<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 1-7155.
THE DUN & BRADSTREET CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 13-2740040
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
ONE DIAMOND HILL ROAD, MURRAY HILL, NJ 07974
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (908) 665-5000.
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<S> <C>
COMMON STOCK, PAR VALUE $1 PER SHARE NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of February 20, 1998, 171,354,339 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 $5,634.8 million.
* Calculated by excluding all shares held by executive officers and directors of
the registrant without conceding that all such persons are "affiliates" of the
registrant for purposes of federal securities laws.
(Continued)
================================================================================
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<S> <C> <C> <C>
PART I
- - -------
Item 1 -- Business............................... Note 16 (Segment Information) on pages
53 and 54 of the 1997 Annual Report.
PART II
- - -------
Item 5 -- Market for the Registrant's Common
Equity and Related Stockholder
Matters.............................. Page 34, Management's Discussion and
Analysis of Financial Condition and
Results of Operations, of the 1997
Annual Report.
Item 6 -- Selected Financial Data................ Page 56, Five-Year Selected Financial
Data, of the 1997 Annual Report.
Item 7 -- Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... Pages 29 to 34, Management's Discussion
and Analysis of Financial Condition and
Results of Operations, of the 1997
Annual Report.
Item 7A -- Quantitative and Qualitative
Disclosures about Market Risk........ Pages 29 to 34, Management's Discussion
and Analysis of Financial Condition and
Results of Operations, of the 1997
Annual Report, and Note 5 (Financial
Instruments with Off-Balance Sheet
Risks) on Page 44 of the 1997 Annual
Report.
Item 8 -- Financial Statements and Supplementary
Data................................. Pages 35 to 56 of the 1997 Annual
Report.
PART
III
- - -------
Item 10 -- Directors and Executive Officers of the
Registrant........................... Pages 2 to 3 of the Company's Proxy
Statement dated March 6, 1998 (as
supplemented by the Company's
additional proxy materials dated March
17, 1998).
Item 11 -- Executive Compensation................. Pages 9 to 20 of the Company's Proxy
Statement dated March 6, 1998 (as
supplemented by the Company's
additional proxy materials dated March
17, 1998).
Item 12 -- Security Ownership of Certain
Beneficial Owners and Management..... Pages 4 to 7 of the Company's Proxy
Statement dated March 6, 1998 (as
supplemented by the Company's
additional proxy materials dated March
17, 1998).
Item 13 -- Certain Relationships and Related
Transactions......................... Pages 4 to 7 of the Company's Proxy
Statement dated March 6, 1998 (as
supplemented by the Company's
additional proxy materials dated March
17, 1998).
</TABLE>
------------------------
The Index to Exhibits is located on Pages 17 to 19.
1
<PAGE> 3
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 November 1, 1996, The Dun & Bradstreet Corporation reorganized into
three publicly traded independent companies by spinning off, through a tax-free
distribution to shareholders (the "1996 Distribution"), two of its businesses.
The two companies spun off in the 1996 Distribution were ACNielsen Corporation
("ACNielsen") and Cognizant Corporation ("Cognizant").
On December 17, 1997, the Company announced a plan to reorganize into two
publicly traded independent companies by spinning off, through a tax-free
distribution to shareholders (the "1998 Distribution"), a subsidiary corporation
comprising the Company's Risk Management Services segment. After the 1998
Distribution, the business of the Company will consist entirely of the Directory
Information Services business conducted by Reuben H. Donnelley, and the Risk
Management Services segment will comprise the business of a new publicly traded
company that will succeed to the name "The Dun & Bradstreet Corporation." The
1998 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 in the summer of 1998.
(2) Not applicable.
(b) The response to this item is incorporated herein by reference to Note
16 (Segment Information) on Pages 53 and 54 of the 1997 Annual Report.
(c) The Dun & Bradstreet Corporation is a non-operating holding company
whose revenue is derived primarily from dividends received from its
subsidiaries. A descriptive narrative of the Company's business segments follows
item (d).
The number of full-time equivalent employees at December 31, 1997 was
approximately 15,100.
(d) The response to this item is incorporated herein by reference to Note
16 (Segment Information) on Pages 53 and 54 of the 1997 Annual Report.
The Company is the world's leading marketer of information and services for
business decision-making. Its operations can be divided into two business
segments: Risk Management Services and Directory Information Services. The
businesses formerly comprising the Marketing Information Services, Software
Services and Other Business Services segments were spun-off pursuant to the 1996
Distribution and are treated as discontinued operations in the Company's
historical financial statements. A narrative description of the Company's
operations by business segment follows.
RISK MANAGEMENT SERVICES
DUN & BRADSTREET
Dun & Bradstreet ("D&B") is the world's largest provider of
business-to-business credit, marketing and purchasing information and
receivables management services. D&B operates offices in 36 countries, conducts
operations in two other countries via minority interests in joint venture
companies, and operates through independent correspondents in over 150
additional countries. D&B gathers data through telephone and personal interviews
with business managers and through third party sources. At the core of D&B's
products and services are its worldwide database containing information on more
than 48 million businesses, the
2
<PAGE> 4
D-U-N-S numbering system (a numerical identification system used to identify
corporate affiliations), and its ability to integrate business information from
multiple sources and create decision support tools. Companies throughout the
world use D&B's products and services to evaluate and make decisions about their
working relationships with customers and suppliers; to improve efficiency and
productivity; to identify growth opportunities and market their products more
successfully; and to take actions that increase revenue, cash flow and profits.
D&B conducts business in three general regions: United States; Europe, Africa
and Middle East; and Asia-Pacific, Canada and Latin America.
DUN & BRADSTREET, U.S.
In the United States, D&B provides Value-Added Products, Credit Information
Services, Marketing Information Services and Receivable Management Services, as
described below.
Value-Added Products
Value-Added Products, which include Database Marketing Services, Predictive
Scoring Services, Decision Support Services, Supplier Evaluation and Management
Services, Software Partner Marketing and Internet Access, provide easy, open
access to D&B's databases and allow D&B to embed its information in its
customers' business processes and technology. These products and services are
scalable for use on individual desktops, in networks and on computer hosts, and
are designed to improve customers' decision making, speed-of-action and
productivity and to help customers realize the full value of their information
and technology investments.
The D-U-N-S Numbering System is a critical component in D&B's Valued-Added
Products. As a unique, universal identifier of more than 48 million businesses
around the world, the D-U-N-S Number can help customers tap revenue and customer
service opportunities by uncovering prospects and linking related customers'
accounts, identifying cross-selling opportunities within the same corporate
family, eliminating duplicate file entries in customer and supplier databases,
and reducing operating costs and increasing purchasing power by linking
interrelated suppliers.
Database Marketing Services help give D&B's customers a better
understanding of the profitability and performance of their customers by
enhancing internal customer data with external information and analysis that can
help target the most profitable customers and prospects, analyze market
penetration, territory alignment and market segmentation and perform demand
estimation. Predictive Scoring Services, such as the Commercial Credit Score,
Industry-specific Credit Scores and OneScore, use statistical models to help
D&B's customers predict the likelihood of delinquent payment or failure to pay
within terms, while the Financial Stress Score is a statistical model that helps
D&B's customers predict the likelihood that a customer or prospect will
discontinue operations or file for bankruptcy. Decision Support Services include
desktop decision support systems such as Risk Assessment Manager and Supplier
Assessment Manager. These systems use the customers' rules to automate credit
and purchasing decisions, respectively, using internal and external information,
including D&B's predictive scores. Supplier Evaluation and Management Services
provide information and analyses that help customers identify suppliers and
assess the risk of doing business with them. Through alliances being developed
with major business application software providers, Software Partner Marketing
can cleanse, consolidate and migrate legacy customer and vendor data to a
business's new enterprise application system, as well as provide real-time,
online access to D&B information. Internet Access allows customers to access D&B
information directly from D&B's Web site using secure transaction services and
from the Web sites of certain third parties. D&B is also developing custom
access to its databases via customers' Intranets.
Value-Added Products, while a market leader in its industry, faces
competition from various information services and software providers.
Credit Information Services
D&B provides business credit information on more than 11 million U.S.
businesses. Its core credit information is available through a variety of
company-specific reports, including the Business Information
3
<PAGE> 5
Report, Payment Analysis Report, Alert Services and business reference
directories. Customers can access this information via D&B's Web site, personal
computer, mail, telephone, fax and customized connections between D&B and a
customer's computer systems. Credit Information Services also distributes its
products via a number of other firms, including leading vendors of online
information services and the Web sites of certain third parties.
The Business Information Report contains commercial credit information that
may include the D&B Rating, PAYDEX Score, financials, summary information,
public record data and payment history. The Payment Analysis Report provides
information on a company's payment record and includes the PAYDEX Score,
historical trends and industry comparisons. Alert Services provide businesses
with the ability to monitor accounts or their portfolio for significant changes
that could impact a customer, supplier or partner. The Dun & Bradstreet
Reference Book of American Business contains approximately 3.4 million business
listings in the United States and Puerto Rico.
Customers use D&B's Credit Information Services to extend commercial
credit, approve loans and leases, underwrite insurance, evaluate vendors, and
make other financial and risk assessment decisions. D&B's largest customers for
this information are major manufacturers and wholesalers, insurance companies,
banks, and other credit and financial institutions.
Traditionally, Credit Information Services were offered pursuant to an
annual contract requiring a minimum volume commitment. In January 1998, D&B
began to offer customers a choice of how to pay for these services. Customers
can now continue to commit to a standard, annual discounted contract or opt for
a flexible, monthly, pay-as-you-go discount plan, with no minimum usage
requirement.
Credit Information Services is the leading commercial credit-reporting
agency in the United States. However, it faces competition from in-house
operations of the businesses it seeks as customers and from other general and
specialized credit reporting agencies and other information services providers.
It believes the principal attributes in judging the competition are information
quality, availability, service and price.
Marketing Information Services
Marketing Information Services provides business-to-business marketing
information and analysis. This information is derived from D&B's database of
information on more than 48 million businesses in 200 countries. The information
is delivered in print, on diskette, magnetic tape and CD-ROM, through online
information services and other third parties, and via D&B's Web site and the Web
sites of certain third parties. These products and services help businesses
conduct market segmentation, customer profiling, prospect selection and
marketing list development.
Market Data Retrieval ("MDR") offers marketing information that helps
businesses sell to the education market. MDR's database includes information on
course offerings, facilities and more than 4 million educators in 250,000
pre-school, elementary, secondary and higher educational institutions and
libraries in the United States and Canada.
Marketing Information Services, while a market leader in its industry,
faces competition from data providers who have competitive distribution
channels, delivery formats and data quality.
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 receivables management
outsourcing programs. These services substitute and/or enhance its customers'
own internal management of accounts receivable.
RMS services and collects delinquent receivables on behalf of 30,000
customers primarily in the business-to-business market. Principal markets
include insurance, telecommunications, and transportation services. Customers
select the applicable RMS service that best meets their receivable portfolio
needs.
RMS uses the Dun & Bradstreet name to communicate with debtors about
delinquent accounts for collection services. Revenues are generally earned on a
contingent fee basis. Receivables outsourcing programs
4
<PAGE> 6
are selected when customers seek to outsource their accounts receivable function
to a third party vendor. Services include debt verification and collection,
customer service functions and analytical reporting.
RMS has sold franchises to third parties, which are given permission to
sell debt collection services under the RMS name. These franchises cover
portions of 27 states. RMS uses franchises to complement its field sales and
telesales forces. These franchises are located in less concentrated markets
where local presence is preferred. RMS continues to be responsible for all
product fulfillment. Customer ownership remains with RMS with franchisees
retaining exclusive access in their markets.
Certain states require licensing for consumer and commercial debt
collection. RMS, and in some instances the individual collectors, must be
licensed in order to conduct business in these states. The laws under which such
licenses are granted generally require annual license renewal and provide for
denial, suspension or revocation for improper actions or other reasons.
Internationally, RMS provides cross-border receivable services in which the
RMS worldwide offices service cross-border claims for one another. This service
has grown significantly, but comprises only 2 percent of RMS' total revenue.
RMS is considered to be a leader in the commercial receivables management
industry in the U.S. There are several consumer collection agencies that have
larger receivables portfolios, particularly health care and credit card
collection providers. The third-party commercial collection market is highly
fragmented with over 5,000 collection agencies. The outsourcing market has
significantly fewer competitors due to the need for larger scale operations by
the receivables providers. Both markets are very price competitive with status
and statistical reporting and speed of service as key qualitative attributes.
DUN & BRADSTREET EUROPE, AFRICA AND MIDDLE EAST AND DUN & BRADSTREET
ASIA-PACIFIC, CANADA AND LATIN AMERICA
Dun & Bradstreet Europe, Africa and Middle East and Dun & Bradstreet
Asia-Pacific, Canada and Latin America ("D&B Europe" and "D&B Asia-Pacific,
Canada and 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.
D&B Europe and D&B Asia-Pacific, Canada and Latin America provide
substantially the same business-to-business credit, marketing and purchasing
information and receivable management services outside the United States as
those provided domestically by D&B U.S. D&B Europe and D&B Asia-Pacific, Canada
and Latin America's major products and services include company-specific
reports, 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
receivables management services. Customers can access information via D&B's Web
site and the Web sites of certain third parties, personal computer, mail, fax,
CD-ROM, online information services and other third parties.
In 1996, D&B Asia-Pacific, Canada and Latin America reorganized its
operations in Brazil, Mexico, Chile and Venezuela. It continues to provide
cross-border services originating in Latin America through local affiliates,
small local operations centers and an operations center in Florida, and in the
Asia-Pacific region is exploring possible joint venture and distribution
arrangements to leverage its staff and data sourcing and distribution
capabilities.
D&B Europe continues to invest in data systems and is continuing its
rollout to the European market of a new range of cross-border products. D&B
Europe has also continued investing heavily in a new technology platform, which
is expected to result in enhanced product/service flexibility as well as
opportunities to streamline operations.
D&B Europe and D&B Asia-Pacific, Canada and 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 and possible
nationalization, expropriation, price controls, changes in the availability of
data from public sector sources, limits on providing information across borders
or other restrictive governmental actions. Management believes that the risks of
nationalization or expropriation are reduced because its basic service is the
delivery of
5
<PAGE> 7
information, rather than the production of products that require manufacturing
facilities or the use of natural resources.
D&B Europe and D&B Asia-Pacific, Canada and Latin America face competition
from banks, consumer information companies, application software developers,
online content providers and in-house operations of businesses as well as direct
competition from businesses providing similar services. D&B 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.
MOODY'S INVESTORS SERVICE, INC.
Moody's Investors Service, Inc. ("Moody's") publishes credit opinions on
investment securities, assigning ratings to fixed-income securities and other
credit obligations. It also provides a broad range of business and financial
information. Moody's was founded in 1900. It now employs approximately 600
analysts and has a total of more than 1,500 associates located around the world.
