March 27, 1996
OFICS Filer Support
Mail Stop 0-7
SEC Operations Center
6432 General Green Way
Alexandria, VA 22312-2413
RE: File No. 1-7155 - Annual Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
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Gentlemen:
Pursuant to the rules of the Securities Exchange Act of 1934 as amended,
enclosed is one copy of The Dun & Bradstreet Corporation's Annual Report on Form
10-K for the year ended December 31, 1995. As an electronic filer, one paper
copy is enclosed for backup. As required, adequate funds are available to cover
the fee. In accordance with the SEC's previous request, three additional annual
reports have been enclosed.
Please acknowledge receipt of the report by stamping and returning the enclosed
copy of this letter.
Very truly yours,
/s/ Stuart J. Goldshein
Stuart J. Goldshein
SGJ:sw
Enclosures
sec/
Receipt of the above described material is hereby acknowledged.
Securities and Exchange Commission
Date: By:
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]
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.)
187 Danbury Road, Wilton, Connecticut 06897
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203)834-4200.
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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
---
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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<PAGE>
Documents Incorporated by Reference
PART I
ITEM -Business Dun & Bradstreet Business Segments, 1995,
Pages 31 and 32, Note 16 Operations by
Business Segments and page 32, Note 17
Operations by Geographic Area, of the 1995
Annual Report.
PART II
ITEM 5 -Market for the Registrant Page 14, Financial Review,
Common Equity and Related of the 1995 Annual Report.
Stockholder Matters
ITEM 6 -Selected Financial Data Pages 34 and 35, Ten-Year Selected
Financial Data, of the 1995 Annual Report.
ITEM 7 -Management's Discussion Pages 9 to 14, Financial Review,
and Analysis of Financial of the 1995 Annual Report.
Condition and Results of
Operations
ITEM -Financial Statements and Pages 16 to 35 of the 1995 Annual Report.
Supplementary Data
PART III
ITEM 10 -Directors and Executive Pages 2 to 4 of the Company's Proxy
Officers of the Registrant Statement dated March 8, 1996.
ITEM 11 -Executive Compensation Pages 8 to 18 of the Company's Proxy
Statement dated March 8, 1996.
ITEM 12 -Security Ownership of Pages 18 to 20 of the Company's Proxy
Certain Beneficial Statement dated March 8, 1996.
Owners and Management
ITEM 13 -Certain Relationships Pages 18 to 20 of the Company's Proxy
and Related Transactions Statement dated March 8, 1996.
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The Index to Exhibits is located on Pages 22 to 24.
<PAGE>
PART I
As used in this report, except where the context indicates otherwise,
the term "Company" means The Dun & Bradstreet Corporation and all subsidiaries
consolidated in the financial statements contained herein.
ITEM 1. BUSINESS
(a)(1) The Dun & Bradstreet Corporation was incorporated under the
laws of the State of Delaware on February 6, 1973 and became the parent holding
company of Dun & Bradstreet, Inc. and its subsidiaries on June 1, 1973.
Dun & Bradstreet, Inc. was incorporated under the laws of the State of
Delaware in 1930 and is the successor to a business commenced in 1841.
On January 9, 1996, the Company announced a plan to reorganize into
three public 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.
(2) Not applicable.
(b)(1) The response to this item is incorporated herein by reference
to Note 16 Operations by Business Segments on Pages 31 to 32 of the 1995
Annual Report.
(2) Not applicable.
(c)(1) The Dun & Bradstreet Corporation is a non-operating holding
company whose revenue is derived primarily from dividends received from its
subsidiaries. Reference should be made to EXHIBIT B, List of Active Subsidiaries
as of January 31, 1996, which describes the Company's subsidiaries. A
descriptive narrative of the Company's business segments follows item (d).
The number of full-time equivalent employees at December 31, 1995 was
approximately 49,500.
(d) The response to this item is incorporated herein by reference to
Note 17 Operations by Geographic Area on Page 32 of the 1995 Annual Report.
The Company is the world's leading marketer of information, software
and services for business decision-making. Its operations can be divided into
five business segments: Marketing Information Services, Risk Management and
Business Marketing Information Services, Software Services, Directory
Information Services and Other Business Services. A narrative description of the
Company's operations by business segment follows.
MARKETING INFORMATION SERVICES
IMS International, Inc.
IMS International, Inc. (IMS) provides information and decision support
services to the pharmaceutical and healthcare industries. IMS' principal
services are sales territory reports, national pharmaceutical-sales audits and
national medical audits, as well as a multinational data analysis system. Within
each of these product classes, individual country-level reports may differ in
one or more important characteristics depending on the circumstances of local
pharmaceutical sales and distribution. IMS' reports are provided in printed
format, as well as on-line and as part of electronic customer-site workstations.
IMS provides information services covering over 70 countries and maintains
offices in 57 countries on six continents, with 62% of total revenue generated
outside the U.S. In 1995, IMS continued its expansion into developing markets in
Eastern Europe and Asia, growing revenues by 30% in these areas. New product
sales were also initiated in China and India.
Sales-territory reports measure the effectiveness of pharmaceutical
companies' sales forces, by product and product group within a geographic
configuration tailored to each client's needs. IMS sales-territory reports are
available in 25 countries and account for approximately 40% of IMS' worldwide
revenues.
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Pharmaceutical audits are syndicated reports which measure sales of
pharmaceutical products for an entire national market and are primarily used by
pharmaceutical companies to understand market dynamics and plan effective
business strategies.Pharmaceutical audits are available in over 65 countries.
National medical audits are syndicated reports utilizing data from
physician practices to provide information on how pharmaceutical products are
used, including patient and doctor details, diagnosis and drug therapy. Medical
audits are available in over 40 countries.
In 1995, Sales Technologies, Inc., a wholly owned subsidiary of Dun &
Bradstreet, was refocused on the healthcare industry and became an operating
unit of IMS. Sales Technologies is a leader in sales automation solutions and
develops, installs, and supports networked systems that enable pharmaceutical,
healthcare, and consumer packaged goods organizations to improve sales force
effectiveness, productivity, communication and customer satisfaction.
In the U.S., IMS launched Xplorer, a customized client/server decision
support system that integrates customers' internal sales and marketing data with
IMS and other external data. IMS also launched MediVal to assist in the
management and resolution of Medicaid rebate disputes between states and
pharmaceutical manufacturers. IMS acquired Decision Surveys International Ltd.,
a South African company involved in pharmaceutical market research.
The raw data from which IMS' services are generated are derived either
from statistically selected panels of drugstores, hospitals, physicians, etc.,
or from activities such as warehouse shipments or wholesalers' sales data. To
protect privacy, no individual patient is identified in any IMS medical
database. IMS has generally well-established relationships with the sources
required to create its databases and in many cases has historical connections
with the trade associations and professional associations involved.
All major pharmaceutical companies are customers of IMS, and many of
the companies subscribe to reports and services in several countries. The scope
of IMS' customer base enables it to avoid dependence on any single customer.
While the services offered by IMS are in many ways unique in their
scope and completeness, there is competition in many countries in which it
operates from other market research firms, direct mail information service
firms, as well as the in-house capabilities of its customers. Competition has
generally arisen on a country-by-country basis, but one company now provides
information services to the pharmaceutical industry in a number of countries.
However, no competitor has the global presence nor offers the range of services
that IMS is able to deliver.
A. C. Nielsen
A. C. Nielsen (ACN) is the worldwide leader in the marketing research
industry. Offering a full range of services to customers in 88 countries around
the globe, ACN provides its customers with marketing information, applications
and analysis for understanding and making critical decisions about their
products and their markets. Given ACN's geographic reach and comprehensive scope
of services, ACN is in a unique position within the industry to help its
customers succeed within a global marketplace. Today, more than three quarters
of ACN's revenues are generated outside the United States.
ACN holds a global leadership position across a wide spectrum of
research services. These services include: ACN's Retail Measurement Services,
Worldwide Consumer Panel, Marketing and Sales Applications, Merchandising
Services, Customized Research Services, Modeling and Analytic Services, Retailer
Services and Information Delivery Services. Internationally, ACN also offers a
range of Media Services to its clients.
ACN's Retail Measurement Service, the cornerstone of the ACN portfolio
of products, remains the industry standard in delivering quality data to
customers on product movement and related causal information in six continents.
Introduced in 1933, ACN's original Food and Drug Indices soon became the
industry measurement tool for understanding the dynamics of product sales. Over
the years, technology has dramatically improved ACN's ability to collect and
analyze information from retailers and consumers. The availability of scanning
technology in retail outlets around the world has broadened both the scope and
capabilities of ACN's original retail indices. ACN Retail Measurement Services
are available in over 65 countries.
With its worldwide network of research services, ACN also assists
retailers and manufacturers in better understanding, differences in consumer
behavior on a market-by-market basis. ACN's Worldwide Consumer Panel is the
largest in the world and is continuing to expand globally. In 1995, three new
countries were added to the panel (Canada, South Africa and France), bringing
the total number of countries in which there are ACN Consumer Panels to 15.
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Through ACN's information delivery services, ACN customers can retrieve
data and analyze information on their business. Available in major languages
around the world, ACN's INF*ACT workstation is a Windows-based platform for data
retrieval and analysis. Used by over 1,800 companies, with 20,000+ installations
worldwide, ACN's workstations provide a foundation for a variety of advanced
analytical applications. Spotlight is an expert system that enables users to
access ACN's databases and find the most important facts related to volume and
share changes for a brand. SPACEMAN offers a family of space management products
that provide a hierarchy of integrated solutions for analyzing merchandising
variables and producing automated "planograms". Now in over 20 countries,
SPACEMAN is available in 10 languages and is used by over 10,000 manufacturers
and retailers, representing 2,000 different companies.
ACN also offers customized research services internationally across a
wide range of industries, particularly in ACN's Asia/Pacific region. Strategic
alliances with other research firms such as Millward Brown in Asia/Pacific have
further increased the breadth of ACN's customized research capabilities.
ACN's products and services are subject to direct and indirect
competition from rival marketing research, information services and analytic
consulting firms, as well as the in-house operations of a number of large
manufacturers and publishers. There are five major competitors worldwide, but
none has the global depth and breadth of coverage that ACN provides.
Nielsen Media
Nielsen Media measures television audiences and reports this and
related information to advertisers, advertising agencies, syndicators, broadcast
networks, cable networks, cable operators, television stations and station
representatives in order to increase the effectiveness of television advertising
and programming. This syndicated information is offered on a subscription basis.
Custom or ad-hoc analyses of the data are also offered. The information is then
used by subscribers to buy, sell, plan and price television time and to make
programming and scheduling decisions.
In 1995, advertisers spent approximately $35.8 billion on television
advertising, including $2.6 billion on cable television advertising, according
to McCann-Erickson Worldwide, to bring a variety of programs and advertising
messages to approximately 95.9 million U.S. television households. These data
underscore the need for television stations, networks, advertisers, advertising
agencies and others to obtain reports on how many households and types of people
are reached by such programming.
Nielsen Media measures television audiences and reports data through
six services: Nielsen Television Index, Nielsen Syndication Services, Nielsen
Homevideo Index, Nielsen Station Index, Nielsen Hispanic Television Index and
Nielsen Hispanic Station Index. Nielsen Television Index provides daily audience
measurement and demographic estimates for all national broadcast
network-television programs through the use of the Nielsen People Meter. Nielsen
Syndication Services provides reports and services on both the local and
national levels to the program syndication segment of the television industry.
Nielsen Homevideo Index provides viewing measurement of cable, pay cable and
other newer television technologies. Nielsen Station Index provides television
audience measurement information in over 200 local markets and daily information
in 33 markets through set meters in the U.S. Nielsen Hispanic Television Index
provides viewing measurement of national Hispanic audiences, while Nielsen
Hispanic Station Index provides viewing measurement of local Hispanic audiences.
Nielsen Media has maintained a strong leadership position in relation
to its competitors. Arbitron, a former competitor, discontinued its syndicated
broadcast and cable television ratings service as of December 31, 1993. A
television ratings project funded by the Committee on Nationwide Television
Audience Measurement (CONTAM) and designed and operated by Statistical Research,
Inc. (SRI), is developing a national television ratings laboratory. Installation
of a test sample has begun in Philadelphia, PA for completion in 1996. This
sample will be used to produce test data in 1996. Recently, the NBC Television
Network asked SRI for a business plan for the creation of a national measurement
system that could provide an alternative to the Nielsen service.
This project could give rise to a national competitor in the next few years.
On the local level, ADCOM, an emerging competitor, has announced plans
to offer individual cable system measurement. A coalition of station owners may
issue a "request for proposal" for a new local ratings service that would
potentially compete with the Nielsen Station Index. Arbitron continues to
develop its passive people meter technology and could use this to re-enter the
television audience measurement business. Indirectly, on both a national and
local basis, competition stems from other marketing research services offering
product movement and television audience data and services.
During 1995, Nielsen Media again expanded its local market television
services and continued to invest to enhance product value, technical
competencies and data quality. Significant investments are being made to
transition the company from its present mainframe-based systems to a new
flexible client/server architecture for data collection, processing and
delivery. In addition, Nielsen Media is developing a new metering system to
enable measurement of program viewing in the emerging digital television
environment. The United States Patent and Trademark Office has awarded Nielsen
Media a patent on this metering approach. This new system will use codes, which
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are imperceptible to the viewer, inserted in the active audio and/or video
portions of programs and commercials. These codes will be detected by metering
equipment installed in the sample households. This system will allow Media to
identify the program or commercial regardless of the delivery method to the home
and simplify the process of installing meters in sample households.
Nielsen Media's Monitor Plus Service provides commercial occurrence
data and expenditure estimates. Customers use the data to determine competitive
advertising trends within markets of interest. Monitor Plus currently provides
service in 50 markets versus the 75 markets covered by its competitor and market
leader, Competitive Media Reporting. Monitor Plus plans to expand its operations
to cover 75 markets and to deploy a new digital data collection and processing
technology.
During 1995, Nielsen Media entered into a strategic relationship with
Internet Profiles Corporation (I/PRO). D&B Enterprises and Nielsen Media have
together taken a substantial minority position in the company. Under the terms
of the agreement, Nielsen Media and I/PRO will jointly market and brand two
I/PRO products: I/COUNT (monitors Web site usage) and I/AUDIT (audits and
verifies audience usage and characteristics). Also under the agreement,
additional products may be jointly developed and marketed.
Nielsen and IMS are subject to the usual risks inherent in carrying on
business in certain countries outside the U.S., including currency fluctuations,
possible nationalization, expropriation, price controls or other restrictive
government actions. Management believes that the risk of nationalization or
expropriation is reduced because its basic service is the delivery of
information, rather than the production of products which require manufacturing
facilities or the use of natural resources.
RISK MANAGEMENT AND
BUSINESS MARKETING INFORMATION SERVICES
Dun & Bradstreet Information Services
Dun & Bradstreet Information Services (DBIS) is the world's largest
supplier of business, commercial-credit and business-marketing information
services, with operations in 37 countries and a worldwide database covering more
than 40 million businesses. DBIS also provides receivables management services
worldwide and credit insurance in the U.S. and Canada. DBIS is organized into
three regions: United States, Europe/Middle East/Africa and Asia-Pacific,
Canada, Latin America.
Dun & Bradstreet Information Services U.S.
Dun & Bradstreet Information Services, U.S. provides business
information, marketing information, receivable management and credit insurance
services through Credit and Marketing Information Services, Receivable
Management Services and American Credit Indemnity Company which are described
below:
Credit Information
Credit Information provides its customers with access to a database on
more than 10 million U.S. businesses. Its core products include the Business
Information Report, Payment Analysis Report, Credit Scoring and reference
services. Value-added solutions are provided through Specialized Industry
Services, Predictive Scoring Services, Industry and Financial Consulting
Services, Business Development Services, Analytical Services and Monitoring
Services. Customers can order and receive information in a variety of ways,
including mail, phone, fax, from personal computers and through a variety of
customized high-volume connections between Dun & Bradstreet and customer
computer systems.
Credit Information licenses its data to customers. It also distributes
its information via a number of other firms, including leading vendors of
on-line services.
Customers of Credit Information (approximately 64,000 subscription
customers and over 175,000 non-subscription customers in the U.S.) use this
information in making decisions to extend commercial credit, approve loans and
leases, underwrite insurance, evaluate vendors, and make other financial and
risk assessment decisions. Credit Information's largest customers are major
manufacturers and wholesalers, insurance companies, banks and other credit and
financial institutions.
The Business Information Report contains commercial credit information
on specific businesses. This report includes the D&B Rating and the PAYDEX
score, a dollar-weighted numerical score of the company's payment performance.
Both the D&B Rating and the PAYDEX score are based on information in the Dun &
Bradstreet database.
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The Business Information Report also includes summary
information and detailed payment data, as well as financial, banking, public
filing, historical and operational data. The Dun & Bradstreet Reference Book of
American Business contains listings on approximately 3 million businesses in the
United States and Puerto Rico. This book also contains the D&B Rating, which
reflects the credit and financial strength of a business. The Payment Analysis
Report provides information on a company's payment record and includes the
current PAYDEX score, the 90-day PAYDEX score, historical trends and industry
comparisons. Predictive Scoring Services combine advanced statistical modeling
with Dun & Bradstreet's database to help customers automate their risk
management processes. D&B Express and other mass market services provide
non-subscription customers who have an occasional need for business information
with data on a specific company. Credit Information also markets other
specialized reports and business information.
Credit Information is the leading commercial credit reporting agency in
the United States. However, it faces competition both from in-house operations
of the businesses it seeks as customers and from other general and specialized
credit reporting and other information services. It believes the principal
methods of competition to be based on information quality, availability, service
and price.
