basis, and 11%
excluding the impact of a weaker U.S. dollar, acquisitions and contract changes
discussed above. A.C. Nielsen reported 1995 revenue of $1,286 million, up 17% on
a reported basis, and up 6% excluding the impact of a weaker U.S. dollar and
acquisitions. Nielsen Media posted strong revenue growth for the year, excluding
the impact of timing factors described above. Operating income for the segment
decreased by 56% to $125.6 million from $285.3 million in 1994. Excluding the
impact of restructuring income in 1995 and 1994, the postemployment benefit
provision in the third quarter and the non-recurring charge in the fourth
quarter of 1995, segment operating income increased 22%.
Risk Management and Business Marketing Information Services reported 1995
revenue growth of 8.0% to $1,734.1 million from $1,605.7 million in 1994.
Excluding the impact of the weaker U.S. dollar, acquisitions and divestitures,
segment revenue increased by 6%. Moody's reported a moderate increase in 1995
revenue, principally due to weakness in corporate-bond volumes and public-debt
refundings in the first half of the year. DBIS' 1995 revenue was up 10.7% to
$1,390 million on a reported basis, and rose 6% excluding the impact of a weaker
U.S. dollar and acquisitions. Revenue at DBIS U.S. increased 6% to $766 million.
While DBIS Europe reported 20% growth in revenue for the year, excluding the
impact of a weaker U.S. dollar and acquisitions, revenue was up modestly due to
weakness in several countries. Operating income for the segment was essentially
unchanged at $449.5 million, compared with $447.0 million in 1994. Excluding the
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impact of the gain from the sale of Interactive Data, restructuring income in
1994, the postemployment benefit provision in the third quarter and the
non-recurring charge in the fourth quarter, segment operating income decreased
by 9%, due, in part, to major insolvencies that resulted in increased incurred
losses of about $28 million at ACI, planned for divestiture in 1996. Segment
profits in 1995 also were dampened by weakness in DBIS' international
operations, including the impact of integrating certain acquisitions and the
effects of weak economic conditions in Latin America.
Software Services reported a 12.7% increase in 1995 revenue to $457.4
million from $405.9 million a year ago. Excluding the impact of the weaker U.S.
dollar and the acquisition of Pilot Software, underlying revenue growth was 5%.
D&B Software posted a gain in revenue for the year, reflecting strong sales of
client/server software. Client/server revenue increased by 150% in 1995,
exceeding $100 million for the year. The segment's operating loss increased to
$10.3 million from a loss of $3.6 million in 1994. Excluding charges related to
restructuring in 1995 and 1994, postemployment benefit charges and the fourth
quarter non-recurring charge, segment operating income was $30.3 million,
compared with a slight loss in 1994.
Directory Information Services reported a 3.7% decrease in 1995 revenue to
$423.7 million from $440.1 million a year ago, as a result of changes in
contractual arrangements with telephone companies. Underlying 1995 sales of
Directory Information Services were up modestly. Operating income for the
segment decreased by 25% to $186.3 million from $248.0 million. Excluding the
impact of gains related to divestitures, charges related to restructuring in
1994 and the non-recurring charge in the fourth quarter, segment operating
income decreased by 5%.
F-11
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Other Business Services reported 1995 revenue of $411.8 million, up 2.7%
from $401.1 million in 1994. Excluding the divestiture of D&B Plan Services and
the weaker U.S. dollar, segment revenue increased by 25%. Gartner Group reported
excellent revenue growth in 1995. NCH Promotional Services reported a slight
decrease in 1995 revenue. Operating income for the segment decreased 44.4% to
$61.2 million. Excluding the impact of the divestiture of D&B Plan Services, the
third-quarter 1994 gain on the sale of the assets of DunsNet, charges related to
restructuring in 1994, and the non-recurring charge, segment operating income
increased 22%.
In 1994, the Company reported earnings per share of $3.70, up 10.1% from
$3.36 in 1993, excluding the adoption of Financial Accounting Standards Board
(FASB) Statements of Financial Accounting Standards (SFAS) No. 112 and No. 106
and a net restructuring charge of $166.7 million after tax, in 1993. (See Notes
3 and 7 to the Consolidated Financial Statements.) Including these factors, the
Company reported 1993 earnings per share of $.23. Net income in 1994 increased
by 5.7% to $629.5 million from $595.4 million in 1993, excluding the factors
cited above. Including these factors, the Company reported 1993 net income of
$38.1 million.
Reported 1994 revenue increased by 3.9% to $4,895.7 million, from $4,710.4
million in 1993. Excluding the effects of acquisitions and divestitures and
timing factors affecting the Marketing Information Services and Directory
Information Services segments, discussed below, 1994 revenue rose by about 2%.
For the full year, the impact of the dollar was not significant. Good revenue
performance at IMS, Nielsen Media and Gartner Group was largely offset by a
decline at Moody's Investors Service resulting from the change in bond-market
conditions, a decrease in mainframe-related revenue at D&B Software and by past
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competitive losses at A.C. Nielsen in the U.S. (Excluding these three
businesses, D&B's full-year underlying revenue was up about 5%, and
fourth-quarter underlying revenue was up about 7%.)
During the second quarter of 1994, the Company took further steps to
improve productivity. The Company divested two non-strategic businesses -
Thomson Directories Ltd. (TDL) and the Machinery Information Division of
Dataquest (MID) - and initiated other actions to restructure certain operations
and businesses, and to reduce costs and increase operating efficiencies. These
restructuring measures included office consolidations, the closedown of Sales
Technologies' European operations, the discontinuance of certain production and
data-collection systems and products, as well as additional steps to complete
certain actions initiated in the fourth quarter of 1993. The pre-tax costs
associated with these restructuring actions essentially offset a pre-tax gain of
$56.3 million on the two divestitures. (See Note 3 to the Consolidated Financial
Statements.)
In the third quarter of 1994, several non-recurring gains and significant
changes in costs were included in the Company's operating results. 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, which 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 A.C. Nielsen. In addition, a change in eligibility requirements for the
Company's postretirement medical plan resulted in a curtailment gain of
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approximately $25.7 million, which was largely offset by a substantial increase
in spending for new-product development.
In the fourth quarter of 1994, as part of the Company's global initiative
to improve productivity and increase synergies, the Company realized a $12.6
million benefit-plan curtailment gain due to workforce reductions and
divestitures and a $10.2 million gain from the sale of A.C. Nielsen's
headquarters in Northbrook, Illinois. The Company also realized a $9.8 million
benefit, included in other expense-net, from tax sharing agreements with an
Alaska Native Corporation. These gains partially offset the high level of
spending on new growth initiatives in the quarter.
Reported operating income in 1994 increased by 11.5% to $925.5 million from
$830.0 million, before restructuring expense-net in 1993. Operating-income
growth outpaced revenue growth primarily because of improved productivity from
workforce reductions, prior restructuring actions and other company-wide
productivity initiatives. Excluding the effects of acquisitions, divestitures,
timing factors affecting the Marketing Information Services and Directory
Information Services segments, discussed below, and restructuring expense-net,
D&B's 1994 operating income grew by about 10%.
Operating costs and selling and administrative expenses, excluding the
effect of acquisitions and divestitures, restructuring expense-net and the
effect of the weaker dollar increased .4% in 1994 compared with 1993, reflecting
productivity improvements.
D&B reported an 18.9% operating margin for 1994 - up from 16.0% in 1991.
Productivity actions ranged from a workforce reduction of about 5,000 since late
1993, to company-wide consolidation of data-processing centers, real estate and
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back-office accounting.
The Company reported 1994 non-operating expense-net of $46.3 million,
compared with non-operating income-net of $35.5 million in 1993. Non-operating
income-net in 1993 included a $21.0 million gain on the initial public offering
of Gartner Group. Non-operating expense-net in 1994 was due in part to a lower
cash position as a result of cash payments for acquisitions, restructuring and
severance, lower interest rates earned on international cash investments and
higher interest rates paid on increased U.S. short-term borrowings, and higher
minority interest expense related to two limited partnerships (see Note 11 to
the Consolidated Financial Statements) and to Gartner Group. These expenses were
partially offset by benefits from tax sharing agreements with an Alaska Native
Corporation. The cost of funds raised by one partnership, which provided funding
for the Company's 1993 share repurchases, was more than offset by the favorable
impact on earnings per share of lower average shares outstanding.
Marketing Information Services reported a 9.3% increase in 1994 revenue to
$2,042.9 million from $1,868.3 million in 1993. Adjusted for the acquisitions of
SRG, AGB Australia and Amfac Chemdata, the divestiture of Donnelley Marketing
Information Services (DMIS), and the positive effect on 1994's revenues of
contract changes with pharmaceutical customers by IMS, and new contracts for
secondary market coverage by Nielsen Media due to Arbitron's decision to exit
the television audience measurement business, 1994 revenue growth for the
segment was up about 6%. IMS reported 1994 revenue of $691 million, up about 13%
on a reported basis and up about 8%, adjusted for the acquisition of Amfac
F-15
<PAGE>
Chemdata and the timing factors previously described. A.C. Nielsen reported 1994
revenue of $1,102.0 million, up 4.8% on a reported basis and up about 3%,
adjusted for acquisitions and the divestiture of DMIS. Nielsen Media reported
excellent revenue growth in 1994. Reported operating income for the segment
before restructuring expense-net decreased 6.5% to $277.1 million from $296.5
million a year ago. Adjusted for acquisitions, the divestiture of DMIS and
timing factors discussed above, operating income before restructuring
expense-net was down 18%. Operating income before restructuring expense-net in
1994 reflected increased investment spending in the segment, as well as past
competitive losses and higher costs in A.C. Nielsen's U.S.
business.
Risk Management and Business Marketing Information Services reported 1994
revenue growth of 2.7% to $1,605.7 million from $1,564.2 million in 1993.
Adjusted for the impact of the acquisitions of Novinform AG, S&W and Orefro,
segment revenue was essentially unchanged, held down by a decline at Moody's
Investors Service. Moody's reported lower 1994 revenue, principally due to the
dramatic decline in corporate-bond volumes and public-debt refundings. DBIS
reported 1994 revenue of $1,256.3 million, up 3.0% from 1993. Adjusted for the
impact of acquisitions, DBIS' revenue was up about 1%. DBIS North America's 1994
revenue was essentially unchanged, held down by slightly lower U.S. credit
services revenue resulting from customers' increased use of lower priced, less
comprehensive U.S. credit services products. Adjusted for the impact of
acquisitions, DBIS Europe's 1994 revenue increased by about 1%. Reported
operating income for the segment before restructuring expense-net increased
10.0% to $445.2 million from $404.6 million in 1993. Adjusted for the impact of
F-16
<PAGE>
acquisitions, operating income before restructuring expense-net was up 9%,
despite a decline at Moody's, due primarily to productivity gains at DBIS.
Software Services reported a 14.7% decrease in 1994 revenue to $405.9
million from $475.6 million in 1993. DBS' 1994 revenue, adjusted for the U.S.
dollar, was down in line with the segment, due to lower mainframe-related
revenue. The Software Services segment posted a slight loss in 1994 before
restructuring expense-net, due to a third-quarter charge for the revaluation of
computer software. Excluding the charge, the segment had a modest profit,
compared with operating income before restructuring expense-net of $43.7 million
in 1993.
Directory Information Services reported a 2.4% decrease in 1994 revenue to
$440.1 million from $450.7 million in 1993, largely as a result of the effects
of changes in publication dates for certain yellow pages directories. Excluding
the impact of changes in publication dates and the divestiture of TDL, revenue
growth for 1994 was about 6%. Underlying sales of Directory Information Services
yellow pages directories were up slightly. Reported operating income for the
segment before restructuring expense-net increased 15.6% to $214.2 million from
$185.2 million in 1993. Excluding the impact of changes in publication dates and
the divestiture, segment operating income before restructuring expense-net was
up 32%, reflecting significant productivity gains.