Moody's provides ratings and information on governmental and commercial entities
in over 95 countries. Moody's customers include investors (both institutional
and individual), banks and other financial intermediaries, and a wide range of
corporate and governmental issuers of securities.
Moody's publishes rating opinions on a broad range of credit obligations.
These include various United States corporate and governmental obligations,
Eurosecurities, structured finance securities and commercial paper issues. In
recent years, Moody's has moved beyond its traditional bond ratings activity,
assigning ratings to insurance companies' obligations, bank loans, derivative
product companies, debt, mutual funds and derivatives. At the end of 1997,
Moody's had outstanding ratings on approximately 85,000 corporate and 62,000
public finance obligations. Ratings are disseminated to the public through a
variety of electronic and print media. Detailed descriptions of both the rated
issue and issuer, along with a summary of the rationale for the assignment of
the specific rating, also appear in various Moody's credit research products.
The ratings fees charged to most issuers account for a majority of Moody's
revenues. Therefore, a substantial portion of Moody's revenues is dependent upon
the volume of debt securities issued in the global capital markets.
In addition to revenues from its ratings activities, Moody's derives
revenues from its publication of investor-oriented credit research services to
over 30,000 subscribers globally. Moody's publishes more than 100 research
products, including in-depth research on major issuers, industry studies,
special comments and summary credit opinion handbooks. Product selection
includes insurance, utilities, speculative grade instruments, bank and global
credit research.
Moody's also offers current and historical business and financial
information for investment research and reference uses. Such information is
published in more than 30 different products and services, including in manuals,
handbooks and guides, as well as on CD-ROM and in other electronic formats.
These products and services cover over 20,000 major U.S. and non-U.S. companies,
as well as over 22,000 municipalities and governmental entities and their
securities.
Moody's international operations have continued to grow as a result of the
expansion and development of international debt markets in recent years. Moody's
maintains offices in 12 countries. Moody's non-U.S. operations are subject to
the usual risks inherent in carrying on business in certain countries outside
the U.S., including currency fluctuations and possible nationalization,
expropriation, price controls and/or other restrictive governmental actions.
Management believes that the risks of nationalization or expropriation are
negligible. Moody's international business is not solely dependent on non-U.S.
office staff, as these offices are supported by travel from Moody's
internationally-focused personnel.
Moody's is one of the two largest ratings agencies in the world. Both in
the United States and internationally, competition is increasing as the volume
of ratable credit-sensitive instruments increases and additional ratings
agencies are created or existing agencies enter new markets.
Moody's is registered as an investment advisor under the Investment
Advisers Act of 1940.
6
<PAGE> 8
DIRECTORY INFORMATION SERVICES
THE REUBEN H. DONNELLEY CORPORATION
The Reuben H. Donnelley Corporation ("RHD") provides sales, marketing and
publishing services for yellow pages and other directory products for more than
275 directories, operates in 14 states, and is the largest independent marketer
of yellow pages advertising in the United States. RHD serves the yellow pages
marketing needs of over a half million small and medium size businesses and
service organizations that purchase yellow pages advertising.
RHD's telephone company clients include Ameritech advertising services
("Aas"), Bell Atlantic Yellow Pages Company ("Bell Atlantic"), formerly NYNEX
Information Resources Company, Sprint Publishing & Advertising and Centel
Directory Company, both subsidiaries of Sprint Corporation ("Sprint"), in
addition to other smaller telephone companies. RHD's client agreements include
both partnership and agency relationships.
DonTech, a partnership between RHD and Aas, was restructured in August
1997. Under the new structure, DonTech acts as the exclusive advertising sales
agent for Ameritech's printed and Internet directories in Illinois and northwest
Indiana. The restructured partnership continues to be a perpetual partnership.
Under a separate agreement, RHD provides publishing services for Ameritech's
Illinois and northwestern Indiana directories through 2003.
RHD, as sales agent for Bell Atlantic, provides advertising sales services
for directories published in substantially all of New York State. The agreement
continues until 2005.
RHD's relationship with Sprint includes the CenDon partnership agreement
with Centel Directory Company, and related directory contracts with several of
Sprint's operating subsidiaries, to publish, manufacture and distribute
telephone directories in Florida, Nevada, North Carolina and Virginia. RHD, as
sales agent, provides advertising sales and publishing services for Sprint's
directories in the greater Orlando marketplace. Both the CenDon Partnership and
the Sprint sales agency agreements continue until 2004.
RHD's agency relationship with Cincinnati Bell Directory expired in August
1997. RHD launched a proprietary directory operation in Cincinnati, northern
Kentucky and southwest Indiana in September 1997.
In December 1997, RHD sold its proprietary yellow pages directories located
in Delaware, Maryland, New Jersey, Pennsylvania, Virginia and the District of
Columbia to Yellow Book USA L.P. ("Yellow Book"). As part of the asset sale, RHD
assigned to Yellow Book its rights and responsibilities under the C-Don
partnership agreement with Commonwealth Communications, Inc., as well as the
joint venture agreements with North Pittsburgh Telephone Company, Conestoga
Telephone and Telegraph, and Denver and Ephrata Telephone Company in
Pennsylvania. Under a separate five-year agreement, RHD provides publishing
services for the directories purchased by Yellow Book.
RHD also has an agency agreement to provide sales and publishing services
for CFW Telephone Company in Virginia.
RHD's publishing and marketing operations provide a variety of leading-edge
pre-press processes and information management services to produce or support
print and electronic directory products. Core publishing services include
graphics and ad composition, customer order processing, listing database
management, and pagination. RHD provides for both clients and its own
proprietary business some of the most comprehensive capabilities in the
directory information industry, including tools and information to effectively
conduct sales and marketing planning, sales management, sales compensation, and
customer service activities. Publishing operations are based at its facilities
in Raleigh, North Carolina and Dunmore, Pennsylvania. The advanced database
management and publishing systems in Raleigh's state-of-the art facility became
fully operational in 1997.
Competition in the directory industry takes many forms and there is
competition to varying degrees from other yellow pages publishers in some of the
markets that RHD serves, although in most of its markets RHD represents the
leading product in the market. There is also competition for advertising dollars
by newspapers,
7
<PAGE> 9
radio, direct mail, online information services and television, and advances in
technology have brought in new industry participants, new products and new
channels. In response, RHD has developed non-traditional relationships with
businesses not formerly associated with the yellow pages industry to develop
revenues from other sources, including the sale of advertising for internet
yellow pages as well as cable television advertising.
The deregulation of the telecommunications industry as a result of the
Telecommunications Act of 1996 is resulting in increased competition for local
telephone service and expanded geographic markets for local telephone service
providers, thereby opening up potential opportunities for directory publishers.
INTELLECTUAL PROPERTY
The Company owns and controls a number of trade secrets, confidential
information, trademarks, trade names, copyrights, patents and other intellectual
property rights which, in the aggregate, are of material importance to the
Company's business. Management of the Company believes that each of the "Dun &
Bradstreet", "Moody's" and "Reuben H. Donnelley" names and related names, marks
and logos are of material importance to the Company. The Company is licensed to
use certain technology and other intellectual property rights owned and
controlled by others, and, similarly, other companies are licensed to use
certain technology and other intellectual property rights owned and controlled
by the Company. The Company considers its trademarks, service marks, databases,
software and other intellectual property to be proprietary and the Company
relies on a combination of copyright, trademark, trade secret, patent,
non-disclosure and contract safeguards for protection.
The names of the Company's products and services referred to herein are
trademarks, service marks or registered trademarks or service marks owned by or
licensed to the Company or one or more of its subsidiaries.
ITEM 2. PROPERTIES
The executive offices of the Company are located at One Diamond Hill Road,
Murray Hill, New Jersey in a property owned by D&B.
The other properties of the Company are geographically distributed to meet
sales and operating requirements worldwide. They are generally considered to be
both suitable and adequate to meet current operating requirements and virtually
all space is being utilized. The principal properties of the Company, by
business segment, are set forth below.
RISK MANAGEMENT SERVICES
Owned properties located within the U.S. total five, consisting of two
buildings in Berkeley Heights, New Jersey, one each in Murray Hill and
Parsippany, New Jersey, and one in 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; Lyon, France; Marseille, France; and Milan,
Italy. The operations of this segment are also conducted from 84 leased offices
located throughout the U.S. and 93 leased non-U.S. office locations.
DIRECTORY INFORMATION SERVICES
Operations are conducted from 38 leased locations throughout the U.S.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in legal proceedings, claims
and litigation arising in the ordinary course of business. In the opinion of
management, the outcome of such current legal proceedings, claims and litigation
could have a material effect on quarterly or annual operating results or cash
flows when resolved in a future period. However, in the opinion of management,
these matters will not materially affect the Company's consolidated financial
position.
8
<PAGE> 10
Information Resources
In addition to the matters referred to above, on July 29, 1996, Information
Resources, Inc. ("IRI") filed a complaint in the United States District Court
for the Southern District of New York, naming as defendants the Company, A.C.
Nielsen Company (a subsidiary of ACNielsen) and IMS International, Inc. (a
subsidiary of Cognizant).
The complaint alleges various violations of United States antitrust laws,
including alleged violations of Section 1 and 2 of the Sherman Act. The
complaint also alleges a claim of tortious interference with a contract and a
claim of tortious interference with a prospective business relationship. These
claims relate to the acquisition by defendants of Survey Research Group Limited
("SRG"). IRI alleges SRG violated an alleged agreement with IRI when it agreed
to be acquired by the defendants and that the defendants induced SRG to breach
that agreement.
On October 15, 1996, defendants moved for an order dismissing all claims in
the complaint. On May 6, 1997, the United States District Court for the Southern
District of New York issued a decision dismissing IRI's claim of attempted
monopolization in the United States, with leave to replead within sixty days.
The Court denied defendants' motion with respect to the remaining claims in the
complaint. On June 3, 1997, defendants filed an answer denying the material
allegations in IRI's complaint, and A.C. Neilsen Company filed a counterclaim
alleging that IRI has made false and misleading statements about its services
and commercial activities. On July 7, 1997, IRI filed an Amended and Restated
Complaint repleading its alleged claim of monopolization in the United States
and realleging its other claims. By notice of motion dated August 18, 1997,
defendants moved for an order dismissing the amended claim. On December 1, 1997,
the Court denied the motion and, on December 16, 1997, defendants filed a
supplemental answer denying the remaining material allegations of the amended
complaint.
IRI's complaint alleges damages in excess of $350 million, which amount IRI
asked to be trebled under antitrust laws. IRI also seeks punitive damages in an
unspecified amount.
In connection with the IRI action, Cognizant, ACNielsen and the Company
entered into an Indemnity and Joint Defense Agreement (the "Indemnity and Joint
Defense Agreement") pursuant to which they have agreed (i) to certain
arrangements allocating potential liabilities ("IRI Liabilities") that may arise
out of or in connection with the IRI action and (ii) to conduct a joint defense
of such action. In particular, the Indemnity and Joint Defense Agreement
provides that ACNielsen will assume exclusive liability for IRI Liabilities up
to a maximum amount to be calculated at such time such liabilities, if any,
become payable (the "ACN Maximum Amount"), and that the Company and Cognizant
will share liability equally for any amounts in excess of the ACN Maximum
Amount. The ACN Maximum Amount will be determined by an investment banking firm
as the maximum amount which ACNielsen is able to pay after giving effect to (i)
any plan submitted by such investment bank which is designed to maximize the
claims-paying ability of ACNielsen without impairing the investment banking
firm's ability to deliver a viability opinion (but which will not require any
action requiring stockholder approval) and (ii) payment of related fees and
expenses. For these purposes, financial viability means the ability of
ACNielsen, after giving effect to such plan, the payment of related fees and
expenses and the payment of the ACN Maximum Amount, to pay its debts as they
become due and to finance the current and anticipated operating and capital
requirements of its business, as reconstituted by such plan, for two years from
the date any such plan is expected to be implemented.
Management is unable to predict at this time the final outcome of the IRI
action or whether the resolution of this matter could materially affect the
Company's results of operations, cash flows or financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
9
<PAGE> 11
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 20, 1998
and brief summaries of their business experience during the past five years.
<TABLE>
<CAPTION>
NAME TITLE AGE
---- ----- ---
<S> <C> <C>
Volney Taylor**............. Chairman of the Board and Chief Executive Officer 58
William F. Doescher......... Senior Vice President and Chief Communications Officer 60
Nancy L. Henry.............. Senior Vice President and Chief Legal Counsel 52
Elahe Hessamfar............. Senior Vice President and Chief Information Officer 44
Frank R. Noonan............. Senior Vice President and President -- The Reuben H. 55
Donnelley Corporation
Peter J. Ross............... Senior Vice President and Chief Human Resources Officer 52
Frank S. Sowinski........... Senior Vice President and Chief Financial Officer 41
Chester J. Geveda, Jr. ..... Vice President and Controller 51
</TABLE>
- - ---------------
* Set forth as a separate item pursuant to Items 401(b) and (e) of Regulation
S-K.
** Member of the Board of Directors since December 19, 1984.
Mr. Taylor was elected Chairman of the Board and Chief Executive Officer,
The Dun & Bradstreet Corporation, effective November 1, 1996. He served as
Executive Vice President, The Dun & Bradstreet Corporation, from February 1,
1982 to October 31, 1996. Since January 1, 1991, he has also served as Chairman,
Dun & Bradstreet.
Mr. Doescher was elected Senior Vice President and Chief Communications
Officer, The Dun & Bradstreet Corporation, effective November 1, 1996. Since
April 1992, he has also served as Senior Vice President -- Global
Communications, Dun & Bradstreet. He served as Vice President -- Public
Relations and Advertising, The Dun & Bradstreet Corporation, from April 1983
until October 1996.
Ms. Henry was elected Senior Vice President and Chief Legal Counsel, The
Dun & Bradstreet Corporation, effective March 27, 1997. Prior thereto, she was
with the law firm of Skadden, Arps, Slate, Meagher & Flom from 1980.
Ms. Hessamfar was elected Senior Vice President and Chief Information
Officer, The Dun & Bradstreet Corporation, effective August 18, 1997. Prior
thereto, she served as Chief Information Officer of Turner Broadcasting System
from July 1993 to August 1997. She previously served as Vice President
Information Systems for PAC Bell Directories from May 1987 to July 1993.
Mr. Noonan was elected Senior Vice President, The Dun & Bradstreet
Corporation, and President, The Reuben H. Donnelley Corporation, effective
November 1, 1996. He previously served, until October 1996, as Senior Vice
President, The Dun & Bradstreet Corporation, since February 20, 1995, and as
Chairman, President and Chief Executive Officer, The Reuben H. Donnelley
Corporation, since August 7, 1991 (President), January 1, 1994 (Chief Executive
Officer) and February 20, 1995 (Chairman).
Mr. Ross was elected Senior Vice President and Chief Human Resources
Officer, The Dun & Bradstreet Corporation, effective November 1, 1996. Since
June 1988, he has also served as Senior Vice President -- Human Resources, Dun &
Bradstreet.
