<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
R.H. DONNELLEY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[RHDonnelley Logo]
R.H. DONNELLEY CORPORATION
ONE MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
------------------------
To Our Stockholders:
You are cordially invited to attend the Special Meeting (the "Meeting") of
Stockholders of R.H. Donnelley Corporation (the "Company") to be held on August
24, 1998 at 10:00 a.m. local time, at The Rye Town Hilton, 699 Westchester
Avenue, Rye Brook, New York 10573. At the Meeting, you will be asked to vote
upon the proposal set forth in the formal Notice (the "Notice") of the Meeting
which follows this letter.
As set forth in the Notice, the principal item of business to be addressed
at the Meeting is to consider and act upon a proposal to amend the Company's
Restated Certificate of Incorporation (the "Certificate of Incorporation") to
effect a one-for-five reverse stock split of the Company's Common Stock (the
"Common Stock"). This proposal will decrease the number of outstanding shares of
Common Stock from approximately 171.2 million to approximately 34.2 million.
PLEASE NOTE THAT THE REVERSE STOCK SPLIT WILL NOT CHANGE YOUR PROPORTIONATE
EQUITY INTERESTS IN THE COMPANY, EXCEPT AS MAY RESULT FROM THE ELIMINATION OF
FRACTIONAL SHARES.
The Board of Directors believes that the current per share price of the
Company's Common Stock, which results from the Company's separation from The Dun
& Bradstreet Corporation on June 30, 1998, may reduce its marketability.
Furthermore, the Board of Directors also believes that a reverse stock split
could position the Company more attractively with institutional investors who
generally have restrictions on investing in low priced stocks and retail stock
brokers who are generally disinclined to invest in low priced stocks.
The Board of Directors unanimously recommends that the Company's
stockholders approve of the proposal set forth in the Notice. The enclosed Proxy
Statement sets forth more detailed information regarding this proposal. Please
carefully review the information in the Proxy Statement.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS VERY IMPORTANT THAT
YOU MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED
AS SOON AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AT THAT
TIME BY REQUESTING THE RIGHT TO VOTE IN PERSON.
Sincerely,
[Frank R. Noonan Signature]
Frank R. Noonan
Chairman of the Board, President and
Chief
Executive Officer
<PAGE> 3
R.H. DONNELLEY CORPORATION
ONE MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 24, 1998
To the Stockholders of
R.H. Donnelley Corporation
Notice is hereby given that the Special Meeting of Stockholders of R.H.
Donnelley Corporation ("RHD" or the "Company") will be held on August 24, 1998
at 10:00 a.m., local time, at The Rye Town Hilton, 699 Westchester Avenue, Rye
Brook, New York 10573, to consider and act on the following:
1. To consider and approve a proposal to amend the Company's Restated
Certificate of Incorporation (the "Amendment") to effect a one-for-five
reverse stock split of the Company's Common Stock (the "Common Stock")
as a result of which holders of the Common Stock will receive one share
of Common Stock for each five shares of Common Stock owned on the
effective date of the Amendment; and
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on July 27, 1998 will
be entitled to vote at the Special Meeting. A list of such stockholders will be
available at the time and place of meeting and, during the ten days prior to the
meeting, at the Company's executive offices located at One Manhattanville Road,
Purchase, New York 10577.
By Order of the Board of Directors
[Frank R. Noonan Signature]
Frank R. Noonan
Chairman of the Board
Purchase, New York
July 30, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO COMPLETE, SIGN, DATE AND
MAIL THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED
ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS USE BY DELIVERING TO
THE COMPANY A WRITTEN NOTICE OF REVOCATION OR DULY EXECUTED PROXY BEARING A
LATER DATE. ANY STOCKHOLDER WHO HAS EXECUTED A PROXY BUT IS PRESENT AT THE
SPECIAL MEETING AND WHO WISHES TO VOTE IN PERSON MAY DO SO BY REVOKING HIS, HER
OR ITS PROXY AS DESCRIBED IN THE PRECEDING SENTENCE.