Other Business Services reported 1994 revenue of $401.1 million, up 14.1%
from $351.6 million in 1993. Adjusted for Dataquest's divestiture of MID and the
divestiture of D&B Plan Services, segment revenue increased about 17%. Gartner
Group reported excellent revenue growth in 1994. NCH Promotional Services
F-17
<PAGE>
reported a decrease in 1994 revenue, reflecting a decline in worldwide coupon
redemptions and competitive pricing in the industry, as well as the impact of
actions taken to improve cash flow and profitability. Reported operating income
for the segment before restructuring expense-net increased by 215.4% to $88.3
million from $28.0 million in 1993, due primarily to the third-quarter gain on
the sale of the assets of DunsNet. Adjusted for Dataquest's divestiture of MID
and the divestiture of D&B Plan Services, segment operating income before
restructuring expense-net was up significantly, due to the DunsNet gain and the
excellent performance at Gartner Group.
In 1993, the Company reported earnings per share of $3.36, up 8.4% from
$3.10 in 1992, excluding, in 1993, the cumulative effect of accounting changes
and the net restructuring charge. Nineteen ninety-three earnings per share were
reduced by $.05 per share as a result of an increase in the U.S. corporate
income tax rate. Including the effect of these factors, the Company reported
1993 earnings per share of $.23 and net income of $38.1 million.
Operating revenue in 1993 was down .8% to $4,710.4 million from $4,750.7
million in 1992. Excluding the effects of divestitures and acquisitions and the
Adverse impact of the stronger dollar, 1993 revenue was up about 3.5%.
Operating income before restructuring expense-net in 1993 increased 5.6% to
$830.0 million from $785.9 million in 1992. Excluding the effects of
divestitures and acquisitions, the stronger U.S. dollar, and restructuring
expense-net, 1993 operating income was up about 13%. Operating income decreased
to $552.5 million.
F-18
<PAGE>
Operating costs and selling and administrative expenses, excluding the
effect of acquisitions and divestitures, restructuring expense-net and the
effect of the stronger dollar, increased 1.7% in 1993 compared with 1992,
reflecting productivity improvements.
The Company reported 1993 non-operating income-net of $35.5 million,
compared with non-operating income-net of $9.3 million in 1992. Non-operating
income-net in 1993 included a $21.0 million gain from the initial public
offering of Gartner Group. Other expense-net of $12.4 million in 1993 compared
with other expense-net of $2.0 million in 1992 reflected the minority interest's
share of income/loss of majority-owned subsidiaries and two limited partnerships
(see Note 11 to the Consolidated Financial Statements). Non-operating
expense-net in 1993 also reflected lower interest expense due in part to a lower
level of short-term borrowings, a larger portfolio of marketable securities and
interest income on notes related to the sale of Datastream International. In
effect, a portion of the increase in interest income-net represented an offset
to the absence of operating income from divested businesses.
Adoption of Statements of Financial Accounting Standards - In 1993, the
Company adopted the provisions of SFAS No. 112, "Employers' Accounting for
Postemployment Benefits" and SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." The adoption of SFAS No. 112 and
SFAS No. 106 resulted in one-time, non-cash, after-tax charges of $250 million
and $140 million, respectively, in the first quarter of 1993. (See Note 7 to the
Consolidated Financial Statements.)
F-19
<PAGE>
In the fourth quarter of 1995, the Company recorded a charge of $448.4
million. This charge included an impairment loss of $218 million related to
long-lived assets for which management having the authority to approve such
business decisions, committed to a plan to discontinue or dispose of such
assets.
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" requires that long-lived assets and
certain intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amounts of an asset may not be
recoverable. In general, this statement requires recognition of 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 impairment loss is then
based on the fair value of the asset. While SFAS No. 121 affected the
measurement of the impairment charge noted above, it had no effect on the
timing of recognition of the impairment. The charge principally reflected the
revaluation of certain fixed assets, administrative and production systems and
other intangibles that will be replaced or will no longer be used at A.C.
Nielsen, IMS, DBIS and Dun & Bradstreet Corporate headquarters.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which requires that companies with stock-based compensation plans
either recognize compensation expense based on new fair value accounting methods
or disclose pro forma net income and earnings per share assuming the fair value
method had been applied. The Company is evaluating the new statement and has not
F-20
<PAGE>
determined whether it will adopt the recognition or disclosure alternative of
the statement. Therefore, the impact of adoption on the Company's financial
statements has not been determined. Restructuring - In line with the Company's
strategy of sharpening its focus on key markets for information services, during
1993, the Company sold DMIS, redeemed preferred shares and notes related to the
sales of Donnelley Marketing and Datastream International and resolved certain
contingencies related to other divestitures. As a result of the above
transactions, a $40.0 million restructuring gain was recognized. In 1993, the
Company also recognized a $21.0 million non-operating gain related to the
initial public offering of Gartner Group in which the Company holds a majority
interest. In connection with the above operating and non-operating gains, the
Company recorded $61.0 million of restructuring expense related to workforce
reductions (non-severance costs) and restructuring of certain operations and
businesses.
Additional restructuring actions were initiated in the fourth quarter of
1993 totaling $256.5 million. (See Note 3 to the Consolidated Financial
Statements.) These actions were designed to achieve long-term productivity
improvement, reduce costs and leverage the Company's global synergies. The costs
associated with this plan, and all other restructuring actions, included only
specific, direct and incremental costs that could be estimated with reasonable
accuracy and were clearly identifiable with the related plans.
Costs included in the fourth quarter restructuring charge included $54.0
million for the consolidation of fourteen major data centers in North America
and Europe into two data centers in the U.S. and two centers located in Europe,
resulting principally in lease termination costs, asset writeoffs and other
costs incident to the consolidation of such data centers. The Company also
F-21
<PAGE>
provided $117.2 million to initiate approximately seventy separate actions to
reduce real estate costs by consolidating office facilities in each of fifteen
major geographic regions in the U.S. and nine geographic regions in Europe.
Costs incurred included lease termination costs and asset writeoffs. A provision
of $19.1 million was taken to consolidate and reengineer the Company's back
office accounting functions by consolidating thirty-five reporting entities into
one accounting center for the U.S. and Canada, and twenty-five reporting
entities into four primary centers in Europe, and to reengineer all accounting
processes and functions. Costs incurred included project implementation costs,
outside consulting costs and asset writeoffs. The restructuring charge also
included $66.2 million to discontinue certain production systems at A.C. Nielsen
U.S. and DBIS U.S., due to accelerating the introduction of new technologies; to
discontinue certain data collection systems of A.C. Nielsen U.S.; and to
discontinue products at A.C. Nielsen U.S., Sales Technologies and Erisco. Costs
principally related to writeoffs of computer software and other intangible
assets.
At December 31, 1994 and 1995, restructuring accruals for the 1993 synergy
actions totaled $134.8 million and $42.2 million, respectively. Other
restructuring accruals for workforce reductions (non-severance costs) and other
actions from prior years totaled $44.4 million and $30.5 million at December 31,
1994 and 1995, respectively. (See Note 3 to the Consolidated Financial
Statements.) The remaining balances of the restructuring accruals of $72.7
million will be expended, primarily in cash, in 1996.
The pre-tax savings from the 1993 synergy actions totaled approximately
$145 million through December 31, 1995, and were expected to grow to
approximately $100 million annually. The pre-tax savings from the restructuring
F-22
<PAGE>
actions taken in 1994 totaled $21 million through December 31, 1995. The impact
of the planned reorganization of D&B into three independent companies on these
synergy projects is being evaluated.
In 1994 and 1993, certain restructuring actions initiated in 1993, 1992 and
1991 were completed at a lower cost than originally estimated and other actions
required more costs to implement than originally expected. In addition, costs to
complete certain actions being implemented changed based on revised estimates
and experience to date. In a number of instances, new restructuring actions were
initiated to complement or enhance original actions and certain actions were
expanded, contracted or discontinued based on changed circumstances. While the
total costs of all restructuring actions remained unchanged, the changes in
estimates and other changes did impact operating income by business segment.
(See Notes 13 and 16 to the Consolidated Financial Statements.)
Non-U.S. Operating and Monetary Assets - The Company has operations in more
than 70 countries. Approximately 44% of the Company's revenues in 1995 were from
non-U.S. operations, including approximately 29% from European operations.
Non-U.S. operations accounted for approximately 31% of the Company's operating
income in 1995, including European operations, which accounted for approximately
17%. Changes in the value of non-U.S. currencies relative to the U.S. dollar
cause fluctuations in U.S. dollar operating results. In 1995, foreign currency
translation increased U.S. dollar revenue and operating income growth by
approximately 3%. The effect of foreign currency translation on revenue and
operating income growth in 1994 was insignificant.
F-23
<PAGE>
From 1989 through 1993, the Company had used various financial instruments,
which have provided partial protection against foreign currency exposures versus
annual plan; however, this practice did not avoid year-to-year fluctuation in
U.S. dollar operating results resulting from foreign currency translation. In
1994, the Company discontinued this practice; however, the cost/benefit of this
practice is periodically reviewed and might be used in the future. The Company
does enter into foreign exchange forward contracts to hedge the effects of
exchange rates on certain of the Company's non-U.S. net investments. (See Note 6
to the Consolidated Financial Statements.)
Non-U.S. monetary assets are maintained in currencies other than the U.S.
dollar, principally in Germany, Spain, Italy and Japan. Changes in the value of
these currencies relative to the U.S. dollar are charged or credited to
shareholders' equity. The effect of exchange rate changes during 1995 increased
the U.S. dollar amount of cash and cash equivalents by approximately $13.1
million.
Liquidity and Financial Position - At December 31, 1995, cash, cash
equivalents and current and non-current marketable securities totaled $578
million (including $128 million of American Credit Indemnity's marketable
securities, a portion of which is subject to insurance regulation restriction),
an increase of $83 million from December 31, 1994, and short-term debt totaled
$445 million, a decrease of $56 million from December 31, 1994. The combined
increase in cash and decrease in short-term debt of $139 million included
proceeds from the sale of businesses of $216 million (net of payments for
acquisitions of $25 million) which were more than offset by expected payments
for postemployment benefits and restructuring of $131 million and $101 million,
respectively. Excluding the aforementioned items, the Company generated $155
F-24
<PAGE>
million of cash, which was partially the result of lower income tax payments net
of refunds ($79 million lower than in 1994).
Net cash provided by operating activities was $895.2 million, $606.0
million and $959.9 million in 1995, 1994 and 1993, respectively. The increase of
$289.2 million in net cash provided by operating activities in 1995, compared
with 1994, primarily reflected lower restructuring payments ($41.6 million),
lower postemployment benefit payments ($44.0 million) and a decrease in other
working capital items ($208.8 million) reflecting lower income tax payments net
of refunds ($78.6 million) and higher deferred revenue ($50.4 million), offset
in part by increased investment in accounts receivable ($99.7 million),
reflecting in part, increased revenues.
Net cash used in investing activities totaled $311.8 million for 1995,
compared with $683.1 million and $409.9 million in 1994 and 1993, respectively.
The decrease in cash usage in 1995 of $371.3 million primarily reflected lower
payments for acquisitions and equity investments (included in Other Investments
and Notes Receivable) of $232.2 million and higher proceeds from sale of
businesses ($97.6 million). Capital expenditures were $286.2 million, $272.5
million, and $235.7 million in 1995, 1994 and 1993, respectively.
Cash received ($241.3 million) during 1995, principally from the sale of
Donnelley Marketing warrants and Interactive Data, was added to the general
funds of the Company. Net cash used in financing activities totaled $546.4
million in 1995, compared with $253.8 million in 1994 and $353.8 million in
1993. The increase in cash usage in 1995 reflected
a decrease in U.S. short-term borrowings ($38.7 million) in 1995 compared with
F-25
<PAGE>
an increase in 1994 of $194.6 million (net of payments for Alaska Native Corp.
obligations of $166.2 million).
The Company has entered into interest rate swap agreements, which
effectively fixed interest rates on $400 million of variable rate debt, at a
weighted average fixed rate payable of 7.07%. (See Note 6 to the Consolidated
Financial Statements.)