Receivable Management Services
Receivable Management Services (RMS) provides its customers with a full
range of accounts receivable management services, including third party
collection of accounts, letter demand services and receivable outsourcing
programs. These services substitute and/or enhance the customer's own internal
management of accounts receivable.
RMS collects delinquent receivables primarily from commercial
establishments on behalf of more than 35,000 customers, including commercial and
insurance enterprises and government agencies. Collection services are provided
throughout the U.S. with charges generally contingent upon collection. RMS also
provides receivable outsourcing programs, letter demand services and customer
training programs on a fixed-fee or subscription basis.
Certain states require that RMS, or in some instances an individual
associate of RMS who is responsible for the conduct of relevant operations in
the respective state, be licensed in connection with collection operations. The
laws under which such licenses are granted generally provide for annual license
renewals, as well as denials, suspensions or revocations for improper actions or
other factors.
In 1995, RMS began offering sales franchises in twenty-six states.
These franchises are located in states with less concentrated markets and will
focus on selling, while RMS continues to be responsible for all product
fulfillment.
RMS is considered to be the leader in the commercial collection
industry in the United States. RMS faces competition from numerous other
commercial collection agencies, attorneys who receive claims directly from
clients and companies that conduct commercial collections in-house. In addition,
RMS now faces competition from the expansion of large consumer agencies into the
commercial marketplace.
Marketing Information Services
Marketing Information Services provides marketing information for
business-to-business and educational marketers. The Marketing Information
Services provides comprehensive information and related services used to plan,
execute and evaluate the results of marketing programs; model, target and reach
prospects; and track sales activities. This information is derived from a
proprietary database covering more than 40 million businesses in over 200
countries. Information is delivered in print, on diskette, magnetic tape, CD-ROM
and on-line formats. Additionally, Marketing Information Services offers a line
of Database Marketing products providing solutions for marketing professionals
by organizing various databases into an "information warehouse." The development
of such a "warehouse" leads to useful market penetration, market segmentation,
territory alignment, and demand estimation analyses as well as the
identification of the best prospective customers. Database Marketing products
are available in both a PC desktop version and on a larger computing platform.
Market Data Retrieval offers services that help businesses sell to the
education market. The products provided include information about course
offerings, facilities, teachers and administrators in primary and secondary
schools, school districts, preschools, libraries, colleges and universities.
Marketing Information Services, while a market leader in its industry,
faces competition from other data providers in competitive distribution
channels, delivery formats and data quality enhancements.
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American Credit Indemnity Company
American Credit Indemnity Company (ACI) insures manufacturers,
wholesalers and other businesses against excessive credit losses from commercial
accounts. ACI also provides credit-risk management services for business
credit-insurance policyholders. ACI's services are offered through its own
dedicated agency force with offices throughout the U.S. and Canada. The Company
has announced that it plans to divest ACI during 1996.
ACI's policy terms are generally for twelve months. Coverage with
respect to a particular credit risk being insured can be canceled at any time by
ACI as to future shipments, upon notice to the policyholder.
A business credit insurance specialist since 1893, ACI enjoys a
substantial market position with regard to credit insurance policies which are
issued in the U.S. and Canada. Competition arises from other providers of
business-credit insurance, from companies choosing to self-insure their credit
risks and from providers of other financial services such as factoring. At the
same time, however, the potential market for credit insurance is not deeply
penetrated by ACI or other credit insurers.
Dun & Bradstreet Information Services Europe/Middle East/Africa and
Dun & Bradstreet Information Services Asia-Pacific, Canada,
Latin America
Dun & Bradstreet Information Services Europe/Middle East/Africa and
Asia-Pacific, Canada, Latin America (DBIS Europe and Asia-Pacific, Canada, Latin
America, respectively) opened their first overseas office in 1857 and today
conduct operations in offices and branches located throughout Europe, Latin
America, Africa, the Middle East, Asia, Japan, the Pacific Rim and Canada.
DBIS Europe and DBIS Asia-Pacific, Canada, Latin America provide
substantially the same business information, marketing information and
receivable management services outside the United States as those provided by
Dun & Bradstreet Information Services, U.S. The Business Information Report
contains background and financial information on businesses located throughout
the world obtained from D&B offices in the 37 countries where there are full
operations and from Dun & Bradstreet correspondents in over 200 other countries.
DBIS Europe and Asia-Pacific, Canada, Latin America's other major products or
services include analytical tools to help the customer make better business
decisions, local and international credit-reference publications, marketing
publications, marketing information systems, consumer-credit information, as
well as receivable-management services. Customers can receive information
through a direct link to the computer, in printed form, by fax, on CD-ROM or
through third parties.
During 1995, DBIS Europe continued to invest in data systems. New
products were introduced in France, Italy and Belgium during the year. Also, in
late 1995 a new range of cross-border products was rolled-out to the European
market. DBIS Europe also continued investing heavily in a new technology
platform, which will result in enhanced product/service flexibility as well as
opportunities to streamline operations.
In 1995, Dun & Bradstreet Japan (D&B Japan) and Japan's second largest
credit information provider, Tokyo Shoko Research, Ltd. (TSR), formed a
marketing, technology and database alliance. The alliance results in the
utilization of TSR's capabilities and resources in the Japan market and D&B
Japan's resources as a global information provider.
DBIS Europe and DBIS Asia-Pacific, Canada, Latin America's operations
are subject to the usual risks inherent in carrying on business in certain
countries outside of the U.S., including currency fluctuations, possible
nationalization, expropriation, price controls, changes in the availability of
data from public sector sources, limits on providing information across borders
or other restrictive government action. Management believes that the risk of
nationalization or expropriation is reduced because its basic service is the
delivery of information, rather than the production of products that require
manufacturing facilities or the use of natural resources.
DBIS Europe and DBIS Asia-Pacific, Canada, Latin America face
competition from banks, consumer information companies, application software
developers, on-line content providers and in-house operations of businesses as
well as direct competition from businesses providing similar services. DBIS
Europe is believed to be the largest single supplier of credit information
services in Europe. The competition is primarily local and there are no
competitors offering a comparable range of global services or capabilities as
DBIS Europe.
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Moody's Investors Service, Inc.
Moody's Investors Service, Inc. (Moody's) assigns ratings to fixed
income securities and publishes a wide variety of business and financial
information. Moody's business extends to over 60 countries and its customers
include corporations, stockbrokers, governments, municipalities, banks,
libraries, institutions and individuals.
Moody's assigns ratings to various corporate and governmental
obligations, Eurosecurities, structured finance transactions and commercial
paper issuers, for which it charges most issuers a fee. At the end of 1995,
Moody's had outstanding ratings on approximately 55,500 corporate and 54,000
municipal obligations. Corporate, municipal and government ratings are
disseminated to the public through a variety of electronic and print media. A
detailed description both of the issue which is rated and of the issuer, along
with a summary of the rating rationale for the assignment of the specific
rating, also appears in various Moody's publications.
In addition to revenues derived from ratings, Moody's provides
comprehensive historical and current business, financial, investment and
marketing information on over 38,000 major U.S. and non-U.S. entities and on
over 24,000 municipalities and governments and their securities. This
information is available in eight Manuals and on CD-ROM, tapes and other
electronic formats. The Manuals are published annually and are supplemented by
news reports issued on a weekly basis. Moody's also publishes a variety of
investment guides.
Moody's international operations have continued to grow due to the
expansion of international debt markets in recent years. Moody's maintains
offices in ten countries outside of the U.S. Moody's non-U.S. operations are
subject to the usual risks inherent in carrying on business in countries outside
the U.S., including currency fluctuations, possible nationalization,
expropriation, price controls and/or other restrictive government actions.
Management believes that the risks of nationalization or expropriation are
negligible. Moody's business is not solely dependent on non-U.S. office
operations as these offices are supported by the intensive travel schedule of an
internationally-focused staff.
As one of the two largest ratings agencies in the world, Moody's
provides opinions on debt instruments and other obligations of both U.S. and
non-U.S. issuers. Internationally, a large number of national and international
ratings agencies have been created over the last several years as the value of
the ratings process has become better understood and utilized abroad. However,
Moody's believes that its long-standing reputation for integrity and
high-quality analysis and its pre-eminent position in the marketplace leaves it
well positioned to take advantage of the growth in ratable debt. Moody's
publishing business is a viable competitor in the large and highly-segmented
print market for financial information. Moody's intends to maintain its
well-established reputation in the financial information market through
enhancements of its databases and by further expansion into the electronic
market for financial information. Moody's is registered as an investment adviser
under the Investment Advisers Act of 1940 and the laws of a number of states.
SOFTWARE SERVICES
Dun & Bradstreet Software Services, Inc.
Dun & Bradstreet Software Services, Inc. (D&B Software) is a worldwide
leader in the marketplace for client/server and mainframe packaged application
software for financial, human resource, and manufacturing and distribution
business functions, as well as advanced decision support software. The Company
has announced that it plans to divest D&B Software during 1996.
D&B Software products are installed throughout the world on a wide
range of computer hardware platforms, including Data General, Digital Equipment
Corporation, Compaq, Fujitsu, Hewlett-Packard, IBM, ICL and Sun. D&B Software's
products consist of an extensive line of applications software packages for
business management as well as related implementation and education services. In
addition, D&B Software provides application tools which enable users to
customize their own applications, link mainframe and microcomputers and perform
sophisticated report writing.
Revenues are derived primarily from sales of perpetual non-exclusive
licenses to use D&B Software's products, annual maintenance fees for such
products, customer education and consulting services related to implementation
of license products. Most of the license and services revenue is generated by a
direct sales force. Maintenance fees and professional services currently
comprise approximately 57% and 19% of D&B Software's revenues, respectively.
Approximately 30% of total revenue is generated from operations outside of the
U.S.
7
<PAGE>
D&B Software continued to broaden and enhance its client/server product
line during 1995. Revenues related to client/server applications now exceed $100
million. SmartStream for the Distributed Enterprise (SmartStream DE), the first
client/server business application suite built on a fully distributed
architecture, was released in November. The SmartStream DE release includes
numerous enhancements to existing products such as SmartStream Builder,
SmartStream Manufacturing/Distribution, SmartStream Financials, SmartStream
Human Resources and SmartStream Decision Support. SmartStream DE distributes
data, workflow and business processes throughout the enterprise, allowing
companies to blend centralized control with local autonomy, dynamically change
business processes, and broaden decision-making authority. SmartStream is now
available in eight languages, and multiple platforms and operating systems.
D&B Software has strategic alliances with Powersoft, Sybase, Microsoft
and Cognos and incorporates software developed by partners in the SmartStream
product suite. D&B Software also has alliances with hardware vendors such as
Hewlett Packard, IBM, Sun, Digital Equipment Corporation, Compaq and Data
General. D&B Software incurs significant costs in enhancing its existing product
line as well as developing new client/server applications. As the company
continues to invest in client/server solutions, D&B Software faces continuing
risks including the ability to build new client/server products, migrate
customers to new applications and manage changes in capabilities required to
install and support new products.
D&B Software faces numerous existing as well as potential competitors.
Most competitors operate as niche players in particular segments of the
marketplace. However, SAP, Oracle and PeopleSoft are often encountered in
competitive situations. As in the past, D&B Software anticipates that the field
of competitors will continue to change, resulting from technological changes and
shifts in customer needs. The management of D&B Software believes the quality of
software and related customer support are important competitive factors in this
industry.
Pilot Software, Inc.
Pilot Software, Inc. (Pilot) is a leading global provider of
client/server decision support solutions for medium and large-scale enterprises.
Its products include powerful visualization and modeling tools that can be used
by analysts, managers and executives to easily access internal and external data
and provide the business insights needed to create sustainable competitive
advantage.
The company's flagship product, LightShip, is a scaleable on-line
analytical processing (OLAP) environment. It is a comprehensive environment that
includes visual desktop analysis tools, pre-built analysis libraries, scaleable
multidimensional servers and design tools. LightShip's library of pre-built
visual analysis tools allow users to quickly implement solutions that can be
easily customized and extended. Its multidimensional server provides unique
time-based business analysis capabilities. LightShip's open architecture allows
it to seamlessly interface with other components of a corporate information
technology (IT) environment including desktop productivity tools, query and
reporting tools and client/server development tools.
Pilot faces several competitors. However, Pilot's software solutions
offer distinct advantages in terms of data access and analysis. The power of
Pilot's solutions lies in the software's ability to allow organizations to
quickly identify key trends, problems and opportunities so they can take
effective action. These advantages enable executives, managers and analysts to
effectively access and understand the vast amount of information trapped in
their operational systems.
Pilot has a strong international presence, with offices throughout
North and South America, Europe and the Pacific Rim. Pilot has a multi-channel
distribution strategy including software developers, value-added resellers and
consulting organizations. Pilot is working closely with several other Dun &
Bradstreet companies including DBIS, IMS and Nielsen to deliver additional data
access and analysis tools that compliment their existing products. Pilot and its
partners offer a full range of technical support, training and consulting
services around the world.
Revenues are derived primarily from sales of licenses to use Pilot's
products, annual renewal fees and consulting and training services related to
implementation of the products. More than 50% of total revenue is generated from
operations outside of the U.S. Pilot's non-U.S. operations are subject to the
usual risks inherent in carrying on business in certain countries outside of the
U.S., including currency fluctuations, possible nationalization, expropriation,
price controls or other restrictive government actions. Management believes that
the risk of nationalization or expropriation is reduced because its products are
software and services, rather than the production of products which require
manufacturing facilities or the use of natural resources.
Erisco, Inc.
Erisco, Inc. (Erisco) develops and markets proprietary software
applications and services used primarily in the administration of health care
benefits and the support of managed care services. Its primary markets include
managed care organizations, insurance carriers, third-party administrators and
self-administered corporations. Erisco has successfully completed the
8
<PAGE>
development of the core applications for its newest product, Facets, which is a
managed care information system built using client/server technology. The target
market for Facets is managed care companies such as Health Maintenance or
Preferred Provider Organizations. This highly advanced state-of-the-art system
is unique in the marketplace as it combines the latest technology with advanced
managed care business functionality. Erisco faces competition from a variety of
software vendors in both the traditional indemnity, as well as the new managed
care markets. The continued trend of expanding growth in managed care membership
and the acceptance of enterprise-wide client/server system architecture
positions Facets well in the marketplace.
DIRECTORY INFORMATION SERVICES
The Reuben H. Donnelley Corporation
The Reuben H. Donnelley Corporation (RHD) compiles, publishes or serves
as sales and marketing representative of Yellow Pages and other directories for
17 telephone company clients throughout the U.S. RHD provides these services for
more than 400 directories in 19 states and the District of Columbia, and is one
of the largest marketers of Yellow Pages in the U.S. RHD serves the Yellow Pages
marketing needs of over 600,000 business and service organizations who purchase
Yellow Pages advertising space in the U.S.
Products include consumer and business-to-business Yellow Pages,
neighborhood directories, bilingual directories and street address directories.
RHD Yellow Pages product and marketing enhancements include English and Spanish
Talking Yellow Pages, Yellow Pages Television, Touch Four, AutoIntelligence,
audiotex, expanded Community Action Pages and Restaurant Menu Advertising Units.
RHD acts in different capacities, depending upon specific contracts and
markets. These capacities include sales agent, partner, proprietary publisher
and publisher and/or compiler.
Proprietary Operations publishes proprietary Yellow Pages directories
in Delaware, Maryland, New Jersey, Pennsylvania, Virginia, the District of
Columbia and southern California. The unit also participates in the management
of directory activity of RHD's C-Don partnership with Commonwealth Telephone
Company to serve customers in northeastern Pennsylvania, and the directory
activity of three joint venture agreements between RHD and North Pittsburgh
Telephone Company, Conestoga Telephone and Telegraph, and Denver and Ephrata
Telephone and Telegraph Company in Pennsylvania. RHD also has an agreement with
Centennial Media Corporation to publish directories in Denver and Boulder,
Colorado.
NYNEX Operations manages the Directory Services Agreement with NYNEX
Information Resources Company for customers in New York.
Cincinnati Operations manages the Directory Services Agreement with
Cincinnati Bell for customers in Ohio and northern Kentucky.
Sprint Operations manages the CenDon partnership agreement and
contracts with several of Sprint's operating subsidiaries to publish,
manufacture and distribute classified telephone directories in Florida,
Illinois, Nevada, North Carolina and Virginia. In addition, Sprint Operations
manages the Directory Services Agreement with Sprint Publishing and Advertising
to serve customers and advertisers in central Florida markets.
DonTech, a partnership between RHD and Ameritech, is responsible for
publishing telephone directories throughout Illinois and northwestern Indiana.
DonTech also publishes Street Address Directories in Illinois, Michigan and
Indiana, and operates a fulfillment center which markets telephone directories
primarily throughout Illinois.
The units of RHD face increasing competition from other Yellow Pages
publishers and other media, including newspapers, radio, direct mail, on-line
information services and television.
OTHER BUSINESS SERVICES
Gartner Group, Inc.
Gartner Group, Inc. (Gartner Group) is the leading independent provider
of research and analysis of the computer hardware, software, communications and
related technology industries (collectively, the information technology or IT
industry). Gartner Group's core business is researching and analyzing
significant IT industry developments, packaging such analyses into annually
9
<PAGE>
renewable subscription-based products and distributing such products through
print and electronic media. Gartner Group's product offerings collectively
provide comprehensive coverage of the information technology industry.