<PAGE> 4
R.H. DONNELLEY CORPORATION
ONE MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
------------------------
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of R.H. Donnelley Corporation ("RHD" or the "Company") of
proxies for use at the Special Meeting of Stockholders (the "Special Meeting")
or at any adjournments or postponements thereof. The Special Meeting will be
held on August 24, 1998 at 10:00 a.m., local time, at The Rye Town Hilton, 699
Westchester Avenue, Rye Brook, New York 10573 for the purposes set forth in the
accompanying Notice of Special Meeting of Shareholders.
If a stockholder properly executes and returns the enclosed form of proxy,
it will be voted according to his, her or its instructions. If no instructions
are given, then the proxy will be voted FOR approval of the amendment (the
"Amendment") to the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation") to effect a one-for-five reverse stock split of
the Company's Common Stock (the "Common Stock"), and in the discretion of the
proxies named on the proxy card with respect to any other matters properly
brought before the Special Meeting. Any proxy given by a stockholder may be
revoked by the stockholder at any time before it is voted by written notice to
the Secretary of the Company, by a duly executed proxy bearing a later date, or
by voting in person at the meeting. No appraisal rights exist for any action
proposed to be taken at the Special Meeting.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. The
solicitation of proxies may be made by directors, officers and regular employees
of the Company or any of its subsidiaries personally or by mail, telephone,
facsimile communication or telegraph. No additional compensation will be paid
for such solicitation. In addition, arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to forward proxy
soliciting material to the beneficial owners of stock held of record by such
persons, and the Company will reimburse them for reasonable out-of-pocket
expenses incurred by them in so doing. In addition, the Company has engaged the
services of Innisfree M&A Incorporated to solicit proxies and will pay such
proxy soliciting agent $10,000 plus expenses in connection therewith.
Solicitation by such firm may be by mail, personal interview, telephone, fax or
telegraph.
So far as the management of the Company is aware, stockholders will take
action on no matters other than those described in this Proxy Statement. In the
event that any other matters properly come before the meeting that call for a
vote of stockholders, the persons named as proxies in the enclosed form of proxy
will vote in accordance with their best judgment on such other matters.
The Company is mailing this Proxy Statement and the accompanying form of
proxy to stockholders on or about July 30, 1998.
VOTING
The Board of Directors has fixed the close of business on July 27, 1998 as
the record date (the "Record Date") for determining stockholders entitled to
notice of and to vote at the Special Meeting. On the Record Date, there were
outstanding 171,253,057 shares of the Company's Common Stock, par value $1 per
share. At the Special Meeting, holders of issued and outstanding shares of
Common Stock are entitled to one vote for each share they hold. The presence in
person or by proxy of a majority of the votes entitled to be cast will
<PAGE> 5
constitute a quorum for purposes of conducting business at the Special Meeting.
Shares represented by proxies that are marked "abstain" will be counted as
shares present for purposes of determining the presence of a quorum on all
matters. Proxies relating to "street name" shares that are voted by brokers will
be treated as shares present for purposes of determining the presence of a
quorum on all matters.
The proposal to amend the Certificate of Incorporation requires the
approval of a majority of the shares entitled to vote at the Special Meeting.