In late 1996, third parties special investors interests ($500 million) in
an investment partnership (see Note 11 to the Consolidated Financial Statements)
will be redeemed for cash, Company stock, a debt instrument issued by the
Company, or a combination thereof, at the Company's discretion. Additionally,
the limited partners in the database licensing partnership described in Note 11
will have the right to have their limited partnership interests ($125 million)
liquidated in late 1996.
The Company has announced that in late 1996 it will be reorganized into
three independent companies by spinning off two of its businesses to
shareholders and divesting D&B Software and ACI. (See Note 19 to the
Consolidated Financial Statements.) Management estimates that one-time cash
outlays of $75 million will be required to complete the reorganization of the
Company and additional payments approximating $70 million and $40 million will
be accelerated into 1996 from 1997 and 1998, respectively. These costs will be
recorded as incurred. In addition, outlays approximating $70 million for
completion of previously planned restructuring actions and $100 million for
postemployment benefits are expected in 1996.
While the capital structures of the three independent companies have not
been concluded, it is expected that financing alternatives, proceeds from
F-26
<PAGE>
planned divestitures, existing portfolio of cash, cash equivalents and
marketable securities and cash generated from operations will be more than
sufficient to meet the needs of the three Companies. Dividends - The regular
quarterly dividend was increased to $.66 from $.65 per share on April 19, 1995.
The increase brought dividends per share in 1995 to $2.63, an increase of 2.7%
over the $2.56 paid in 1994. On an annualized basis, the dividend rate of $2.64
was up 1.5% from the previous rate.
On January 9, 1996 the board of directors approved a first-quarter 1996
quarterly dividend of $.66 per share, payable March 8, 1996 to shareholders of
record at the close of business February 20, 1996. The Company anticipates that
its current dividend policy will be maintained through at least the first half
of 1996. It is expected that dividend policies for all three independent public
companies will be formulated consistent with comparable businesses. The dividend
payout range being evaluated for the new Dun & Bradstreet is 55-to-60 percent,
and a dividend payout in the range of 20 percent is under consideration for
Cognizant Corporation. A.C. Nielsen does not anticipate paying a dividend.
Common Stock Information - The Company's common stock (symbol DNB) is listed on
the New York, London, Tokyo, Zurich, Geneva and Basel stock exchanges. During
1995 and 1994, 85.5 million shares and 63.3 million shares, respectively, were
traded, representing 50.4% and 37.2% of the average number of shares outstanding
in the respective years. The number of shareholders of record declined to 14,390
at January 31, 1996 from 14,646 at January 31, 1995.
F-27
<PAGE>
<TABLE>
The following summarizes price and dividend-per-share information for Dun &
Bradstreet common stock as reported in the periods shown:
<CAPTION>
Price Per Share ($)Dividends Paid
1995 1994 Per Share ($)
<S> <C> <C> <C> <C> <C> <C>
High Low High Low 1995 1994
-------------------- ----------------- -----------------
First Quarter 55 1/4 48 1/2 64 57 7/8 .65 .61
Second Quarter 55 1/2 50 1/2 59 3/4 55 1/4 .66 .65
Third Quarter 59 1/8 51 59 1/4 55 1/2 .66 .65
Fourth Quarter 65 1/2 57 60 3/4 51 7/8 .66 .65
-------------------- ----------------- -----------------
Year 65 1/2 48 1/2 64 51 7/8 2.63 2.56
</TABLE>
F-28
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors of The Dun & Bradstreet
Corporation:
We have audited the accompanying consolidated statement of financial position of
The Dun & Bradstreet Corporation and Subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, shareholders' equity
and cash flows for the years ended December 31, 1995, 1994 and 1993. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Dun &
Bradstreet Corporation and Subsidiaries as of December 31, 1995 and 1994, and
the consolidated results of their operations and their cash flows for the years
ended December 31, 1995, 1994 and 1993, in conformity with generally accepted
accounting principles.
As discussed in Note 2 to the consolidated financial statements, in 1995, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." In addition, as discussed in Note 7 to the consolidated
financial statements, in 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" and SFAS No. 112,
"Employers' Accounting for Postemployment Benefits."
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
January 23, 1996
F-29
<PAGE>
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 on pages 9 to 35. The
consolidated financial statements, which include amounts based on estimates of
management, have been prepared in conformity with generally accepted accounting
principles. Other financial information in the annual report 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 people 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. Coopers & Lybrand
L.L.P. and the internal auditors each have full and free access to the Audit
Committee and meet with it regularly, with and without management.
Robert E. Weissman
- - ------------------------
Robert E. Weissman
Chairman and
Chief Executive Officer
Nicholas L. Trivisonno
- - ----------------------------------
Nicholas L. Trivisonno
Executive Vice President - Finance
and Chief Financial Officer
F-30
<PAGE>
Item 8 - Financial Statements and Supplementary Data
<TABLE>
The Dun & Bradstreet Corporation and Subsidiaries
Consolidated Statement of Income
Years Ended December 31,
Dollar amounts in millions, except per share data
<CAPTION>
1995 1994 1993
---------------------------------
<S> <C> <C> <C>
Operating Revenue ........................................ $5,415.1 $4,895.7 $4,710.4
Operating Costs .......................................... 2,499.2 1,732.6 1,634.4
Selling and Administrative Expenses ...................... 2,039.9 1,816.5 1,872.3
Depreciation & Amortization .............................. 474.5 421.1 373.7
Restructuring (Income)/Expense - Net ..................... (120.3) 0 277.5
----------------------------------
Operating Income ......................................... 521.8 925.5 552.5
----------------------------------
Interest Income .......................................... 31.7 31.2 51.6
Interest Expense ......................................... (52.6) (39.0) (24.7)
Gain on Sale of Gartner Group Stock ...................... 0 0 21.0
Other Expense - Net ...................................... (57.2) (38.5) (12.4)
----------------------------------
Non-Operating (Expense) Income - Net ..................... (78.1) (46.3) 35.5
Income Before Provision for Income Taxes and
Cumulative Effect of Changes in Accounting Principles .. 443.7 879.2 588.0
Provision for Income Taxes ............................... 122.9 249.7 159.3
-----------------------------------
Income Before Cumulative Effect of Changes in
Accounting Principles .................................. 320.8 629.5 428.7
Cumulative Effect to January 1, 1993, of Changes in
Accounting Principles:
-SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," Net of Income Tax
Benefits of $93.7 ..................................... - - (140.6)
-SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," Net of Income Tax Benefits of $150.0 ....... - - (250.0)
------------------------------------
Net Income ............................................... $320.8 $629.5 $38.1
------------------------------------
Earnings Per Share of Common Stock:
Before Cumulative Effect of Changes in
Accounting Principles .................................. $ 1.89 $3.70 $2.42
Cumulative Effect to January 1, 1993, of Changes
in Accounting Principles:
-SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" ......................... - - (.79)
-SFAS No. 112, "Employers' Accounting for Postemployment
Benefits" ............................................. - - (1.40)
-------------------------------------
Net Earnings Per Share of Common Stock ................... $ 1.89 $3.70 $.23
-------------------------------------
Average Number of Shares Outstanding ..................... 169,522,000 169,946,000 177,181,000
-------------------------------------
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
F-31
<PAGE>
<TABLE>
The Dun & Bradstreet Corporation and Subsidiaries
Consolidated Statement of Financial Position
December 31,
<CAPTION>
Dollar amounts in millions, except per share data
Assets 1995 1994
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 385.5 $ 335.4
Marketable Securities 52.8 26.9
Accounts Receivable - Net 1,451.7 1,256.5
Other Current Assets 408.5 362.2
---------------------------
Total Current Assets 2,298.5 1,981.0
Investments
Marketable Securities 139.5 133.1
Other Investments and Notes Receivable 336.9 366.4
---------------------------
Total Investments 476.4 499.5
Property, Plant and Equipment-Net 874.4 918.5
Other Assets-Net
Deferred Charges 366.3 363.1
Computer Software 312.3 335.9
Other Intangibles 178.5 216.0
Goodwill 1,009.4 1,149.9
---------------------------
Total Other Assets-Net 1,866.5 2,064.9
---------------------------
Total Assets $5,515.8 $5,463.9
---------------------------
Liabilities and Shareholders' Equity
Current Liabilities
Accounts and Notes Payable $802.1 $790.8
Accrued and Other Current Liabilities 1,364.3 1,300.4
Accrued Income Taxes 42.1 95.4
Redeemable Partnership Interests 625.0 0.0
---------------------------
Total Current Liabilities 2,833.5 2,186.6
Unearned Subscription Income 319.6 290.3
Postretirement and Postemployment Benefits 553.3 484.9
Deferred Income Taxes 167.7 209.3
Other Liabilities and Minority Interests 459.2 974.2
---------------------------
Total Liabilities $4,333.3 $4,145.3
---------------------------
Shareholders' Equity
Preferred Stock, par value $1 per share, authorized-10,000,000 shares;
outstanding--none
Common Stock, par value $1 per share, authorized-400,000,000 shares;
issued---188,420,996 and 188,411,297 shares for 1995 and 1994, respectively $188.4 $188.4
Capital in Excess of Par Value 70.0 67.2
Retained Earnings 2,204.7 2,330.0
Treasury Stock, at cost,19,031,922 and 18,650,410 shares
for 1995 and 1994, respectively (1,107.3) (1,077.2)
Cumulative Translation Adjustment (177.3) (183.5)
Unrealized Gains (Losses) on Investments 4.0 (6.3)
---------------------------
Total Shareholders' Equity $1,182.5 $1,318.6
---------------------------
Total Liabilities and Shareholders' Equity $5,515.8 $5,463.9
---------------------------
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
F-32
<PAGE>
<TABLE>
The Dun & Bradstreet Corporation and Subsidiaries
Consolidated Statement of Cash Flows
Years Ended December 31,
<CAPTION>
Dollar amounts in millions 1995 1994 1993
------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $320.8 $629.5 $38.1
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Cumulative Effect of Changes in Accounting Principles:
Postretirement Benefits Other Than Pensions 0 0 140.6
Postemployment Benefits 0 0 250.0
Depreciation and Amortization 474.5 421.1 373.7
Gain from Sale of DunsNet Assets 0 (36.0) 0
Gains from Sale of Businesses and Gartner Group Stock (133.1) (56.3) (61.0)
Restructuring Provisions 12.8 56.3 317.5
Provisions Related to Reorganization 448.4 0 0
Restructuring Payments (101.2) (142.8) (95.1)
Postemployment Benefit Expense 90.7 8.6 10.0
Postemployment Benefit Curtailment Loss/(Gain) 4.5 (46.0) (2.1)
Postemployment Benefit Payments (130.5) (174.5) (44.3)
Net (Increase) Decrease in Accounts Receivable (188.0) (88.3) 36.8
Deferred Income Taxes (72.0) 67.9 2.9
Net Decrease (Increase) in Other Working Capital Items 119.4 (89.4) (15.7)
Other 48.9 55.9 8.5
---------------------------------------
Net Cash Provided by Operating Activities 895.2 606.0 959.9
Cash Flows from Investing Activities:
Proceeds from Marketable Securities 74.6 145.1 146.8
Payments for Marketable Securities (96.3) (181.0) (95.9)
Proceeds from Sale of Businesses 241.3 143.7 107.5
Payments for Acquisition of Businesses (excluding cash and cash equivalents
acquired of $.5 million, $1.9 million and $12.8 million in 1995, 1994 and 1993
respectively) (25.3) (234.0) (120.1)
Capital Expenditures (286.2) (272.5) (235.7)
Additions to Computer Software and Other Intangibles (231.9) (230.2) (202.9)
Increase in Other Investments and Notes Receivable (17.6) (73.9) (46.7)
Other 29.6 19.7 37.1
---------------------------------------
Net Cash Used in Investing Activities (311.8) (683.1) (409.9)
Cash Flows from Financing Activities:
Payment of Dividends (446.1) (435.2) (423.0)
Payments for Purchase of Treasury Shares (72.3) (70.0) (612.2)
Net Proceeds from Exercise of Stock Options 34.2 23.4 43.1
(Decrease) Increase in U.S. Short-term Borrowings (38.7) 360.8 (34.9)
Third-Parties Investments in Partnerships 0 0 625.0
Payment of Alaska Native Corp. Obligations 0 (166.2) 0
Other (23.5) 33.4 48.2
----------------------------------------
Net Cash Used in Financing Activities (546.4) (253.8) (353.8)
----------------------------------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 13.1 15.4 (39.8)
Increase (Decrease) in Cash and Cash Equivalents 50.1 (315.5) 156.4
Cash and Cash Equivalents , Beginning of Year 335.4 650.9 494.5
Cash and Cash Equivalents, End of Year $385.5 $335.4 $650.9
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
F-33
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
Dollar amounts in millions, except per share data
Common Capital in Cumulative Unrealized
Three Years Ended Stock Excess of Retained Treasury Translation Gains (Losses)
December 31, 1995 ($1 Par Value) Par Value Earnings Stock Adjustment on Investments Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1993 $188.4 $59.4 $2,520.6 $(472.0) $(140.4) $0 $2,156.0
Net Income 38.1 38.1
Cash Dividends ($2.40 per share) (423.0) (423.0)
Treasury shares reissued under
stock options and deferred
compensation plans (958,011) 4.8 43.1 47.9
Treasury shares reissued under
restricted stock plan (93,888) 5.4 5.4
Less unearned portion (5.4) (5.4)
Plus earned portion of grants 4.6 4.6
Treasury shares acquired (9,010,227) (612.2) (612.2)
Change in cumulative translation
adjustment (100.1) (100.1)
- - ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 188.4 64.2 2,135.7 (1,036.5) (240.5) 0 1,111.3
Net Income 629.5 629.5
Cash Dividends ($2.56 per share) (435.2) (435.2)
Treasury shares reissued under
stock options and deferred
compensation plans (552,805) 3.0 23.4 26.4
Treasury shares reissued under
restricted stock plan (114,930) 7.1 7.1
Less unearned portion (7.1) (7.1)
Plus earned portion of grants 5.9 5.9
Treasury shares acquired (1,193,631) (70.0) (70.0)
Change in cumulative translation
adjustment 57.0 57.0
Unrealized losses on investments (6.3) (6.3)
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 188.4 67.2 2,330.0 (1,077.2) (183.5) (6.3) 1,318.6
Net Income 320.8 320.8
Cash Dividends ($2.63 per share) (446.1) (446.1)
Treasury shares reissued under
stock options and deferred
compensation plans (741,526) 2.8 34.2 37.0
Treasury shares reissued under
restricted stock plan (174,100) 8.8 8.8
Less unearned portion (8.8) (8.8)
Plus earned portion of grants 8.0 8.0
Treasury shares acquired (1,297,138) (72.3) (72.3)
Change in cumulative translation
adjustment 6.2 6.2
Unrealized gains on investments 10.3 10.3
- - ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 $188.4 $70.0 $2,204.7 $(1,107.3) $(177.3) $4.0 $1,182.5
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
F-34
<PAGE>
Note 1. Summary of Significant Accounting Policies Principles of Consolidation.