Gartner Group's principal products are called continuous services
which, on an ongoing basis, highlight industry developments, review new products
and technologies and analyze industry trends within a particular technology or
market sector. Gartner Group currently offers 50 principal continuous services
products. Each service is supported by a team of research staff members with
substantial experience in the covered segment or topic of the IT industry.
Gartner Group's staff researches and prepares the published analyses, responds
to telephone inquiries from client companies, and holds conferences and
executive briefings.
Late in 1995, Gartner Group acquired Dataquest, formerly a unit of The
Dun & Bradstreet Corporation. Dataquest is a leading provider of information
technology, market research and consulting for the IT vendor, manufacturer and
financial communities which complements the Gartner Group end-user focus.
Gartner Group has made a substantial investment in recent years in the
expansion of its distribution network and increased its direct sales force in
the United States from a total of 26 sales people at the start of fiscal year
1990 to 205 sales people as of September 30, 1995. In the Europe/Middle
East/Africa region, Gartner Group has 20 sales offices, including 9 independent
distributors. In the Asia/Pacific Rim, Gartner Group has 12 sales offices,
including 8 distributors. In the Americas region, in addition to the United
States sales offices, Gartner Group has sales relationships with 6 independent
distributors.
Gartner Group experiences competition in the market for information
products and services from other independent providers of similar services as
well as the internal marketing and planning organizations of their clients.
Gartner Group also competes indirectly against other information providers,
including electronic and print media companies and consulting firms. Gartner
Group's indirect competitors, many of whom have substantially greater financial,
information gathering and marketing resources than Gartner Group, could choose
to compete directly against Gartner Group in the future. In addition, although
Gartner Group believes that it has established a significant market presence,
there are few barriers to entry into their market, and new competitors could
readily seek to compete against them in one or more market segments addressed by
Gartner Group's continuous service products. Increased competition, direct and
indirect, could adversely affect Gartner Group's operating results through
pricing pressure and loss of market share.
As of September 30, 1995, there were approximately 5,500 client
organizations which subscribe to Gartner Group's continuous services products.
In addition, Gartner Group had approximately 19,200 client interfaces, defined
as an individual IT professional at a company who receives directly from Gartner
Group all printed and electronic materials relating to a particular continuous
service. No single client organization accounted for over two percent of
continuous service revenues as of September 30, 1995.
NCH Promotional Services
NCH Promotional Services (NCH) is a worldwide supplier of coupon
processing and promotion information management. NCH provides a range of
promotional services including processing of coupons and coupon-related
administration, research and analytical services for manufacturers and retailers
both domestically and internationally. Internationally, NCH also provides a
promotion service for manufacturer coupon-and-cash-refund programs. NCH derives
approximately 60% of its revenues from U.S.
operations.
Coupons are distributed throughout the U.S. in various forms of print
media, in and on packages, in stores and through direct mail. Using laser
scanning technology, NCH's SmartScan service processes coupons for retailers.
Retailers consolidate and ship all of their coupons, regardless of type or
issuing manufacturer, to NCH where their coupons will be scanned, counted,
valued, sorted and billed to the appropriate manufacturers. Various coupon
activity reports are also supplied. Retailers then receive reimbursement from
NCH in a single check. This service provides retailers and manufacturers with a
convenient, economical means of handling coupon redemption.
NCH provides services for manufacturers in three key areas: coupon
processing, financial management and reporting and promotion analysis. Process
2000 is NCH's coupon processing system which validates coupon claims, performs
misredemption analysis and provides timely payment to retailers. A wide range of
customized marketing reports are available in various data formats including
hardcopy, on-line access via the LauNCH product, EDI transmissions and diskette.
NCH's foreign operations are subject to the usual risks inherent in
carrying on business in certain countries outside of the U.S., including
currency fluctuations, possible nationalization, expropriation, price controls
10
<PAGE>
or other restrictive government actions. Management believes that the risk of
nationalization or expropriation is reduced by the fact that its basic products
are services and the delivery of information, rather than the production of
products which require manufacturing facilities or the use of natural resources.
NCH is believed to be the world's largest coupon processor and
promotion-information supplier. Competition includes numerous rival coupon
clearing houses, billing services, manufacturer redemption agents and
manufacturers who handle their own redemption services. NCH's competition in the
retailer service business focus primarily on price. The manufacturer service
business competes on a combination of price and value-added services such as
advanced redemption analysis, consistent and timely payments to retailers and
misredemption control. NCH is a recognized leader in the coupon industry.
Dun & Bradstreet Pension Services, Inc.
Dun & Bradstreet Pension Services, Inc. provides pension administration
and benefit consulting for small to medium-sized businesses throughout the U.S.
The market for pension administration services is fragmented among many
competitors, none of which has a significant share of the market.
D&B Enterprises, Inc.
D&B Enterprises, Inc., (to be known in the future as Cognizant
Enterprises) invests in emerging and established businesses in the information
industry. It invests as a limited partner in Information Partners Capital Fund
and Information Associates, venture capital limited partnerships, as well as
through direct investments.
RESOURCE GROUP
Shared Transaction Services
Shared Transaction Services (STS) began operations in 1994 as an
internal-services business that leads the ongoing "reengineering" of business
processes across internal divisions in the functions of accounting, purchasing,
payroll, employee benefits and related areas, and operates shared-services
centers to process transactions for many of these functions. These STS Centers
provide centralized services formerly supplied within each Dun & Bradstreet
division but at lower cost with higher levels of service.
STS now operates in North America and Europe with operational STS
Centers established in the United States, Canada, France, Germany, Italy and the
U.K. These Centers process internal transactions according to standard and/or
reengineered processes, both manual and electronic. In several instances, STS
manages the contractual performance of outside vendors to supply transactional
services to Dun & Bradstreet divisions and employees.
Dun & Bradstreet Data Services
Dun & Bradstreet Data Services (Data Services) is an organization that
provides information processing services for the majority of the Company's North
American and European business units. The primary service provided is mainframe
processing. Data Services also performs selective distributed processing,
telecommunications, printing and PC/LAN support. The objectives of Data Services
are to reduce expenses and improve operations through the integration of
individual data centers into regional data centers and to leverage economies of
scale in purchasing the collective capacity requirements of all divisions.
During 1995, Data Services successfully integrated individual data centers into
five data centers; three in the United States and two in Europe.
The names of the Company's products are trademarks or registered
trademarks of The Dun & Bradstreet Corporation or one of its subsidiaries.
11
<PAGE>
ITEM 2. PROPERTIES
The principal properties of the Company, by business segment, are set
forth below.
The executive offices of The Dun & Bradstreet Corporation are located
at 187 Danbury Road, Wilton, Connecticut in an owned property and at 299 Park
Avenue, New York, New York in a leased facility.
Property of the Company is geographically distributed to meet sales and
operating requirements worldwide. The properties of the Company are generally
considered to be both suitable and adequate to meet current operating
requirements and virtually all space is being utilized.
Marketing Information Services
Owned properties located within the U.S. include eight facilities.
Three properties are located in Omaha, Nebraska and one property each in
Dunedin, Florida; Fond du Lac, Wisconsin; Totowa, New Jersey; Plymouth Meeting
and West Norriton, Pennsylvania.
Owned properties located outside the U.S. include fifteen facilities:
two properties in Lisbon, Portugal; and one property each in Ontario, Canada;
Sao Paulo, Brazil; Espoo, Finland; Mexico City, Mexico; Buenos Aires, Argentina;
Crows Nest and Artarmon, Australia; Innsbruck, Austria; Santiago, Chile; London,
Oxford and Pinner, England; and Caracas, Venezuela.
The operations of this segment are also conducted from fifty-seven
leased offices located throughout the U.S. and 142 non-U.S. locations.
Risk Management and Business Marketing Information Services
Owned properties located within the U.S. include two office buildings
in Berkeley Heights, New Jersey and one each in Murray Hill and Parsippany, New
Jersey and New York, New York.
Owned properties located outside the U.S. are located in Melbourne,
Australia; Curitiba, Brazil; Santiago, Chile; Mexico City, Mexico; Caracas,
Venezuela; High Wycombe, England; Lyons, France; Ebeltoft, Denmark; and seven
properties within Italy. The operations of this segment are also conducted from
ninety-three leased offices located throughout the U.S. and 105 non-U.S. office
locations.
Software Services
Operations are conducted from forty-seven leased offices located
throughout the U.S. and twenty-six non-U.S. office locations.
Directory Information Services
Owned property located within the U.S. consists of an office building
in Terre Haute, Indiana. Operations are also conducted from thirty-five leased
office locations throughout the U.S.
Other Business Services
Owned property located within the U.S. consists of an office building
in Clinton, Iowa.
Owned properties located outside the U.S. include five properties in
Mexico and one facility each in Saint John, N.B., Canada and Corby, England.
The operations of this segment are also conducted from thirty-four
leased offices located throughout the U.S. and twenty-five non-U.S. office
locations.
Resource Group and Corporate
Owned properties within the U.S. include two buildings in Wilton,
Connecticut. Operations are also conducted from six leased office locations
throughout the U.S.
<PAGE>
12
ITEM 3. LEGAL PROCEEDINGS
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 management, these matters will not
materially affect the Company's consolidated financial position.
Additionally, reference is made to the settlement of the Shareowners
Class Action described in Note 6, Litigation, in the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995 ("Third Quarter 10-Q"). On
January 12, 1996, the United States District Court for the Southern District of
New York (the "Court") ordered payment of the settlement amount to class
plaintiffs whose claims were allowed in the settlement.
Reference is also made to the settlement of the Towers Class Action
involving the Company's 95%-owned subsidiary American Credit Indemnity Company
("ACI") described in Note 6, Litigation, in the Company's Third Quarter 10-Q. On
December 18, 1995, the Court granted its final approval to the settlement,
dismissed all claims against ACI, and directed the parties to implement the
settlement, which included payment of the settlement amount to class plaintiffs
whose claims were allowed in the settlement.
In each of the foregoing settlements, the amount of the settlement did
not materially affect the Company's 1995 earnings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
13
<PAGE>
<TABLE>
EXECUTIVE OFFICERS OF THE REGISTRANT*
Officers are elected by the Board of Directors to hold office until
their respective successors are chosen and qualified.
Listed below are the executive officers of the registrant at March 1,
1996 and brief summaries of their business experience during the past five
years.
<CAPTION>
Name Title Age
<S> <C> <C>
Robert E. Weissman Chairman and Chief Executive Officer** 55
William G. Jacobi Executive Vice President 52
Robert J Lievense Executive Vice President 50
Dennis G. Sisco Executive Vice President 49
Volney Taylor Executive Vice President** 56
Nicholas L. Trivisonno Executive Vice President-Finance 48
and Chief Financial Officer
Michael F. Brewer Senior Vice President-Communications
& Government Affairs 52
Michael P. Connors Senior Vice President and Chief Human
Resources Officer 40
Earl H. Doppelt Senior Vice President and General Counsel 42
Victoria R. Fash Senior Vice President-Business Strategy 44
Frank R. Noonan Senior Vice President 53
Thomas W. Young Senior Vice President and Controller 57
<FN>
*Set forth as a separate item pursuant to Items 401(b) and (e) of Regulation S-K.
**Member of the Board of Directors.
Mr. Weissman was elected Chairman and Chief Executive Officer of Dun &
Bradstreet, effective April 1, 1995; he had been elected President and Chief
Executive Officer of Dun & Bradstreet, effective January 1, 1994, and President
and Chief Operating Officer, effective January 1, 1985.
Mr. Jacobi was elected Executive Vice President of Dun & Bradstreet,
effective February 20, 1995. He also serves as Chairman of I.M.S. International,
Inc., effective February 20, 1995. He had been elected Senior Vice President of
Dun & Bradstreet, effective July 21, 1993. Prior thereto, he had served as
President & Chief Operating Officer of Nielsen Media Research (January 1, 1991)
and as Executive Vice President of Nielsen Media Research (March 1, 1989).
Mr. Lievense was elected Executive Vice President of Dun & Bradstreet,
effective February 20, 1995. He had been elected Senior Vice President of Dun
& Bradstreet, effective July 21, 1993. He also serves as President and Chief
Operating Officer of A. C. Nielsen Company, effective January 10, 1996.
Previously he had served as Chairman and Chief Executive Officer of A. C.
Nielsen Company (February 20, 1995), Chairman of The Reuben H. Donnelley
Corporation (July 26, 1993), Chairman of Dataquest Incorporated
(September 1, 1991), President of NCH Promotional Services, Inc. (July 27,
1990) and President of the Nielsen Clearing House Division of A. C. Nielsen
Company (June 25, 1989).
Mr. Sisco was elected Executive Vice President of Dun & Bradstreet,
effective February 20, 1995. He had been elected Senior Vice President of Dun &
Bradstreet, effective July 21, 1993. He also serves as President of D&B
Enterprises, Inc., to which office he was elected, effective December 18, 1988,
and as Chairman of Pilot Software, Inc., to which office he was elected October
27, 1994. He had also served through November 20, 1995 as Chairman of Dataquest
Incorporated, to which office he was elected, effective July 26, 1993.
14
<PAGE>
Mr. Taylor was elected Executive Vice President of Dun & Bradstreet,
effective February 1, 1982. He also serves as Chairman of Dun & Bradstreet
Information Services, to which position he was appointed, effective January 1,
1991, and as President of Dun & Bradstreet, Inc. and President of Dun &
Bradstreet International, Ltd., to which offices he was elected, effective
January 1, 1991. He had also served through February 4, 1990 as President of The
Reuben H. Donnelley Corporation, to which office he was elected, effective
January 1, 1988.
Mr. Trivisonno was elected Executive Vice President-Finance and Chief
Financial Officer of Dun & Bradstreet, effective September 20, 1995. He also
serves as Chairman and Chief Executive Officer of A. C. Nielsen Company,
effective January 10, 1996. Prior thereto, he had served with GTE Corporation
through July 1995 as Executive Vice President-Strategic Planning and Group
President (October 1993), as Senior Vice President-Finance (January 1989) and as
Corporate Vice President and Controller (November 1988). He also served as a
director of GTE Corporation and as a member of the Office of the Chairman from
October 1993 through July 1995.
Mr. Brewer was elected Senior Vice President-Communications & Government
Affairs of Dun & Bradstreet, effective March 15, 1993; he had been elected Vice
President-Government Affairs, effective January 1, 1987.
Mr. Connors was elected Senior Vice President and Chief Human Resources
Officer of Dun & Bradstreet, effective March 27, 1995. Prior thereto, he had
served as Senior Vice President of American Express Travel Related Services from
September 1989.
Mr. Doppelt was elected Senior Vice President and General Counsel of
Dun & Bradstreet, effective May 18, 1994. Prior thereto, he had served with
Viacom Inc. as Senior Vice President and Deputy General Counsel (March 1994)
and with Paramount Communications Inc. as Senior Vice President and Deputy
General Counsel (September 1992) and as Vice President and Deputy General
Counsel (October 1986).
Ms. Fash was elected Senior Vice President-Business Strategy of Dun &
Bradstreet, effective April 19, 1995; she had been elected Vice
President-Business Operations Planning, effective May 18, 1994. Prior thereto,
she had served as Assistant to the President of Dun & Bradstreet (September
1991) and as Assistant to the President of Dun & Bradstreet Software Services
(formerly Management Science America, Inc.) (January 1991).
Mr. Noonan was elected Senior Vice President of Dun & Bradstreet,
effective February 20, 1995. He also serves as Chairman, President and Chief
Executive Officer of The Reuben H. Donnelley Corporation, to which offices he
was elected, effective August 7, 1991 (President), January 1, 1994 (Chief
Executive Officer) and February 20, 1995 (Chairman). Previously he had served as
Senior Vice President-Finance of the Business Information Group (January 1,
1991) and as Senior Vice President-Finance of the Financial Information Services
Group (May 30, 1989).
Mr. Young was elected Senior Vice President and Controller of Dun &
Bradstreet, effective April 15, 1992; he had been elected Vice President and
Controller, effective November 20, 1985.
15
</FN>
</TABLE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information in response to this Item is set forth under Dividends and
Common Stock Information in the "Financial Review" on Page 14 of the 1995 Annual
Report, which information is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data required by this Item is incorporated herein by
reference to the information relating to the years 1991 through 1995 set forth
in the "Ten-Year Selected Financial Data" on Pages 34 and 35 of the 1995 Annual
Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information in response to this Item is set forth in the "Financial
Review" on Pages 9 to 14 of the 1995 Annual Report,
which information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Schedules under Item 14 on Page
19.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information in response to this Item is incorporated herein by
reference to the section entitled "Election of Directors" in the Company's proxy
statement dated March 8, 1996 filed with the Securities and Exchange Commission,
except that "Executive Officers of the Registrant" on Pages 14 to 15 of this
report responds to Item 401(b) and (e) of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
Information in response to this Item is incorporated herein by
reference to the section entitled "Compensation of Executive Officers and
Directors" in the Company's proxy statement dated March 8, 1996 filed with the
Securities and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information in response to this Item is incorporated herein by
reference to the section entitled "Security Ownership of Management and Others"
in the Company's proxy statement dated March 8, 1996 filed with the Securities
and Exchange Commission.
16
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this Item is incorporated herein by
reference to the section entitled "Security Ownership of Management and Others"
in the Company's proxy statement dated March 8, 1996 filed with the Securities
and Exchange Commission.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report.
(1) Financial Statements.
See Index to Financial Statements and Schedule on
Page 19.
(2) Financial Statement Schedule.
See Index to Financial Statements and Schedule on
Page 19.
(3) Other Financial Information.
Business Segments, 1995.
Ten Year Selected Financial Data.
(4) Exhibits.