Abstentions with respect to Proposal 1 will have the same effect as votes
against such proposal. Additionally, with respect to Proposal 1, broker
non-votes will not be counted. However, such broker non-votes will have the
practical effect of reducing the number of affirmative votes required to achieve
a majority by reducing the total number of shares from which such majority is
calculated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of July 1, 1998 by (i) owners of more than 5% of the
outstanding shares of the Company's Common Stock, (ii) each of the Company's
directors, (iii) each of the Company's named executive officers, and (iv) all
directors and named executive officers of the Company as a group. Except as
indicated in the footnotes to the table, the Company believes that the persons
named in the table have sole voting and investment power with respect to all
shares owned beneficially by them. The mailing address for each of the Company's
directors and executive officers listed below is One Manhattanville Road,
Purchase, NY 10577.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
------------------------------------
AMOUNT BENEFICIALLY PERCENTAGE OF
BENEFICIAL OWNERS OWNED(1) CLASS
- ----------------- ------------------- -------------
<S> <C> <C>
Frank R. Noonan............................................. 1,151,203(2) *
Phillip C. Danford.......................................... 393,048(3) *
Frederick J. Groser......................................... 249,926(4) *
Alexander R. Marasco........................................ 376,645(5) *
David C. Swanson............................................ 173,241(6) *
Diane P. Baker.............................................. 15,000(7) *
William G. Jacobi........................................... 20,578(7) *
Robert J. Kamerschen........................................ 15,000(7) *
Barry Lawson Williams....................................... 15,000(7) *
All Directors and Executive Officers as a Group............. 2,833,722 1.65%
Harris Associates L.P. and its general partner,
Harris Associates, Inc.................................... 17,374,440(8) 10.14%
Two North LaSalle Street,
Ste. 500
Chicago, Illinois 60602-3790
AMVESCAP, PLC and certain of its subsidiaries............... 12,048,320(9) 7.03%
11 Devonshire Square
London EC2M 4YR
England
</TABLE>
- ---------------
* Represents ownership of less than 1%.
(1) The amounts and percentage of the Company's Common Stock beneficially owned
are reported on the basis of rules and regulations of the Securities and
Exchange Commission (the "Commission") governing the determination of
beneficial ownership of securities. Under such rules and regulations, a
person is deemed to be a "beneficial owner" of a security if that person has
or shares "voting power", which includes the power to vote or to direct the
voting of such security, or "investment power", which includes the power to
dispose of or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities which that person has a
right to acquire beneficial ownership of within 60 days. Under these rules
and regulations, more than one person may be deemed a beneficial owner of
2
<PAGE> 6
the same securities and a person may be deemed to be a beneficial owner of
securities in which he has no economic interest.
(2) Includes 1,142,893 shares of the Company's Common Stock which may be
acquired pursuant to options exercisable as of June 30, 1998 or within 60
days thereafter.
(3) Includes 391,268 shares of the Company's Common Stock which may be acquired
pursuant to options exercisable as of June 30, 1998 or within 60 days
thereafter.
(4) Includes 249,359 shares of the Company's Common Stock which may be acquired
pursuant to options exercisable as of June 30, 1998 or within 60 days
thereafter.
(5) Includes 366,543 shares of the Company's Common Stock which may be acquired
pursuant to options exercisable as of June 30, 1998 or within 60 days
thereafter.
(6) Includes 172,188 shares of the Company's Common Stock which may be acquired
pursuant to options exercisable as of June 30, 1998 or within 60 days
thereafter.
(7) Includes (i) options to purchase 7500 shares of the Company's Common Stock,
which options will become exercisable in equal increments on the day before
each of the 1999, 2000 and 2001 Annual Meetings of the Company and (ii) 7500
deferred shares of Company's Common Stock which will vest in equal
increments on the day before each of the 1999, 2000 and 2001 Annual Meetings
of the Company.
(8) Harris Associates L.P. ("Harris") and its sole general partner, Harris
Associates, Inc. ("Harris Inc."), jointly filed a Schedule 13G with the
Commission on February 11, 1998. According to such Schedule 13G, Harris, a
registered investment adviser, had as of December 31, 1997, shared voting
power over 14,903,640 shares of the Company's Common Stock. Of such shares,
Harris had sole dispositive power over 5,171,140 shares and shared
dispositive power over 9,732,500 shares. On April 9, 1998, Harris and Harris
Inc. jointly filed an amendment to their Schedule 13G with the Commission
which reported that as of March 31, 1998 Harris shared voting power over
17,374,440 shares of the Company's Common Stock. Of such shares, Harris had
sole dispositive power over 5,435,440 shares and shared dispositive power
over 11,939,000 shares. The foregoing Schedule 13G and the amendments
thereto related to the common stock of The Dun & Bradstreet Corporation, the
predecessor of the Company. See "Background of and Reasons for the Reverse
Stock Split".