Mr. Sowinski was elected Senior Vice President and Chief Financial Officer,
The Dun & Bradstreet Corporation, effective November 1, 1996. He served as
Executive Vice President -- Applications & Alliances, Dun & Bradstreet, U.S.
from November 1996 to December 1997, and as Executive Vice President --
Applications, Mass Marketing & Alliances, Dun & Bradstreet, U.S. from October
1993 to October 1996. Prior
10
<PAGE> 12
thereto, he served as Senior Vice President -- Finance & Planning, Dun &
Bradstreet, U.S. from August 1989 to September 1993.
Mr. Geveda was elected Vice President and Controller, The Dun & Bradstreet
Corporation, effective November 1, 1996. Since November 1996, he has also served
as Senior Vice President -- Finance, Dun & Bradstreet. From April 1993 until
October 1996, he served as Senior Vice President -- Finance and Planning, Dun &
Bradstreet, U.S. He had previously served as Senior Vice President -- Finance
and Administration, Dun & Bradstreet Europe, Africa and Middle East, from
September 1990 until March 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information in response to this Item is set forth under Dividends and
Common Stock Information in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on Page 34 of the 1997 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 1993 through 1997 set forth
in the "Five-Year Selected Financial Data" on Page 56 of the 1997 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 "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
Pages 29 to 34 of the 1997 Annual Report, which information is incorporated
herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information in response to this Item is set forth in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
Pages 29 to 34 of the 1997 Annual Report and in Note 5 (Financial Instruments
with Off-Balance Sheet Risks) on Page 44 of the 1997 Annual Report, which
information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Schedules on Page 14.
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 6, 1998 (as supplemented by the Company's additional proxy materials
dated March 17, 1998) filed with the Securities and Exchange Commission, except
that "Executive Officers of the Registrant" on Pages 10 and 11 of this report
responds to Item 401(b) and (e) of Regulation S-K.
11
<PAGE> 13
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 6, 1998 (as supplemented by the Company's
additional proxy materials dated March 17, 1998) 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 6, 1998 (as supplemented by the Company's
additional proxy materials dated March 17, 1998) filed with the Securities and
Exchange Commission.
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 6, 1998 (as supplemented by the Company's
additional proxy materials dated March 17, 1998) 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 Schedules on Page 14.
(2) Financial Statement Schedules.
See Index to Financial Statements and Schedules on Page 14.
(3) Exhibits.
See Index to Exhibits on Pages 17 to 19.
(b) Reports on Form 8-K.
Filed December 19, 1997, Item 5. Other Events reported.
(c) Exhibits.
See Index to Exhibits on Pages 17 to 19.
(d) Financial Statement Schedules.
See Index to Financial Statements and Schedules on Page 14.
12
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE DUN & BRADSTREET CORPORATION
(Registrant)
By: /s/ VOLNEY TAYLOR
--------------------------------------
(Volney Taylor,
Chairman and Chief Executive Officer)
Date: March 20, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C>
/s/ VOLNEY TAYLOR /s/ ROBERT J. LANIGAN
- - --------------------------------------------------- ---------------------------------------------------
(Volney Taylor, (Robert J. Lanigan, Director)
Chairman, Chief Executive Officer
and Director)
/s/ FRANK S. SOWINSKI /s/ VERNON R. LOUCKS JR.
- - --------------------------------------------------- ---------------------------------------------------
(Frank S. Sowinski, (Vernon R. Loucks Jr., Director)
Senior Vice President and
Chief Financial Officer)
/s/ CHESTER J. GEVEDA, JR. /s/ HENRY A. MCKINNELL
- - --------------------------------------------------- ---------------------------------------------------
Chester J. Geveda, Jr. (Henry A. McKinnell, Director)
Vice President -- Controller)
/s/ HALL ADAMS, JR. /s/ JOHN R. MEYER
- - --------------------------------------------------- ---------------------------------------------------
(Hall Adams, Jr., Director) (John R. Meyer, Director)
/s/ CLIFFORD L. ALEXANDER, JR. /s/ JAMES R. PETERSON
- - --------------------------------------------------- ---------------------------------------------------
(Clifford L. Alexander, Jr., Director) (James R. Peterson, Director)
/s/ MARY JOHNSTON EVANS /s/ MICHAEL R. QUINLAN
- - --------------------------------------------------- ---------------------------------------------------
(Mary Johnston Evans, Director) (Michael R. Quinlan, Director)
/s/ RONALD L. KUEHN, JR.
- - ---------------------------------------------------
(Ronald L. Kuehn, Jr., Director)
</TABLE>
Date: March 20, 1998
13
<PAGE> 15
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
FINANCIAL STATEMENTS:
The Company's consolidated financial statements, the notes thereto and the
related report thereon of Coopers & Lybrand L.L.P., independent accountants, for
the years ended December 31, 1997, 1996 and 1995, appearing on Pages 35 to 56 of
the accompanying 1997 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.
<TABLE>
<CAPTION>
PAGE
---------------------------
1997 ANNUAL
10-K REPORT
------------ -----------
<S> <C> <C>
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants........................... F-7 35
Statement of Management Responsibility for Financial
Statements................................................ F-7 35
At December 31, 1997 and 1996:
Consolidated Balance Sheets............................... F-9 37
For the years ended December 31, 1997, 1996 and 1995:
Consolidated Statements of Operations..................... F-8 36
Consolidated Statements of Cash Flows..................... F-10 38
Consolidated Statements of Shareholders' Equity........... F-11 39
Notes to Consolidated Financial Statements................ F-12 to F-27 40 to 55
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. F-1 to F-6 29 to 34
Other Financial Information:
Five-Year Selected Financial Data......................... F-28 56
SCHEDULES:
Report of Independent Accountants......................... 15 --
II -- Valuation and Qualifying Accounts for the years
ended December 31, 1997, 1996 and 1995................. 16 --
</TABLE>
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.
14
<PAGE> 16
REPORT OF INDEPENDENT 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 at December 31, 1997 and 1996, and for the years ended December 31,
1997, 1996 and 1995, which report includes an explanatory paragraph regarding
the Company's change in certain revenue recognition accounting policies, has
been incorporated by reference in this Form 10-K from page 35 of the 1997 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 14 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.
/s/ COOPERS & LYBRAND L.L.P.
New York, New York
February 13, 1998
15
<PAGE> 17
SCHEDULE II
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<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
----------- --------- ---------- ------------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
For the Year Ended December 31, 1997......... $38.1 $27.5 $(22.2) $43.4
===== ===== ====== =====
For the Year Ended December 31, 1996......... $35.7 $25.8 $(23.4) $38.1
===== ===== ====== =====
For the Year Ended December 31, 1995......... $47.8 $35.2 $(47.3) $35.7
===== ===== ====== =====
</TABLE>
- - ---------------
NOTE:
(a) Represents primarily the write-off of uncollectible accounts for which a
reserve was provided.
16
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
REGULATION S-K
EXHIBIT
NUMBER
- - --------------
<C> <C> <S>
(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.
(a) Credit Agreement, dated as of August 30, 1996, among The Dun
& Bradstreet Corporation, The Borrowing Subsidiaries Party
Hereto, The Lenders Party Hereto, The Chase Manhattan Bank,
Citibank, N.A. and Morgan Guaranty Trust Company of New
York, $1,000,000,000 Revolving Credit and Competitive
Advance Facility (incorporated herein by reference to
Exhibit 4(a) to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996, file number 1-7155, filed
March 27, 1997). Another Instrument with respect to an issue
of long term debt has not been filed as an exhibit to this
Annual Report on Form 10-K, as the authorized principal
amount of such issue does not exceed 10% of total assets of
registrant and subsidiaries on a consolidated basis. The Dun
& Bradstreet Corporation agrees to furnish a copy of such
instrument to the Commission upon request.
*(b) Notice dated April 10, 1997 of election by The Dun &
Bradstreet Corporation to reduce commitments under
$1,000,000,000 Revolving Credit and Competitive Advance
Facility to $750,000,000.
(10) Material Contracts.
*+(a) Nonfunded Deferred Compensation Plan for Non-Employee
Directors of Registrant, as amended July 16, 1997.
*+(b) Pension Benefit Equalization Plan, as amended July 16, 1997.
*+(c) Profit Participation Benefit Equalization Plan, as amended
and restated effective July 16, 1997.
*+(d) 1982 Key Employees Stock Option Plan for Registrant and
Subsidiaries, as amended July 16, 1997.
*+(e) 1991 Key Employees Stock Option Plan for Registrant and
Subsidiaries, as amended July 16, 1997.
+(f) Form of 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).
+(g) Form of 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).
*+(h) Form of Limited Stock Appreciation Rights Agreement Relating
to Stock Options, effective for grants made on and after
November 15, 1996.
*+(i) Key Employees Performance Unit Plan for Registrant and
Subsidiaries, as amended December 17, 1997.
+(j) Corporate Management Incentive Plan, as amended February 19,
1997 (incorporated herein by reference to Exhibit A to
Registrant's Proxy Statement dated March 27, 1997, file
number 1-7155).
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
REGULATION S-K
EXHIBIT
NUMBER
- - --------------
<C> <C> <S>
*+(k) 1989 Key Employees Restricted Stock Plan for Registrant and
Subsidiaries, as amended July 16, 1997.
*+(l) Forms of Change-in-Control Severance Agreement, as amended
July 16, 1997.
*+(m) Supplemental Executive Benefit Plan, as amended July 16,
1997.
*+(n) Restricted Stock Plan for Non-Employee Directors, as amended
July 16, 1997.
+(o) Executive Transition Plan, as amended February 19, 1997
(incorporated by reference to Exhibit 10(s) to Registrant's
Annual Report on Form 10-K for the year ended December 31,
1996, file number 1-7155, filed March 27, 1997).
*+(p) 1996 The Dun & Bradstreet Corporation Non Employee
Directors' Stock Incentive Plan, as amended December 17,
1997.
*+(q) Special Corporate Management Incentive Plan, adopted
December 17, 1997.
(r) Amended and Restated Agreement of Limited Partnership of D&B
Investors L.P., dated April 1, 1997 (incorporated by
reference to Exhibit 10(u) to Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997, file
number 1-7155, filed August 14, 1997).
*(s) Amendment No. 1, dated July 14, 1997, to the Amended and
Restated Agreement of Limited Partnership of D&B Investors,
L.P., dated April 1, 1997.
(t) Agreement to Retire General Partner Interest dated October
21, 1996 by and between D&B Investors L.P. and IMS America,
Ltd. (incorporated by reference to Exhibit 10(w) to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, file number 1-7155, filed March 27,
1997).
(u) Distribution Agreement dated as of October 28, 1996, among
the Company, Cognizant Corporation and ACNielsen Corporation
(incorporated by reference to Exhibit 10(x) to Registrant's
Annual Report on Form 10-K for the year ended December 31,
1996, file number 1-7155, filed March 27, 1997).
(v) Tax Allocation Agreement dated as of October 28, 1996, among
the Company, Cognizant Corporation and ACNielsen Corporation
(incorporated by reference to Exhibit 10(y) to Registrant's
Annual Report on Form 10-K for the year ended December 31,
1996, file number 1-7155, filed March 27, 1997).
(w) Employee Benefits Agreement dated as of October 28, 1996,
among the Company, Cognizant Corporation and ACNielsen
Corporation (incorporated by reference to Exhibit 10(z) to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, file number 1-7155, filed March 27,
1997).
(x) Indemnity and Joint Defense Agreement dated as of October
28, 1996, among the Company, Cognizant Corporation and
ACNielsen Corporation (incorporated by reference to Exhibit
10(aa) to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996, file number 1-7155, filed
March 27, 1997).
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
REGULATION S-K
EXHIBIT
NUMBER
- - --------------
<C> <C> <S>
*(13) Annual Report to Security Holders.
1997 Annual Report
*(18) Letter Re Change in Accounting Principles.
*(21) Subsidiaries of the Registrant.
List of Active Subsidiaries as of January 31, 1998
*(23) Consents of Experts and Counsel.
Consent of Coopers & Lybrand L.L.P.
*(27) Financial Data Schedule.
</TABLE>
- - ---------------
* Filed herewith.
+ Represents a management contract or compensatory plan.
19
<PAGE> 1
EXHIBIT 4(b)
[DUN & BRADSTREET LOGO]
Philip C. Danford 1 Diamond Hill Road, Murray Hill, NJ 07974
Vice President & Treasurer 908-665-5033
Fax 908-665-5032
by fax: 212-552-5700
April 10, 1997
Ms. Rana Khan
Chase Manhattan Bank
Agent Bank Services
1 Chase Manhattan Plaza. 8th Floor
New York, New York 10081
Dear Rana,
Please use this letter as notification of The Dun & Bradstreet Corporation
election to reduce the outstanding commitments under Section 2.08 (c) of our
$1,000,000,000 Credit Agreement dated August 30, 1996 and Section 2.08 (c) of
our $200,000,000 Credit Agreement dated August 30, 1996. Specifically, we wish
to reduce the commitments as follows:
<TABLE>
<CAPTION>
Commitments Amount Commitments
Before Reduction of Reduction After Reduction
-------------- ------------ ------------
<S> <C> <C>
$1,000,000,000 $250,000,000 $750,000,000
200,000,000 50,000,000 150,000,000
-------------- ------------ ------------
Total $1,200,000,000 $300,000,000 $900,000,000
</TABLE>
Under Section 2.08 (c) of the Credit Agreements, we are required to give at
least three days notice. We request that the reduction be effective April 16,
1997. Please confirm your acceptance by return facsimile.
Sincerely,
/s/ Philip C. Danford
cc: M. Benveniste
H. Buckland
L. Brown
F. Colarusso
<PAGE> 1
EXHIBIT 10(a)
THE DUN & BRADSTREET CORPORATION
NONFUNDED DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
(AS AMENDED EFFECTIVE JULY 16, 1997)
------------------------------------------------------------------
1. Directors who are not employees of The Dun & Bradstreet Corporation (the
"Company") or any of its subsidiaries may elect on or before December 31 of any
year to have payment of all or a specified part of all fees payable to them for
their services as Directors (including fees payable to them for services as
members of a committee of the Board) during the calendar year following such
election and succeeding calendar years deferred until they cease to be Directors
of the Company. Any person, not an employee, who shall become a Director during
any calendar year, and who was not a Director of the Company on the preceding
December 31, may elect, before the term as a Director begins, to have payment of
all or a specified part of such fees for the remainder of such calendar year and
for succeeding calendar years so deferred. Any such election shall be made by
written notice delivered to the Secretary of the Company.