See Index to Exhibits on Pages 22 to 24, which
indicates which Exhibits are management contracts or
compensatory plans required to be filed as Exhibits.
Only responsive information appearing on Pages 4 to
35 to Exhibit D is incorporated herein by reference,
and no other information appearing in Exhibit D is or
shall be deemed to be filed as part of this Form
10-K.
(b) Reports on Form 8-K.
None.
17
<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: ROBERT E. WEISSMAN
- ------------------------------------------
(Robert E. Weissman,
Chairman and Chief Executive Officer)
By: NICHOLAS L. TRIVISONNO
- ------------------------------------------
(Nicholas L. Trivisonno,
Executive Vice President - Finance
and Chief Financial Officer)
By: THOMAS W. YOUNG
- ------------------------------------------
(Thomas W. Young,
Senior Vice President and Controller)
Date: March 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
HALL ADAMS, JR. JAMES R. PETERSON
- ---------------------------------------- ---------------------------------------
(Hall Adams, Jr., Director) (James R. Peterson, Director)
CLIFFORD L. ALEXANDER, JR. M. BERNARD PUCKETT
- ---------------------------------------- ---------------------------------------
(Clifford L. Alexander, Jr., Director) (M. Bernard Puckett, Director)
MARY JOHNSTON EVANS MICHAEL R. QUINLAN
- ---------------------------------------- ---------------------------------------
(Mary Johnston Evans, Director) (Michael R. Quinlan, Director)
ROBERT J. LANIGAN VOLNEY TAYLOR
- ---------------------------------------- ---------------------------------------
(Robert J. Lanigan, Director) (Volney Taylor, Director)
VERNON R. LOUCKS JR. ROBERT E. WEISSMAN
- ---------------------------------------- ---------------------------------------
(Vernon R. Loucks Jr., Director) (Robert E. Weissman, Director)
JOHN R. MEYER
- ----------------------------------------
(John R. Meyer, Director)
Date: March 27, 1996
18
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS:
The Company's consolidated financial statements, the notes thereto and
the related report thereon of Coopers & Lybrand L.L.P., independent public
accountants, for the years ended December 31, 1995, 1994 and 1993, appearing on
Pages 15 to 35 of the accompanying 1995 Annual Report, are incorporated by
reference into this Annual Report on Form 10-K (see below). The additional
financial data indicated below should be read in conjunction with such
consolidated financial statements.
Page
--------------------------------
10-K 1995 Annual
Report
----------------- ----------------
----------------- ----------------
Report of Independent Public F-27 15
Accountants
Statement of Management Responsibility
for Financial F-28 15
Statements
As of December 31, 1995 and 1994:
Consolidated Statement of Financial F-30 17
Position
For the years ended December 31, 1995, 1994 and 1993:
Consolidated Statement of F-29 16
Income
Consolidated Statement of Cash F-31 18
Flows
Consolidated Statement of Shareholders' F-32 19
Equity
Notes to Consolidated Financial F-33 to F-56 20 to 33
Statements
Quarterly Financial Data (Unaudited) for the years ended
December 31, 1995 and F-55 33
1994
Management's Discussion and Analysis of Financial
Condition and Results of Operations F-6 to F-26 9 to 14
Other financial information:
Business Segments, F-1 to F-5 4 to 8
1995
Ten-year selected financial F-57 34 to 35
data
SCHEDULE:
Report of Independent Public 20 15
Accountants
The Dun & Bradstreet Corporation and Subsidiaries:
II-Valuation and Qualifying Accounts for
the years ended December 31,
1995, 1994 and 1993 21 -
Schedules other than the one listed above are omitted as not required
or inapplicable or because the required information is provided in the
consolidated financial statements, including the notes thereto.
19
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors of
The Dun & Bradstreet Corporation:
Our report on the consolidated financial statements of The Dun & Bradstreet
Corporation as of December 31, 1995 and 1994, and for the years ended December
31, 1995, 1994 and 1993, has been incorporated by reference in this Form 10-K
from page 15 of the 1995 Annual Report of The Dun & Bradstreet Corporation. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 19 of this
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
January 23, 1996
20
<PAGE>
<TABLE>
SCHEDULE II
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1995, 1994, 1993
(In millions)
<CAPTION>
- ------------------------------------------------------ ---------------- -- -------------- -- ---------------- - ---------------
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------------ ---------------- -- -------------- -- ---------------- - ---------------
- ------------------------------------------------------ ---------------- -- -------------- -- ---------------- - ---------------
Additions
Balance Charged to Balance
Beginning Costs and at End
Description of Period Expenses Deductions(a) of Period
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
<S> <C> <C> <C> <C>
For the Year Ended December 31, 1995 $ 76.8 $ 43.5 $ 45.9 $ 74.4
====== ======= ======= ======
====== ======= ======= ======
For the Year Ended December 31, 1994 $ 79.2 $ 50.7 $ 53.1 $ 76.8
====== ======= ======= ======
====== ======= ======= ======
For the Year Ended December 31, 1993 $ 82.4 $ 42.2 $ 45.4 $ 79.2
====== ======= ======= ======
====== ======= ======= ======
<FN>
NOTE:
(a) Represents primarily the charge-off of uncollectible accounts for which a reserve was provided.
</FN>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
<S> <C>
Regulation S-K Exhibit to
Exhibit Number this Report
(3) Articles of Incorporation and By-laws.
(a) Restated Certificate of Incorporation of The Dun & Bradstreet
Corporation dated June 15, 1988 (incorporated herein by reference to
Exhibit 4(a) to Registrant's Registration No. 33-25774 on Form S-8
filed November 25, 1988).
(b) By-laws of Registrant dated December 15, 1993 (incorporated herein by
reference to Exhibit E to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993, file number 1-7155, filed March 25,
1994).
(4) Instruments Defining the Rights of Security Holders, Including Indentures.
Not Applicable.
(9) Voting Trust Agreement.
Not Applicable.
(10) Material Contracts. (All of the following documents, except for items (v) and (w),
are management contracts or compensatory plans or arrangements required to be
filed pursuant to Item 14(c).)
(a) Retirement Plan for Directors of Registrant, as amended December 21,
1994 (incorporated herein by reference to Exhibit E to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994, file
number 1-7155, filed March 27, 1995).
(b) Nonfunded Deferred Compensation Plan for Non-Employee Directors of
Registrant, as amended April 21, 1993 (incorporated herein by reference
to Exhibit F to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993, file number 1-7155, filed March 25, 1994).
(c) Pension Benefit Equalization Plan, as amended December 21, 1994
(incorporated herein by reference to Exhibit F to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994, file number
1-7155, filed March 27, 1995).
(d) Profit Participation Benefit Equalization Plan, as amended and restated effective
January 1, 1995 Exhibit E^
(e) 1982 Key Employees Stock Option Plan for Registrant and Subsidiaries, as amended
April 18, 1995 Exhibit F^
(f) 1991 Key Employees Stock Option Plan for Registrant and Subsidiaries,
as amended April 18, 1995 (incorporated herein by reference to Exhibit
C to Registrant's Proxy Statement dated March 10, 1995, file number
1-7155).
(g) Ten-Year Incentive Stock Option Agreement (incorporated herein by reference to
Exhibit 28(b) to Registrant's Registration No. 33-44551 on Form S-8, filed December
18, 1991).
(h) Ten-Year Non-Qualified Stock Option Agreement (incorporated herein by reference to
Exhibit 28(c) to Registrant's Registration No. 33-44551 on Form S-8, filed
December 18, 1991).
(i) Stock Appreciation Rights Agreement relating to Incentive Stock Options
(incorporated herein by reference to Exhibit 28(d) to Registrant's
Registration No.
33-44551 on Form S-8, filed December 18, 1991).
(j) Stock Appreciation Rights Agreement relating to Non-Qualified Stock
Options (incorporated herein by reference to Exhibit 28(e) to
Registrant's Registration No.
33-44551 on Form S-8, filed December 18, 1991).
(k) Limited Stock Appreciation Rights Agreement relating to Incentive Stock
Options (incorporated herein by reference to Exhibit 28(f) to
Registrant's Registration No.
33-44551 on Form S-8, filed December 18, 1991).
22
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Regulation S-K Exhibit to
Exhibit Number this Report
(l) Limited Stock Appreciation Rights Agreement relating to Non-Qualified
Stock Options (incorporated herein by reference to Exhibit 28(g) to
Registrant's Registration No.
33-44551 on Form S-8, filed December 18, 1991).
(m) 1982 Key Employees Performance Unit Plan for Registrant and
Subsidiaries, as amended December 18, 1991 (incorporated herein by
reference to Exhibit F to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991, file number 1-7155, filed March 26,
1992).
(n) Key Employees Performance Unit Plan for Registrant and Subsidiaries, as
amended April 18, 1995 (incorporated by reference to Exhibit B to
Registrant's Proxy Statement dated March 10, 1995, file number 1-7155).
(o) Corporate Management Incentive Plan, as amended April 18, 1995
(incorporated herein by reference to Exhibit A to Registrant's Proxy
Statement dated March 10, 1995, file number 1-7155).
(p) 1989 Key Employees Restricted Stock Plan for Registrant and
Subsidiaries, as amended April 18, 1995 (incorporated herein by
reference to Exhibit D to Registrant's Proxy Statement dated March 10,
1995, file number 1-7155).
(q) Restricted Stock Agreement (incorporated herein by reference to Exhibit
L to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989, file number 1-7155, filed March 26, 1990).
(r) Form of Change-in-Control Severance Agreement, approved July 19, 1989
(incorporated herein by reference to Exhibit M to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1989, file number
1-7155, filed March 26, 1990).
(s) Supplemental Executive Benefit Plan, as amended December 21, 1994
(incorporated herein by reference to Exhibit G to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994, file number
1-7155, filed March 27, 1995).
(t) Restricted Stock Plan for Non-Employee Directors, adopted July 20, 1994
(incorporated by reference to Exhibit E to Registrant's Proxy Statement
dated March 10, 1995, file number 1-7155).
(u) Executive Transition Plan, adopted May 17,1995 Exhibit G^
(v) Agreement of Limited Partnership of D&B Investors L.P., dated as of
October 14, 1993 (incorporated herein by reference to Exhibit H to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1993, file number 1-7155, filed March 25, 1994).
(w) Purchase Agreement and Purchase Agreement Amendment dated October 14,
1993 among D&B Investors L.P. and other parties (incorporated herein by
reference to Exhibit I to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993, file number 1-7155, filed March 25,
1994).
(x) Consulting Agreement, dated March 6, 1995, between Registrant and
Charles W. Moritz (incorporated herein by reference to Exhibit H to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1994, file number 1-7155, filed March 27, 1995).
(y) Memorandum of Agreement, dated April 13, 1995, between Registrant and
Serge Okun (incorporated by reference to Exhibit 10 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, file
number 1-7155, filed August 10, 1995).
(z) Agreement and Release, dated July 20, 1995, between Registrant and
Edwin A. Bescherer, Jr. (incorporated by reference to Exhibit 10 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, file number
1-7155, filed November 10, 1995).
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Regulation S-K Exhibit to
Exhibit Number this Report
(11) Statement Re Computation of Per Share Earnings.
Computation of Earnings Per Share of Common Stock on a Fully Diluted
Basis Exhibit.A^
(12) Statement Re Computation of Ratios.
Not applicable.
(13) Annual Report to Security Holders.
1995 Annual Report Exhibit D^
(18) Letter Re Change in Accounting Principles.
Not applicable.
(19) Report Furnished to Security Holders.
Not applicable
(21) Subsidiaries of the Registrant.
List of Active Subsidiaries as of January 31, 1996 Exhibit B^
(22) Published Report Regarding Matters Submitted to a Vote of Security Holders.
Not applicable.
(23) Consents of Experts and Counsel.
Consent of Independent Public Accountants Exhibit C^
(24) Power of Attorney.
Not applicable.
(27) Financial Data Schedules Exhibit H^
(28) Information from Reports Furnished to State Insurance Regulatory Authorities.
Not applicable.
(99) Additional Exhibits.
Not applicable.
<FN>
^Filed electronically.
</FN>
</TABLE>
24
<TABLE>
EXHIBIT A
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
ON A FULLY DILUTED BASIS
Dollar Amounts in Millions, Except Per Share Data 1995 1994 1993
(Average share data in thousands)
<CAPTION>
<S> <C> <C> <C>
Weighted average number of shares 169,522 169,946 177,181
Dilutive effect of shares issuable as of year-end under stock option
plans, stock appreciation rights and restricted stock plan 2,061 1,668 1,789
Adjustment of shares applicable to stock options and stock
appreciation rights exercised during the year 25 50 88
-------------------------------------------------
Weighted average number of shares on a fully diluted basis 171,608 171,664 179,058
-------------------------------------------------
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 on a fully diluted basis:
Before Cumulative Effect of Changes in Accounting Principles $1.87 $3.67 $ 2.39
Cumulative Effect to January 1, 1993, of Changes in Accounting Principles:
-SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" - - (.78)
-SFAS No. 112, "Employers' Accounting for Postemployment Benefits" - - (1.39)
========= ====== =========== ===== =============
Net Income $1.87(a) $3.67 (a) $ .22 (a)
========= ====== =========== ===== =============
<FN>
Note: (a) Also reflects Earnings Per Share on a primary basis.