(9) AMVESCAP PLC and its subsidiaries, ADZ, Inc. (a holding company), AIM
Management Group Inc. (a holding company), INVESCO, Inc. (a holding
company), INVESCO North American Holdings, Inc. (a holding company), INVESCO
Capital Management, Inc. (a registered investment adviser), INVESCO Funds
Group, Inc. (a registered investment adviser), INVESCO Management &
Research, Inc. (a registered investment adviser), and INVESCO Realty
Advisers, Inc. (a registered investment adviser), jointly filed a Schedule
13G with the Commission on February 11, 1998. This Schedule 13G reported
that these companies had, as of December 31, 1997, shared voting power and
shared dispositive power over 12,048,320 shares of the Company's Common
Stock. The foregoing Schedule 13G related to the common stock of The Dun &
Bradstreet Corporation, the predecessor of the Company. See "Background of
and Reasons for the Reverse Stock Split".
3
<PAGE> 7
PROPOSAL 1:
THE REVERSE STOCK SPLIT
GENERAL
The Board of Directors has determined that it would be advisable to amend
and restate the Company's Certificate of Incorporation to effect a one-for-five
reverse stock split (the "Reverse Stock Split") of the Company's Common Stock. A
copy of the proposed amendment to the Certificate of Incorporation (the
"Amendment") is attached hereto as Exhibit A. If the Amendment is approved by
the stockholders, each five shares of Common Stock, par value $1 per share, (the
"Old Common Stock") outstanding on the Effective Date (as defined below) will be
converted automatically into one share of new Common Stock, par value $1 per
share, (the "New Common Stock"). To avoid the existence of fractional shares of
New Common Stock, stockholders who would otherwise be entitled to receive
fractional shares of New Common Stock shall receive a cash distribution in lieu
thereof. See "Exchange of Stock Certificates." The "Effective Date" of the
Reverse Stock Split will be the date on which the Amendment is filed with the
Secretary of State of Delaware, which is anticipated to be as soon as
practicable following the date of the Special Meeting.
BACKGROUND OF AND REASONS FOR THE REVERSE STOCK SPLIT
On July 14, 1998, the Board of Directors adopted resolutions approving the
Amendment and directing that the Amendment be placed on the agenda for the
consideration of the stockholders at the Special Meeting.
On December 17, 1997, The Dun & Bradstreet Corporation ("Old D&B"), the
predecessor of the Company, announced its intention to separate itself into two
publicly-traded companies, The Dun & Bradstreet Corporation ("New D&B") and the
Company, by means of a pro rata tax-free distribution (the "Distribution") of
all of New D&B common stock to holders of the Common Stock. On June 3, 1998, Old
D&B's Board of Directors formally approved the Distribution and declared a
dividend payable to each holder of record of Old D&B's common stock at the close
of business on June 17, 1998 of one share of New D&B common stock for each share
of D&B common stock held by such holder at the close of business of June 17,
1998. Prior to the Distribution Old D&B contributed to New D&B all or
substantially all of the businesses which now comprise the New D&B business.
Such businesses had accounted for approximately 84% of Old D&B's revenues and
75% of Old D&B's operating income in 1997. In connection with the Distribution
Old D&B changed its name to the R.H. Donnelley Corporation and Old D&B common
stock became the Common Stock of the Company. The distribution was successfully
completed on June 30, 1998. On June 30, 1998, the last trading day prior to the
Distribution, the closing price per share of the Company's Common Stock on the
New York Stock Exchange (the "NYSE") was $36.00. On July 1, 1998, the first day
of trading post-Distribution, the Common Stock traded at an average price of
$3.1563. Since the pre-Distribution market price of the Company's Common Stock
reflected the present and expected future earnings stream of the entire Old D&B
business (including the Company), the post-Distribution market prices of the
Company's Common Stock have been reduced significantly. From July 1, 1998,
through July 28, 1998, the Common Stock has traded in a range of $2.875 to
$3.937 per share.