The consolidated financial statements include those of the Company, its
subsidiaries and partnerships 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 at equity. The effects of all significant
intercompany transactions have been eliminated.
The financial statements of IMS International, Inc. (IMS), Dun & Bradstreet
Software and subsidiaries outside the United States and Canada reflect a fiscal
year ending November 30 to facilitate timely reporting of the Company's
consolidated financial results.
Cash Equivalents. Marketable securities that mature within 90 days of purchase
date are considered cash equivalents.
Marketable Securities. The Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" in 1994. At December 31, 1994, all
marketable securities were classified as "available for sale" and , therefore,
were reported at fair value, with net unrealized gains and losses reported in
shareowners' equity. At December 31, 1995, marketable securities are either
classified as "available for sale" or "held to maturity". The marketable
securities classified as "held to maturity" are valued at amortized cost, which
approximates market value.
The fair value of current and non-current marketable securities (and interest
rate swap agreements and foreign exchange forward contracts discussed in Note 6
to the Consolidated Financial Statements) were estimated based on quoted market
prices whenever available. When quoted market prices were not available, the
Company used standard pricing models for various types of financial instruments
which take into account the present value of estimated future cash flows.
Realized gains and losses on marketable securities are determined on the
specific identification method.
Unbilled Expenditures. These expenditures, which are included in other current
assets, represent costs to be expensed upon contract completion and the cost of
coupons purchased in connection with clearing house activities, which are
rebilled to customers.
Property, Plant and Equipment. Buildings and machinery and equipment are
depreciated over their estimated useful lives using principally the
straight-line method. 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.
Other Assets. Deferred charges include prepaid pension costs and assets
of grantor trusts established to pay benefits for U.S. supplemental pension
plans. 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. Other intangibles result from acquisitions and database
development. Computer software and other intangibles are being amortized, using
principally the straight-line method, over three to five years and five 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 seven to 40 years.
The Company adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" in
1995. This statement requires that long-lived assets and certain identifiable
intangibles held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. In general, this statement requires recognition of 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 impairment
loss is then based on the fair value of the asset. See Note 2 to the
Consolidated Financial Statements.
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 earned, which is
generally over the contract period or as the information is delivered or related
services are performed. Amounts billed for service and subscriptions are
credited to unearned subscription income and reflected in operating revenue over
the subscription term, which is generally one year. Software license revenue is
recognized upon delivery of the software and documentation when there are no
significant remaining related obligations. Revenue from post-contract customer
support (maintenance) is recognized on a straight-line basis over the term of
the contract.
F-35
<PAGE>
Note 1. (Cont'd.)
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 average monthly rates of exchange. For
these countries, currency translation adjustments are accumulated in a separate
component of shareowners' equity, whereas realized transaction gains and losses
are recognized in other 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, nonmonetary accounts are translated using historical
exchange rates, and all translation and transaction adjustments are recognized
in other expense-net.
Earnings Per Share of Common Stock. Earnings per share are based on the weighted
average number of shares of common stock outstanding during the year. The
inclusion of shares issuable under stock options in the calculation of earnings
per share would not result in material dilution.
Financial Instruments. 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. The
counterparties to these instruments are major international financial
institutions. See Note 6 to the Consolidated Financial Statements.
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, liabilities, revenues
and expenses and the disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Reclassifications. Certain prior-year amounts have been reclassified to conform
with the 1995 presentation.
F-36
<PAGE>
Note 2. Non-Recurring Charges
In the fourth quarter of 1995, the Company recorded within operating costs a
charge of $448.4 million. This charge primarily reflected an impairment loss in
connection with the adoption of the provisions of SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
($218.1 million), a provision for postemployment benefits ($79.8 million) under
the Company's severance plan, an accrual for contractual obligations that have
no future economic benefits and penalties to cancel certain contracts ($100.7
million) and other asset revaluations ($49.8 million). No payments relating
to the accrued contractual obligation were made in 1995.
This non-recurring charge evolved from the Company's annual budget and
strategic planning process, which included a review of the Company's underlying
cost structure, products and services and assets used in the business. Based
upon such analysis, management having the authority to approve such business
decisions committed in December 1995 to a plan to discontinue certain product
lines and dispose of certain other assets, resulting in the charge. These
decisions were not reversed or modified as a result of the Company's
reorganization plan, which reorganization plan was reviewed and, subject to
certain conditions, approved by the Board of Directors on January 9, 1996.
SFAS No. 121 requires that long-lived assets and certain intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. In connection with
this review, the Company recorded an impairment loss of $218.1 million
reflecting the revaluation of certain fixed assets, administrative and
production systems and other intangibles that will be replaced or will no longer
be used at A.C. Nielsen, IMS, Dun & Bradstreet Information Services (DBIS) and
Dun & Bradstreet Corporate headquarters.
The provision for postemployment benefits of $79.8 million, represents the
cost of workforce reductions. The accrual for contractual obligations that
have no future economic benefits and penalties to cancel certain contracts of
$100.7 million principally relates to the acquisition of certain information and
services that are no longer used by the Company. In addition, the Company
recognized a charge of $49.8 million principally related to the write-off of
certain computer software product lines that were discontinued.
In the third quarter of 1994, several non-recurring gains and significant
changes in costs were included in the Company's operating results. 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 D&B Software,
IMS, DBIS and A.C. 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.
F-37
<PAGE>
Note 3. Restructuring
In 1995, the Company reported a $28 million restructuring gain related to the
sale of warrants received in connection with the divestiture of Donnelley
Marketing and restructuring gains totaling $105.1 million relating to the sale
of Interactive Data and other divestitures. The Company also recorded a $12.8
million restructuring provision primarily to write off software for product
lines that were discontinued at Sales Technologies.
In the second quarter of 1994, the Company divested two non-strategic
businesses - Thomson Directories Ltd. (TDL) and the Machinery Information
Division of Dataquest (MID) - and initiated other actions to restructure certain
operations and businesses, and to reduce costs and increase operating
efficiencies. These restructuring measures included office consolidations, the
closedown of Sales Technologies' European operations, the discontinuance of
certain production and data-collection systems and products, as well as
additional steps to complete certain actions initiated in the fourth quarter of
1993. The pre-tax costs associated with these restructuring actions essentially
offset a pre-tax gain of $56.3 million on the two divestitures.
During 1993, the Company sold Donnelley Marketing Information Services,
redeemed preferred shares and notes related to the sales of Donnelley Marketing
and Datastream International and resolved certain contingencies related to other
divestitures. As a result of the above transactions, a $40.0 million
restructuring gain was recognized. In 1993, the Company also recognized a $21.0
million non-operating gain related to the initial public offering of Gartner
Group, in which the Company holds a majority interest. In connection with the
above operating and non-operating gains, the Company recorded $61.0 million of
restructuring expense related to workforce reductions (non-severance costs) and
restructuring of certain operations and businesses.
Additional restructuring actions were initiated in the fourth quarter of
1993 totaling $256.5 million. These actions were designed to achieve long-term
productivity improvement, reduce costs and leverage the Company's global
synergies. The costs associated with this plan, and all other restructuring
actions, included only specific, direct and incremental costs that could be
estimated with reasonable accuracy and were clearly identifiable with the
related plans.
Costs included in the restructuring charge included $54.0 million for the
consolidation of fourteen major data centers in North America and Europe into
two data centers in the U.S. and two centers located in Europe, resulting
principally in lease termination costs, asset writeoffs and other costs incident
to the consolidation of such data centers. The Company also provided $117.2
million to initiate approximately seventy separate actions to reduce real estate
costs by consolidating office facilities in each of fifteen major geographic
regions in the U.S. and nine geographic regions in Europe. Costs incurred
include lease termination costs and asset writeoffs. A provision of $19.1
million was taken to consolidate and reengineer the
Company's back office accounting functions by consolidating thirty-five
reporting entities into one accounting center for the U.S. and Canada, and
twenty-five reporting entities into four primary centers in Europe, and to
reengineer all accounting processes and functions. Costs incurred include
project implementation costs, outside consulting costs and asset writeoffs. The
restructuring charge also included $66.2 million to discontinue certain
production systems at A.C. Nielsen U.S. and DBIS U.S., due to accelerating the
introduction of new technologies; to discontinue certain data collection systems
of A.C. Nielsen U.S.; and to discontinue products at A.C. Nielsen U.S., Sales
Technologies and Erisco. Costs principally related to writeoffs of computer
software and other intangible assets.
The table below sets forth the details of all restructuring accrual
activity by major category for the years ended December 31, 1994 and 1995.