</FN>
A-1
</TABLE>
<TABLE>
EXHIBIT B
THE DUN & BRADSTREET CORPORATION
LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1996
<CAPTION>
State or Other % Ownership
Name Jurisdiction of 100% Except
Incorporation as Noted
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A. C. NIELSEN COMPANY Delaware
A. C. Nielsen (Argentina) S.A. Delaware
Control Publicitario S.A. Argentina
IPSA S.A. Argentina 80.25
IPSA Nielsen Argentina S.A. Argentina
Dun & Bradstreet Information Services Ges.mbH Austria
CMIS Coordinierte Management Informations Systeme Ges.mbH Austria
ANR Piackutato Kft. Hungary
A. C. Nielsen Company (Belgium) S.A. Belgium
The Dun & Bradstreet Corporation & Co. SNC Belgium
Palmetto Assurance Ltd. Bermuda
Dun & Bradstreet Canada Holding, Ltd. Canada
The D&B Companies of Canada Ltd. Canada
Dun & Bradstreet Finance Inc. Canada
Nielsen Korea Limited Korea
Dun & Bradstreet Software Services Canada L.P. Delaware
A. C. Nielsen Chile Limitada Chile
A. C. Nielsen Chile S.A. Chile 51.0
A. C. Nielsen de Colombia S.A. Colombia 94.0
Nielsen del Ecuador S.A. Ecuador
ANR Amer Nielsen Research Limited Cyprus 51.0
Teollisuuden Tielopalvelu Industrial Intelligence Ltd. Oy Finland
A. C. Nielsen Finland Oy Finland
Finnpanel Oy Finland 50.0
A. C. Nielsen S.A. France
D&B Finance France France
Dun & Bradstreet-France, S.A. France
S&W S.A. France
S&W S.A. Belgium
Dun & Bradstreet Shared Services SARL France
Dun & Bradstreet Software Services (France) S.A. France
ERIM S.A. France
Moody's France S.A. France
Panel de Gestion S.A.R.L. France
Amer-Nielsen Research Hellas S.A. Greece 80.0
A. C. Nielsen of Ireland Limited Ireland
D & B Group Limited Ireland
D&B Marketing Information Services S.p.A Italy
C.R.A. S.r.l. Italy 60.0
Telepanel S.A. Italy
SITA, Societa per gli Indici Tessile e Abbigliamento-S.r.l. Italy 60.0
Ciser S.r.l. Italy
Management Tools S.r.l. Italy 60.0
Dun & Bradstreet Holding (Belgium) S.A. Belgium
B-1
<PAGE>
A. C. NIELSEN COMPANY (Continued)
Nielsen Japan K.K. Japan
A. C. Nielsen Company de Mexico, S.A. de C.V. Mexico
Inmobiliaria Zeta, S.A. de C.V. Mexico
A. C. Nielsen (N.Z.) Limited New Zealand
AGB McNair Holdings Limited New Zealand
AGB Research NZ Ltd. New Zealand
Hunter AGB Ltd. New Zealand
Media Research Services Ltd. New Zealand 75.0
OTR Research Limited New Zealand
Spectrum Research Ltd. New Zealand
Market Research (NZ) Ltd. New Zealand
Nielsen Norge as Norway 98.9
A/S Norsk Reklame-Statistikk Norway 83.7
A. C. Nielsen de Panama S.A. Panama
A. C. Nielsen Peru S.A. Peru
Nedro-Nielsen Estudios de Mercado, Lda. Portugal
A. C. Nielsen P.R. Inc. Puerto Rico
Dun & Bradstreet Norden AB Sweden
A. C. Nielsen Company A.B. Sweden
Dun & Bradstreet Soliditet AB Sweden
Dun & Bradstreet Finland OY Finland
A. C. Nielsen Singapore Pte. Ltd. Singapore
Dun & Bradstreet Holdings Spain B.V. The Netherlands
Dun & Bradstreet S.A. Spain
A. C. Nielsen Company S.A. Spain
Infoadex S.A. Spain 50.0
Panel Internacional S.A. Spain
A. C. Nielsen Management Services S.A. Switzerland
A. C. Nielsen S.A. Switzerland
IHA Institut for Marktanalysen Switzerland 50.0
ACN/PIB Partners Connecticut 50.01
Addex, Inc. Delaware
Nieuw Willemstad Holdings, Inc. Delaware
NCH Promotional Services, Inc. Delaware
Nielsen Holdings, Inc. Delaware
Nielsen Leasing Corporation Delaware
Panel Internationel S.A. Delaware
AMERICAN CREDIT INDEMNITY COMPANY New York 95.0
D&B CORPORATION JAPAN K.K. Japan
D&B ENTERPRISES, INC. Delaware
Information Associates, L.P. Delaware 50.0
B-2
<PAGE>
D&B (R.I.C.) LTD. Delaware
Dun & Bradstreet India Private Limited India
Dun & Bradstreet Marketing Research Private Limited India 70.0
Dun & Bradstreet-Satyam Software Private Limited India 76.0
Dun & Bradstreet East-Vent Ltd. Delaware 80.0
Dun & Bradstreet C.I.S. Russia
D&B TRANSPORTATION SERVICES COMPANY, INC. Delaware
DBHC, INC. Delaware
Dun & Bradstreet HealthCare Information Inc. Illinois
DUN & BRADSTREET COMPUTER LEASING, INC. Delaware
Fillupar Leasing Partnership Delaware 98.0
DUN & BRADSTREET DIVESTITURE, INC. Delaware
DUN & BRADSTREET HOLDINGS, INC. Delaware
Dun & Bradstreet Pension Services, Inc. Delaware
NA Insurance Services, Inc. California
Erisco, Inc. New York
DUN & BRADSTREET, INC. Delaware
D&B Investors L.P. Delaware 99.0
Dun & Bradstreet Life Insurance Company Arizona
Dun & Bradstreet Program Management Services, Inc. Delaware
Dun & Bradstreet RMS Franchise Corporation Delaware
Duns Holding, Inc. Delaware
D&B Acquisition Corp. Delaware
Duns Licensing Associates, L.P. Delaware 82.5
Corinthian Leasing Corporation Delaware
Mergex, Inc. Delaware
DUN & BRADSTREET INTERNATIONAL, LTD. Delaware
Dun & Bradstreet S.A. Argentina
Arrebnac Pty. Ltd. Australia
Dun & Bradstreet Pension Plan Pty. Ltd. Australia
A. C. Nielsen (Holdings) Pty. Limited Australia
A. C. Nielsen Australia Pty. Limited Australia
AGB McNair Holdings Pty. Limited Australia
AGB Research Holdings Pty. Limited Australia
Tart Research Pty. Limited Australia
AGB McNair Pty. Limited Australia
McNair Anderson Australia
Associates Pty. Limited
Marketing Insights Pty. Ltd. Australia
B-3
<PAGE>
DUN & BRADSTREET INTERNATIONAL, LTD. (Continued)
Arrebnac Pty. Ltd. (Continued)
Dun & Bradstreet Pension Plan Pty. Ltd. (Continued)
College Mercantile Pty. Ltd. Australia
Dun & Bradstreet (Australia) Pty. Limited Australia
Dun & Bradstreet (Nominees) Pty. Ltd. Australia
Dun & Bradstreet Unit Trust Australia
Dun & Bradstreet Software Services Australia Pty Limited Australia
Moody's Investors Service Pty. Limited Australia
Nandette Pty. Limited Australia
Australian Independent Media Data Pty. Limited Australia 50.0
IMS Australia Pty. Ltd. Australia
Amfac Pty. Limited Australia
Chemdata Pty. Limited Australia
Data Design Hisoft Pty. Limited Australia
Medrecord Australia Pty. Limited Australia
Permail Pty. Limited Australia
N.V. Dun & Bradstreet-Eurinform S.A. Belgium
Dun & Bradstreet do Brasil Ltda. Brazil
Companhia Brasileira de Pesquisa e Analise Brazil 50.0
Dun & Bradstreet Ltda. Chile
Dun & Bradstreet International Consultant (Shanghai) Co. Ltd. China
Dun & Bradstreet Holdings-France, Inc. Delaware
Kosmos Business Information Limited England
D & B Group, Ltd. Delaware
A. C. Nielsen (Holdings) Limited England
A. C. Nielsen Company Limited England
Dataquest Europe Limited England
Dun & Bradstreet Finance Ltd. England
Dun & Bradstreet Software Services Limited England
Dun & Bradstreet Software Services (England ) Ltd England
Dun & Bradstreet Software Services Medium Systems Limited England
Advance-Peterholm Group Ltd. England
D & B Telephone Company Ltd. England
D&B PCNet Ltd. England
D&B Europe Limited England
Dun & Bradstreet Limited England
Dun & Bradstreet Limited Ireland
Dun & Bradstreet (U.K.) Ltd. England
Dun & Bradstreet (U.K.) Pension Plan Trustee Company Ltd. England
DunsGate Limited England
IMS Holdings (U.K.) Limited England
Intercontinental Medical Statistics Ltd. England
Imsworld Publications Ltd. England
IMS Nominees Limited England
IMS Sold Out Limited England
Medical Direct Mail Organisation Ltd. England
PMS International Limited England
B-4
<PAGE>
DUN & BRADSTREET INTERNATIONAL, LTD. (Continued)
D & B Group, Ltd (Continued)
IMS Holdings (U.K.) Limited (Continued)
Pharma Strategy Group Limited England
Moody's Investors Service Limited England
ST Europe Ltd. England
Dun & Bradstreet Credit Control, Ltd. Delaware
Dun & Bradstreet (HK) Limited Hong Kong
Dun & Bradstreet Portfolios-Holland, Inc. Delaware
Dun & Bradstreet Finance B.V. The Netherlands
Dun & Bradstreet (Israel) Ltd. Israel
Dunbrad, Inc. Delaware
Dun & Bradstreet Credit Reporting (Israel) Israel
Wiri Beleggingen B.V. The Netherlands
Dun & Bradstreet Kosmos S.p.A. Italy
Argus Situazioni Aziendali S.r.l. Italy
Consorzio Manifatturieri S.r.l. Italy
Orefro Data S.r.l. Italy
Orefro L'Informazione S.p.A. Italy
Ore. Tel S.r.l. Italy
D&B Information Services Japan K.K. Japan
D&B Information Services (M) Sdn. Bhd. Malaysia
Dun & Bradstreet S.A. de C.V. Mexico
Dun & Bradstreet Nederland Holding B.V. The Netherlands
South African L.P. (No official name) South Africa 50.0
Nielsen Marketing Research spol, s.r.o. Czech Republic
Dun & Bradstreet Danmark Holding A/S Denmark
AIM Nielsen A/S Denmark
AIM Farmstat ApS Denmark 66.67
D & B International A/S Denmark
Informations Medicales Et Statistiques SA France
Perfect Data International N.V. The Netherlands Antilles
Perfect Data Services Nederland B.V. The Netherlands
A. C. Nielsen (Nederland) B.V. The Netherlands
Centrum voor Marketing Analyses B.V. The Netherlands 70.0
Dun & Bradstreet (C & EE) Holding B.V. The Netherlands 70.0
Dun & Bradstreet spol s r.o. Czech Republic
Dun & Bradstreet Hungaria Informacio Szolgaltato Korlatolt Hungary 88.73
Felelosegu Tarsasag (d/b/a Dun & Bradstreet Hungaria Kft.)
Dun & Bradstreet Poland sp. z o.o. Poland
Dun & Bradstreet Software Services (Nederland) B.V. The Netherlands
Dun & Bradstreet B.V. The Netherlands
IMS Services Nederland B.V. The Netherlands
Dun & Bradstreet Holding Norway AS Norway
Dun & Bradstreet Norge AS Norway
ANR Amer Nielsen Research Sp. z.o.o. Poland
B-5
<PAGE>
DUN & BRADSTREET INTERNATIONAL, LTD. (Continued)
Dun & Bradstreet (New Zealand) Limited New Zealand
Dun & Bradstreet S.A. Peru
Dun & Bradstreet Portugal, Lda. Portugal
Dun & Bradstreet (Singapore) Pte. Ltd. Singapore
Ifico-Buergel A.G. Switzerland
Dun & Bradstreet S.A. Uruguay
Dun & Bradstreet C.A. Venezuela
Dun & Bradstreet Zimbabwe (Private) Limited Zimbabwe
DUN & BRADSTREET INVESTMENTS CANADA INC. Canada
DUN & BRADSTREET LEASING INC. Canada
DUN & BRADSTREET SOFTWARE HOLDINGS, INC. Delaware
DBC Holding Corp. Delaware
Dun & Bradstreet Software Services, Inc. Georgia
Dun & Bradstreet Software Services Australia Holdings Pty. Ltd. Australia
DBS-Dun & Bradstreet Software Services do Brasil Ltda. Brazil
Dun & Bradstreet Software Services (Canada) No. 2 Limited Canada
Dun & Bradstreet Software Services Hong Kong Limited Hong Kong
D&B Technology Asia K.K. Japan
D&BS Services (M) Sdn. Bhd. Malaysia
Dun & Bradstreet Software Services New Zealand Limited New Zealand
Dun & Bradstreet Software Services (S) PTE Ltd. Singapore
Dun & Bradstreet Software Services International, Inc. Georgia
DUN-DONNELLEY PUBLISHING CORPORATION Delaware
DUNS INVESTING CORPORATION Delaware
GARTNER GROUP, INC. Delaware 52.3
Gartner Group Pacific Pty Limited Australia
Gartner Group Scandinavia, A/S Denmark
Gartner Group UK Ltd. England
Gartner Group France S.A.R.L. France
Gartner Group, GMBH Germany
Gartner Group Italia S.R.L. Italy
Nomos Ricerca S.r.l. Italy
Nomos Ricerca Services Italy
Nomos Ricerca Telecomunicazioni Italy
Gartner Group Japan KK Japan
Gartner Group Nederland BV The Netherlands
Gartner Group Norge, A/S Norway
Gartner Group Sverige, AB Sweden
B-6
<PAGE>
GARTNER GROUP, INC. (Continued)
Decision Drivers, Inc. Delaware 85.0
Gartner Group Asia, Inc. Delaware
Gartner Group Credit Corporation Delaware
Gartner Group Europe, Inc. Delaware
Gartner Group Investment Corporation Delaware
RCI, LP Massachusetts 58.0
Gartner Group Sales, Inc. Delaware
GG Hong Kong, Inc. Delaware
GG Investment Management, Inc. Delaware
Gartner Enterprises, Ltd. Delaware
G.G. West Corporation Delaware
New Science Associates Inc. Delaware
New Science Associates, Ltd. England
RCI Management Corporation Delaware
Real Decisions, Inc. Connecticut
Dataquest Incorporated California
Dataquest Europe S.A. France
DATAQUEST Japan Limited Japan
Dataquest Asia Pacific Limited Hong Kong
DQ Research Pte. Ltd Singapore
Dataquest Taiwan Limited Taiwan
Dataquest Research (Thailand) Limited Thailand
Gartner Group FSC, Inc. Virgin Islands
I.M.S. INTERNATIONAL, INC. Delaware
Dun & Bradstreet Marketing Pty. Ltd. Australia
Dun & Bradstreet (Australia) Holdings Pty. Australia
Dun & Bradstreet (Australia) Group Pty. Ltd. Australia
IMS of Canada, Ltd. Canada
IMS Pacific Limited Hong Kong
IMS HK Investments Ltd. Hong Kong
IMS (NZ) Limited New Zealand
IMS Investments (NZ) Limited New Zealand
I.M.S. Portugal-Consultores Internacionais de Marketung Farmaceutico, Lda. Portugal
IMS International (South Africa) (Pty.) Ltd. South Africa
IMS Pharminform Holding AG Switzerland
Pharmadat Marktforschungs-Gesellschaft m.b.H. Austria
Pharmacall Statistik Ges. m.b.H. Austria
Informations Medicales Et Statistiques S.A. Belgium
IMS Servicos Ltda. Brazil
Intercomunicaciones Y Servicio de Datos S.A. [k/a Interdata S.A.] Colombia
IMS Medinform A.S. Czech Republic
Interdata Dominicana, S.A. Dominican Republic
Datandina Ecuador S.A. Ecuador
B-7
<PAGE>
I.M.S. INTERNATIONAL, INC. (Continued)
IMS Pharminform Holding AG (Continued)
IMS Egypt Limited Egypt
Institute for Medical Statistics Oy Finland
Asserta Centroamerica Medicion de Mercados, S.A. Guatemala
SRG Holdings Limited Hong Kong
SRG Management Services Limited Hong Kong
Research Consulting Services Ltd. Hong Kong
SRG China Ltd. Hong Kong
Shanghai SRG Ltd. China 80.0
SRG International (HK) Ltd. Hong Kong
SRG Research Services (HK) Ltd. Hong Kong
Survey Research HongKong Ltd. Hong Kong
Survey Research Asia Pacific Ltd. Hong Kong
Survey Research Taiwan Ltd. Taiwan
Survey Research Group Ltd. Hong Kong
SRG Guangzhou Ltd. China 92.0
Survey Research Group Pte. Ltd. Singapore
SRG Research Canada Ltd. Canada
D.J. Calhoun Marketing & Canada 86.0
Development Ltd.
Recherches en Marketing (Quebec) Inc. Canada
ASI Market Research Inc. Japan
Hankook Research Company Korea 50.0
Survey Research Malaysia Sdn Bhd Malaysia
Target Marketing Promotions Sdn Bhd Malaysia
Consumer Pulse Inc. Philippines
Dealer Pulse Inc. Philippines
Media Pulse Inc. Philippines
Philippine Monitoring Services Inc. Philippines
Research Philippines Unisearch Inc. Philippines
Survey Research Singapore Pte. Ltd. Singapore
Deemar Company Ltd. Thailand
SRG International Ltd. New York
IMS Medinform Hungaria Market Research Services Ltd. Hungary
Interdata S.A. de C.V. Mexico
Informations Medicales & Statistiques S.A.R.L. Morocco
I.M.S. (Nederland) B.V. The Netherlands
IMS Denmark ApS Denmark
I.M.S. Finance Nederland B.V. The Netherlands
Institute for Medical Statistics Norge A/S Norway
Pharma Data Paraguaya S.R.L. Paraguay
Datandina S.A. Peru
IMS Philippines, Inc. Philippines
Intercontinental Marketing Services Iberica, S.A. Spain
Mercados Y Analisis, S.A. [k/a M.A.S.A.] Spain
IMS Sweden AB Sweden
B-8
<PAGE>
I.M.S. INTERNATIONAL, INC. (Continued)
IMS Pharminform Holding AG (Continued)
D&B Novinform AG Switzerland
ICM Institut fur Credit Management AG Switzerland
Data Coordination AG Switzerland
PMA Sociedad Anonima Argentina
IMS AG Switzerland
IMS Information Medical Statistics AG Switzerland
IMS Poland Limited Sp. z.o.o. Poland
RCI Research Consultants AG Switzerland
Marketing Y Datos Limitada (k/a Markdata Ltda.) Chile
Interstatistik AG Switzerland
I M S Ges.m.b.H. Austria
Datec Industria e Comercio, Distribuidora Grafica Brazil
e Mala Direta Ltda.
IMS Tunisia Tunisia
IMS Tibbi Istatistik Ticaret ve Musavirlik Ltd Sirketi Turkey
Pharma Data Uruguaya S.A. Uruguay
PMV De Venezuela, C.A. Venezuela
I.M.S. Financial, Inc. Delaware
Dun & Bradstreet Germany Holding GmbH Germany
ACN Marketing Research Holding GmbH Germany
A. C. Nielsen GmbH Germany
A. C. Nielsen Werbeforschung S&P GmbH Germany
"P&S" Handelsberatung GmbH Germany
Dun & Bradstreet Schimmelpfeng GmbH Germany
D&B Unterstutzungskasse GmbH Germany
Dun & Bradsteet Information Solutions GmbH Germany
IMS Holding Deutschland GmbH Germany
IFNS Marktforschung GmbH Germany
IMS GmbH Institut fur Medizinische Statistik Germany
IMS Data GmbH Germany
I.M.S. Hellas Ltd. Greece
GPI Krankenhausforschung Gesellschaft Germany 60.0
Fur Pharminformations Systems mbH
MedVantage GmbH Integriertes Germany 60.0
Datenmanagement im Health Care-Markt
Midoc Medizinische Informations-und Dokumentations- Germany
Gesellschaft m.b.H.
Data Coordination (Israel) Ltd. Israel
IMS Japan Ltd. KK Japan
Japan T.K. Japan
Nippon Computer Services, Inc. Japan
IMS Asia (1989) Pte. Ltd. Singapore
Clark-O'Neill, Inc. New Jersey
IMS America, Ltd. New Jersey
Coordinated Management Systems, Inc. Delaware
Emron, Inc. New Jersey
B-9
<PAGE>
I.M.S. INTERNATIONAL, LTD. (Continued)
IMS Software Services, Ltd. Delaware
Intercontinental Medical Statistics International, Ltd. Delaware
Intercontinental Medical Statistics International, Ltd. New York
PJH Technology Solutions, Ltd. Delaware
Decision Surveys International (Pty.) Ltd. South Africa
IMSA (Pty.) Ltd. South Africa
IPRA (Pty.) Ltd. South Africa
PMSA (Pty.) Ltd. South Africa
MOODY'S INVESTORS SERVICE, INC. Delaware
Moody's Canada Inc. Canada
Moody's Deutschland GmbH Germany
Moody's Asia Pacific Limited Hong Kong
Moody's Japan Kabushiki Kaisha Japan
Moody's Singapore Pte Ltd. Singapore
Moody's Investors Service Espana, S.A. Spain
Financial Proformas, Inc. Delaware
Moody's Emerging Markets Service, Inc. Delaware
Moody's Overseas Holdings, Inc. Delaware
Moody's Interbank Credit Service Limited Cyprus
OAK INVESTMENTS LTD. Bermuda
PILOT SOFTWARE, INC. Delaware
PES (Amsterdam) Holding en Finance B.V. The Netherlands
Pilot Software Pty. Ltd. Australia
Pilot Software Ltd. England
Thorn EMI Computer Software Ltd. England
Pilot Software S.A.R.L. France
Pilot Software GmbH Germany
Pilot Software S.R.L. Italy
Pilot Software B.V. The Netherlands
Pilot Software Pte. Ltd. Singapore
Pilot Software AB Sweden
SALES TECHNOLOGIES, INC. Georgia
THE REUBEN H. DONNELLEY CORPORATION Delaware
RHD Systems, Inc. Delaware
Am-Don Partnership [d/b/a DonTech] Illinois 50.0
The CenDon Partnership Illinois 50.0
C-Don Partnership Pennsylvania 50.0
Uni-Don Partnership Florida
</TABLE>
B-10
EXHIBIT C
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.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
March 27, 1996
C-1
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
<PAGE>
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
<PAGE>
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
<PAGE>
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 oper-ating 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
<PAGE>
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
<PAGE>
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 for costs principally associated with
the Company's plan to reorganize. Including the non-recurring pre-tax charge of
$448.4 million, the Company's 1995 earnings per share was $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.