Many investors look upon low priced stock as unduly speculative in nature
and, as a matter of policy, avoid investment in such stocks. Such Investors may
believe that low stock prices reflect companies that are of low quality or poor
performers. Accordingly, the Board of Directors believes that the current per
share price of the Common Stock may reduce the effective marketability of the
shares because of the reluctance of many leading brokerage firms to recommend
low priced stock to their clients. Further, various brokerage house policies and
practices tend to discourage individual brokers from dealing in low priced
stocks. Some of those policies and practices pertain to the payment of brokers'
commissions and to time-consuming procedures which function to make the handling
of low priced stocks unattractive to brokers from an economic standpoint.
Additionally, several institutional investors have policies prohibiting them
from holding low priced stock in their own portfolios. In addition, the
structure of trading commissions also tends to have an adverse impact upon
holders of low priced stock because the brokerage commission on a sale of low
priced stock generally represents a higher percentage of the sales price than
the commission on higher priced issues.
4
<PAGE> 8
The Board of Directors believes that the Reverse Stock Split should result
in a stock price of five times the current price range, putting the stock in a
price range where the aforementioned negative perceptions do not exist. As a
result, the Common Stock would be more effectively priced, better reflecting the
underlying equity valuation of the Company.
There can be no assurance, however, that the foregoing will occur or that
the market price of the Common Stock immediately after implementation of the
Reverse Stock Split will increase, and, if it increases, no assurance that such
increase can be maintained for any period of time, or that such market price
will approximate five times the market price before the Reverse Stock Split.
Dissenting stockholders have no appraisal rights under Delaware law or
under the Company's Certificate of Incorporation and Bylaws in connection with
Reverse Stock Split.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT ALL STOCKHOLDERS VOTE FOR THE APPROVAL OF THE AMENDMENT.
EFFECTS OF THE REVERSE STOCK SPLIT
General Effects. If the Amendment is approved by the stockholders, the
principal effect of the Reverse Stock Split will be to decrease the number of
outstanding shares of Common Stock from 171,253,057 shares to approximately
34,250,611 shares, based on share information as of July 27, 1998. The Reverse
Stock Split would not affect the proportionate equity interest in the Company of
any holder of Common Stock, except as may result from the provisions for the
elimination of fractional shares as described below. The Reverse Stock Split
will not affect the registration of the Common Stock under the Exchange Act or
the listing of the Common Stock on the NYSE. The relative rights and preferences
on the New Common Stock will be identical to the relative rights and preferences
of the Old Common Stock.
In order that the Company may avoid the expense and inconvenience of
issuing and transferring fractional shares of New Common Stock, stockholders who
would otherwise be entitled to receive a fractional share of New Common Stock
(the "Fractional Stockholders") shall receive payment in cash in lieu of
receiving a fractional share of New Common Stock. See "Exchange of Stock
Certificates."
The Reverse Stock Split may leave certain stockholders with one or more
"odd lots" of New Common Stock, i.e., stock in amounts of less than 100 shares.
These odd lots may be more difficult to sell or require greater transactions
costs per share to sell, than shares in even multiples of 100.
EFFECT ON STOCK OPTION PLANS
As of July 27, 1998, there were outstanding options to purchase shares and
outstanding grants for the right to purchase shares under the Company's stock
incentive and employee stock option plans relating to an aggregate of
approximately 23.7 million shares of Old Common Stock. On that date
approximately 8.0 million shares of Old Common Stock remained available for
grant under such plans. All of the stock compensation plans of the Company
include provisions for adjustments in the number of shares covered thereby, the
number of shares subject to and the exercise price of outstanding options
granted thereunder, in the event of a reverse stock split by appropriate action
of the Compensation & Benefits Committee of the Company's Board of Directors. If
the Reverse Stock Split is approved and effected, there would be reserved for
issuance upon exercise of all outstanding options and other grants a total of
approximately 4.74 million shares of New Common Stock. Each of the outstanding
options would thereafter evidence the right to purchase 20% of the shares of Old
Common Stock previously covered thereby and the exercise price per share would
be five times the previous exercise price. The number of shares available for
grant under the Company's stock incentive and employee stock purchase plans
would be decreased to approximately 1.60 million shares of New Common Stock.