2. All deferred fees shall be held in the general funds of the Company, shall be
credited to the Director's account and shall be deemed to have been invested in
one or more of the funds (as set forth on the Deferred Compensation Election
Form attached hereto as Exhibit A) in the Addendum to the Company's Profit
Participation Plan as such Director shall have most recently elected. Such
election shall be made on a Deferred Compensation Election Form filed with the
Secretary of the Company. The Director's account shall be credited on a monthly
basis with the investment
<PAGE> 2
-2-
performance of the respective funds in which the account is invested. Directors
may elect to have deferred amounts held and invested in one or more of the funds
in multiples of 10%, except that no Director may elect to have more than 50% of
his or her account invested in the Dun & Bradstreet Common Stock Fund. Subject
to the foregoing investment limitation in the Dun & Bradstreet Common Stock Fund
and to the limitation on multiples of 10%, each Director may, at any time, make
a revised investment election applicable to amounts deferred, or elect to have
the amount credited to his or her account reallocated among the investment
funds, such revised election or reallocation to be effective from and after the
first day of the month following receipt of a Deferred Compensation Election
Form by the Secretary of the Company. In the event a Director fails to make an
investment election, his or her entire account shall be credited to the Special
Fixed Income Fund.
3. The aggregate balance in the Director's account, giving effect to the
investment performance of the fund(s) to which deferred fees were credited,
shall be paid to the Director in five or ten annual installments or in a lump
sum, as the Director shall elect in the notice referred to in Paragraph 1 above.
The first installment (or lump sum payment if the Director so elects) shall be
paid on the tenth day of the calendar year immediately following the calendar
year in which the Director ceases to be a Director of the Company, and
subsequent installments shall be made on the tenth day of each succeeding
calendar year until the entire amount credited to the Director's account shall
have been paid. The amount of each installment shall be determined by
multiplying the
<PAGE> 3
-3-
balance credited to the Director's account as of the December 31 immediately
preceding the installment payment date by a fraction, the numerator of which
shall be one and the denominator of which shall be the number of installment
payments over which payment of such amount is to be made, less the number of
installments theretofore made. Thus, if payment is to be made in ten
installments, the fraction for the first installment shall be 1/10th, for the
second installment 1/9th, and so on.
4. If a Director should die before full payment of all amounts credited to the
Director's account, the full amount credited to the account as of December 31 of
the year of the Director's death shall be paid on the tenth day of the calendar
year following the year of death to the Director's estate or to such beneficiary
or beneficiaries as previously designated by the Director in a written notice
delivered to the Secretary of the Company.
5. A Director's election to defer compensation shall continue until a Director
ceases to be a Director or until the Director changes or terminates such
election by written notice delivered to the Secretary of the Company. Any such
notice of change or termination shall become effective as of the end of the
calendar year in which such notice is given. Amounts credited to the account of
a Director prior to the effective date of such change or termination shall not
be affected thereby and shall be paid to the Director only in accordance with
paragraph 3 (or Paragraph 4 in the event of death) above.
<PAGE> 4
-4-
6. The right of a Director to any deferred fees and/or the interest thereon
shall not be subject to assignment by the Director. If a Director does make an
assignment of any deferred fees and/or the interest thereon, the Company may
disregard such assignment and discharge its obligation hereunder by making
payment as though no such assignment has been made.
7. If there is a "Change in Control" of the Company, as defined in Paragraph 8:
a) The total amount to the credit of each Director's account under
the Plan shall be paid to the Director in a lump sum within 30 days from
the date of such Change in Control; provided, however, if such payment is
not made within such 30-day period, the amount to the credit of the
Director's account shall be credited with interest from the date of such
Change in Control until the actual payment date at an annual rate equal to
the yield on 90-day U.S. Treasury Bills plus one percentage point. For
this purpose the yield on U.S. Treasury Bills shall be the rate published
in The Wall Street Journal on the first business day of the calendar month
in which the Change in Control occurred.
b) The total amount credited to each Director's account under the
Plan from the date of the Change in Control until the date the Director
ceases to be a Director shall be paid to the Director in a lump sum within
30 days from the date the Director ceases to be a Director.
c) If a Director elects to change or terminate an election with
respect to the deferral of fees by written notice delivered to the
Secretary of the Company, and such notice is given during the calendar
year in which a Change in Control occurs and on or before the date of the
Change in Control, the change or termination of election shall become
effective as of the date of the Change in Control. If such notice is given
subsequent to the date of the Change in Control, it shall become effective
as of the end of the calendar year in which the notice is given.
8. A "Change in Control" of the Company shall mean the occurrence of any of the
following events:
a) any "Person," as such term is used in Sections 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
<PAGE> 5
-5-
benefit plan of the Company, or any corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions 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 20% or
more of the combined voting power of the Company's then outstanding
securities;
b) during any period of twenty-four months (not including any period
prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new Director (other
than (1) a Director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(a), (c) or (d) of this Section, (2) a Director designated by any Person
(including the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an actual or
threatened proxy contest) which if consummated would constitute a Change
in Control or (3) a Director designated by any Person who is the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's
securities) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the Directors then still in office who either were Directors at the
beginning of the period or whose election or nomination for election was
previously so approved cease for any reason to constitute at least a
majority thereof;
c) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, 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 and (2) after which no Person holds 20%
or more of the combined voting power of the then outstanding securities of
the Company or such surviving entity; or
d) the shareholders 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.
9. Notwithstanding any provision herein to the contrary, amounts payable under
this Plan shall not be funded and shall be made out of the general funds of the
Company; provided, however, that the Company reserves the right to establish one
or more trusts
<PAGE> 6
-6-
to provide alternate sources of benefit payments under this Plan; provided,
further, however, that upon the occurrence of a "Potential Change in Control" of
the Company, as defined below, the appropriate officers of the Company are
authorized to make transfers to such a trust fund, established as an alternate
source of benefits payable under the Plan, as are necessary to fund the lump sum
payments to Directors required pursuant to Paragraph 7 of this Plan in the event
of a Change in Control of the Company; provided, further, however, that if
payments are made from such trust fund, such payments will satisfy the Company's
obligations under this Plan to the extent made from such trust fund.
For the purposes of this Plan, "Potential Change in Control" means:
a) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control of the Company;
b) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control of the Company;
c) any person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company (or a company
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), who is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 9.5% or more of the combined
voting power of the Company's then outstanding securities, increases such
person's beneficial ownership of such securities by 5% or more over the
percentage so owned by such person; or
d) the Board of Directors of the Company adopts a resolution to the
effect that, for purposes of this Plan, a Potential Change in Control of
the Company has occurred.
10. The Executive Compensation and Stock Option Committee of the Board (the
"Committee") shall be responsible for the administration of the Plan and may
delegate
<PAGE> 7
-7-
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 interpret the provisions of the Plan and construe all of its terms,
to adopt, amend and rescind rules and regulations for the administration of the
Plan, and generally to conduct and administer the Plan and to make all
determinations in connection with the Plan as may be necessary or advisable,
other than those determinations delegated to management employees or independent
third parties by the Board. All of its rules, interpretations and decisions
shall be applied in a uniform manner to all Directors similarly situated and
decisions of the Committee shall be conclusive and binding on all persons.
11. The Plan may be modified, amended or revoked at any time by the Board of
Directors of the Company.
Adopted by Executive
Committee: December 23, 1975
Amended by Board of
Directors effective: January 1, 1977
January 1, 1982
September 20, 1989
December 19, 1990
April 21, 1993
November 20, 1996
July 16, 1997
<PAGE> 8
EXHIBIT A
THE DUN & BRADSTREET CORPORATION
NONFUNDED DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
DEFERRED COMPENSATION ELECTION FORM
The completed form should be forwarded to: The Office of the Corporate
Secretary, attention William H. Buchanan, Jr., One Diamond Hill Road, Murray
Hill, NJ 07974.
INVESTMENT ELECTION
I wish to have the investment experience for the following Funds used as the
basis for the interest rate to be credited on my deferred account balance.
Investments must be made in 10% increments:
<TABLE>
<S> <C>
% S&P 500 Index Fund
----------
% Mid- and Small-Capitalization Equity Index Fund
----------
% International Equity Index Fund
----------
% Dun & Bradstreet Common Stock Fund (% in fund cannot
---------- exceed 50%)
% Special Fixed Income Fund
----------
% Balanced Index Fund
----------
100 %
==========
</TABLE>
Signature: Date:
------------------------------------- ------------------
<PAGE> 1
EXHIBIT 10(b)
PENSION BENEFIT EQUALIZATION PLAN
OF
THE DUN & BRADSTREET CORPORATION
(As Amended Effective July 16, 1997)
I. Purpose of the Plan
The purpose of the Pension Benefit Equalization Plan of The
Dun & Bradstreet Corporation (the "Plan") is to provide a means of equalizing
the benefits of those employees participating in the Master Retirement Plan of
The Dun & Bradstreet Corporation (the "Retirement Plan") whose funded benefits
under the Retirement 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 Retirement 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 Retirement Plan have been limited by Section 401(a)(17) of
the Code.
II. Administration of the Plan
The Executive Compensation and Stock Option Committee (the
"Committee") of the Board of Directors (the "Board") of The Dun & Bradstreet
Corporation (the "Corporation") 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 Retirement Plan shall be eligible to
participate in this Plan whenever their benefits under the Retirement 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
<PAGE> 2
contained in the Retirement 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 Retirement Plan, the
limitations imposed by Section 415 of the Code shall be deemed to be met when
the sum of the participant's defined benefit plan fraction and his defined
contribution plan fraction equals 1.0, as such fractions are computed for
purposes of Section 415 of the Code and Section 19.4 of the Retirement Plan.
V. Equalized Benefits
The Corporation shall pay to each eligible member of the
Retirement Plan and his beneficiaries a supplemental pension benefit equal to
the benefit which would have been payable to them under the Retirement Plan, as
if no provision were set forth therein incorporating limitations imposed by
Sections 401, 415 or any other applicable Section of the Code, to the extent
that such benefit otherwise payable under the Retirement Plan exceeds the
benefit limitations related to the Retirement Plan as described in Section III
of this Plan.
Subject to Section XII of this Plan, such supplemental pension
benefits shall be payable in accordance with all of the terms and conditions
applicable to the participant's benefits under the Retirement Plan including
whatever optional benefits he may have elected; provided, however, if an
Election (as defined in Section IX of this Plan) or a Special Election (as
defined in Section X of this Plan) has been made and becomes effective prior to
the date when benefits under this Plan would otherwise be payable, the form of
payment of benefits under this Plan shall be in the form so elected pursuant to
such Election or Special Election; provided further that notwithstanding any
Election or Special Election, if the lump sum value, determined in the same
manner as provided under Section IX below, of the benefits payable under this
Plan is $10,000 or less at the time such benefits are payable under this Plan,
such benefits shall be payable as a lump sum.
Any portion of the benefits payable under this Plan as a lump
sum, including any amounts payable as a lump sum under Section VI, shall be paid
60 days after the date when payments of the same benefits under this Plan, if
payable in the form of an annuity, would otherwise commence, or as soon as
practicable thereafter, provided the Committee has approved such payment. Any
such lump sum distribution of a participant's or beneficiary's benefits under
this Plan shall fully satisfy all present and future Plan liability with respect
to such participant or beneficiary for such portion or all of such benefits so
distributed. Any portion of the benefits payable under this Plan as an annuity
shall commence on the date when annuity benefits under this Plan would otherwise
commence, without regard to any Election or Special Election.
<PAGE> 3
VI. Payments of Benefits in the Event of Death
In case of the death of the participant, the amount in his
account shall, where applicable and subject to Section XII of this Plan, be
distributed to the surviving beneficiary who has been designated to receive
benefits under the Retirement Plan and in the manner which has been elected
under the Retirement Plan; provided, however, if an Election (as defined in
Section IX of this Plan) or a Special Election (as defined in Section X of this
Plan) has been made and becomes effective prior to the date when benefits under
this Plan would otherwise be payable, the form of payment of benefits payable to
such surviving beneficiary under this Plan shall be in the form so elected
pursuant to such Election or Special Election; provided further that
notwithstanding any Election or Special Election, if the lump sum value,
determined in the same manner as provided under Section IX below, of the
benefits payable under this Plan is $10,000 or less at the time such benefits
are payable to such surviving beneficiary under this Plan, such benefits shall
be payable as a lump sum.
If the participant has not designated a beneficiary under the
Retirement Plan, or if no such beneficiary is living at the time of the
participant's death, the amount, if any, in the participant's account that is
distributable upon his death shall be distributed to the person or persons who
would otherwise be entitled to receive a distribution of the participant's
Retirement Plan benefits. Payment to such person or persons shall completely
discharge the Plan with respect to the amount so paid.
VII. Change in Control
Upon the occurrence of a "Change in Control" of the
Corporation, as such term is defined below, (i) each participant and beneficiary
already receiving benefits and/or survivor's benefits under the Plan shall
receive a lump sum distribution of their unpaid benefits and/or survivor's
benefits under the Plan in an amount equal to the present value of such benefits
and/or survivor's benefits in full satisfaction of all present and future Plan
liability with respect to such participant or beneficiary, and (ii) each vested
participant who is not already receiving benefits under the Plan shall receive
(A) a lump sum distribution of the present value of his accrued benefit under
the Plan as of the date of such Change in Control, within 30 days of the date of
such Change in Control and (B) a lump sum distribution of the present value of
his additional benefit, if any, accrued under the Plan from the date of the
Change in Control until the date he retires or terminates employment with the
Corporation, within 30 days from the date of the participant's retirement or
termination of employment with the Corporation. In determining the amount of the
lump sum distributions to be paid under this Section VII, the following
actuarial assumptions shall be used: (i) the interest rate used shall be the
interest rate used by the Pension Benefit Guaranty Corporation for determining
the value of immediate annuities as of January 1st of either the year of the
occurrence of the Change in Control or the participant's retirement or
termination of employment, whichever is applicable, (ii) the 1983 Group Annuity
Mortality Table shall be used; and (iii) it shall be assumed that all
participants retired or terminated employment with the Corporation on the date
of the occurrence of the Change in Control for purposes of determining the
amount of the lump sum distribution to be paid upon the occurrence of the Change
in Control.
For purposes of this Plan, a "Change in Control" shall be
deemed to have occurred if
<PAGE> 4
(a) any "Person," as such term is used in Section 13 (d) and
14 (d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Corporation, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation, or any corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions
as their ownership of stock of the Corporation), is or becomes the
"Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then
outstanding securities;
(b) during any period of twenty-four months (not including any
period prior to the effective date of this provision), individuals who
at the beginning of such period constitute the Board, and any new
director (other than (1) a director designated by a person who has
entered into an agreement with the Corporation to effect a transaction
described in clause (a), (c) or (d) of this Section) (2) a director
designated by any Person (including the Corporation) who publicly
announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest)
which if consummated would constitute a Change in Control or (3) a
director designated by any Person who is the Beneficial Owner, directly
or indirectly, of securities of the Corporation representing 10% or
more of the combined voting power of the Corporation's securities)
whose election by the Board or nomination for election by the
Corporation's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason
to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other company, other than (1)
a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation and (2) after which no Person holds 20% or more of the
combined voting power of the then outstanding securities of the
Corporation or such surviving entity; or
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
<PAGE> 5
VIII. Funding
Benefits payable under this Plan shall not be funded and shall
be made out of the general funds of the Corporation; provided, however, that the
Corporation reserves the right to establish one or more trusts to provide
alternate sources of benefit payments under this Plan, provided, further,
however, that upon the occurrence of a "Potential Change in Control" of the
Corporation, as defined below, the appropriate officers of the Corporation are
authorized to make contributions to such a trust fund, established as an
alternate source of benefits payable under the Plan, as are necessary to fund
the lump sum payments to Plan participants required pursuant to Section VII of
this Plan in the event of a Change in Control of the Corporation; provided,
further, however, that if payments are made from such trust fund, such payments
will satisfy the Corporation's obligations under this Plan to the extent made
from such trust fund.