F-38
<PAGE>
<TABLE>
<CAPTION>
1994 Activity 1995 Activity
---------------------------------- -----------------------------------
January 1, Cash & December 31, Cash & December 31,
Category 1994 Expense Noncash Items 1994 Expense Noncash Items 1995
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Data center consolidations $54.0 - ($28.7) $25.3 - (13.2) 12.1
Real estate cost reductions 117.2 - (21.7) 95.5 - (68.7) 26.8
Accounting function consolidations 19.1 - (11.6) 7.5 - (4.2) 3.3
Discontinue production and data
collection systems and products 14.8 - (8.3) 6.5 12.8 (14.9) 4.4
Other 80.9 $56.3 (92.8) 44.4 - (18.3) 26.1
- - ------------------------------------------------------------------------------------------------------------------------------------
Total $286.0 $56.3 ($163.1) $179.2 12.8 (119.3) 72.7
- - ------------------------------------------------------------------------------------------------------------------------------------
Current restructuring liability $187.1 $145.0 $72.7
Non Current restructuring liability 98.9 34.2 0
- - ------------------------------------------------------------------------------------------------------------------------------------
Total restructuring liability $286.0 $179.2 $72.7
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In 1994 and 1993, certain restructuring actions initiated in 1993, 1992 and 1991
were completed at a lower cost than originally estimated and other actions
required more costs to implement than originally expected. In addition, costs to
complete certain actions being implemented changed based on revised estimates
and experience to date. In a number of instances, new restructuring actions were
initiated to complement or enhance original actions and certain actions were
expanded, contracted or discontinued based on changed circumstances. While the
total costs of all restructuring actions remained unchanged, the changes in
estimates and other changes did impact operating income by business segment.
(See Note 16 to the Consolidated Financial Statements.)
F-39
<PAGE>
Note 4. Acquisitions
In1995, 1994 and 1993, the Company acquired various companies in separate
transactions that were accounted for as purchases. The aggregate purchase
price of such acquisitions totaled approximately $25 million in 1995. The
aggregate purchase price for acquisitions totaled approximately $234
million in 1994 (approximately $300 million including acquisition costs,
contingent payments and minority interests in several companies). The largest
acquisitions were: Survey Research Group, a premier market research firm in
Southeast Asia; S&W S.N.R.C. - Wys Muller S.A., a French credit information
company; and Pilot Software, a leading provider of on-line analytic processing
software solutions that support business decision making needs across many
industries.
In 1993, the Company acquired Soliditet, a provider of commercial-credit
information in Scandinavia, and Gartner Group, a provider of research, analysis
and advisory services to users and suppliers of information technology systems
and software. The aggregate purchase price for acquisitions totaled
approximately $120 million in 1993.
The results of operations of all purchases are included in the Consolidated
Statement of Income from dates of acquisition. Had the acquisitions made in
1993, 1994 and 1995 been consummated on January 1 of the year preceding the year
of acquisition, the results of these acquired operations would not have had a
significant impact on the Company's consolidated results of operations for any
of the years presented.
F-40
<PAGE>
Note 5. Marketable Securities
Amounts included below are classified in the consolidated statement of financial
position as marketable securities, as well as assets of grantor trusts
established to pay benefits for U.S. supplemental pension plans and certain
marketable securities included in other investments and notes receivable. Cash
equivalents of $54.1 million and $46.4 million at December 31, 1995 and 1994,
respectively, represent marketable securities purchased within 90 days of
maturity date, for which book value, including accrued interest, approximates
fair value. Cash equivalents have been excluded from these disclosures.
A summary of cost (amortized cost of debt instruments) and fair values follows:
December 31, 1995 December 31, 1994
Cost Fair Cost Fair
Value Value
Equity securities ...................... $ 25.6 $ 23.7 $ 35.3 $ 31.6
Debt securities of the U.S. ............
Government and its agencies ...... 71.8 75.2 82.2 79.5
Debt securities of states and other sub-
divisions of the U.S. Government . 129.2 131.8 99.7 97.7
Debt securities of non-U.S. governments 13.7 14.2 13.9 13.6
Corporate debt securities .............. 12.3 12.3 11.7 11.5
Other .................................. .1 .1 .1 .1
- - --------------------------------------------------------------------------------
$ 252.7 $ 257.3 $ 242.9 $ 234.0
At December 31, 1995, gross unrealized gains and losses were $9.2 million and
$4.6 million, respectively. At December 31, 1994, gross unrealized gains and
losses were $2.6 million and $11.5 million, respectively.
Debt securities of states and other subdivisions of the U.S. Government totaling
$30.1 million have been classified as "held to maturity" at December 31, 1995,
and mature in one year or less. All other securities are classified as
"available for sale."
At December 31, 1995, cost and fair values of debt securities by contractual
maturity were as follows:
Cost Fair Value
Due in one year or less ............................... $ 53.5 $ 53.5
Due after one year through five years ................. 97.3 101.9
Due after five years through ten years ................ 71.4 73.1
More than ten years ................................... 1.5 1.7
Mortgage-backed securities ............................ 3.4 3.4
$ 227.1 $ 233.6
For the years ended December 31, 1995 and 1994, proceeds from the sales and
maturities of marketable securities were $74.6 million and $145.1 million,
respectively, and gross realized
F-41
<PAGE>
Note 6 - Financial Instruments with Off-Balance-Sheet Risk and Fair Value of
Financial Instruments 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. The
counterparties to these instruments are major international financial
institutions. The Company is exposed to interest and exchange rate risk in the
event of nonperformance by the counterparties to the financial instruments;
however, the Company does not anticipate such nonperformance. The amount of such
exposure is generally the unrealized gains in such contracts.
Interest rate swap agreements are entered into as hedges against variable
interest rate exposures. During the first quarter of 1995, the Company entered
into swap agreements that effectively fixed interest rates on $100 million of
variable rate debt, from 1995 through February 2001. In 1994, the Company
entered into swap agreements that effectively fixed interest rates on $300
million of variable rate debt, from 1994 through January 2005. The weighted
average fixed rate payable under these agreements is 7.07%. The differential
interest to be paid or received annually under these agreements is included in
interest expense. At December 31, 1995, the unrealized fair value of the
interest rate swaps was a loss of $26 million.
Foreign exchange forward contracts are entered into to hedge the effects of
exchange rate changes on certain of the Company's non-U.S. net investments and
to hedge against foreign exchange movements between the dates that foreign
currency transactions are recorded and the dates they are settled. At December
31, 1995, the Company had approximately $148 million in foreign exchange forward
contracts outstanding with various expiration dates through January 1996.
Unrealized losses on these contracts were insignificant. Gains and losses on the
contracts designated as hedges of non-U.S. net investments are included in the
cumulative translation adjustment component of shareholders' equity, and the
remaining gains and losses on foreign exchange forward contracts are recorded in
other expense - net.
F-42
<PAGE>
Note 7. Postretirement and Postemployment Benefits
The Company has defined benefit pension plans covering substantially all
associates in the United States. The benefits to be paid to associates under
these plans are based on years of credited service and average final
compensation. Pension costs are determined actuarially and funded to the extent
allowable under the Internal Revenue Code. Supplemental plans in the United
States are maintained to provide retirement benefits in excess of levels allowed
by ERISA.
The Company's non-U.S. subsidiaries provide retirement benefits for
associates consistent with local practices, primarily using defined benefit
or termination indemnity plans.
The components of net periodic pension cost are summarized as follows:
1995 1994 1993
Service Cost $43.1 $50.3 $42.2
Interest Cost 108.5 93.8 88.8
Actual Return on
Plan Assets (248.1) (7.2) (126.3)
Net Amortization
and Deferral 126.8 (111.1) 14.2
- - ----------------------------------------------------
Net Periodic
Pension Cost $30.3 $25.8 $18.9
- - -----------------------------------------------------
The status of defined benefit pension plans at December 31, 1995 and 1994, is as
follows:
<TABLE>
<CAPTION>
Funded Unfunded
U.S.(1) Non-U.S.
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Fair Value of Plan Assets $1,366.3 $1,178.7
Actuarial Present Value of Benefit Obligations:
Vested Benefits 1,065.6 896.6 $140.3 $90.8 $68.6 $65.1
Non-Vested Benefits 42.1 37.1 3.7 4.4 0 .1
- - ------------------------------------------------------------------------------------------------------------------------------------
Accumulated Benefit Obligations 1,107.7 933.7 144.0 95.2 68.6 65.2
Effect of Projected Future Salary Increases 133.9 114.1 59.4 56.0 .1 .1
- - ------------------------------------------------------------------------------------------------------------------------------------
Projected Benefit Obligations 1,241.6 1,047.8 203.4 151.2 68.7 65.3
- - ------------------------------------------------------------------------------------------------------------------------------------
Plan Assets in Excess of (Less than) Projected
Benefit Obligations 124.7 130.9 (203.4) (151.2) (68.7) (65.3)
Unrecognized Net Loss (Gain) 154.1 144.6 55.4 30.4 --- (.5)
Unrecognized Prior Service Cost 13.3 13.2 30.3 33.5 .6 1.0
Unrecognized Net Transition(Asset)Obligation (79.5) (94.6) 2.0 2.5 --- ---
Adjustment to Recognize Minimum Liability --- --- (28.3) (15.1) (.5) (.4)
- - --------------------------------------------------------------------------------------------------------------------------------
Prepaid (Accrued) Pension Cost $212.6 $194.1 $(144.0) $(99.9) $(68.6) $(65.2)
<FN>
(1)Represents supplemental plans for which grantor trusts (with assets of $71
and $69 million at December 31, 1995 and 1994, respectively) have been
established to pay plan benefits.
</FN>
</TABLE>
The weighted average expected long-term rate of return on pension plan assets
was 9.75% for 1995, 1994 and 1993. At December 31, 1995 and 1994, the projected
benefit obligations were determined using weighted average discount rates of
7.16% and 8.51%, respectively, and weighted average rates of increase in future
compensation levels of 4.70% and 5.78%, respectively. Plan assets are invested
in diversified portfolios that consist primarily of equity and debt securities.
During 1994, the Company recognized pension curtailment gains of
approximately $15 million, resulting from a previously announced work-force
reduction, and $3 million resulting from divestitures. In addition to providing
pension benefits, the Company provides various health-care and life-insurance
benefits for retired associates. Substantially all of the Company's associates
in the United States become eligible for these benefits if they reach normal
retirement age while working for the Company. Certain of the Company's
subsidiaries outside the United States have postretirement benefit plans,
although most participants are covered by government-sponsored or -administered
programs. The cost of company-sponsored postretirement benefit plans outside the
U.S. is not significant.
F-43
<PAGE>
During 1993, the Company adopted the provisions of SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions." The statement
requires the accrual of the projected future cost of providing postretirement
benefits during the period that associates render the services necessary to be
eligible for such benefits. In prior years, this expense was recognized as
claims were paid and was not material to the Company's results of operations.
The Company elected to immediately recognize the accumulated postretirement
benefit obligation. Measured as of January 1, 1993, the effect of adopting SFAS
No. 106 was a one-time, non-cash, after-tax charge of $140.6 million ($.79 per
share).
The components of net periodic postretirement benefit cost other than pensions
are summarized as follows:
1995 1994 1993
- - ---------------------------------------------------
Service Cost $5.1 $ 4.5 $ 6.0
Interest Cost 16.0 15.8 18.3
Net Amortization
and Deferral (5.0) (4.3) (1.0)
- - ---------------------------------------------------
Net Periodic Postretirement
Benefit Cost $16.1 $16.0 $23.3
- - ---------------------------------------------------
The status of postretirement benefit plans other than pensions at December 31,
1995 and 1994, is as follows:
1995 1994
Actuarial Present Value of Benefit Obligation:
Retirees and Dependents $(170.0) $(134.7)
Active Associates - Eligible (25.7) (28.4)
Active Associates - Not Yet Eligible (35.6) (33.0)
- - -------------------------------------------------------------------------
Accumulated Postretirement
Benefit Obligation (231.3) (196.1)
Unrecognized Net Loss (Gain) 26.2 (1.0)
Unrecognized Prior Service Cost (Credit) (18.1) (23.1)
- - -------------------------------------------------------------------------
Accrued Postretirement Benefit Obligation $(223.2) $(220.2)
- - -------------------------------------------------------------------------
The accumulated postretirement benefit obligation at December 31, 1995 and 1994
was determined using discount rates of 7.0% and 8.5%, respectively. The assumed
rate of future increases in per capita cost of covered health-care benefits is
8.9% in 1996, decreasing gradually to 5.0% for the year 2021 and remaining
constant thereafter. Increasing the assumed health-care cost trend rate by one
percentage point in each year would increase the accumulated postretirement
benefit obligation by $27 million and would increase annual aggregate service
and interest costs by $2.3 million.