5
<PAGE> 9
CHANGES IN STOCKHOLDERS' EQUITY
As an additional result of the Reverse Stock Split, the Company's stated
capital, which consists of the par value per share of Common Stock multiplied by
the number of shares of Common Stock issued, will be reduced by approximately
$137,002,445 to $34,250,611 on the Effective Date. Correspondingly, the
Company's capital in excess of par value, which consists of the difference
between the Company's stated capital and the aggregate amount paid to the
Company upon the issuance by the Company of all currently outstanding Common
Stock, will be increased by approximately $137,002,445. The following table
illustrates the principal effects of the Reverse Stock Split discussed in the
preceding paragraphs:
<TABLE>
<CAPTION>
PRIOR TO REVERSE AFTER REVERSE
SPLIT AND AMENDMENT SPLIT AND AMENDMENT
NUMBER OF SHARES OF COMMON STOCK TO CERTIFICATE TO CERTIFICATE
-------------------------------- ------------------- -------------------
<S> <C> <C>
Authorized.............................................. 400,000,000 400,000,000
Outstanding............................................. 171,253,057 34,250,611
Reserved for future issuance under stock compensation
plans................................................. 23,700,000 4,740,000
Available for future issuance by action of the Board of
Directors (after giving effect to the above
reservations)......................................... 205,046,943 361,009,389
</TABLE>
Assuming the Amendment effecting the Reverse Stock Split is approved, the
Amendment will be filed with the Secretary of State of the State of Delaware as
promptly as practicable thereafter. The Amendment and the proposed Reverse Stock
Split would become effective upon the Effective Date.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the federal income tax consequences of the Reverse
Stock Split is based on current law, including the Internal Revenue Code of
1986, as amended (the "Code"), and is for general information only. The tax
treatment of a stockholder may vary depending upon the particular facts and
circumstances of such stockholder. Certain stockholders, including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
non-resident aliens, foreign corporations and persons who do not hold the Common
Stock as a capital asset, may be subject to special rules not discussed below.
ACCORDINGLY, EACH STOCKHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE STOCK
SPLIT, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL OR FOREIGN
INCOME TAX AND OTHER LAWS.
The receipt of shares of New Common Stock (except to the extent that cash
is received in lieu of fractional shares of New Common Stock) in the Reverse
Stock Split will be a nontaxable transaction under the Code for federal income
tax purposes. Consequently, except with respect to cash received in lieu of
fractional shares of New Common Stock, a stockholder receiving shares of New
Common Stock will not recognize either gain or loss with respect to shares of
New Common Stock received as a result of the Reverse Stock Split. In addition,
the aggregate tax basis (excluding the portion of such basis allocable to
fractional shares of New Common Stock) of such stockholder's shares of Old
Common Stock prior to the Reverse Stock Split will carry over as the tax basis
of the stockholder's shares of New Common Stock. Each stockholder will be
required to allocate such stockholder's basis in such stockholder's shares of
Old Common Stock ratably among the total number of shares of New Common Stock
owned following the Reverse Stock Split. The holding period of the shares of New
Common Stock will also include the holding period during which the stockholder
held the Common Stock, provided that such Old Common Stock was held by the
stockholder as a capital asset on the Effective Date.