In determining the amount of the necessary contribution to the
trust fund in the event of a Potential Change in Control, the following
actuarial assumptions shall be used: (i) the interest rate used shall be the
interest rate used by the Pension Benefit Guaranty Corporation for determining
the value of immediate annuities as of January 1st of the year of the occurrence
of the Potential Change in Control, (ii) the 1983 Group Annuity Mortality Table
shall be used; and (iii) it shall be assumed that all participants will retire
or terminate employment with the Corporation as soon as practicable after the
occurrence of the Potential Change in Control.
For the purposes of this Plan, "Potential Change in Control"
means:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control of the
Corporation;
(b) any person (including the Corporation) publicly announces
an intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Corporation;
(c) any person, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation
(or a Corporation owned, directly or indirectly, by the stockholders of
the Corporation in substantially the same proportions as their
ownership of stock of the Corporation), who is or becomes the
beneficial owner, directly or indirectly, of securities of the
Corporation representing 9.5% or more of the combined voting power of
the Corporation's then outstanding securities, increases his beneficial
ownership of such securities by 5% or more over the percentage so owned
by such person; or
(d) The Board of Directors of the Corporation adopts a
resolution to the effect that, for purposes of this Plan, a Potential
Change in Control of the Corporation has occurred.
<PAGE> 6
IX. Election of Form of Payment
A participant under this Plan may make an election, on a form
supplied by the Committee, to receive all, none, or a specified portion of his
benefits under this Plan in a lump sum and to receive any balance of such
benefits in the form of an annuity (an "Election"); provided that any such
Election shall be effective for purposes of this Plan only if (i) such
participant remains in the employment of the Corporation or an Affiliate (as
defined under Section XII below), as the case may be, for the full twelve
calendar months immediately following the Election Date of such Election, except
in the case of such participant's death or disability as provided below and (ii)
such participant complies with the administrative procedures set forth by the
Committee with respect to the making of the Election. A participant making such
Election shall be subject to the provisions of Section XII of this Plan.
A participant may elect a payment form different than the
payment form previously elected by him under this Section IX by filing a revised
election form; provided that any such new Election shall be effective only if
the conditions in clauses (i) and (ii) of the immediately preceding paragraph
are satisfied with respect to such new Election. Any prior Election made by a
participant that has satisfied such conditions remains effective for purposes of
this Plan until such participant has made a new Election that satisfies such
conditions.
A participant making an election under this Section IX may
specify the portion of his benefits under this Plan to be received in a lump sum
as follows: 0 percent, 25 percent, 50 percent, 75 percent or 100 percent.
In the event a participant who has made an Election dies or
becomes "totally disabled" as defined in The Dun & Bradstreet Corporation Long
Term Disability Plan while employed by the Corporation or an Affiliate and such
death or total disability occurs during the twelve-calendar-month period
immediately following the Election Date of such Election, the condition that
such participant remain employed with the Corporation or an Affiliate (as
defined in Section XII) for such twelve-month-period shall be deemed to be
satisfied and such Election shall be effective with respect to benefits payable
to such participant or participant's beneficiaries under this Plan.
The amount of any portion of the benefits payable as a lump
sum under this Section IX will equal the present value of such portion of such
benefits, and the present value shall be determined (i) based on a discount rate
equal to the average of 85% of the 15-year non-callable U.S. Treasury bond
yields as of the close of business on the last business day of each of the three
months immediately preceding the date the annuity value is determined and (ii)
using the 1983 Group Annuity Mortality Table.
"Election Date" for purposes of this Plan means the date that
a properly completed election form with respect to an Election or Special
Election (as defined in Section X below) is received by the Corporate Assistant
Treasurer of the Corporation.
X. Special Election of Form of Payment
Any participant under this Plan (except for the Chairman of
the Board of Directors of the Corporation on December 21, 1994) who as of
December 31, 1994 (i) is age 54
<PAGE> 7
or older and (ii) has at least 4 years of Credited Service (as defined in the
Corporation's Supplemental Executive Benefit Plan) may make an election, on a
form supplied by the Committee, to receive all, none, or a specified portion, in
the same percentages as described in Section IX above, of his benefits under
this Plan in a lump sum and to receive any balance of such benefits in the form
of an annuity (a "Special Election"); provided that any such Special Election
shall be effective for purposes of this Plan only if such participant remains in
employment with the Corporation or an Affiliate (as defined in Section XII
below), as the case may be, for the one calendar month immediately following the
Election Date, except in the case of death or disability as provided below and
complies with the administrative procedures set forth by the Committee with
respect to the making of the Special Election; and provided further that the
Election Date with respect to any such Special Election may not be later than
January 31, 1995. A participant making such Special Election shall be subject to
the provisions of Section XII of this Plan.
In the event a participant who has made a Special Election
dies or becomes "totally disabled" as defined in The Dun & Bradstreet
Corporation Long Term Disability Plan while employed by the Corporation or an
Affiliate (as defined in Section XII below) and such death or total disability
occurs during the one-calendar-month-period immediately following the Election
Date of such Special Election, the participant shall for purposes of this
Section X be deemed to have been employed with the Corporation or an Affiliate
(as defined in Section XII below), as the case may be, for such one
calendar-month period, and such Special Election shall be effective with respect
to benefits payable to such participant or participant's beneficiaries under
this Plan.
The amount of any portion of the benefits payable as a lump
sum under this Section X will equal the present value of such portion of such
benefits, and the present value shall be determined (i) based on a discount rate
equal to the average of 85% of the 15-year non-callable U.S. Treasury bond
yields as of the close of business on the last business day of each of the three
months immediately preceding the date the annuity value is determined and (ii)
using the 1983 Group Annuity Mortality Table.
XI. Indemnification
Subject to certain conditions as provided below, the
Corporation shall indemnify each participant or beneficiary who receives any
benefits under this Plan in the form of an annuity for any interest and
penalties that may be assessed by the U.S. Internal Revenue Service (the
"Service") with respect to U.S. Federal income tax on such benefits (payable
under the Plan in the form of an annuity) upon final settlement or judgment with
respect to any such assessment in favor of the Service, provided the basis for
the assessment is that the amendment of this Plan to provide for the Election or
the Special Election causes the participant or the beneficiary, as the case may
be, to be treated as being in constructive receipt of such benefits prior to the
time when such benefits are actually payable under the Plan.
In case any such assessment shall be made against a
participant or beneficiary, such participant or beneficiary, as the case may be
(the "indemnified party"), shall promptly notify the Corporation's Treasurer in
writing and the Corporation, upon request of such indemnified party, shall
select and retain an accountant or legal counsel reasonably satisfactory to the
indemnified party to represent the indemnified party in connection with such
assessment
<PAGE> 8
and shall pay the fees and expenses of such accountant or legal counsel related
to such representation, and the Corporation shall have the right to determine
how and when such assessment by the Service should be settled, litigated or
appealed. In connection with any such assessment, any indemnified party shall
have the right to retain his own accountant or legal counsel, but the fees and
expenses of such accountant or legal counsel shall be at the expense of such
indemnified party unless the Corporation and the indemnified party shall have
mutually agreed to the retention of such accountant or legal counsel.
The Corporation shall not be liable to a participant or
beneficiary for any payments under this Section XI with respect to any
assessment described in the second preceding paragraph if such participant or
beneficiary against whom such assessment is made has not notified or allowed the
Corporation to participate with respect to such assessment in the manner
described above or, following demand by the Corporation, has not made the
deposit to avoid additional interest or penalties as described below, or has
agreed to, or otherwise settled with the Service with respect to, such
assessment without the Corporation's written consent, provided, however, (i) if
such assessment is settled with such consent or if there is a final judgment for
the Service, (ii) the Corporation has been notified and allowed to participate
in the manner as provided above and (iii) such participant or beneficiary has
made any required deposit to avoid additional interest or penalties as described
below, the Corporation agrees to indemnify the indemnified party to the extent
set forth in this Section XI.
In the event a final settlement or judgment with respect to an
assessment as described under this Section XI has been made against a
participant or beneficiary, such participant or beneficiary may elect to receive
a portion or all of his benefits that is otherwise payable as an annuity under
the Plan in the form of a lump sum in accordance with procedures as the
Committee may set forth, and such lump sum distribution will be made as soon as
practicable after any such election. At the time such assessment is made against
such participant or beneficiary (the "assessed party") and prior to any final
settlement or judgement with respect to such assessment, if so directed by the
Corporation, such assessed party shall, as a condition to receiving an indemnity
under this Section XI, as soon as practicable after notification of such
assessment make a deposit with the Service to avoid any additional interest or
penalties with respect to such assessment and, upon the request of such assessed
party, the Corporation shall lend, or arrange for the lending to, such assessed
party a portion of his remaining benefit under the Plan, not to exceed the lump
sum value of such benefit under the Plan, determined using the actuarial
assumptions set forth in Section IX, solely for purposes of providing the
assessed party with funds to make a deposit with the Service to avoid any
additional interest or penalties with respect to such assessment.
XII. Limitations on Payment of Benefits
If a participant under this Plan has at any time made an
Election or a Special Election to have all or a portion of the benefits under
this Plan distributed in a lump sum, such participant shall be subject to this
Section XII.
<PAGE> 9
Notwithstanding any other provision of this Plan to the
contrary, no benefits or no further benefits, as the case may be, shall be paid
to a participant who is subject to this Section XII if the Committee reasonably
determines that such participant has:
(i) To the detriment of the Corporation or any
Affiliate, directly or indirectly acquired, without the prior written
consent of the Committee, an interest in any other company, firm,
association, or organization (other than an investment interest of less
than 1% in a publicly-owned company or organization), the business of
which is in direct competition with the business (present or future) of
the Corporation or any of its Affiliates;
(ii) To the detriment of the Corporation or any
Affiliate, directly or indirectly competed with the Corporation or any
Affiliate as an owner, employee, partner, director or contractor of a
business, in a field of business activity in which the participant has
been primarily engaged on behalf of the Corporation or any Affiliate or
in which he has considerable knowledge as a result of his employment by
the Corporation or any Affiliate, either for his own benefit or with
any person other than the Corporation or any Affiliate, without the
prior written consent of the Committee; or
(iii) Been discharged from employment with the
Corporation or any Affiliate for "Cause."
An "Affiliate" for purposes of this Plan means any
corporation, partnership, division or other organization controlling, controlled
by or under common control with the Corporation or any joint venture entered
into by the Corporation.
"Cause" for purposes of this Section XII shall include the
occurrence of any of the following events or such other dishonest or disloyal
act or omission as the Committee determines to be "cause":
(b) The participant has misappropriated any funds or property
of the Corporation or any Affiliate;
(c) The participant has, without the prior knowledge or
written consent of the Committee, obtained personal profit as a result
of any transaction by a third party with the Corporation or any
Affiliate; or
(d) The participant has sold or otherwise imparted to any
person, firm, or corporation the names of the customers of the
Corporation or any Affiliate or any confidential records, data,
formulae, specifications and other trade secrets or other information
of value to the Corporation or any Affiliate derived by his or her
association with the Corporation or any Affiliate.
In any case described in this Section XII, the participant shall be given prior
written notice that no benefits or no further benefits, as the case may be, will
be paid to such participant. Such written notice shall specify the particular
act(s), or failures to act, on the basis of which the decision to terminate his
benefits has been made.
<PAGE> 10
Notwithstanding any other provision of this Plan to the
contrary, a participant who receives in a lump sum any portion of his benefits
under this Plan pursuant to an Election or Special Election shall receive such
lump sum portion of his benefits subject to the condition that if such
participant engages in any of the acts described in clause (i) or (ii) of this
Section XII, then such participant shall within 60 days after written notice by
the Corporation repay to the Corporation the amount described in the immediately
following sentence. The amount to be repaid shall equal the amount, as
determined by the Committee, of the participant's lump sum benefit paid under
this Plan to which such participant would not have been entitled, if such lump
sum benefit had instead been payable in the form of an annuity under this Plan
and such annuity payments were subject to the provisions of this Section XII.
XIII. Miscellaneous
This Plan may be terminated at any time by the Board of
Directors of the Corporation, in which event the rights of participants to their
accrued benefits shall become nonforfeitable. This Plan may also be amended at
any time by the Board of Directors of the Corporation, except that no such
amendment shall deprive any participant of his benefits accrued at the time of
such amendment.
No right to payment or any other interest under this Plan may
be alienated, sold, transferred, pledged, assigned, or made subject to
attachment, execution, or levy of any kind.
Nothing in this Plan shall be construed as giving any employee
the right to be retained in the employ of the Corporation. The Corporation
expressly reserves the right to dismiss any employee at any time without regard
to the effect which such dismissal might have upon him under the Plan.
This Plan shall be construed, administered and enforced
according to the laws of the State of New York.
XIV. Effective Date
This Plan shall be effective as of October 17, 1990, upon its
adoption by the Board of Directors of The Dun & Bradstreet Corporation.
<PAGE> 1
EXHIBIT 10(c)
PROFIT PARTICIPATION BENEFIT EQUALIZATION PLAN
OF
THE DUN & BRADSTREET CORPORATION
As Amended and Restated Effective July 16, 1997
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") 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.
<PAGE> 2
2
III. Participation in the Plan
All members of the Profit Participation Plan shall be eligible
to participate in this Plan whenever their benefits under the Profit
Participation Plan as from time to time in effect would exceed the limitations
on benefits and contributions imposed by Sections 401, 415 or any other
applicable Section of the Code, calculated from and after September 2, 1974. For
purposes of this Plan, benefits of a participant in this Plan shall be
determined as though no provision were contained in the Profit Participation
Plan incorporating limitations imposed by Sections 401, 415 or any other Section
of the Code.
IV. Benefit Limitations
For purposes of this Plan and the Profit Participation Plan,
the limitations imposed by Section 415 of the Code shall be deemed to be met
when the sum of the participant's defined benefit plan fraction and his defined
contribution plan fraction equals 1.0, as such fractions are computed for
purposes of Section 415 of the Code and Section 14.4 of the Profit Participation
Plan.
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.