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
F-6
<PAGE>
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.
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 related principally to the
reorganization, 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
F-7
<PAGE>
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
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
F-8
<PAGE>
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
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.
F-9
<PAGE>
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%.
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
F-10
<PAGE>
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
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
F-11
<PAGE>
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
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
F-12
<PAGE>
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
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
F-13
<PAGE>
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
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
F-14
<PAGE>
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
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,
F-15
<PAGE>
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
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.
F-16
<PAGE>
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.
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
F-17
<PAGE>
(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.)
In the fourth quarter of 1995, the Company recorded a charge of $448.4
million. This charge included an impairment loss of $218 million 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".
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 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. The charge principally reflected the revaluation of certain fixed
F-18
<PAGE>
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 due, principally, to the new business
strategies that will result from the announced plans to spin-off certain
businesses. (See Notes 2 and 19 to the Consolidated Financial Statements.)
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
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.
F-19
<PAGE>
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
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
F-20
<PAGE>
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
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.)
F-21
<PAGE>
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.
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.
F-22
<PAGE>
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
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
F-23
<PAGE>
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
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
F-24
<PAGE>
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
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 $.66 per share, payable March 8, 1996 to shareholders of
record at the close of business February 20, 1996. The Company anticipates that
its current dividend policy will be maintained through at least the first half
of 1996. It is expected that dividend policies for all three independent public
companies will be formulated consistent with comparable businesses. The dividend
payout range being evaluated for the new Dun & Bradstreet is 55-to-60 percent,
and a dividend payout in the range of 20 percent is under consideration for
Cognizant Corporation. A.C. Nielsen does not anticipate paying a dividend.
F-25
<PAGE>
Common Stock Information - The Company's common stock (symbol DNB) is listed on
the New York, London, Tokyo, Zurich, Geneva and Basel stock exchanges. During
1995 and 1994, 85.5 million shares and 63.3 million shares, respectively, were
traded, representing 50.4% and 37.2% of the average number of shares outstanding
in the respective years. The number of shareholders of record declined to 14,390
at January 31, 1996 from 14,646 at January 31, 1995.
<TABLE>
The following summarizes price and dividend-per-share information for Dun &
Bradstreet common stock as reported in the periods shown:
<CAPTION>
Price Per Share ($)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-26
<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."
Stamford, Connecticut
January 23, 1996
F-27
<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-28
<PAGE>
<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-29
<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-30
<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-31
<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-32
<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-33
<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-34
<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).
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 due, principally, to the new business
strategies that will result from the plans to spin-off certain businesses. (See
Note 19 to the Consolidated Financial Statements.)
The provision for postemployment benefits of $79.8 million, represents the
cost of workforce productivity improvements anticipated from the planned
spin-offs. The accrual for contractual obligations that have no future economic
benefits and penalties to cancel certain contracts of $100.7 million and the
other asset revaluations of $49.8 million (primarily computer software) are
necessitated based on an evaluation of the new business initiatives.
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-35
<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-36
<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-37
<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-38
<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-39
<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-40
<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-41
<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 ($1.40 per share).
F-42
<PAGE>
Note 8. Employee Stock Plans
The Company has granted options to certain associates, under its Key Employees
Stock Option Plans, to purchase shares of its common stock at the market price
on the date of the grant. Options outstanding at December 31, 1995 were granted
during the years 1986 through 1995 and are exercisable over periods ending not
later than 2005. At December 31, 1995, 1994 and 1993, options for 4,859,596,
4,306,119 and 3,556,944 shares of common stock were exercisable and 10,306,592,
1,567,393 and 3,467,164 shares were available for future grants under the plans.
Changes in stock options for the three years ended December 31, 1995 are
summarized as follows:
Option Price Per
Shares Share ($) 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-43
<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-44
<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-45
<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-46
<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-47
<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-48
<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-49
<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-50
<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-51
<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-52
<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-53
<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-54
<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-55
<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-56
<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-57
<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-58
PROFIT PARTICIPATION BENEFIT EQUALIZATION PLAN
OF
THE DUN & BRADSTREET CORPORATION
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1995
I. Purpose of the Plan
-------------------
The purpose of the Profit Participation Benefit Equalization Plan of
The Dun & Bradstreet Corporation (the "Plan") is to provide a means of
equalizing the benefits of those employees participating in the Profit
Participation Plan for Employees of The Dun & Bradstreet Corporation (the
"Profit Participation Plan") whose funded benefits under the Profit
Participation Plan are or will be limited by the application of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
Internal Revenue Code of 1986, as amended (the "Code") or any applicable
law or regulation. The Plan is intended to be an "excess benefit plan" as
that term is defined in Section 3(36) of ERISA with respect to those
participants whose benefits under the Profit Participation Plan have been
limited by Section 415 of the Code, and a "top hat" plan meeting the
requirements of Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of
ERISA with respect to those participants whose benefits under the Profit
Participation Plan have been limited by Section 401(a)(17) of the Code.
II. Administration of the Plan
--------------------------
The Executive Compensation and Stock Option Committee of the Board of
Directors (the "Committee") of The Dun & Bradstreet Corporation (the
"Corporation" or the "Company") shall administer the Plan and may delegate
to any management committee, employee, director or agent its responsibility
to perform any act hereunder, including without limitation those matters
involving the exercise of discretion, provided that such delegation shall
be subject to revocation at any time at its discretion. The Committee shall
have full authority to determine all questions arising in connection with
the Plan-, other than those determinations delegated to management
employees or independent third parties by the Board of Directors, including
interpreting its provisions and construing all of its terms; may adopt
procedural rules; and may employ and rely on such legal counsel, such
actuaries, such accountants and such agents as it may deem advisable to
assist in the administration of the Plan. All of its rules, interpretations
and decisions shall be applied in a uniform manner to all participants
similarly situated and decisions of the Committee shall be conclusive and
binding on all persons.
III. Participation in the Plan
-------------------------
All members of the Profit Participation Plan shall be eligible to
participate in this Plan whenever their benefits under the Profit
Participation Plan as from time to time in effect would exceed the
limitations on benefits and contributions imposed by Sections 401, 415 or
any other applicable Section of the Code, calculated from and after
September 2, 1974. For purposes of this Plan, benefits of a participant in
this Plan shall be determined as though no provision were contained in the
Profit Participation Plan incorporating limitations imposed by Sections
401, 415 or any other Section of the Code.
IV. Benefit Limitations
-------------------
For purposes of this Plan and the Profit Participation Plan, the
limitations imposed by Section 415 of the Code shall. be deemed to be met
when the sum of the participant's defined benefit plan fraction and the
participant's defined contribution plan fraction equals 1.0, as such
fractions are computed for purposes of Section 415 of the Code and Section
14.4 of the Profit Participation Plan.
V. Equalized Benefits
------------------
If member participating contributions or Company contributions to the
Profit Participation Plan are suspended during any calendar year because
any such contributions would cause the participant's account under such
plan to exceed the benefit limitations related to such plan as described in
Section III of this Plan, the Corporation shall pay the participant, on or
about March 1st of the following year, an amount equal to:
(1) the Company contributions that otherwise would have been
credited to such participant's account under the Profit
Participation Plan for the balance of the year in which such
suspension occurs, as if no provision were set forth therein
incorporating limitations imposed by Section 401, 415 or any
other applicable Section of the Code, and the participant had
continued his participating contributions to the Profit
Participation Plan at the rate in effect at the time such
contributions were suspended for the balance of the year in
which such suspension occurs, plus
(2) an interest factor equal to one-half of the annual return
which would have been received by the participant had such
payment been invested eighty percent (80%) in the Special
Fixed Income Fund (Fund C) of the Profit Participation Plan
and twenty percent (20%) in the Wells Fargo Equity Index Fund
(Fund A) of the Profit Participation Plan during the year in
which such suspension occurs, less
(3) any applicable withholding taxes.
VI. Change in Control
-----------------
Upon the occurrence of a "Change in Control" of the Corporation, as
such term is defined in the Profit Participation Plan, each participant
under the Plan shall receive a lump sum distribution equal to:
(1) the total amount which such participant had accrued under
the Plan which had not yet been distributed to such
participant pursuant to Section V(1) hereof as of the date of
such Change in Control, plus
(2) an interest factor equal to one-half of the return which
would have been received by the participant had such amount
been invested eighty percent (80%) in the Special Fixed Income
Fund (Fund C) of the Profit Participation Plan and twenty
(20%) in the Wells Fargo Equity Index Fund (Fund A) of the
Profit Participation Plan during the portion of the calendar
year subsequent to the date contributions to such
participant's account were suspended under the Profit
Participation Plan and prior to such Change in Control, less
(3) any applicable withholding taxes.
Any such lump sum distribution shall be paid to the participant within
sixty days of the Change in Control provided, however, that any such
payment will not prevent the further accrual of benefits under the Plan
after the date of such Change in Control.
VII. Miscellaneous
-------------
This Plan may be terminated at any time by the Board of Directors of
the Corporation, in which event the rights of participants to their accrued
benefits shall become nonforfeitable. This Plan may also be amended at any
time by the Board of Directors of the Corporation, except that no such
amendment shall deprive any participant of benefits accrued at the time of
such amendment.
Benefits payable under this Plan shall not be funded and shall be made
out of the general funds of the Corporation; provided, however, that the
Corporation reserves the right to establish a trust fund as an alternate
source of benefits payable under the Plan and to the extent payments are
made from such trust, such payments will satisfy the Corporation's
obligations under this Plan.
No right to payment or any other interest under this Plan may be
alienated, sold, transferred, pledged, assigned, or made subject to
attachment, execution, or levy of any kind.
Nothing in this Plan shall be construed as giving any employee the
right to be retained in the employ of the Corporation. The Corporation
expressly reserves the right to dismiss any employee at any time without
regard to the effect which such dismissal might have upon him under the
Plan.
This Plan shall be construed, administered and enforced according to
the laws of the State of New York.
VIII. Effective Date
--------------
This Plan shall be effective as of October 17, 1990, upon its adoption
by the Board of Directors of The Dun & Bradstreet Corporation.
1982 KEY EMPLOYEES STOCK OPTION PLAN
FOR
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
1. Purpose of the Plan
The purpose of the Plan is to aid The Dun & Bradstreet Corporation
(herein called the "Company") and its subsidiaries in securing and retaining key
employees of outstanding ability and to motivate such employees to exert their
best efforts on behalf of the Company and its subsidiaries by providing
incentive through the award of stock options and stock appreciation rights. The
Company expects that it will benefit from the added interest which such key
employees will have in the welfare of the Company as a result of their
proprietary interest in the Company's success.
2. Stock Subject to the Plan
The total number of shares of Common Stock of the Company which may be
issued under the Plan is 7,600,000. The shares may consist, in whole or in part,
of unissued shares or treasury shares. Issuance of shares of Common Stock upon
exercise of an option or reduction of the number of shares of Common Stock
subject to an option upon exercise of a stock appreciation right shall reduce
the total number of shares of Common Stock available under the Plan. Shares
which are subject to unexercised stock options which terminate or lapse may be
optioned again under the Plan.
3. Administration
The Board of Directors of the Company shall appoint an Executive
Compensation and Stock Option Committee (herein called the "Committee")
consisting of at least three members of the Board of Directors who shall
administer the Plan and serve at the pleasure of the Board. Each member of the
Committee shall not be eligible to participate in the Plan and shall not at any
time within one year prior to appointment have been eligible for selection as a
person to whom stock may have been allocated or to whom stock options or stock
appreciation rights of the Company or any of its affiliates may have been
granted pursuant to the Plan or any other plan of the Company or its affiliates.
The Committee shall have the authority, consistent with the Plan, to determine
the provisions of the stock options and stock appreciation rights to be granted,
to interpret the Plan and the stock options and the stock appreciation rights
granted under the Plan, to adopt, amend and rescind rules and regulations for
the administration of the Plan, the stock options and the stock appreciation
rights and generally to conduct and administer the Plan and to make all
determinations in connection therewith which may be necessary or advisable, and
all such actions of the Committee shall be binding upon all participants. The
Committee shall require payment of any amount the Company may determine to be
necessary to withhold for federal, state or local taxes as a result of the
exercise of a stock option or a stock appreciation right. Fair market value of
the Common Stock as of a given date shall be determined in accordance with
procedures established by the Committee.
4. Eligibility
Key employees (but not members of the Committee and any person who
serves only as a director) of the Company and its subsidiaries (within the
meaning of Section 425(f) of the Internal Revenue Code of 1954, as amended (the
"Code")), who are from time to time responsible for the management, growth and
protection of the business of the Company and its subsidiaries, are eligible to
be granted stock options or stock appreciation rights under the Plan. The
participants under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible, and the Committee
shall determine, in its sole discretion, the number of shares to be covered by
the stock options or stock appreciation rights or both granted to each
participant. An employee may not be granted a stock option, however, if at the
time such option is to be granted, such employee owns stock of the Company or
any of its subsidiaries possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any such subsidiary. For
purposes of the preceding sentence, the attribution rules of stock ownership set
forth in Section 425(d) of the Code shall apply. The granting of a stock option
or stock appreciation right under the Plan shall impose no obligation on the
Company or any subsidiary to continue the employment of an optionee and shall
not lessen or affect the right to terminate the employment of an optionee.
5. Limitations
No stock option may be granted under the Plan after January 19, 1992,
but stock options theretofore granted may extend beyond that date.
6. Terms and Conditions of Stock Options
Stock options granted under the Plan shall be, as determined by the
Committee, non-qualified, incentive or other stock options for federal income
tax purposes, as evidenced by option grants, and shall be subject to the
foregoing and the following terms and conditions and to such other terms and
conditions, not inconsistent therewith, as the Committee shall determine:
(a) Option Price. The option price per share shall be determined
by the Committee, but shall not be less than 100% of the fair market
value of the Common Stock on the date an option is granted.
(b) Exercisability. Stock options granted under the Plan shall
be exercisable at such time and upon such terms and conditions as may
be determined by the Committee, but in no event shall an option be
exercisable more than ten years after the date it is granted.
(c) First Year Non-Exercisability. Except as provided in
Paragraph 9 of the Plan, no stock option shall
be exercisable during the year ending on the first anniversary date of
the granting of the option.
(d) Limitation on Incentive Stock Options. The aggregate fair
market value (determined as of the time the options are granted) of the
stock with respect to which incentive stock options may be exercised
for the first time by any optionee in any calendar year shall not
exceed $100,000. This limitation shall apply to incentive stock options
granted after December 31, 1986 under all stock option plans of the
optionee's employer corporation and its parent and subsidiary
corporations, if any.
(e) Exercise of Stock Options. Except as otherwise provided in
the Plan or the option, a stock option may be exercised for all, or
from time to time any part, of the shares for which it is then
exercisable. The purchase price for the shares as to which an option is
exercised shall be paid to the Company in full at the time of exercise
at the election of the optionee (i) in cash, (ii) in shares of Common
Stock of the Company having a fair market value equal to the option
price for the shares being purchased and satisfying such other
requirements as may be imposed by the Committee or (iii) partly in cash
and partly in such shares of Common Stock of the Company. The Committee
may permit the optionee to elect, subject to such terms and conditions
as the Committee shall determine, to have the number of shares
deliverable to the optionee as a result of the exercise reduced by a
number sufficient to pay the amount the Company determines to be
necessary to withhold for federal, state or local taxes as a result of
the exercise of the option, up to the amount calculated by applying the
optionee's maximum marginal tax rate. No optionee shall have any rights
to dividends or other rights of a shareowner with respect to shares
subject to an option until the optionee has given written notice of
exercise of the option, paid in full for such shares and, if requested,
given the representation described in Paragraph 6(i) of the Plan.
(f) Exercisability Upon Termination of Employment by Death. If
an optionee's employment by the Company or a subsidiary terminates by
reason of death one year or more after the date of grant of a stock
option, the option thereafter may be exercised, during the three years
after the date of death or the remaining stated period of the option,
whichever period is shorter, to the extent to which such option was
exercisable at the time of death or thereafter would become exercisable
during the three-year period after the date of death in accordance with
its terms.