The receipt by a Fractional Stockholder of cash in lieu of a fractional
share of New Common Stock pursuant to the Reverse Stock Split will be a taxable
transaction for federal income tax purposes. The receipt of cash in lieu of
fractional shares of New Common Stock will generally result in gain or loss to
the Fractional Stockholders measured by the difference between the amount of
cash received and the adjusted basis of the fractional share. Shareholders
owning a substantial interest in the Company, however, should consult their tax
6
<PAGE> 10
advisors as to the possibility of dividend treatment upon the receipt of cash in
lieu of a fractional share pursuant to Section 302 of the Code. Assuming that
the receipt of cash in lieu of a fractional share is not treated as a dividend
and that the Old Common Stock was held by the Fractional Shareholder as a
capital asset on the Effective Date, any such gain or loss will be capital gain
or loss, and will be long term capital gain or loss if on the Effective Date the
shares of Old Common Stock have been held by the Fractional Stockholder for more
than one year.
Based on certain exceptions contained in regulations issued by the Internal
Revenue Service, the Company does not believe that it or Fractional Stockholders
will be subject to backup withholding or information reporting with respect to
the cash distributed to a Fractional Stockholder unless the amount of cash
distributed to the Fractional Shareholder is $20.00 or more.
EXCHANGE OF STOCK CERTIFICATES
If the proposal to implement the Reverse Stock Split is adopted,
stockholders will be required to exchange their stock certificates for new
certificates representing the shares of New Common Stock. Stockholders of record
on the Effective Date will be furnished the necessary materials and instructions
for the surrender and exchange of share certificates at the appropriate time by
the Company's Transfer Agent (the "Transfer Agent"). Stockholders will not have
to pay a transfer fee or other fee in connection with the exchange of
certificates. Stockholders should not submit any certificates until requested to
do so.
As soon as practicable after the Effective Date, the Transfer Agent will
send a letter of transmittal to each stockholder advising such holder of the
procedure for surrendering stock certificates in exchange for new certificates
representing the ownership of New Common Stock. No certificates representing
fractional shares shall be issued. In lieu thereof, a certificate or
certificates evidencing the aggregate of all fractional shares otherwise
issuable (rounded, if necessary, to the next higher whole share) shall be issued
to the Transfer Agent or its nominee, as agent for the accounts of all holders
of Old Common Stock otherwise entitled to have a fraction of a share issued to
them in connection with the Reverse Stock Split. Sales of fractional interests
will be effected by the Transfer Agent as soon as practicable on the basis of
prevailing market prices of the New Common Stock on the NYSE at the time of
sale. After the Effective Date, the Transfer Agent will pay to such stockholders
their pro rata share of the net proceeds derived from the sale of their
fractional interests upon surrender of their stock certificates. No service
charges or brokerage commissions will be payable by stockholders in connection
with the sale of fractional interests, all of which costs will be borne by the
Company.
Until they have surrendered their stock certificates for exchange,
stockholders will not be entitled to receive any dividends or other
distributions that may be declared and payable to holders of record. Upon the
surrender of certificates representing Old Common Stock, certificates
representing New Common Stock together with any such withheld dividends or other
distributions, without interest, will be delivered. At the same time or as soon
as possible thereafter, any cash payment for a fractional share will be paid
(without interest).
Any stockholder whose certificate for Old Common Stock has been lost,
destroyed or stolen will be entitled to issuance of a certificate representing
the shares of New Common Stock into which such shares will have been converted
upon compliance with such requirements as the Company and the Transfer Agent
customarily apply in connection with lost, stolen or destroyed certificates.
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
Proposals of the Company's stockholders intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company no
later than December 28, 1998 to be included in the Company's proxy statement and
form of proxy relating to such annual meeting. Any proposal should be addressed
to Stephen B. Wiznitzer Esq., Senior Vice President and General Counsel, R.H.
Donnelley Corporation, One Manhattanville Road, Purchase, New York 10577, and
should be sent by certified mail, return receipt requested.
7
<PAGE> 11
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for action
at the forthcoming Special Meeting. However, the proxy confers upon the persons
named therein discretionary authority to act upon any other matter that may
properly come before the meeting.