<PAGE> 3
3
VI. Change in Control
Upon the occurrence of a "Change in Control", each participant
under the Plan shall receive a lump sum distribution equal to:
(1) the total amount which such participant had accrued under the Plan
which has 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
For purposes of this Plan, a "Change in Control" shall be
deemed to have occurred if
(a) any "Person," as such term is used in Section 13 (d) and
14 (d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Corporation, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation, or any corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions
as their ownership of stock of the Corporation), is or becomes the
"Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then
outstanding securities;
(b) during any period of twenty-four months (not including any
period prior to the effective date of this provision), individuals who
at the beginning of such period constitute the Board, and any new
director (other than (1) a director designated by a person who has
entered into an agreement with the Corporation to effect a transaction
described in clause (a), (c) or (d) of this Section, (2) a director
designated by any Person (including the Corporation) who publicly
announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest)
which if consummated
<PAGE> 4
4
would constitute a Change in Control or (3) a director designated by
any Person who is the Beneficial Owner, directly or indirectly, of
securities of the Corporation representing 10% or more of the combined
voting power of the Corporation's securities) whose election by the
Board or nomination for election by the Corporation's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved cease for any reason to constitute at least a majority
thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other company, other than (1)
a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation and (2) after which no Person holds 20% or more of the
combined voting power of the then outstanding securities of the
Corporation or such surviving entity; or
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
VII. Miscellaneous
This Plan may be terminated at any time by the Board of
Directors of the Corporation, in which event the rights of participants to their
accrued benefits shall become nonforfeitable. This Plan may also be amended at
any time by the Board of Directors of the Corporation, except that no such
amendment shall deprive any participant of his benefits accrued at the time of
such amendment.
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
<PAGE> 5
5
Corporation. The Corporation expressly reserves the right to dismiss any
employee at any time without regard to the effect which such dismissal might
have upon him under the Plan.
This Plan shall be construed, administered and enforced
according to the laws of the State of New York.
VIII. Effective Date
This Plan shall be effective as of October 17, 1990, upon its
adoption by the Board of Directors of the Dun & Bradstreet Corporation.
<PAGE> 1
EXHIBIT 10(d)
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.
<PAGE> 2
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
2
<PAGE> 3
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:
3
<PAGE> 4
(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
4
<PAGE> 5
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
shareholder 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
5
<PAGE> 6
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 Paragraph 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
Paragraph 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
6
<PAGE> 7
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. Except as otherwise
provided in this Paragraph 6(j), a stock option shall not be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and during the lifetime of an optionee an option shall be
exercisable only by the optionee. An option exercisable after the death of
an optionee or a transferee pursuant to the following sentence may be
exercised by the legatees, personal representatives or distributees of the
optionee or such transferee. The Committee may, in its discretion,
authorize all or a portion of the options previously granted or to be
granted to an optionee to be on terms which permit irrevocable transfer
for no consideration by such optionee to (i) any or all of the spouse,
children or grandchildren of the optionee ("Immediate Family Members"),
(ii) a trust or trusts for the exclusive benefit of the optionee and/or
any or all of such Immediate Family Members, or (iii) a partnership in
which the optionee and/or any or all of such Immediate Family Members are
the only partners, provided that subsequent transfers of transferred
options shall be prohibited except those in accordance with the first
sentence of this Paragraph 6(j). Following transfer, any such options
shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. The events of termination of
employment of Paragraphs 6(f), 6(g) and 6(h) hereof shall continue to be
applied with respect to the original optionee, following which the options
shall be exercisable by the transferee only to the extent, and for the
periods specified, in Paragraphs 6(f), 6(g) and 6(h). The Committee may
delegate to the
7
<PAGE> 8
Administrative Committee the authority to authorize transfers, establish
terms and conditions upon which transfers may be made and establish
classes of optionees eligible to transfer options, as well as to make
other determinations with respect to option transfers.
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
8
<PAGE> 9
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
9
<PAGE> 10
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 shareholders of the Company will receive cash or
10
<PAGE> 11
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 shareholders' 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
11
<PAGE> 12
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
12
<PAGE> 13
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 shareholders 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.
13
<PAGE> 14
12. EFFECTIVENESS OF THE PLAN AND AMENDMENTS
The Plan became effective upon approval by the shareholders at the 1982
Annual Meeting. Paragraph 6(j) as amended became effective upon approval by the
Board of Directors at its July 16, 1997 meeting.
14
<PAGE> 1
EXHIBIT 10(e)
1991 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 17,000,000. The maximum number of shares for which
options may be granted from the 1995 Annual Meeting during the remaining term of
the Plan to any individual optionee shall be 1,000,000. 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
<PAGE> 2
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,
except as permitted under regulations adopted under Section 16 of the Securities
Exchange Act of 1934. 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.
2
<PAGE> 3
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.
3
<PAGE> 4
5. LIMITATIONS
No stock option may be granted under the Plan after February 19, 2001, 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) 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
4
<PAGE> 5
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. No optionee shall have any
rights to dividends or other rights of a shareholder 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(h) of the Plan.
(e) 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.
(f) 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
5
<PAGE> 6
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 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 Paragraph 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 Paragraph 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.
(g) 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 as described above, each stock option and stock
appreciation right held by such participant shall thereupon terminate.
6
<PAGE> 7
(h) 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.
(i) Nontransferability of Stock Options. Except as otherwise
provided in this Paragraph 6(i), a stock option shall not be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and during the lifetime of an optionee an option shall be
exercisable only by the optionee. An option exercisable after the death of
an optionee or a transferee pursuant to the following sentence may be
exercised by the legatees, personal representatives or distributees of the
optionee or such transferee. The Committee may, in its discretion,
authorize all or a portion of the options previously granted or to be
granted to an optionee to be on terms which permit irrevocable transfer
for no consideration by such optionee to (i) any or all of the spouse,
children or grandchildren of the optionee
7
<PAGE> 8
("Immediate Family Members"), (ii) a trust or trusts for the exclusive
benefit of the optionee and/or any or all of such Immediate Family
Members, or (iii) a partnership in which the optionee and/or any or all of
such Immediate Family Members are the only partners, provided that
subsequent transfers of transferred options shall be prohibited except
those in accordance with the first sentence of this Paragraph 6(i).
Following transfer, any such options shall continue to be subject to the
same terms and conditions as were applicable immediately prior to
transfer. The events of termination of employment of Paragraphs 6(e), 6(f)
and 6(g) hereof shall continue to be applied with respect to the original
optionee, following which the options shall be exercisable by the
transferee only to the extent, and for the periods specified, in
Paragraphs 6(e), 6(f) and 6(g). The Committee may delegate to the
Administrative Committee the authority to authorize transfers, establish
terms and conditions upon which transfers may be made and establish
classes of optionees eligible to transfer options, as well as to make
other determinations with respect to option transfers.
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).
8
<PAGE> 9
(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.
9
<PAGE> 10
(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 in writing 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.
10
<PAGE> 11
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 (both in the aggregate and
to any one optionee), 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 shareholders 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
11
<PAGE> 12
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 shareholders' 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. 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
12
<PAGE> 13
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.
13
<PAGE> 14
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 shareholders of the
Company, would:
14
<PAGE> 15
(a) Except as is provided in Paragraph 9 of the Plan, increase the
total number of shares reserved for the purposes of the Plan or change the
maximum number of shares for which options may be granted to any optionee.
(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 AND AMENDMENTS
The Plan became effective upon approval by the shareholders at the 1991
Annual Meeting. The Amendments proposed in 1995 became effective upon approval
by the shareholders at the 1995 Annual Meeting. Paragraph 6(f) as amended shall
apply to all options outstanding at the date of the 1995 Annual Meeting or
thereafter. Paragraph 6(i) as amended became effective upon approval by the
Board of Directors at its July 16, 1997 meeting.
15
<PAGE> 1
EXHIBIT 10(h)
LIMITED STOCK APPRECIATION RIGHTS AGREEMENT
RELATING TO STOCK OPTIONS
UNDER THE 1991 KEY EMPLOYEES STOCK OPTION PLAN
This Agreement confirms the grant on [ grant date ] by THE DUN & BRADSTREET
CORPORATION (the "Company") to:
[Associate Name] (the "Associate")
of Limited Stock Appreciation Rights ("LSAR's") with respect to the following
ten-year stock options to purchase shares of the Company's Common Stock, par
value $1 per share ("Common Stock"), presently held by the Associate or granted
to the Associate contemporaneously herewith under the 1991 Key Employees Stock
Option Plan for The Dun & Bradstreet Corporation and Subsidiaries, as amended
from time to time (the "1991 Plan"):
Date of Option Grant Number of Shares Option Exercise Price
- - -------------------- ---------------- ---------------------
[ ] [ ] [$ ]
Each LSAR represents the right to receive, in cash, upon exercise, the excess of
the Tender Offer Price (as defined below) over the option exercise price of the
above option to which the LSAR relates, such excess constituting the
"Appreciation." These LSAR's are issued in accordance with and are subject to
the terms of the 1991 Plan, which plan is incorporated herein by reference, and
the following additional terms and conditions:
1. Each LSAR is related to an option (the "Related Option") to purchase the
number of shares of Common Stock at the option exercise price per share
indicated above.
2. These LSAR's may be exercised, in whole or in part, only on and after six
months after the date of grant and only during the 30-day period beginning
on the first day following the acquisition of at least 20% of all
outstanding shares of Common Stock pursuant to any tender or exchange
offer for shares of Common Stock (other than one made by the Company),
whether the Company does or does not support the offer. A tender or
exchange offer filed with the Securities and Exchange Commission on Form
14D-1 (or successor form) shall be treated conclusively as a tender or
exchange offer for purposes of this provision. Each LSAR is exercisable
only if and to the extent the Related Option is exercisable. During the
30-day period when these LSAR's are exercisable, other stock appreciation
rights relating to the Related Option shall not be exercisable.
3. To the extent exercisable, these LSAR's may be exercised from time to time
by notice to the Company. The date a notice of exercise is received by the
Company shall be the exercise date. At the time of payment of the
Appreciation to the Associate, the Company 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 an LSAR.
4. Exercise of an LSAR shall reduce the number of shares of Common Stock
covered by the Related Option and any other related stock appreciation
right on a share for share basis. The exercise of a Related Option or of
any other related stock appreciation right shall reduce the number of
related LSAR's on the same basis.
<PAGE> 2
5. The term "Tender Offer Price" when used herein shall mean the highest
price paid for shares of Common Stock in any tender or exchange offer of
the kind contemplated in Paragraph 2 above which is in effect at any time
during the 60-day period preceding the date of exercise of an LSAR,
provided that any securities or property which are part or all of the
consideration paid for shares of Common Stock in any such tender or
exchange offer shall be valued at the higher of (i) the valuation placed
on such securities or property by the person making such offer or (ii) the
valuation (for purposes hereof) placed on such securities or property by
the Executive Compensation and Stock Option Committee of the Board of
Directors of the Company (the "Committee").
6. These LSAR's shall terminate when the Associate is no longer subject to
the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended.
7. These LSAR's are not transferable by the Associate, provided that the
Committee may, in its discretion, authorize the irrevocable transfer for
no consideration by the Associate to certain of the Associate's immediate
family members or to certain trusts and partnerships in which the
Associate and/or such family members have an interest.
IN WITNESS WHEREOF, The Dun & Bradstreet Corporation has caused this Agreement
to be executed in duplicate by its officer thereunto duly authorized.
THE DUN & BRADSTREET CORPORATION
By______________________________
Chief Executive Officer
The undersigned hereby accepts and agrees to all the terms and provisions of the
foregoing Limited Stock Appreciation Rights Agreement and acknowledges receipt
of (i) a copy of the Prospectus dated May 31, 1995 relating to the 1991 Key
Employees Stock Option Plan for The Dun & Bradstreet Corporation and
Subsidiaries and (ii) a copy of the [ year ] Annual Report of The Dun &
Bradstreet Corporation.
___________________ __________________________________
Date Associate
<PAGE> 1
EXHIBIT 10(i)
KEY EMPLOYEES PERFORMANCE UNIT 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 ("Dun &
Bradstreet") and its subsidiaries (collectively, the "Company") 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 performance units. 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 interest in the long-term
performance of the Company.
2. ADMINISTRATION
The Board of Directors of Dun & Bradstreet 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 (a) shall not be eligible to participate in the Plan, (b) shall not at
any time within one year prior to his or her 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 Dun & Bradstreet or any of its
affiliates may have been granted, except as permitted under regulations adopted
under Section 16 of the Securities Exchange Act of 1934, and (c) from and after
April 16, 1996, shall be an "outside director" as defined in the regulations
under Section 162(m) of the Internal Revenue Code (the "Code"). The Committee
shall have the authority, consistent with the
<PAGE> 2
Plan, to determine the provisions of the performance units to be granted, to
interpret the Plan and the performance units granted under the Plan, to adopt,
amend and rescind rules and regulations for the administration of the Plan and
the performance units, 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.
3. ELIGIBILITY
Key employees (but not members of the Committee and any person who serves
only as a Director) of the Company, who are from time to time responsible for
the management, growth and protection of the business of the Company, are
eligible to be granted performance units under the Plan. The participants under
the Plan shall be selected from time to time by the Committee, in its
discretion, from among those eligible, and the Committee shall determine, in its
discretion, consistent with the terms of the Plan, the terms and conditions of
the performance units granted to each participant. The granting of a performance
unit under the Plan shall impose no obligation on Dun & Bradstreet or any
subsidiary to continue the employment of a participant and shall not lessen or
affect the right to terminate the employment of a participant.
4. PERFORMANCE UNITS
Performance units ("Units") granted under this Plan shall be subject to
the following terms and conditions:
(a) Award Period. The Award Period for a Unit shall be established by the
Committee at the time of grant and shall be not more than four (4) calendar
years in length. The Committee may provide that the Award Period for such Units
shall begin with the calendar year during which such Units are granted.
Notwithstanding any other provision of the Plan, if the Committee anticipates
that the Company will be distributing to the Company's shareholders the voting
securities of any
2
<PAGE> 3
entity then wholly owned by the Company ("Newco"), then the Committee may
establish a separate Award Period for those employees who continue employment
with the Company following the date on which the voting securities of Newco are
distributed to the Company's shareholders (the "Spin-off Date"), which Award
Period may commence on the first day of the next calendar year and terminate on
the earlier of the last day of such year or the Spin-off Date.
(b) Valuation of Units. (i) Payment values for each Unit, which may be in
cash, in restricted stock issued pursuant to the Key Employees Restricted Stock
Plan or other restricted stock plan of Dun & Bradstreet as in effect from time
to time, in performance shares of common stock in the Company or in any
combination of the foregoing, shall be established by the Committee, together
with targets to be achieved during the Award Period for one or more performance
measures, no later than March 31 of the first year of the Award Period; such
performance measures, targets and Unit payment schedules shall govern the
valuation of Units for award payment determination purposes.