(g) Exercisability Upon Termination of Employment by Disability
or Retirement. If an optionee's employment by the Company or a
subsidiary terminates by reason of disability or retirement one year or
more after the date of grant of an option, the option thereafter may be
exercised, during the five years after the date of such termination of
employment or the remaining stated period of the option, whichever
period is shorter, to the extent to which such option was exercisable
at the time of such termination of employment or thereafter would
become exercisable during such period in accordance with its terms;
provided, however, that if the optionee dies within a period of five
years after such termination of employment, any unexercised stock
option may be exercised thereafter, during either (1) the period ending
on the later of (i) five years after such termination of employment and
(ii) one year after the date of death or (2) the period remaining in
the stated term of the option, whichever period is shorter, to the
extent to which such option was exercisable at the time of his death or
thereafter would become exercisable during the remainder of the
five-year period after such termination of employment in accordance
with its terms. For purposes of this Section 6, "retirement" shall mean
termination of employment with the Company or a subsidiary after the
optionee has attained age 55 and completed ten or more years of
employment; or after the optionee has attained age 65, regardless of
the length of such optionee's employment. An optionee shall not be
considered disabled for purposes of this Section 6, unless he or she
furnishes such medical or other evidence of the existence of the
disability as the Committee, in its sole discretion, may require.
(h) Effect of Other Termination of Employment. If a
participant's employment terminates for any reason, other than
disability, death or retirement one year or more after the date of
grant of a stock option or stock appreciation right, each stock option
and stock appreciation right held by such participant shall thereupon
terminate.
(i) Additional Agreements of Optionee and Restrictions on
Transfer. The Committee may require each person purchasing shares
pursuant to exercise of a stock option to represent to and agree with
the Company in writing that the shares are being acquired without a
view to distribution thereof. The certificates for shares so purchased
may include any legend which the Committee deems appropriate to reflect
any restrictions on transfers. The Committee also may impose, in its
discretion, as a condition of any option, any restrictions on the
transferability of shares acquired through the exercise of such option
as it may deem fit. Without limiting the generality of the foregoing,
the Committee may impose conditions restricting absolutely the
transferability of shares acquired through the exercise of options for
such periods as the Committee may determine and, further, in the event
the optionee's employment by the Company or a subsidiary terminates
during the period in which such shares are nontransferable, the
optionee may be required, if required by the related option agreement,
to sell such shares back to the Company at such price and on such other
terms as the Committee may have specified in the option agreement.
(j) Nontransferability of Stock Options. A stock option shall
not be transferable by the optionee otherwise than by will or by the
laws of descent and distribution. During the lifetime of an optionee an
option shall be exercisable only by the optionee. An option exercisable
after the death of an optionee may be exercised by the legatees,
personal representatives or distributees of the optionee.
7. Terms and Conditions of Stock Appreciation Rights
(a) Grants. The Committee also may grant stock appreciation rights in
connection with stock options granted under the Plan, either at the time of
grant of options or subsequently. Stock appreciation rights shall cover the same
shares covered by an option (or such lesser number of shares of Common Stock as
the Committee may determine) and shall be subject to the same terms and
conditions as the option except for such additional limitations as are
contemplated by this Paragraph 7 (or as may be included in a stock appreciation
right granted hereunder).
(b) Terms. Each stock appreciation right shall entitle an optionee to
surrender to the Company an unexercised option, or any portion thereof, and to
receive from the Company in exchange therefor an amount equal to the excess of
the fair market value on the exercise date of one share of Common Stock over the
option price per share times the number of shares covered by the option, or
portion thereof, which is surrendered. The date a notice of exercise is received
by the Company shall be the exercise date. Payment shall be made in shares of
Common Stock or in cash, or partly in shares and partly in cash, valued at such
fair market value, all as shall be determined by the Committee. Stock
appreciation rights may be exercised from time to time upon actual receipt by
the Company of written notice of exercise stating the number of shares of Common
Stock subject to an exercisable option with respect to which the stock
appreciation right is being exercised. No fractional shares of Common Stock will
be issued in payment for stock appreciation rights, but instead cash will be
paid for a fraction or, if the Committee should so determine, the number of
shares will be rounded downward to the next whole share.
(c) Limitations on Exercisability. The Committee shall impose such
conditions upon the exercisability of stock appreciation rights as will result,
except upon the occurrence of an event contemplated by limited stock
appreciation rights granted pursuant to Paragraph 7(d) or contemplated by the
provisions of Paragraph 9, in the amount to be charged against the Company's
consolidated income by reason of stock appreciation rights not to exceed, in any
one calendar year, two percent of the Company's prior calendar year's
consolidated income before income taxes. The Committee also may impose, in its
discretion, such other conditions upon the exercisability of stock appreciation
rights as it may deem fit.
(d) Limited Stock Appreciation Rights. The Committee may grant limited
stock appreciation rights which are exercisable upon the occurrence of specified
contingent events. Such stock appreciation rights may provide for a different
method of determining appreciation, may specify that payment will be made only
in cash and may provide that related stock options or stock appreciation rights
or both are not exercisable while such limited stock appreciation rights are
exercisable. Unless the context otherwise requires, whenever the term "stock
appreciation right" is used in the Plan, such term shall include limited stock
appreciation rights.
8. Transfers and Leaves of Absence
For purposes of the Plan: (a) a transfer of an employee from the
Company to a 50% or more owned subsidiary, partnership, venture or other
affiliate (whether or not incorporated) or vice versa, or from one such
subsidiary, partnership, venture or other affiliate to another, (b) a leave of
absence, duly authorized by the Company, for military service or sickness or for
any other purpose approved by the Company if the period of such leave does not
exceed 90 days, or (c) a leave of absence in excess of 90 days, duly authorized
in writing by the Company, provided the employee's right to re-employment is
guaranteed either by statute or by contract, shall not be deemed a termination
of employment under the Plan.
9. Adjustments Upon Changes in Capitalization or Other Events
Upon changes in the Common Stock of the Company by reason of a stock
dividend, stock split, reverse split, recapitalization, merger, consolidation,
combination or exchange of shares, separation, reorganization or liquidation,
the number and class of shares available under the Plan as to which stock
options or stock appreciation rights may be granted, the number and class of
shares under each option and the option price per share, and the terms of stock
appreciation rights shall be correspondingly adjusted by the Committee, such
adjustments to be made in the case of outstanding options without change in the
total price applicable to such options. In the event of a merger, consolidation,
combination, reorganization or other transaction in which the Company will not
be the surviving corporation, an optionee shall be entitled to options on that
number of shares of stock in the new corporation which the optionee would have
received had the optionee exercised all of the unexercised options available to
the optionee under the Plan, whether or not then exercisable, at the instant
immediately prior to the effective date of such transaction, and if such
unexercised options had related stock appreciation rights the optionee also will
receive new stock appreciation rights related to the new options. Thereafter,
adjustments as provided above shall relate to the options or stock appreciation
rights of the new corporation. Except as otherwise specifically provided in the
stock option or stock appreciation right, in the event of a Change in Control,
merger, consolidation, combination, reorganization or other transaction in which
the shareowners of the Company will receive cash or securities (other than
common stock) or in the event that an offer is made to the holders of Common
Stock of the Company to sell or exchange such Common Stock for cash, securities
or stock of another corporation and such offer, if accepted, would result in the
offeror becoming the owner of (a) at least 50% of the outstanding Common Stock
of the Company or (b) such lesser percentage of the outstanding Common Stock
which the Committee in its sole discretion determines will materially adversely
affect the market value of the Common Stock after the tender or exchange offer,
the Committee shall, prior to the shareowners' vote on such transaction or prior
to the expiration date (without extensions) of the tender or exchange offer, (i)
accelerate the time of exercise so that all stock options and stock appreciation
rights which are outstanding shall become immediately exercisable in full
without regard to any limitations of time or amount otherwise contained in the
Plan or the options or stock appreciation rights and/or (ii) determine that the
options and stock appreciation rights shall be adjusted and make such
adjustments by substituting for Common Stock of the Company subject to options
and stock appreciation rights, common stock of the surviving corporation or
offeror if such stock of such corporation is publicly traded or, if such stock
is not publicly traded, by substituting common stock of a parent of the
surviving corporation or offeror if the stock of such parent is publicly traded,
in which event the aggregate option price shall remain the same and the number
of shares subject to option shall be the number of shares which could have been
purchased on the closing day of such transaction or the expiration date of the
offer with the proceeds which would have been received by the optionee if the
option had been exercised in full prior to such transaction or expiration date
and the optionee had exchanged all of such shares in the transaction or sold or
exchanged all of such shares pursuant to the tender or exchange offer, and if
any such option has related stock appreciation rights, the stock appreciation
rights shall likewise be adjusted. No optionee shall have any right to prevent
the consummation of any of the foregoing acts affecting the number of shares
available to the optionee, but the optionee's remedy shall be limited to a
determination by an appropriate court of the number of shares or cash to which
the optionee shall thereafter be entitled and appropriate orders for the
issuance of such shares or payment of such cash. For purposes of this Paragraph
9, "Change in Control" means (i) any "person", as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any corporation
owned, directly or indirectly, by the shareowners of the Company in
substantially the same proportion as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (i), (iii), or (iv) of
this sentence) whose election by the Board or nomination for election by the
Company's shareowners was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof; (iii) the
shareowners of the Company approve a merger or consolidation of the Company with
any other company, other than (1) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (2) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of the Company's then outstanding
securities; or (iv) the shareowners of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
10. Use of Proceeds
Proceeds from the sale of shares of Common Stock pursuant to exercise
of stock options granted under the Plan shall constitute general funds of the
Company.
11. Amendments
The Board of Directors may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair the
rights of any optionee under any option theretofore granted, without the
optionee's consent, or which, without the approval of the shareowners of the
Company, would:
(a) Except as is provided in Paragraph 9 of the Plan, increase
the total number of shares reserved for the purposes of the Plan.
(b) Decrease the option price to less than 100% of fair market
value on the date of grant of an option.
(c) Change the employees (or class of employees) eligible to
receive stock options under the Plan.
(d) Materially increase the benefits accruing to employees
participating under the Plan.
12. Effectiveness of the Plan
The Plan shall be submitted within one year of the date of its adoption
to the shareowners of the Company for their approval, and if not so approved
within that period, the Plan and all options and stock appreciation rights
granted hereunder shall be void and of no force or effect.
THE DUN & BRADSTREET EXECUTIVE TRANSITION PLAN
The Dun & Bradstreet Corporation (the "Company") wishes to
define those circumstances under which it will provide assistance to an Eligible
Employee in the event of his or her Eligible Termination (as such terms are
defined herein). Accordingly, the Company hereby establishes The Dun &
Bradstreet Executive Transition Plan (the "Plan").
1 - DEFINITIONS
-----------
1.1 "Administrative Committee" shall mean a committee of
Company management employees heretofore established by the Committee.
1.2 "Cause" shall mean (a) willful malfeasance or willful
misconduct by the Eligible Employee in connection with his or her employment,
(b) continuing failure to perform such duties as are requested by any
employee to whom the Eligible Employee reports or the Company's board
of directors, (c) failure by the Eligible Employee to observe material
policies of the Company applicable to the Eligible Employee or (d) the
commission by an Eligible Employee of (i) any felony or (ii) any misdemeanor
involving moral turpitude.
1.3 "Committee" shall mean the Executive Compensation and Stock
Option Committee of the Board of Directors of the Company.
1.4 "Eligible Employee" shall mean the Chief Executive Officer
of the Company and such other executive officers of the Company or its
affiliates as are designated in writing by the Chief Executive Officer.
1.5 "Eligible Termination" shall mean (a) an involuntary
termination of employment with the Company by reason of a reduction in force
program, job elimination or unsatisfactory performance in the execution of
an Eligible Employee's duties or (b) a resignation mutually agreed to in
writing by the Company and the Eligible Employee. Notwithstanding the
foregoing, an Eligible Termination shall not include (w) a unilateral
resignation, (x) a termination by the Company for
Cause, (y) a termination as a result of a sale (whether in whole or in part, of
stock or assets), merger or other combination, spinoff, reorganization or
liquidation, dissolution or other winding up or other similar transactions
involving the Company or (z) any termination where an offer of employment is
made to the Eligible Employee of a comparable position at the Company
concurrently with his or her Eligible Termination.
1.6 "Salary" shall mean an Eligible Employee's annual base
salary at the time his or her employment terminates, except as otherwise
provided in Schedule A hereto.
1.7 "Severance and Release Agreement" shall mean an agreement
signed by the Eligible Employee substantially in the form attached hereto as
Exhibit 1. Notwithstanding the foregoing, the Company may, by action of its
chief human resources officer or chief legal counsel, modify the form of
Severance and Release Agreement to be signed by any Eligible Employee in a
manner approved by the Administrative Committee.
2 - SEVERANCE BENEFITS
------------------
2.1 Subject to the provisions of this Section 2, in the event
of an Eligible Termination, an Eligible Employee shall be entitled to receive
from the Company the benefits set forth on Schedule A hereto.
2.2 The grant of severance benefits pursuant to Section 2.1
hereof is conditioned upon an Eligible Employee's (a) signing a Severance
and Release Agreement and the expiration of any revocation period set forth
therein and, (b) relinquishment of any right to benefits under the Dun &
Bradstreet Career Transition Plan.
2.3 Notwithstanding any other provision contained herein, the
Chief Executive Officer of the Company may, at any time, take such action as
such officer, in such officer's sole discretion, deems appropriate to reduce or
increase by any amount the benefits otherwise payable to an Eligible Employee
pursuant to Schedule A or otherwise modify the terms and conditions applicable
to an Eligible Employee under this Plan provided that the Chief Executive
Officer reports any reduction or increase in benefits or other modification of
the terms and conditions hereof to the Committee and provided further that with
respect to benefits payable, or other modifications applicable, to the Chief
Executive Officer, only the Committee may take such action. Benefits granted
hereunder may not exceed an amount nor be paid over a period which would cause
the Plan to be other than a "welfare benefit plan" under section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
2.4 In the event the Company, in its sole discretion, grants
an Eligible Employee a period of inactive employee status, then, in such event,
any amounts paid to such Eligible Employee during any such period shall offset
the benefits payable under this Plan. For this purpose, a period of inactive
employee status shall mean the period beginning on the date such status
commences (of which the Eligible Employee shall be notified) and ending on the
date of such Eligible Employee's termination of employment.
3 - AMENDMENT AND TERMINATION
-------------------------
3.1 The Company reserves the right to terminate the Plan at
any time and without any further obligation by action of its board of
directors or such other person or persons to whom the board properly delegates
such authority.
3.2 The Company shall have the right to modify or amend the
terms of the Plan at any time, or from time to time, to any extent that it may
deem advisable by action of its board of directors, the Committee or such other
person or persons to whom the board or the Committee properly delegates such
authority.
3.3 All modifications of or amendments to the Plan shall be
in writing.
4 - ADMINISTRATION OF THE PLAN
--------------------------
4.1 The Committee shall be the Plan Administrator and shall
have the exclusive right, power and authority to:
(a) interpret, in its sole discretion, any and all of the
provisions of the Plan;
(b) establish a claims and appeals procedures; and
(c) consider and decide conclusively any questions
(whether of fact or otherwise) arising
in connection with the administration of the Plan
or any claim for severance
benefits arising under the Plan.
Any decision or action of the Committee pursuant to this Section 4.1 shall be
conclusive and binding on any affected person.
4.2 The Committee may, in its sole discretion, cause the
Administrative Committee or its designee to function as the Committee for
purposes of this section 4.
4.3 The Company shall indemnify any individual who is a
director, officer or employee of the Company or any affiliate, or his or her
heirs and legal representatives, against all liability and reasonable expense,
including counsel fees, amounts paid in settlement and amounts of judgments,
fines or penalties, incurred or imposed upon him or her in connection
with any claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, in connection with his or her duties with
respect to the Plan, provided that any act or omission giving rise to such
claim, action, suit or proceeding does not constitute willful misconduct or is
not performed or omitted in bad faith.
5 - MISCELLANEOUS
5.1 Neither the establishment of the Plan nor any action of
the Company, the Committee, or any fiduciary shall be held or construed to
confer upon any person any legal right to continue employment with the Company.
The Company expressly reserves the right to discharge any employee whenever the
interest of the Company, in its sole judgment, may so require, without any
liability on the part of the Company, the Committee, or any fiduciary.
5.2 Benefits payable under the Plan shall be paid out of the
general assets of the Company or an affiliate. The Company need not fund the
benefits payable under this Plan; however, nothing in this Section 5.2
shall be interpreted as precluding the Company from funding or setting aside
amounts in anticipation of paying such benefits. Any benefits payable to an
Eligible Employee under this Plan shall represent an unsecured claim by such
Eligible Employee against the general assets of the Company that employed such
Eligible Employee.
5.3 The Company shall deduct from the amount of any severance
benefits payable hereunder the amount required by law to be withheld for the
payment of any taxes and any other amount, properly to be withheld.
5.4 Benefits payable under the Plan shall not be subject to
assignment, alienation, transfer, pledge, encumbrance, commutation or
anticipation by the Eligible Employee. Any attempt to assign, alienate,
transfer, pledge, encumber, commute or anticipate Plan benefits shall be void.
5.5 This Plan shall be interpreted and applied in accordance
with the laws of the State of New York, except to the extent superseded by
applicable federal law.
5.6 This Plan will be of no force or effect to the extent
superseded by foreign law.
5.7 This Plan supersedes any and all prior severance
arrangements, policies, plans or practices of the Company (whether written or
unwritten). Notwithstanding the preceding sentence, the Plan does not affect
the severance provisions of any written individual employment contracts
or written agreements between an Eligible Employee and the Company.
Benefits payable under the Plan shall be offset by any other severance or
termination payment made by the Company including, but not limited to,
amounts paid pursuant to any agreement or law.