During 1994, the Company recognized a curtailment gain of approximately $25.7
million resulting from a change in eligibility requirements for the
postretirement medical plan. In addition, the Company recognized curtailment and
settlement gains of approximately $2 million resulting from divestitures.
During 1993, the Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." SFAS No. 112 requires that employers expense the costs
of postemployment benefits paid before retirement, principally severance
benefits, over the service lives of employees if certain conditions are met.
Under the Company's previous accounting policy, the total cost of such benefits
was expensed when the event occurred.
The initial effect of adopting SFAS No. 112 in 1993 was a one-time,
after-tax charge of $250 million ($1.40 per share).
F-44
<PAGE>
Note 8. Employee Stock Plans
The Company has granted options to certain associates, under its Key Employees
Stock Option Plans, to purchase shares of its common stock at the market price
on the date of the grant. Options outstanding at December 31, 1995 were granted
during the years 1986 through 1995 and are exercisable over periods ending not
later than 2005. At December 31, 1995, 1994 and 1993, options for 4,859,596,
4,306,119 and 3,556,944 shares of common stock were exercisable and 10,306,592,
1,567,393 and 3,467,164 shares were available for future grants under the plans.
Changes in stock options for the three years ended December 31, 1995 are
summarized as follows:
Option Price Per
Shares Share ($) Total
Options outstanding, January 1, 1993 6,848,199 11.16 to 62.50 $337.4
Granted 1,757,578 56.75 to 62.25 109.0
Exercised (951,936) 11.16 to 57.75 (42.7)
Surrendered or Expired (209,675) 41.50 to 62.50 (11.2
- - --------------------------------------------------------------------------------
Options outstanding,December 31, 1993 7,444,166 11.16 to 62.50 392.5
Granted 2,158,258 54.00 to 62.50 116.8
Exercised (547,668) 11.16 to 57.75 (23.1)
Surrendered or Expired (321,584) 11.16 to 62.50 (18.3)
- - --------------------------------------------------------------------------------
Options outstanding,December 31, 1994 8,733,172 20.52 to 62.50 467.9
Granted 1,821,780 50.50 to 63.75 115.4
Exercised (736,145) 20.52 to 62.25 (33.9)
Surrendered or Expired (671,079) 20.52 to 63.75 (38.1)
- - --------------------------------------------------------------------------------
Options outstanding,December 31, 1995 9,147,728 20.52 to 63.75 $511.3
________________________________________________________________________________
Options which became exercisable during:
1993 1,231,406 41.50 to 58.38 $ 61.0
1994 1,344,876 41.50 to 62.25 $73.0
1995 1,493,507 44.63 to 62.50 $84.0
F-45
<PAGE>
All proceeds from options exercised are credited to treasury stock. Any tax
benefit to the Company resulting from the exercise of options is credited to
capital in excess of par value. There have been no charges to income with
respect to any stock options.
The plans also provide for the granting of stock appreciation rights and
limited stock appreciation rights in tandem with stock options to certain key
associates. At December 31, 1995, there were no stock appreciation rights
attached to stock options; however, 788,869 limited stock appreciation rights
were outstanding, which are exercisable only if, and to the extent that, the
related option is exercisable and only upon the occurrence of specified
contingent events.
In 1995, Pilot Software (Pilot), a wholly owned subsidiary of the Company,
adopted an equity participation plan authorizing Pilot to grant options for up
to 19.5% of its stock to its employees. The options are exercisable after nine
years at fair market value, as determined by independent appraisal, however,
vesting may be accelerated based on the occurrence of a "trigger event" as
defined by the plan. Two-thirds of the authorized options were granted in
February 1995 at an exercise price approximating $1.75 per share.
The Company's majority-owned subsidiary Gartner Group, Inc. has several stock
option plans to provide a method of retention and motivation of its senior
personnel and also to align senior management's objectives with long-term stock
price appreciation.
In October 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No.123, "Accounting for Stock-Based Compensation," which requires that
companies with stock-based compensation plans either recognize compensation
expense based on new fair value accounting methods or continue to apply the
existing accounting rules and disclose pro forma net income and earnings per
share assuming the fair value method had been applied. The Company is evaluating
the new statement and has not determined whether it will adopt the recognition
or disclosure alternative of the statement. Therefore, the impact of adoption on
the Company's financial statements has not been determined. The new disclosure
requirements are generally effective for financial statements for fiscal years
beginning after December 15, 1995.
Under the 1989 Key Employees Restricted Stock Plan, key associates may be
granted restricted shares of the Company's stock. The plan provides for the
granting of up to 1,800,000 shares of the Company's common stock prior to
December 31, 1998. During 1995, 1994 and 1993, 184,465, 117,262 and 102,540
restricted shares, respectively, were awarded under the plan. Forfeitures in
1995, 1994 and 1993 totaled 10,365, 2,332 and 8,652, respectively. The
restrictions on the majority of such shares lapse over a period of three years
from the date of the grant and compensation expense is charged to operations
over a service period of six years.
F-46
<PAGE>
Note 9. Income Taxes
Income before provision for income taxes consisted of:
1995 1994 1993
U.S. $270.6 $560.0 $367.6
Non-U.S. 173.1 319.2 220.4
--------------------------------
$443.7 $879.2 $588.0
--------------------------------
The provision (benefit) for income taxes consisted of:
1995 1994 1993
Current tax provision:
U.S. Federal $156.5 $104.1 $224.2
State and Local 4.1 54.3 73.8
Non-U.S. 40.9 34.6 101.0
------------------------
201.5 193.0 399.0
-------------------------
Deferred tax provision (benefit):
U.S. Federal (92.2) 11.6 (194.7)
State and Local (15.9) (17.9) (16.5)
Non-U.S. 29.5 63.0 (28.5)
-------------------------
(78.6) 56.7 (239.7)
-------------------------
$122.9 $249.7 $159.3
-----------------------------
-----------------------------
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.
1995 1994 1993
--------------------------------
Statutory tax rate 35.0% 35.0% 35.0%
State and Local income taxes,
net of U.S. Federal tax benefit (3.1) 2.7 6.4
Non-U.S. taxes 5.6 (1.2) (.9)
Recognition of capital and
ordinary losses (15.9) (8.7) (15.2)
Non-recurring charges 6.0 -- --
Other 0.1 .6 1.8
--------------------------------
Effective tax rate 27.7% 28.4% 27.1%
Income taxes paid were approximately $119.9 million, $191.4 million and $236.3
million in 1995, 1994 and 1993, respectively. Income taxes refunded were
approximately $17.8 million, $10.8 million and $9.5 million in 1995, 1994 and
1993, respectively.
Deferred tax assets (liabilities) are comprised of the following at December 31:
1995 1994
Deferred Tax Assets:
Operating Losses $191.2 $137.8
Postretirement Benefits 86.2 90.2
Postemployment Benefits 42.2 86.4
Non-Recurring Charges 42.0 0.0
Restructuring Costs 35.3 93.6
Bad Debts 26.9 26.3
Intangibles 4.0 15.0
Other 9.2 6.8
--------------------
437.0 456.1
Valuation Allowance (91.8) (78.0)
--------------------
345.2 378.1
Deferred Tax Liabilities:
Intangibles (127.3) (195.3)
Revenue Recognition (87.3) (89.0)
Tax Leasing Transactions (68.9) (80.3)
Depreciation (14.4) (41.5)
Other (3.9) (7.5)
----------------------
(301.8) (413.6)
Net Deferred Tax (Liability) Asset $43.4 $(35.5)
Undistributed earnings of non-U.S. subsidiaries aggregated approximately $924.7
million at December 31, 1995. 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 U.S. Federal income taxes
payable would not be material; however,withholding taxes, imposed by certain
non-U.S. countries, would total approximately $51.3 million.
During 1987 and 1988, the Company entered into tax-sharing agreements with an
Alaska Native Corporation (ANC), under which the Company acquired income tax
benefits related to certain net operating losses (NOLs) of the ANC. In 1995, the
Company recognized benefits of $6.0 million in other expense -- net related to
these transactions. In 1994, the Company recognized benefits of $9.8 million in
other expense -- net related to these transactions, and paid $166.2 million to
settle all liabilities related to the ANC agreements.
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.
F-47
<PAGE>
Note 10. Notes Payable
Notes payable consisted of the following at December 31:
1995 1994
-----------------------------
Commercial Paper $405.0 443.7
Bank Notes 29.2 45.2
Other 10.3 11.7
-----------------------------
$444.5 $500.6
The Company has short-term borrowing agreements with several banks to provide up
to $750 million of borrowings, all of which support a commercial paper program.
The Company also had unused lines of credit of $150 million at December 31,
1995, which were substantially in the form of non-U.S. credit facilities. None
of these arrangements had material commitment fees or compensating balance
requirements.
The weighted average interest rates on notes payable, including borrowings
in hyperinflationary countries, at December 31, 1995 and 1994, respectively
were 7.11 % and 7.53%.
F-48
<PAGE>
Note 11. 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 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 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 December 31, 1994 totaled approximately $625 million
and were reflected in other liabilities and minority interests. The
third-parties' investments in these partnerships at December 31, 1995 totaled
approximately $625 million and were reflected in redeemable partnership
interests. Third-parties' share of partnerships results of operations, including
specified returns, is reflected in other expense-net.
F-49
<PAGE>
Note 12. Capital Stock
In October 1993, the Board of Directors authorized the Company to purchase up to
10 million shares of its common stock. Shares repurchased under this program
totaled 8.3 million in 1993. There were no shares repurchased under this
program in 1994 and 1995.
In October 1988, the Company adopted a Shareholders' Rights Plan. The plan is
intended to protect the shareholders' interests in the event of an unsolicited
attempt to acquire the Company. The plan is not intended to prevent a takeover
of the Company on terms that are favorable and fair to all shareholders and will
not interfere with a merger approved by the Board of Directors.
Under the plan, each share of the Company's common stock has a right which
trades with the stock until the right becomes exercisable. Each right entitles
the shareholders to buy 1/100 of a share of Series A participating preferred
stock at a purchase price of $230, subject to adjustment. The rights will not be
exercisable until a person or group (Acquiring Person) acquires beneficial
ownership of, or commences a tender offer for, 20% or more of the Company's
outstanding common stock.
In the event the Company is acquired in a merger or other business
combination, or subject to other transactions, as described in the Shareholders'
Rights Plan, each right will entitle its holder (other than the Acquiring
Person) to receive upon exercise, stock with a 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 October 1998, for $.01 per right, under certain circumstances.
The shareholders have authorized the issuance of 10 million shares of $1 par
value preferred stock. The preferred stock can be issued with varying terms, as
determined by the Board of Directors. Under certain circumstances, the Company
may not issue voting stock or securities convertible into voting stock of the
Company without shareholder approval.
F-50
<PAGE>
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. Rental expense
under real estate operating leases for the years 1995, 1994 and 1993 was $149.9
million, $156.3 million, and $168.9 million, respectively. The approximate
minimum annual rental expense for real estate operating leases that have
remaining noncancelable lease terms in excess of one year, net of sublease
rentals, at December 31, 1995, was (in millions): 1996 - $138.4; 1997 - $118.9;
1998 - $106.3; 1999 - $91.6; 2000 - $77.0; and an aggregate of $192.7 million
thereafter.
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. Rental expense under
computer and other equipment leases was $64.6 million, $71.6 million and $96.8
million for 1995, 1994 and 1993, respectively. At December 31, 1995, the
approximate minimum annual rental expense for computer and other equipment under
operating leases that have remaining noncancelable lease terms in excess of one
year was (in millions): 1996 - $91.9; 1997 - $79.6; 1998 - $55.2; 1999 - $41.1;
2000 - $20.7.