By Order of the Board of Directors
[Frank R. Noonan Signature]
Frank R. Noonan
Chairman of the Board
July 30, 1998
Purchase, New York
8
<PAGE> 12
EXHIBIT A
PROPOSED CERTIFICATE OF AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION,
OF R.H. DONNELLEY CORPORATION
R.H. Donnelly Corporation (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), does hereby amend the Restated Certificate of
Incorporation of the Corporation.
The undersigned hereby certifies that this amendment to the Restated
Certificate of Incorporation of the Corporation has been duly adopted in
accordance with Section 242 of the DGCL.
Article FOURTH of the Restated Certificate of Incorporation of the
Corporation is hereby amended to include the following text after the last
paragraph thereof:
5. Reverse Stock Split. Effective as of the close of business on the
date of filing this Amendment to the Restated Certificate of Incorporation
(the "Effective Time"), the filing of this Amendment, shall effect a
reverse stock split (the "Reverse Stock Split") pursuant to which each five
(5) shares of common stock, par value $1 per share, of the corporation
issued and outstanding, shall be combined into one (1) validly issued,
fully paid and nonassessable share of common stock, par value $1 per share,
of the corporation. The number of authorized shares, the number of shares
of treasury stock and the par value of the common stock shall not be
affected by the Reverse Stock Split. Each stock certificate that prior to
the Effective Time represented shares of common stock shall, following the
Effective Time, represent the number of shares into which the shares of
common stock represented by such certificate shall be combined. The
corporation shall not issue fractional shares or scrip as a result of the
Reverse Stock Split, but shall arrange for the disposition of shares on
behalf of those record holders of common stock at the Effective Time who
would otherwise be entitled to fractional shares as a result of the Reverse
Stock.
THE UNDERSIGNED, being the of the Corporation, for the
purpose of amending the Restated Certificate of Incorporation, of the
Corporation pursuant to the DGCL, does make this amendment to the Restated
Certificate of Incorporation of the Corporation, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand as of this day of ,
1998.
R.H. DONNELLY CORPORATION
By:
------------------------------------
Name:
Title:
ATTEST:
- ---------------------------------------------------------
Name:
Title:
<PAGE> 13
P R.H. DONNELLY CORPORATION
R SPECIAL MEETING OF STOCKHOLDERS -- AUGUST 24, 1998
0 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X The undersigned hereby consitiutes and appoints Frank R. Noonan,
Phillip C. Danford and Stephen B. Wiznitzer, and each of them, his, her or
Y its true and lawful agents and proxies with full power of substitution in
each, to represent the undersigned at the Special Meeting of Stockholders
of R.H. Donnelly Corporation (the "Company"), to be held at The Rye Town
Hilton, 699 Westchester Avenue, Rye Brook, New York 10573, on August 24,
1998 at 10:00 a.m. local time, and at any adjournments or postponements
thereof, and to vote all the shares of stock of the Company which the
undersigned may be entitled to vote on all matters coming before said
meeting.
______________
| |
| SEE REVERSE |
| SIDE |
|______________|
<PAGE> 14
_____
| X | Please mark your
|_____| votes as in this
example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
FOR AGAINST ABSTAIN
1. Amend the Company's Restated ______ _______ ________
Certificate of incorporation | | | | | |
to effect a one-for-five |______| |_______| |________|
reverse split of the Company's
Common Stock
THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREIN
BE THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE AMENDMENT OF THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO EFFECT A
ONE-FOR-FIVE REVERSE SPLIT OF THE COMPANY'S
COMMON STOCK AND IN THE DISCRETION OF THE
PROXIES ON ALL OTHER MATTERS. PLEASE MARK
THIS PROXY CARD, FILL IN THE DATE AND SIGN
AND RETURN PROMPTLY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED
IN THE UNITED STATES.
SIGNATURES(S)_________________________________________ DATE_________________
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please full title as such.