(ii) The Committee shall select performance measures for each Award Period
from the following: (1) earnings per share, net income, operating income,
revenue, working capital, return on equity, return on assets, total return to
shareholders, and average sales growth, each of which may be on a corporate-wide
basis or with respect to one or more operating units, divisions, acquired
businesses, minority investments, partnerships or joint ventures; and (2) with
respect to participants other than executive officers of Dun & Bradstreet (as
such are determined by the Committee), priority objectives or other qualitative
measures. Executive officers shall include "covered employees" as defined in the
regulations under Section 162(m) of the Code.
(iii) The Committee may increase or decrease targets and/or Unit payment
schedules if in its sole judgment there have been extraordinary occurrences, not
anticipated when Unit grants
3
<PAGE> 4
were approved, which significantly have affected or may affect the Company's
earnings or other performance measures, except that no increase may be made with
respect to awards earned by executive officers, and no change in the targets
applicable to executive officers may be made during the Award Period.
Notwithstanding the above, any expenses incurred either before or after a Change
in Control (as defined below) occurs, as a result of a Change in Control, as
determined by the Company's outside accountants as of the date the Change in
Control occurs, shall not be taken into account in determining whether
performance criteria and targets have been achieved, and in no event shall a
Change in Control constitute an extraordinary occurrence which could justify a
change in performance criteria, targets and/or Unit payment schedules.
(iv) In calculating whether the performance targets for executive officers
have been met, the Committee (A) will make appropriate conforming adjustments in
the performance measures or the targets to exclude the effects of any corporate
transactions such as acquisitions, divestitures and reorganizations, and (B)
will not take into account extraordinary accounting changes or items (as defined
under generally accepted accounting principles), restructuring charges,
nonrecurring events, or any unusual events affecting earnings by more than 10%,
which in any such case affect the results that otherwise would have been
attained under the applicable performance measures.
(c) Payment of Units. As promptly as practicable after the completion of
an Award Period, the Committee shall determine what, if any, award payments have
been earned with respect to related Units. Payment shall be made to participants
in cash, in restricted stock shares, in performance shares of common stock in
the Company or in any combination of the foregoing, as established by the
Committee, promptly after the date the Committee makes such determination. For
purposes of such payment, restricted stock shares and performance shares shall
be valued at the fair market price (i.e., the average of high and low trading
prices) on the business day before the date of such determination. The Company
shall require payment by participants of any
4
<PAGE> 5
amounts the Company may determine to be necessary to withhold for federal, state
or local taxes, except that the Committee may permit a participant to elect to
have a portion of any restricted stock deliverable in payment of an award
withheld to provide for payment of any such taxes.
(d) Termination of Employment. Units held by a participant whose
employment with the Company or any of its subsidiaries terminates for any reason
less than one year after the date of grant of such Units shall be canceled. If
employment terminates more than one year after the date of grant by reason of
disability, death or retirement, the participant shall receive full payment of
the final value of the Units the participant has been granted. If employment
terminates more than one year after the date of grant by reason of termination
by the Company (other than for cause), the Committee may, at its discretion and
subject to such limitations and at such time or times as it may deem advisable,
provide for a pro rata payment of the final value of the Units the participant
has been granted. If employment terminates more than one year after the date of
grant for any reason not specified above in this Section 4(d), Units held by a
participant shall be canceled. Participants shall receive no payment with
respect to canceled Units. Pro rata payment shall be based upon the number of
completed months of the Award Period during which the participant was an
employee relative to the total number of months in the full Award Period. Such
payment shall be made as promptly as practicable after the completion of the
applicable Award Period unless the Committee shall determine, in the event of
the participant's termination by the Company (other than for cause), to make an
earlier payment. The full amount of any award payment to terminated participants
hereunder shall be paid in cash.
(e) Non-Assignability. Each Unit granted under this Plan shall by its
terms be nontransferable by the participant except by will or the laws of
descent and distribution. Each Unit shall be payable during a participant's
lifetime only to the participant.
5
<PAGE> 6
(f) Limitation on Value of Units. The total of all payments to any
participant under this Plan, including cash, restricted stock and/or performance
shares, in any calendar year shall not exceed $6,000,000.
(g) Other Terms and Conditions. The Committee may impose such other terms,
provisions and conditions, not inconsistent with the Plan, as it shall determine
in its sole judgment. Notwithstanding the restrictions contained herein with
respect to executive officers, the Committee may decide to make awards or allow
payment of awards to executive officers without regard to said restrictions (i)
if the Committee decides that special or unforeseen circumstances make such
action advisable or (ii) if such executive officers do not thereby become
"covered employees."
5. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan: (a) a transfer of an employee from the Company
to a subsidiary or vice versa, or from one subsidiary to another, (b) a leave of
absence, duly authorized in writing 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, and (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.
6. CHANGE IN CONTROL
(a)(i) With respect to Units granted on or prior to October 15, 1997, upon
the occurrence or potential occurrence of certain events defined by the
Committee, including without limitation, a merger, consolidation, combination,
reorganization or other transaction in which the Company is not
6
<PAGE> 7
the surviving corporation or in which the determination of whether performance
criteria and targets of outstanding Units will be satisfied at the end of the
Award Period otherwise is impaired (any such event, a "Triggering Event"), or a
"Change in Control" of the Company, Units held by a participant, including Units
held less than one year after the date of grant of such Units, shall immediately
become payable in full, with the final value of such Units determined as though
performance criteria and targets for the full Award Period had been achieved.
(ii) With respect to Units granted after October 15, 1997, (1) upon the
occurrence or potential occurrence of any Triggering Event that does not
constitute a "Change in Control" of the Company, Units held by a participant,
including Units held less than one year after the date of grant of such Units,
shall immediately become payable in an amount equal to the product of (A) the
final value of such Units determined as though performance criteria and targets
for the full Award Period had been achieved at 100%, multiplied by (B) a
fraction, the numerator of which is the number of days in the Award Period prior
to the occurrence of the Triggering Event and the denominator of which is the
number of days in the Award Period; and (2) upon the occurrence of a "Change in
Control," Units held by a participant, including Units held less than one year
after the date of grant of such Units, shall immediately become payable in full,
with the final value of such Units determined as though performance criteria and
targets for the full Award Period had been achieved at 100%.
(b) For all purposes of this Plan, "Change in Control" means (i) any
"Person," as such term is used in Sections 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
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "Beneficial Owner" (as
defined in Rule 13d-3 under the Exchange Act),
7
<PAGE> 8
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
Section) whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who either were Directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof;
(iii) the shareholders 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 shareholders 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.
8
<PAGE> 9
(c) If the Company has not fulfilled a commitment to make a restricted
stock award under a Company restricted stock plan to the participant at the time
of the payment of the participant's Units, the Committee shall authorize an
immediate payment in cash under this Plan to the participant equal in amount to
the value of such restricted stock award without restrictions.
7. AMENDMENTS
The Committee may amend or discontinue the Plan in its sole discretion,
but no amendment or discontinuation shall be made which would impair the rights
of the participant under any Unit granted on or prior to October 15, 1997
without the participant's consent, or which, without the approval of the
shareholders of the Company, would change (a) the performance measures in
Section 4(b) with respect to "covered employees," (b) the individuals or class
of individuals eligible to participate in the Plan, or (c) the maximum amount
payable to an individual participant under the Plan; provided, however, that
upon the occurrence of a Change in Control of the Company, no amendment or
discontinuation shall be made which would impair the rights of the participant
under any Unit theretofore granted without the participant's consent.
8. EFFECTIVENESS
The amendments proposed in 1996 became effective upon approval by the
shareholders at the 1997 Annual Meeting. Sections 6(a) and 7 as amended became
effective upon approval by the Board of Directors at its October 15, 1997
meeting. Section 4(a) as amended became effective upon approval by the Board of
Directors at its December 17, 1997 meeting.
9
<PAGE> 1
EXHIBIT 10(k)
1989 KEY EMPLOYEES RESTRICTED STOCK 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 grant of restricted stock awards ("Awards"). 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 that may be
issued under the Plan is 2,400,000. The shares may consist, in whole or in part,
of unissued shares or treasury shares. If any shares awarded under the Plan are
reacquired by the Company pursuant to the Plan, such shares may thereafter be
reissued 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
<PAGE> 2
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
awarded or to whom stock options or stock appreciation rights of the Company or
any of its affiliates may have been granted under this Plan or any other plan of
the Company or its affiliates, except as permitted under regulations adopted
under Section 16 of the Securities Exchange Act of 1934. The Committee shall
have the authority, consistent with the Plan, to determine the provisions of the
Awards to be granted, to interpret the Plan and any agreements with participants
under the Plan governing the terms of Awards ("Award Agreements"), to adopt,
amend and rescind rules and regulations for the administration of the Plan and
the Awards, 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.
4. ELIGIBILITY
Key management and other employees (but not members of the Committee and
any person who serves only as a Director) of the Company and its subsidiaries,
who are from time to time responsible for the management, growth or protection
of the business of the Company and its subsidiaries, are eligible to be granted
Awards under the Plan. The participants under the Plan shall be selected from
time to time by the Committee, in its discretion, from among those eligible, and
the Committee shall determine, in its discretion, consistent with the terms of
the Plan, the terms and conditions of the Awards granted to each participant.
The granting of an Award under the Plan shall impose no obligation on the
Company or any subsidiary to continue
2
<PAGE> 3
the employment of a participant and shall not lessen or affect the Company's or
subsidiary's right to terminate the employment of a participant.
5. DURATION OF THE PLAN
No Award may be granted under the Plan after December 31, 1998.
6. RESTRICTED STOCK AWARDS
Awards granted under this Plan shall be subject to the following terms and
conditions:
(a) The prospective recipient of an Award shall not, with respect to such
Award, be deemed to have become a participant or to have any rights with
respect to such Award until and unless such recipient shall have executed
an Agreement or other instrument evidencing the Award and its terms and
conditions and delivered a fully executed copy thereof to the Company and
otherwise complied with the then applicable terms and conditions under the
Plan.
(b) Each participant shall be issued a certificate in respect of shares of
restricted stock awarded under the Plan. Such certificate shall be
registered in the name of the participant, and shall bear an appropriate
legend referring to the terms, conditions and restrictions applicable to
such Award substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the 1989 Key
3
<PAGE> 4
Employees Restricted Stock Plan for The Dun & Bradstreet Corporation
and Subsidiaries and an Agreement entered into between the
registered owner and The Dun & Bradstreet Corporation. Copies of
such Plan and Agreement are on file in the offices of the
Secretary's Department of The Dun & Bradstreet Corporation."
(c) All certificates for restricted stock delivered under this Plan shall
be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Company's Common Stock is then listed and any applicable
federal or state securities law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to
such restrictions.
(d) The Committee may adopt rules which provide that the stock certificates
evidencing such shares may be held in custody by a bank or other
institution, or that the Company may itself hold such shares in custody
until the restrictions thereon shall have lapsed, and may require as a
condition of any Award that the participant shall have delivered a stock
power endorsed in blank relating to the stock covered by such Award.
(e) Recipients of Awards under the Plan are not required to make any
payment or provide consideration other than the rendering of services.
4
<PAGE> 5
7. RESTRICTIONS AND FORFEITURES
The shares of Common Stock awarded pursuant to the Plan shall be subject to
the following restrictions and conditions:
(a) During a period set by the Committee of no less than one year nor more
than ten years commencing with the date of an Award (the "Restriction
Period"), the participant will not be permitted to sell, transfer, pledge,
assign or otherwise dispose of restricted stock awarded pursuant to said
Award. Within these limits the Committee may provide for the lapse of such
restrictions in installments where deemed appropriate.
(b) Except as provided in Section 7(a), the participant shall have with
respect to the restricted stock all of the rights of a shareholder of the
Company, including the right to vote the shares and receive dividends and
other distributions.
(c) Subject to the provisions of Section 7(d), upon termination of
employment for any reason during the Restriction Period, all shares still
subject to restriction shall be forfeited by the participant and will be
reacquired by the Company.
(d) In the event of a participant's retirement, disability or death, all
restrictions with respect to such participant's restricted stock shall
lapse (subject to Section 7(e)) and such participant or such participant's
beneficiary shall be entitled to receive (if held in custody by the
Company, a bank or other institution) and retain all of the stock subject
to the Award; provided, however, that, in the case of retirement, the
Committee in its sole
5
<PAGE> 6
discretion may determine that such restrictions shall not lapse as to all
or a portion of an Award or that all or any of the shares subject to
restriction shall be forfeited.
(e) The Committee may impose any conditions on an Award it deems advisable
to ensure the participant's payment to the Company of any federal, state or
local taxes required to be withheld with respect to such Award.
8. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan: (a) a transfer of an employee from the Company to
a subsidiary or vice versa, or from one subsidiary to another, (b) a leave of
absence, duly authorized in writing 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 Awards may
be granted and the number and class of shares under each Award shall be
correspondingly adjusted by the Committee. Except as otherwise specifically
provided in the Agreement relating to any Award, in the event of a Change in
Control, merger, consolidation,
6
<PAGE> 7
combination, reorganization or other transaction in which the shareholders 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 shareholders' vote on such transaction or prior to the
expiration date (without extensions) of the tender or exchange offer (i)
accelerate the termination of the Restriction Period so that all restrictions
with respect to a participant's restricted stock shall immediately lapse without
regard to any limitations of time or amount otherwise contained in the Plan or
the Agreement and/or (ii) determine that the Awards shall be adjusted and make
such adjustments by substituting for Common Stock of the Company subject to
Awards, 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 number of shares
subject to an Award 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 participant if the
participant had exchanged all of such shares in the transaction or sold or
exchanged all of such shares pursuant to the tender or exchange offer. For
purposes of this Section 9, "Change in Control" means:
7
<PAGE> 8
(a) any "Person," as such term is used in Sections 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 shareholders of the Company in substantially the same
proportions 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 20% or
more of the combined voting power of the Company's then outstanding
securities;
(b) during any period of twenty-four months (not including any period prior
to the execution of this Agreement), individuals who at the beginning of
such period constitute the Board, and any new Director (other than (1) a
Director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of this
Section, (2) a Director designated by any Person (including the Company)
who publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest)
which if consummated would constitute a Change in Control or (3) a Director
designated by any Person who is the Beneficial Owner, directly or
indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company's securities) whose election by the
Board or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the Directors then still in
office who either were Directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof;
8
<PAGE> 9
(c) the shareholders of the Company approve a merger or consolidation of
the Company with any other corporation, 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 and (2) after which no Person holds 20%
or more of the combined voting power of the then outstanding securities of
the Company or such surviving entity; or
(d) the shareholders 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. 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 participant under any Award theretofore granted, without the
participant's consent, or which, without the approval of the shareholders of the
Company, would:
(a) Except as is provided in Section 9 of the Plan, increase the total
number of shares reserved for the purposes of the Plan.
9
<PAGE> 10
(b) Change the employees (or class of employees) eligible to receive Awards
under the Plan.
(c) Materially increase the benefits accruing to employees participating
under the Plan.