The Company has agreements with various third parties to purchase certain data
processing and telecommunication services, extending beyond one year. At
December 31, 1995, the purchases covered by these agreements aggregate
approximately (in millions): 1996 - $48.7; 1997 - $46.5; 1998 - $43.6; 1999 -
$27.5; 2000 - $0.8 and an aggregate thereafter of $2.2.
F-51
<PAGE>
Note 14. Litigation
The Company and its subsidiaries are involved in legal proceedings and
litigation arising in the ordinary course of business. 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 managment, these matters will not
materially affect the Company's consolidated financial position.
F-52
<PAGE>
Note 15. Supplemental Financial Data
Accounts Receivable - Net:
1995 1994
Trade $1,411.6 $1,254.4
Less: allowance for doubtful
accounts (74.4) (76.8)
1,337.2 1,177.6
Other 114.5 78.9
- - ------------------------------------------------------------
$1,451.7 $1,256.5
Other Current Assets:
1995 1994
Unbilled expenditures $49.8 $51.1
Deferred taxes 211.1 173.8
Prepaid expenses 121.7 113.6
Inventories 25.9 23.7
- - ---------------------------------------------------------------
$408.5 $362.2
Property, Plant and Equipment - Net, carried at cost,
1995 1994
Buildings $403.6 $439.3
Machinery and Equipment 1,324.7 1,296.1
--------------------------
1,728.3 1,735.4
Less: accumulated depreciation 977.5 935.3
--------------------------
750.8 800.1
- - ------------------------------------------------------------
Leasehold improvements, less:
Acumulated amortization of
$98.6 and $107.7 76.7 67.4
Land 46.9 51.0
- - -------------------------------------------------------------
$874.4 $918.5
Computer Software, Other Intangibles and Goodwill:
Computer Other
Software Intangibles Goodwill
January 1,1994 $294.5 $214.7 $942.4
Additions at cost 182.9 47.3 250.4
Amortization (97.5) (44.6) (48.2)
Other deductions and
reclassifications (44.0) (1.4) 5.3
- - --------------------------------------------------------
December 31,1994 $335.9 $216.0 $1,149.9
Additions at cost 198.6 33.3 17.9
Amortization (119.8) (50.5) (61.8)
Other deductions and
reclassifications (102.4) (20.3) (96.6)
- - ---------------------------------------------------------
December 31,1995 $312.3 $178.5 $1,009.4
Accounts and Notes Payable:
1995 1994
Trade $117.5 $86.4
Customer advances 121.8 125.9
Taxes other than
income taxes 83.4 54.6
Notes 444.5 500.6
Other 34.9 23.3
- - --------------------------------------------
$802.1 $790.8
Accrued and Other Current Liabilities:
1995 1994
Salaries, wages, bonuses and
other compensation $184.3 $255.1
Profit-sharing 40.0 34.7
Deferred revenues on
uncompleted contracts 305.1 270.8
Restructuring costs 72.7 145.0
Postemployment benefits 100.0 100.0
Other 662.2 494.8
- - -----------------------------------------------------
$1,364.3 $1,300.4
<TABLE>
F-53
<PAGE>
Dollar Amounts in Millions
<CAPTION>
Note 16. Operations by Business Segments
The Company, operating in over 70 countries, delivers information,software and
related services principally through five business segments referenced below.
Risk Management(2)
Marketing(1) and Business Directory Other
Information Marketing Software Information Business
Year Ended December 31, 1995 Services Information Services Services Services Services Total
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue $2,388.1 $1,734.1 $457.4 $423.7 $411.8 $5,415.1
Restructuring Income (Expense) - Net(3) $32.5 $90.0 $(12.8) $0 $10.6 $120.3
Segment Operating Income (Loss) (4) $125.6 $449.5 $10.3) $186.3 $61.2 $812.3
General Corporate Expenses (290.5)(5)
Non-Operating Expense - Net (78.1)
Income Before Provision for Income Taxes $443.7
Segment Depreciation and Amortization(6) $233.8 $113.6 $70.6 $16.6 $18.6 $453.2
Segment Capital Expenditures $131.2 $75.0 $14.6 $19.3 $25.1 $265.2
Identifiable Assets at December 31, 1995 $1,844.3 $1,491.7 $603.9 $539.7 $480.2 $4,959.8
- - ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1994
Operating Revenue $2,042.9 $1,605.7 $405.9 $440.1 $401.1 $4,895.7
Restructuring Income (Expense) - Net(3) $8.2 $1.8 $(2.8) $33.8 $21.7 $62.7 (5)
Segment Operating Income (Loss) $285.3 $447.0 $(3.6) $248.0 $110.0 $1,086.7
General Corporate Expenses (161.2) (5)
Non-Operating Income - Net (46.3)
Income Before Provision for Income Taxes $879.2
Segment Depreciation and Amortization(6) $190.3 $102.6 $70.9 $15.6 $27.4 $406.8
Segment Capital Expenditures $124.1 $71.9 $20.2 $8.2 $12.4 $236.8
Identifiable Assets at December 31, 1994 $1,817.9 $1,574.0 $602.2 $514.9 $419.2 $4,928.2
- - ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1993
Operating Revenue $1,868.3 $1,564.2 $475.6 $450.7 $351.6 $4,710.4
Restructuring Expense - Net(3) $(53.0) $(97.0) $(68.3) $(14.9) $(3.2) $(236.4) (5)
Segment Operating Income (Loss) $243.5 $307.6 $(24.6) $170.3 $24.8 $721.6
General Corporate Expenses (169.1) (5)
Non-Operating Income - Net 35.5
Income Before Provision for Income Taxes
and Accounting Changes $588.0
Segment Depreciation and Amortization(6) $153.3 $87.6 $76.7 $15.8 $29.2 $362.6
Segment Capital Expenditures $109.6 $60.3 $33.5 $9.6 $13.1 $226.1
Identifiable Assets at December 31, 1993 $1,641.1 $1,393.5 $629.9 $500.6 $426.9 $4,592.0
- - ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) A.C. Nielsen's operating revenue was $1,286.1 in 1995, $1,102.0 in 1994
and $1,051.8 in 1993. IMS' operating revenue was $818.5 in 1995, $691.1
in 1994 and $613.9 in 1993.
(2) Operating revenue from worldwide credit services was $993.7 in 1995, $917.0
in 1994 and $892.7 in 1993. (3) See Note 3 to the Consolidated Financial
Statements. (4) 1995 Operating Income includes a non-recurring charge of $189.1
in Marketing Information, $45.6 in Risk Management and Business Marketing
Information, $17.7 in Directory Information, $22.7 in Software, and $4.0 in
Other Business in the fourth quarter for costs principally associated with the
Company's plan to reorganize into three independent companies. (5) General
Corporate Expenses include a non-recurring charge of $169.3 million
in 1995 and $62.7 and $41.1 of restructuring expense in 1994 and 1993,
respectively.
(6) Includes depreciation and amortization of Property, Plant and Equipment,
Computer Software, Other Intangibles and Goodwill.
</FN>
</TABLE>
F-54
<PAGE>
Note 16 continued
Directory Information Services' operating revenue includes $121.7 million,
$134.0 million and $110.2 million in 1995, 1994 and 1993, respectively, relating
to the Company's share of earnings of DonTech, a partnership with Ameritech. As
of December 31, 1995, DonTech's assets and liabilities were as follows: current
assets, $213.0 million; other assets, $46.0 million; current liabilities, $15.0
million . DonTech's December 31, 1994, assets and liabilities were as follows:
current assets, $198.5 million; other assets, $48.0 million; current
liabilities, $18.7 million. In 1995, DonTech's revenues totaled $420.5 million
compared to $411.7 million and $382.8 million in 1994 and 1993, respectively.
Pre-tax income was $232.2 million, $216.4 million and $175.0 million in 1995,
1994 and 1993, respectively. At December 31, 1995 and 1994, the Company's
investment in DonTech was $238.2 million and $227.8 million, respectively.
Non-operating assets of $556.0 million, $535.7 million and $578.4 million at
December 31, 1995, 1994 and 1993, respectively, included primarily deferred
pension costs, cash and cash equivalents, marketable securities, other
investments and deferred income taxes. These assets are not identified with
business segments and represent the reconciling item between the identifiable
assets shown and the Company's total assets.
F-55
<PAGE>
<TABLE>
Note 17. Operations by Geographic Area
<CAPTION>
Financial information by geographic area is summarized as follows.
Inter-area sales were not significant. Other
United States Europe Non-U.S. Total
<S> <C> <C> <C> <C>
1995
Operating Revenue $3,016.3 $1,560.9 $837.9 $5,415.1
Restructuring Income - Net(1) $120.3 $0 $0 $120.3
Operating Income(2) $359.2 $90.8 $71.8 $521.8
Identifiable Assets $2,756.2 $1,670.9 $532.7 $4,959.8
- - -----------------------------------------------------------------------------------------------------------------------------------
1994
Operating Revenue $2,889.2 $1,354.2 $652.3 $4,895.7
Restructuring (Expense) Income- Net(1) $(12.5) $26.1 $(13.6) $0
Operating Income $638.5 $214.3 $72.7 $925.5
Identifiable Assets $2,843.7 $1,512.8 $571.7 $4,928.2
- - ------------------------------------------------------------------------------------------------------------------------------------
1993
Operating Revenue $2,938.9 $1,267.7 $503.8 $4,710.4
Restructuring (Expense) - Net(1) $(215.8) $(45.7) $(16.0) $(277.5)
Operating Income $368.0 $120.0 $64.5 $552.5
Identifiable Assets $2,754.9 $1,448.6 $388.5 $4,592.0
- - ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) See Note 3 to the Consolidated Financial Statements.
(2) 1995 Operating Income includes a non-recurring charge of $448.4 million
($369.7 million in the U.S., $46.3 million in Europe, and $32.4 million in Other
Non-U.S.) in the fourth quarter for costs principally associated with the
Company's plan to reorganize into three independent companies.
</FN>
</TABLE>
F-56
<PAGE>
<TABLE>
Note 18. Quarterly Financial Data (Unaudited)
<CAPTION>
Three Months Ended
<S> <C> <C> <C> <C> <C>
March 31 June 30 September 30 December 31 Year
1995
Operating Revenue $1,219.6 $1,307.4 $1,333.4 $1,554.7 $5,415.1
Restructuring Income---Net $28.0 $---- $77.2 $15.1 $120.3
Operating Income (Loss) (1) $172.8 $220.0 $260.7 $(131.7) $521.8
Net Income (Loss) (1) $108.9 $146.1 $171.5 $(105.7) $320.8
Earnings (Loss) Per Share (1) $.64 $.86 $1.01 $(.62) $1.89
- - ----------------------------------------------------------------------------------------------------------------------
1994
Operating Revenue $1,099.2 $1,184.7 $1,203.4 $1,408.4 $4,895.7
Operating Income $159.8 $214.1 $250.4 $301.2 $925.5
Net Income $108.7 $144.6 $166.7 $209.5 $629.5
Earnings Per Share $.64 $.85 $.98 $1.23 $3.70
<FN>
(1)Includes a non-recurring charge of $448.4 million in the fourth quarter for
costs principally associated with the Company's plan to reorganize into
three independent companies. (See Note 2 to the Consolidated Financial
Statements).
</FN>
</TABLE>
F-57
<PAGE>
Note 19. Reorganization Plan
On January 9, 1996 the Company announced a plan to reorganize into three
publicly traded independent companies by spinning off through a tax-free
distribution two of its businesses to shareholders. The three companies will be:
Cognizant Corporation, consisting of IMS International, Gartner Group, Nielsen
Media Research, Pilot Software and Erisco; The Dun & Bradstreet Corporation,
consisting of Dun & Bradstreet Information Services, Moody's Investors Service
and Reuben H. Donnelley; and A.C. Nielsen, the marketer of information, analysis
and insight to the worldwide consumer-products and services industry. In
connection with the reorganization, several other divisions, such as Dun &
Bradstreet Software and American Credit Indemnity, will be divested.