5.8 This Plan shall be effective as of May 17, 1995.
Schedule A
An Eligible Employee entitled to benefits hereunder shall, subject to section
2 of the Plan, receive the following:
1 Salary Continuation
The Eligible Employee shall receive 104 weeks of Salary
continuation, provided, however, that for purposes of determining the Salary
continuation amount, in the event the Eligible Employee has incurred an Eligible
Termination other than by reason of unsatisfactory performance, "Salary" shall
include the Eligible Employee's guideline bonus opportunity under The Dun &
Bradstreet Corporation Corporate Management Incentive Plan or other annual bonus
plan for the year of termination, payment of which will be prorated annually
over a period equal to the number of weeks of Salary continuation (the "Salary
Continuation Period") and made at the same time as other Salary continuation
amounts. Salary continuation hereunder shall be paid at the times the Eligible
Employee's Salary would have been paid if employment had not terminated, over
the Salary Continuation Period. In the event the Eligible Employee performs
services for an entity other than the Company or a Participating Company during
the Salary Continuation Period, such employee shall notify the Company on or
prior to the commencement thereof and, as soon as practicable thereafter,
receive one-half the remaining amount of his or her Salary continuation payments
in a lump sum. No further Salary continuation payments shall be made hereunder
and the Salary Continuation Period shall end upon the commencement of such
services. In the event the Eligible Employee fails to notify the Company of the
performance of such services on or prior to the commencement thereof, the
Eligible Employee shall not be entitled to any further Salary continuation
payments hereunder, the Salary Continuation Period shall end and any amounts
previously paid to the Eligible Employee pursuant to the Plan shall be
immediately repaid to the Company. For purposes of this Schedule A, to "perform
services" shall mean employment or services as a full-time employee, partner,
associate, agent or otherwise on behalf of any person, principal, partnership,
firm or corporation (other than the Company or a Participating Company). All
Salary continuation payments shall cease upon reemployment by the Company or a
Participating Company. For purposes of this paragraph 1, a "Participating
Company" shall mean the Company or any other affiliated entity more than 50% of
the voting interests of which are owned, directly or indirectly, by the Company
and which has elected to participate in The Dun & Bradstreet Corporation Career
Transition Plan.
2 Welfare Benefit Continuation
Medical, dental and life insurance benefits shall be provided
throughout the Salary Continuation Period at the levels in effect for the
Eligible Employee immediately prior to termination of employment but in no event
greater than the levels in effect for active employees generally during the
Salary Continuation Period, provided that the Eligible Employee shall pay the
employee portion of any required premium payments at the level in effect for
employees generally of the Company for such benefits. For purposes of
determining an Eligible Employee's entitlement to continuation coverage as
required by Title I, Subtitle B, Part 6 of ERISA, such employee's 18 month or
other period of coverage shall commence on his or her termination of employment.
3 Annual Bonus Payment
Subject to the provisions of this paragraph 3, a cash bonus
for the calendar year of termination may be paid in an amount equal to the
actual bonus which would have been payable to the Eligible Employee under The
Dun & Bradstreet Corporation Corporate Management Incentive Plan or other annual
bonus plan (the "Incentive Plan") had such employee remained employed through
the end of the year of such termination multiplied by a fraction the numerator
of which is the number of full months of employment during the calendar year of
termination and the denominator of which is 12. Such bonus shall be payable at
the time otherwise payable under the Incentive Plan had employment not
terminated. Notwithstanding the foregoing, no amount shall be paid under this
paragraph in the event the Eligible Employee incurred an Eligible Termination by
reason of unsatisfactory performance. The foregoing provisions of this paragraph
3 shall be appropriately modified in the case of any plan not on a calendar year
basis.
4 Long Term Awards
Cash payments shall be made to an Eligible Employee as set
forth in this paragraph in respect of "Units" (as such term is defined in the
Key Employees Performance Unit Plan for the Dun & Bradstreet Corporation and
Subsidiaries (the "PUP")) otherwise payable under the PUP had the employee
remained employed through the end of the applicable "Award Period" (as defined
in the PUP) in the event the Eligible Employee was employed by the Company for
at least 18 consecutive months of any such Award Period. In such event, cash
payments shall be made to an Eligible Employee in amounts equal to the value of
(i) the Units, as earned, and (ii) the restricted stock match, otherwise payable
under the PUP had the employee remained employed through the end of the
applicable Award Period multiplied by a fraction the numerator of which is the
number of full months of employment with the Company from the beginning of the
Award Period to termination of employment, and the denominator of which is the
full number of months in the Award Period. Such payments shall be made at the
times the Units in respect of which such payments are made would otherwise be
payable under the PUP had employment not terminated. Notwithstanding the
foregoing, no amounts shall be paid under this paragraph in the event the
Eligible Employee incurred an Eligible Termination by reason of unsatisfactory
performance. Nothing contained herein shall reduce any amounts otherwise
required to be paid under the PUP except to the extent such amounts are paid
hereunder.
5 Death
Upon the death of an Eligible Employee during the Salary
Continuation Period, the benefits described in paragraphs 1, 3 and 4 of this
Schedule shall continue to be paid to his or her estate, as applicable, at the
time or times otherwise provided for herein.
6 Cash Equivalency Payment
The Eligible Employee shall receive, as soon as practicable
following the date of termination, an amount in cash equal to the fair market
value on such date of termination of the number of shares of restricted Company
common stock then held by such employee. For purposes of this paragraph 6, the
fair market value of Company common stock shall equal the closing price of such
stock on the New York Stock Exchange composite tape on the date of termination
or, if such date is not a trading day, on the trading day immediately prior
thereto. Notwithstanding the foregoing, no amounts shall be paid under this
paragraph in the event the Eligible Employee incurred an Eligible Termination by
reason of unsatisfactory performance.
7 Other Benefits
The Eligible Employee shall be entitled to such executive
outplacement services during the Salary Continuation Period as shall be provided
by the Company. During the Salary continuation period, financial
planning/counseling shall be afforded to the Eligible Employee to the same
extent afforded immediately prior to termination of employment in the event the
Eligible Employee incurred an Eligible Termination other than by reason of
unsatisfactory performance.
8 No Further Grants, Etc.
Following an Eligible Employee's termination of employment, no
further grants, awards, contributions, accruals or continued participation
(except as otherwise provided for herein) shall be made to or on behalf of such
employee under any plan or program maintained by the Company including, but not
limited to, the Incentive Plan, the PUP or any qualified or nonqualified
retirement, profit sharing, stock option or restricted stock plan of the
Company. Any unvested or unexercised options, unvested restricted stock and all
other benefits under any plan or program maintained by the Company (including,
but not limited to, the Incentive Plan, the PUP or any qualified or nonqualified
retirement, profit sharing, stock option or restricted stock plan) which are
held or accrued by an Eligible Employee at the time of his or her termination of
employment, shall be treated in accordance with the terms of such plans and
programs under which such options, restricted stock or other benefits were
granted or accrued.
Exhibit 1
SEVERANCE AGREEMENT AND RELEASE
THIS SEVERANCE AGREEMENT AND RELEASE, made by and between
(hereinafter referred to as "Employee"), and The Dun & Bradstreet Corporation
(hereinafter deemed to include its worldwide subsidiaries and affiliates and
referred to as "the Company").
WITNESSETH THAT:
WHEREAS, Employee has been employed by the Company since the
date specified in the Appendix; and
WHEREAS, the parties to this Agreement desire to enter into an
agreement in order to provide certain benefits and salary continuation to
Employee;
NOW, THEREFORE, in consideration of the mutual covenants and
promises hereinafter provided and of the actions taken pursuant thereto, the
parties agree as follows:
(1) Employee has resigned from the positions with the Company
specified in the Appendix, and from any committees of which Employee is a
member, effective on the date set forth in the Appendix.
(2) Effective on the date set forth in the Appendix, Employee
will incur an "Eligible Termination" under The Dun & Bradstreet Executive
Transition Plan (the "Plan"), a summary plan description of which Employee
hereby acknowledges receipt, and will, accordingly, be entitled to the benefits
set forth therein subject to the terms and conditions of such Plan. A summary of
the benefits to which Employee is entitled under the Plan is set forth in the
Appendix.
(3) Through the Termination Date specified in the Appendix,
Employee will be reasonably available to consult on matters, and will cooperate
fully with respect to any claims, litigations or investigations, relating to the
Company. No reimbursement for expenses incurred after the commencement of a
period of inactive employee status, or if there is no such period, after
termination of employment, shall be made to Employee unless authorized in
advance by the Company. A period of inactive employee status means the period
beginning on the date such status commences (of which Employee will be notified)
and ending on the date of Employee's termination of employment.
(4) Employee agrees that until the Termination Date Employee
will not become a stockholder (unless such stock is listed on a national
securities exchange or traded on a daily basis in the over-the-counter market
and the Employee's ownership interest is not in excess of 2% of the company
whose shares are being purchased), employee, officer, director or consultant of
or to a corporation, or a member or an employee of or a consultant to a
partnership or any other business or firm, which competes with any of the
businesses owned or operated by the Company; nor if Employee becomes associated
with a company, partnership or individual which company, partnership or
individual acts as a consultant to businesses in competition with the Company
will Employee provide services to such competing businesses. The restrictions
contained in this paragraph shall apply whether or not Employee accepts any form
of compensation from such competing entity or consultant. Employee also agrees
that until the Termination Date Employee will not recruit or solicit any
customers of the Company to become customers of any business entity which
competes with any of the businesses owned or operated by the Company. In
addition, Employee agrees that until the Termination Date neither Employee nor
any company or entity Employee controls or manages, shall recruit or solicit any
employee of the Company to become an employee of any business entity.
(5) If Employee performs services for an entity other than the
Company at any time prior to the Termination Date (whether or not such entity is
in competition with the Company), Employee shall notify the Company on or prior
to the commencement thereof. To "perform services" shall mean employment or
services as a full-time employee, partner, associate, agent or otherwise on
behalf of any person, principal, partnership, firm or corporation. For purposes
of this paragraph 5 only, "Company" shall mean The Dun & Bradstreet Corporation
and any other affiliated entity more than 50% of the voting interests of which
are owned, directly or indirectly, by The Dun & Bradstreet Corporation and which
has elected to participate in The Dun & Bradstreet Career Transition Plan by
action of its board of directors.
(6) Employee agrees that Employee will not directly or
indirectly disclose any proprietary or confidential information, records, data,
formulae, specifications and other trade secrets owned by the Company, whether
oral or written, to any person or use any such information, except pursuant to
court order (in which case Employee will first provide the Company with written
notice of such). All records, files, drawings, documents, models, disks,
equipment and the like relating to the businesses of the Company shall remain
the sole property of the Company and shall not be removed from the premises of
the Company. Employee further agrees to return to the Company any property of
the Company which Employee may have, no matter where located, and not to keep
any copies or portions thereof.
(7) Employee shall not make any derogatory statements about
the Company and shall not make any written or oral statement, news release or
other announcement relating to Employee's employment by the Company or relating
to the Company, its subsidiaries, customers or personnel, which is designed to
embarrass or criticize any of the foregoing.
(8) Employee agrees that in the event of any breach of the
covenants contained in paragraphs 3, 4, 5, 6 or 7 in addition to any remedies
that may be available to the Company, the Company may cease all payments
required to be made to Employee under the Plan and recover all such payments
previously made to Employee pursuant to the Plan. The parties agree that any
such breach would cause injury to the Company which cannot reasonably or
adequately be quantified and that such relief does not constitute in any way a
penalty or a forfeiture.
(9) Employee, for Employee, Employee's family,
representatives, successors and assigns releases and forever discharges the
Company and its successors, assigns, subsidiaries, affiliates, directors,
officers, employees, attorneys, agents and trustees or administrators of any
Company plan from any and all claims, demands, debts, damages, injuries, actions
or rights of action of any nature whatsoever, whether known or unknown, which
Employee had, now has or may have against the Company, its successors, assigns,
subsidiaries, affiliates, directors, officers, employees, attorneys, agents and
trustees or administrators of any Company plan, from the beginning of Employee's
employment to and including the date of this Agreement relating to or arising
out of Employee's employment with the Company or the termination of such
employment other than a claim with respect to a vested right Employee may have
to receive benefits under any plan maintained by the Company. Employee
represents that Employee has not filed any action, complaint, charge, grievance
or arbitration against the Company or any of its successors, assigns,
subsidiaries, affiliates, directors, officers, employees, attorneys, agents and
trustees or administrators of any Company plan.
(10) Employee covenants that neither Employee, nor any of
Employee's respective heirs, representatives, successors or assigns, will
commence, prosecute or cause to be commenced or prosecuted against the Company
or any of its successors, assigns, subsidiaries, affiliates, directors,
officers, employees, attorneys, agents and trustees or administrators of any
Company plan any action or other proceeding based upon any claims, demands,
causes of action, obligations, damages or liabilities which are being released
by this Agreement, nor will Employee seek to challenge the validity of this
Agreement, except that this covenant not to sue does not affect Employee's
future right to enforce appropriately the terms of this Agreement in a court of
competent jurisdiction.
(11) Employee acknowledges that (a) Employee has been advised
to consult with an attorney at Employee's own expense before executing this
Agreement and that Employee has been advised by an attorney or has knowingly
waived Employee's right to do so, (b) Employee has had a period of at least
twenty-one (21) days within which to consider this Agreement, (c) Employee has a
period of seven (7) days from the date that Employee signs this Agreement within
which to revoke it and that this Agreement will not become effective or
enforceable until the expiration of this seven (7) day revocation period, (d)
Employee fully understands the terms and contents of this Agreement and freely,
voluntarily, knowingly and without coercion enters into this Agreement, (e)
Employee is receiving greater consideration hereunder than Employee would
receive had Employee not signed this Agreement and that the consideration
hereunder is given in exchange for all of the provisions hereof and (f) the
waiver or release by Employee of rights or claims Employee may have under Title
VII of the Civil Rights Act of 1964, The Employee Retirement Income Security Act
of 1974, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the Fair Labor Standards Act, the Americans with
Disabilities Act, the Rehabilitation Act, the Worker Adjustment and Retraining
Act (all as amended) and/or any other local, state or federal law dealing with
employment or the termination thereof is knowing and voluntary and, accordingly,
that it shall be a breach of this Agreement to institute any action or to
recover any damages that would be in conflict with or contrary to this
acknowledgement or the releases Employee has granted hereunder. Employee
understands and agrees that the Company's payment of money and other benefits to
Employee and Employee's signing of this Agreement does not in any way indicate
that Employee has any viable claims against the Company or that the Company
admits any liability whatsoever.
(12) This Agreement constitutes the entire agreement of the
parties and all prior negotiations or representations are merged herein. It
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns, heirs and legal representatives but
neither this Agreement nor any rights hereunder shall be assignable by either
party without the other party's consent. In addition, this Agreement supersedes
any prior employment or compensation agreement, whether written, oral or implied
in law or implied in fact between Employee and the Company, other than those
contracts and agreements excepted from the application of section 5.7 of the
Plan pursuant to the terms of such section, which prior agreements are hereby
terminated.
(13) If for any reason any one or more of the provisions of
this Agreement shall be held or deemed to be inoperative, unenforceable or
invalid by a court of competent jurisdiction, such circumstances shall not have
the effect of rendering such provision invalid in any other case or rendering
any other provisions of this Agreement inoperative, unenforceable or invalid.
(14) This Agreement shall be construed in accordance with the
laws of the State of _____________, except to the extent superseded by
applicable federal law.
(15) This Agreement shall terminate in its entirety the
Change in Control Severance Agreement between the Company and
Employee. [USE PROVISION IF APPLICABLE]
IN WITNESS WHEREOF, Employee and The Dun & Bradstreet
Corporation, by its duly authorized agent, have hereunder executed this
Agreement.
Dated:
Employee
<TABLE>
THE DUN & BRADSTREET CORPORATION
Title:
Appendix
Summary of Benefit Entitlements
Under the Dun & Bradstreet
Executive Transition Plan
<CAPTION>
<S> <C>
Employment with
Company Since: ______________________________
Effective Date
of Resignation: ______________________________
Positions Resigned: ______________________________
Effective Date of
Eligible Termination: ______________________________
Termination Date: ______________________________
Salary Continuation: $____ per week for ____ weeks
Welfare Benefit Continuation: [LIST NAMES OF MEDICAL, DENTAL, LIFE PLANS UNDER WHICH
EMPLOYEE COVERED]
Annual Bonus Payment: [x]
12 of the annual bonus otherwise payable to you at time of normal payment.
Long-Term Award: [x]
[y] of the long-term awards otherwise payable to you for the _______ cycles at time of normal payment.
Cash Equivalency Payment:
Executive Outplacement: As provided by the Company.
[Financial Planning/Counseling:]
<FN>
The description of benefits contained in this Appendix is only a
summary and is subject to the terms and conditions of the Plan. Refer
to your summary plan description for more detail.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 385479
<SECURITIES> 52762
<RECEIVABLES> 1451671
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2298438
<PP&E> 1951140
<DEPRECIATION> 1076703
<TOTAL-ASSETS> 5515788
<CURRENT-LIABILITIES> 2208475
<BONDS> 0
0
0
<COMMON> 188417
<OTHER-SE> 994048
<TOTAL-LIABILITY-AND-EQUITY> 5515788
<SALES> 0
<TOTAL-REVENUES> 5415141
<CGS> 0
<TOTAL-COSTS> 4893294
<OTHER-EXPENSES> 57190
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20941
<INCOME-PRETAX> 443716
<INCOME-TAX> 122909
<INCOME-CONTINUING> 320807
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320807
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 1.89
</TABLE>