The distribution is subject to final approval by the Company's board of
directors and obtaining a ruling from the Internal Revenue Service with respect
to the tax-free treatment of the distribution. The Company expects to complete
the reorganization by the end of 1996.
F-58
<PAGE>
<TABLE>
The Dun & Bradstreet Corporation and Subsidiaries
Ten-Year Selected Financial Data
<CAPTION>
All amounts except per share data, average number
of shares outstanding and percentages are shown
in millions of dollars 1995 1994 1993 1992 1991
- - ---------------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Continuing Operations:
Operating Revenue 5,415.1 4,895.7 4,710.4 4,750.7 4,651.0
Costs and Expenses(1) 4,893.3 3,970.2 4,157.9 3,964.8 3,906.7
- - ---------------------------------------------- ------- ------- ------- ------- -------
Operating Income (1) 521.8 925.5 552.5 785.9 744.3
Non-Operating (Expense)Income - Net (78.1) (46.3) 35.5 9.3 (7.0)
- - ---------------------------------------------- ------- ------- ------- ------- -------
Income from Continuing Operations
Before Provision for Income Taxes 443.7 879.2 588.0 795.2 737.3
Provision for Income Taxes 122.9 249.7 159.3 241.7 230.8
- - ---------------------------------------------- ------- ------- ------- ------- -------
Income from Continuing Operations 320.8 629.5 428.7 553.5 506.5
Income from Discontinued Operations,
Net of Income Taxes 0 0 0 0 0
- - ---------------------------------------------- ------- ------- ------- ------- -------
Income from Operations, Net of Income Taxes(2) 320.8 629.5 428.7 553.5 506.5
- - ---------------------------------------------- ------- ------- ------- ------- -------
Cumulative Effect of Accounting Changes(3) 0 0 (390.6) 0 0
- - ---------------------------------------------- ------- ------- ------- ------- -------
Net Income 320.8 629.5 38.1 553.5 506.5
- - ---------------------------------------------- ------- ------- ------- ------- -------
Dividends 446.1 435.2 423.0 401.3 383.9
- - ---------------------------------------------- ------- ------- ------- ------- -------
Earnings Per Share of Common Stock:
Continuing Operations 1.89(7) 3.70 2.42(4) 3.10 2.84
Discontinued Operations .00 .00 .00 .00 .00
- - ---------------------------------------------- ------- ------- ------- ------- -------
Income from Operations(2) 1.89(7) 3.70 2.42(4) 3.10 2.84
- - ---------------------------------------------- ------- ------- ------- ------- -------
Cumulative Effect of Accounting Changes(3) .00 .00 (2.19) .00 .00
- - ---------------------------------------------- ------- ------- ------- ------- -------
Total 1.89 3.70 .23 3.10 2.84
- - ---------------------------------------------- ------- ------- ------- ------- -------
Dividends Per Share 2.63 2.56 2.40 2.25 2.15
- - ---------------------------------------------- ------- ------- ------- ------- -------
Average Number of Shares Outstanding(in millions)169.5 169.9 177.2 178.3 178.6
- - ---------------------------------------------- ------- ------- ------- ------- -------
As a Percentage of Operating Revenue:
Operating Income 9.6(8) 18.9 11.7(5) 16.5 16.0(1)
Income from Operations, Net of Income Taxes 5.9(9) 12.9 9.1(6) 11.7 10.9
- - ---------------------------------------------- ------- ------- ------- ------- -------
Return on Average Shareholders' Equity Percentage 24.6(9) 55.6 24.9(6) 26.1 25.2(1)
- - ---------------------------------------------- ------- ------- ------- ------- -------
Shareholders' Equity 1,182.5 1,318.6 1,111.3 2,156.0 2,123.1
- - ---------------------------------------------- ------- ------- ------- ------- -------
Total Assets 5,515.8 5,463.9 5,170.4 4,914.9 4,828.7
- - --------------------------------------------- --------- -------- ------- ------- -------
<FN>
(1)Includes in 1995 a non-recurring charge of $448.4 million for costs
principally associated with the reorganization of the Company (See Note 2 to
the Consolidated Financial Statements). Also includes impact of $120.3
million restructuring income - net in 1995 and $277.5, $15.0, $32.1, $35.3
and $50.7 million of restructuring expense - net in 1993, 1991, 1988, 1987
and 1986 respectively.
(2)Excludes net gains (losses) from disposals of discontinued operations of
$12.5 and ($.6), or $.07 and $.00 per share, in 1987 and 1986, respectively.
(3)Includes impact of $250.0 million or $1.40 per share for the
adoption of SFAS No. 112 and $140.6 million or $.79 per share
for the adoption of SFAS No. 106 in 1993. (See Note 7 to the
Consolidated Financial Statements.)
(4)$3.36 excluding $277.5 million restructuring expense and $21.0 million gain
from Gartner Group's sale of stock (totaling $256.5 million pre-tax and
$166.7 million after-tax).
(5)17.6% excluding net restructuring expense of $277.5 million as described in
Note 3 to the Consolidated Financial Statements.
(6)Excludes $277.5 million restructuring expense and $21.0 million gain from
Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7
million after-tax) described in Note 3 and the impact of the cumulative
effect of the accounting changes described in Note 7, Return on Average
Shareholders' Equity is 34.6% and Income from Operations, Net of Income Taxes
is 12.6% of Operating Revenue.
(7)$3.80 excluding the non-recurring charge of $448.4 million.
(8)17.9% excluding the non-recurring charge of $448.4 million.
(9)Excluding $448.4 million non-recurring charge, Return on Average
Shareholders' Equity is 48.6% and Income from Operations, Net of Income Taxes
is 11.9% of Operating Revenue.
</FN>
</TABLE>
F-59
<PAGE>
<TABLE>
All amounts except per share data, average number
of shares outstanding and percentages are shown
in millions of dollars 1990 1989 1988 1987 1986
- - ---------------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Continuing Operations:
Operating Revenue 4,837.3 4,318.9 4,267.4 3,788.5 3,463.2
Costs and Expenses(1) 4,050.4 3,455.8 3,497.7 3,098.6 2,859.8
- - ---------------------------------------------- ------- ------- ------- ------- -------
Operating Income (1) 786.9 863.1 769.7 689.9 603.4
Non-Operating (Expense)Income - Net (19.1) 49.0 21.0 43.9 43.5
- - ---------------------------------------------- ------- ------- ------- ------- -------
Income from Continuing Operations
Before Provision for Income Taxes 767.8 912.1 790.7 733.8 646.9
Provision for Income Taxes 261.1 327.9 291.7 295.4 270.0
- - ---------------------------------------------- ------- ------- ------- ------- -------
Income from Continuing Operations 506.7 584.2 499.0 438.4 376.9
Income from Discontinued Operations,
Net of Income Taxes 0 0 0 .6 2.3
- - ---------------------------------------------- ------- ------- ------- ------- -------
Income from Operations, Net of Income Taxes(2) 506.7 584.2 499.0 439.0 379.2
- - ---------------------------------------------- ------- ------- ------- ------- -------
Cumulative Effect of Accounting Changes(3) 0 (31.9) 0 0 0
- - ---------------------------------------------- ------- ------- ------- ------- -------
Net Income 506.7 552.3 499.0 439.0 379.2
- - ---------------------------------------------- ------- ------- ------- ------- -------
Dividends 379.1 361.9 288.1 226.8 193.2
- - ---------------------------------------------- ------- ------- ------- ------- -------
Earnings Per Share of Common Stock:
Continuing Operations 2.79 3.13 2.67 2.36 2.03
Discontinued Operations .00 .00 .00 .00 .01
- - ---------------------------------------------- ------- ------- ------- ------- -------
Income from Operations(2) 2.79 3.13 2.67 2.36 2.04
- - ---------------------------------------------- ------- ------- ------- ------- -------
Cumulative Effect of Accounting Changes(3) .00 (.17) .00 .00 .00
- - ---------------------------------------------- ------- ------- ------- ------- -------
Total 2.79 2.96 2.67 2.36 2.04
- - ---------------------------------------------- ------- ------- ------- ------- -------
Dividends Per Share 2.09 1.935 1.68 1.445 1.235
- - ---------------------------------------------- ------- ------- ------- ------- -------
Average Number of Shares Outstanding(in millions)181.6 186.9 187.1 186.1 185.9
- - ---------------------------------------------- ------- ------- ------- ------- -------
As a Percentage of Operating Revenue:
Operating Income 16.3 20.0 18.0(1) 18.2(1) 17.4(1)
Income from Operations, Net of Income Taxes 10.5 13.5 11.7 11.6 10.9
- - ---------------------------------------------- ------- ------- ------- ------- -------
Return on Average Shareholders' Equity Percentage 24.4 28.1 25.2(1) 25.0 24.4(1)
- - ---------------------------------------------- ------- ------- ------- ------- -------
Shareholders' Equity 2,044.1 2,150.6 2,093.2 1,899.3 1,650.9
- - ---------------------------------------------- ------- ------- ------- ------- -------
Total Assets 4,810.3 5,264.5 5,023.8 3,753.7 3,484.0
- - ---------------------------------------------- ------- ------- ------- ------- -------
<FN>
(1)Includes in 1995 a non-recurring charge of $448.4 million for costs
principally associated with the reorganization of the Company (See Note 2 to
the Consolidated Financial Statements). Also includes impact of $120.3
million restructuring income - net in 1995 and $277.5, $15.0, $32.1, $35.3
and $50.7 million of restructuring expense - net in 1993, 1991, 1988, 1987
and 1986 respectively.
(2)Excludes net gains (losses) from disposals of discontinued operations of
$12.5 and ($.6), or $.07 and $.00 per share, in 1987 and 1986, respectively.
(3)Includes impact of $250.0 million or $1.40 per share for the
adoption of SFAS No. 112 and $140.6 million or $.79 per share
for the adoption of SFAS No. 106 in 1993. (See Note 7 to the
Consolidated Financial Statements.)
(4)$3.36 excluding $277.5 million restructuring expense and $21.0 million gain
from Gartner Group's sale of stock (totaling $256.5 million pre-tax and
$166.7 million after-tax).
(5)17.6% excluding net restructuring expense of $277.5 million as described in
Note 3 to the Consolidated Financial Statements.
(6)Excludes $277.5 million restructuring expense and $21.0 million gain from
Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7
million after-tax) described in Note 3 and the impact of the cumulative
effect of the accounting changes described in Note 7, Return on Average
Shareholders' Equity is 34.6% and Income from Operations, Net of Income Taxes
is 12.6% of Operating Revenue.
(7)$3.80 excluding the non-recurring charge of $448.4 million.
(8)17.9% excluding the non-recurring charge of $448.4 million.
(9)Excluding $448.4 million non-recurring charge, Return on Average
Shareholders' Equity is 48.6% and Income from Operations, Net of Income Taxes
is 11.9% of Operating Revenue.
</FN>
</TABLE>
F-59.2
<PAGE>
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/Thomas W. Young
--------------------
Thomas W. Young,
Senior Vice President
and Controller
October 25, 1996
F-60
<PAGE>
Exhibit Index
---------------
Exhibit
No. Description Page
- - ------ ------------- ------
(23) Consents of Experts and Counsel
Consent of Independent Public
Accountants F-62
F-61
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of The Dun & Bradstreet Corporation on Forms S-8 (File Nos. 2-53006, 33-21719,
33-25774, 33-27144, 33-44551, 33-49060, 33-51005, 33-56289 and 33-64317) of our
reports dated January 23, 1996, on our audits of the consolidated financial
statements and financial statement schedule of The Dun & Bradstreet Corporation
as of December 31, 1995 and 1994 and for the years ended December 31, 1995, 1994
and 1993, which reports are incorporated by reference or included in this Form
10-K/A-2.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
October 25, 1996
F-62