11. EFFECTIVENESS OF THE PLAN
The Plan became effective upon approval by the shareholders at the 1989
Annual Meeting.
10
<PAGE> 1
EXHIBIT 10(l)-a
[NEW HIRE MASTER 3X]
[DATE OF HIRE]
PERSONAL AND CONFIDENTIAL
[NAME]
[ADDRESS]
[ADDRESS]
Dear [FIRST_NAME]:
The Dun & Bradstreet Corporation (the "Company") considers it
essential to the best interests of its shareholders to foster the continued
employment of key management personnel. In this connection, the Board of
Directors of the Company (the "Board") recognizes that, as is the case with many
publicly held corporations, the possibility of a "Change in Control" (as such
term is defined in Section 2) may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of key management personnel to the detriment of the
Company and its shareholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of key members of
the Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a Change in Control.
In order to induce you to remain in the employ of the Company, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement (the "Agreement") in the event your employment with the Company
is terminated under the circumstances described below subsequent to a Change in
Control. No provision of this letter agreement shall be effective for any
purpose whatsoever except upon the occurrence of either a "Potential Change in
Control" (as such term is defined in Section 2) or a Change in Control.
<PAGE> 2
[DATE OF HIRE]
Page 2
1. Term of Agreement. This Agreement shall commence as of the date
hereof, and shall continue in effect through the third December 31st occurring
after the date hereof; provided, however, that commencing on the January 1st
following such third December 31st, and each January 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than September 30th of the preceding year, the Company or you shall
have given notice to the other that it or you, respectively, does not wish to
extend this Agreement, provided, however, that no such notice shall be effective
if a Change in Control or Potential Change in Control shall have occurred prior
to the date of such notice; and provided, further, that if a Change in Control
shall have occurred during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of not less than twenty-four
(24) months beyond the month in which such Change in Control occurred.
2. Change in Control; Potential Change in Control. (i) No benefits
shall be payable hereunder unless there shall have been a Change in Control, as
set forth below. For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred if
(a) any "Person", as such term is used in Sections 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 company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions 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 20% or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of twenty-four months (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other
than (1) a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(a), (c) or (d) of this Section, (2) a director designated by any Person
(including the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an actual or
threatened proxy contest) which if consummated would constitute a Change
in Control or (3) a director designated by any Person who is the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's
securities) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then
<PAGE> 3
[DATE OF HIRE]
Page 3
still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof;
(c) the shareholders of the 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 and (2) after
which no Person holds 20% or more of the combined voting power of the then
outstanding securities of the Company or such surviving entity; or
(d) the shareholders 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.
(ii) For purposes of this Agreement, a "Potential Change in Control"
shall be deemed to have occurred if:
(a) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(b) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control;
(c) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(iii) You agree that, subject to the terms and conditions of this
Agreement, in the event of a Potential Change in Control, you will remain in the
employ of the Company until the earliest of (a) a date which is 180 days from
the occurrence of such Potential Change in Control, (b) the termination by you
of your employment by reason of Disability as defined in Subsection 3(ii), or
(c) the date on which you first become entitled under this Agreement to receive
the benefits provided in Section 4(iii) below.
3. Termination Following Change in Control. (i) General. If any of
the events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(iii) upon
the subsequent termination of your employment during the term of this
<PAGE> 4
[DATE OF HIRE]
Page 4
Agreement unless such termination is (a) because of your death or Disability,
(b) by the Company for Cause, or (c) by you other than for Good Reason. If your
employment with the Company is terminated prior to a Change in Control at the
request of a Person engaging in a transaction or series of transactions that
would result in a Change in Control, the twenty-four month period set forth in
Section 1 of this Agreement will commence upon the subsequent occurrence of a
Change in Control, your actual termination shall be deemed a termination
occurring during such twenty-four month period and covered by Section 3 of this
Agreement, your Date of Termination shall be deemed to have occurred immediately
following the Change in Control, and Notice of Termination shall have been
deemed to have been given by the Company immediately prior to your actual
termination.
(ii) Disability. If, as a result of your incapacity due to physical
or mental illness or disability, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written notice of termination is thereafter given
you shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability".
(iii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination: (a) upon the willful and continued failure by
you to substantially perform your duties with the Company (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
(as defined in Subsection 3(v)) by you for Good Reason (as defined in Subsection
3(iv)), after a written demand for substantial performance is delivered to you
by the Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties; (b) upon the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise; or (c) upon your conviction
of a felony. For purposes of this Subsection, no act, or failure to act, on your
part shall be deemed "willful" unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your action or omission was in the
best interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
this Subsection and specifying the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement,
<PAGE> 5
[DATE OF HIRE]
Page 5
"Good Reason" shall mean without your express written consent, the occurrence
after a Change in Control of any of the following circumstances unless, in the
case of paragraphs (a), (e), (f), (g) or (h), such circumstances are fully
corrected prior to the Date of Termination (as defined in Section 3(vi))
specified in the Notice of Termination (as defined in Section 3(v)) given in
respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to the Change in
Control, or an adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control;
(b) a reduction by the Company in your annual base salary and/or
guideline bonus and/or perquisites as in effect on the date hereof or as
the same may be increased from time to time except for across-the-board
perquisites reductions similarly affecting all management personnel of the
Company and all management personnel of any Person in control of the
Company;
(c) the relocation of the Company's offices at which you are
principally employed immediately prior to the date of the Change in
Control to a location more than thirty-five (35) miles from such location,
except for required travel on the Company's business to an extent
substantially consistent with your business travel obligations prior to
the Change in Control[; PROVIDED, HOWEVER, THAT A RELOCATION OF THE
COMPANY'S OFFICES AT WHICH YOU ARE PRINCIPALLY EMPLOYED IMMEDIATELY PRIOR
TO THE DATE OF THE CHANGE IN CONTROL TO NEW YORK CITY SHALL NOT CONSTITUTE
"GOOD REASON" FOR PURPOSES OF THIS AGREEMENT] (1);
(d) the failure by the Company to pay to you any portion of your
compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Company within
seven (7) days of the date such compensation is due;
(e) the failure by the Company to continue in effect any material
compensation or benefit plan in which you participated immediately prior
to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue your participation therein
(or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level
of your participation relative to other participants, as
(1) Headquarters agreements only.
<PAGE> 6
[DATE OF HIRE]
Page 6
existed at the time of the Change in Control;
(f) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Company's life insurance, medical, dental, accident, or disability plans
or perquisites in which you were participating at the time of the Change
in Control, the taking of any action by the Company which would directly
or indirectly materially reduce any of such benefits, or the failure by
the Company to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at the time
of the Change in Control;
(g) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements
of Subsection (v) hereof (and, if applicable, the requirements of
Subsection (iii) hereof), which purported termination shall not be
effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(vi) Date of Termination, Etc. "Date of Termination" shall mean (a)
if your employment is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), or (b)
if your employment is terminated pursuant to Subsection (iii) or (iv) hereof or
for any other reason (other than Disability), the date specified in the Notice
of Termination (which, in the case of a termination for Cause shall not be less
than thirty (30) days from the date such Notice of Termination is given, and in
the case of a termination for Good Reason shall not be less than fifteen (15)
nor more than sixty (60) days from the date such
<PAGE> 7
[DATE OF HIRE]
Page 7
Notice of Termination is given; provided, however, that if within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this proviso), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); and provided, further, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue you as a participant in all compensation, benefit
and insurance plans in which you were participating when the notice giving rise
to the dispute was given, until the dispute is finally resolved in accordance
with this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement, and shall not be offset against or
reduce any other amounts due under this Agreement and shall not be reduced by
any compensation earned by you as the result of employment by another employer.
4. Compensation Upon Termination or During Disability. Following a
Change in Control, you shall be entitled to the following benefits during a
period of disability, or upon termination of your employment, as the case may
be, provided that such period or termination occurs during the term of this
Agreement:
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or
mental illness or disability, you shall continue to receive your base
salary at the rate in effect at the commencement of any such period,
together with all compensation payable to you under the Company's
disability plan or program or other similar plan during such period, until
this Agreement is terminated pursuant to Section 3(ii) hereof. Thereafter,
or in the event your employment shall be terminated by reason of your
death, your benefits shall be determined under the Company's retirement,
insurance and other compensation programs then in effect in accordance
with the terms of such programs.
(ii) If your employment shall be terminated by the Company for Cause
or by you other than for Good Reason, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts to which you
<PAGE> 8
[DATE OF HIRE]
Page 8
are entitled under any compensation plan of the Company at the time such
payments are due, and the Company shall have no further obligations to you
under this Agreement.
(iii) If your employment by the Company should be terminated by the
Company other than for Cause or Disability or if you should terminate your
employment for Good Reason, you shall be entitled to the benefits provided
below:
(a) the Company shall pay to you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given, no later than the fifth day following the Date
of Termination, plus all other amounts to which you are entitled
under any compensation plan of the Company, at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you, at the time specified in Subsection (v), a
lump sum severance payment (in addition to the payments provided in
paragraphs (c), (d), (e), (f), (g), (h) and (i) below, the
"Severance Payments") equal to (1) 300% of the greater of (A) your
annual base salary in effect on the Date of Termination or (B) your
annual base salary in effect immediately prior to the Change in
Control, and (2) 300% of your guideline bonus with respect to the
year in which the Change in Control occurs; your annual base salary
and guideline bonus (as taken into account under the first half of
this Subsection (iii)(b)) shall count for three years additional
credited service and be included in final average earnings
calculations for participants in the Company's Retirement Account
Plan, Supplemental Executive Retirement Plan, Pension Benefit
Equalization Plan and any successor or substitute plans thereto, a
sample calculation of which appears in Exhibit A to this Agreement;
(c) in lieu of shares of common stock of the Company ("Common
Shares") issuable upon exercise of outstanding options (other than
options qualifying as incentive stock options ("ISOs") under Section
422A of the Internal Revenue Code of 1986 (the "Code") which ISOs
were granted on or before the date hereof) ("Options"), and stock
appreciation rights ("SARs"), if any, granted to you under the
Company's 1982 Stock Option Plan, 1991 Stock Option Plan or any
successor or substitute plans thereto (except those SARs applicable
to ISOs granted on or before the date hereof) (which Options shall
be cancelled upon the making of the payment referred to below), the
Company shall pay to you, at the time specified in Subsection (v),
an amount in cash equal to the product of (1) the excess of, in
<PAGE> 9
[DATE OF HIRE]
Page 9
the case of an ISO granted after the date hereof, the closing price
of Common Shares as reported on the New York Stock Exchange on or
nearest the Date of Termination (or, if not listed on such exchange,
on a nationally recognized exchange or quotation system on which
trading volume in the Common Shares is highest) and, in the case of
all other Options, the higher of such closing price or the highest
per share price for Common Shares actually paid in connection with
any Change in Control, over the per share option price of each
Option held by you (whether or not then fully exercisable), and (2)
the number of Common Shares covered by each such Option;
(d) in lieu of Common Shares issuable upon the lapse of
restrictions, if any, granted to you under the Company's 1989 Key
Employees Restricted Stock Plan or any successor or substitute
plan(s) thereto, the Company shall pay to you, at the time specified
in Subsection (v), an amount in cash equal to the product of (1) the
closing price of Common Shares as reported on the New York Stock
Exchange on or nearest the Date of Termination (or, if not listed on
such exchange, on a nationally recognized exchange or quotation
system on which trading volume in the Common Shares is highest) or
the highest per share price for Common Shares actually paid in
connection with any Change in Control, whichever is greater (such
price, the "Price"), and (2) the number of Common Shares granted to
you subject to such restrictions;
(e) (1) all outstanding performance units awarded to you under
the Company's Key Employees Performance Unit Plan (the "PUP"),
whether or not vested, shall be cancelled, and you shall receive a
cash payment equal to the amount you would have earned at a 100%
target award valuation; (2) all outstanding restricted stock awarded
to you under the PUP, whether or not vested (and whether or not any
restrictions thereupon have lapsed), shall be cancelled, and you
shall receive a cash payment equal to the product of (A) the number
of cancelled restricted shares and (B) the Price; and (3) all
outstanding unrestricted stock awarded to you under the PUP, whether
or not vested, shall be cancelled, and you shall receive a cash
payment equal to the product of (A) the number of cancelled
unrestricted shares and (B) the Price;
(f) the Company shall provide you with a cash allowance, at
the time specified in Subsection (v), for outplacement counseling
and job search activities in the amount of 20% of your annual salary
and guideline bonus as in effect on the Date of Termination but not
to exceed a maximum allowance of $100,000; and the
<PAGE> 10
[DATE OF HIRE]
Page 10
Company shall pay to you all legal fees and expenses incurred by you
as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder);
(g) for a thirty-six (36) month period after such termination,
the Company shall arrange to provide you with life and health
insurance benefits and perquisites substantially similar to those
which you were receiving immediately prior to the Notice of
Termination. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you pursuant to this
paragraph (g) if an equivalent benefit is actually received by you
during the thirty-six (36) month period following your termination,
and any such benefit actually received by you shall be reported to
the Company;
(h) at the time specified in Subsection (v), the Company shall
pay to you, in lieu of amounts which may otherwise be payable to you
under any bonus plan (a "Bonus Plan"), an amount in cash equal to
(1) your annual target bonus for the year in which the Change in
Control occurs, multiplied by a fraction, (A) the numerator of which
equals the number of full or partial days in such annual performance
period during which you were employed by the Company and (B) the
denominator of which is 365, and (2) the entire target bonus
opportunity with respect to each performance period in progress
under all other Bonus Plans in effect at the time of termination;
and
(i) starting at age 55, you shall receive retiree medical and
life benefits from the Company. Such benefits shall be no less
favorable than the benefits that you would have received had you, at
the time Notice of Termination is given, both (1) attained age 55
and (2) retired from the Company. Notwithstanding the foregoing, any
benefit described in the preceding sentence shall constitute
secondary coverage with respect to retiree medical and life benefits
actually received by you in connection with any subsequent
employment (or self-employment) following your termination.
(iv) In the event that you become entitled to the Severance
Payments, if any of the Severance Payments will be subject to the tax (the
"Excise Tax") imposed by section 4999 of the Code, (or any similar
federal, state or local
<PAGE> 11
[DATE OF HIRE]
Page 11
tax that may hereafter be imposed), the Company shall pay to you at the
time specified in Subsection (v) below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments (as hereinafter defined)
and any federal, state and local income tax and Excise Tax upon the
payment provided for by this subsection, shall be equal to the Total
Payments. For purposes of determining whether any of the Severance
Payments will be subject to the Excise Tax and the amount of such Excise
Tax, (a) any other payments or benefits received or to be received by you
in connection with a Change in Control or your termination of employment
(whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result
in a Change in Control or any Person affiliated with the Company or such
Person) (which, together with the Severance Payments, constitute the
"Total Payments") shall be treated as "parachute payments" within the
meaning of section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel selected
by the Company's independent auditors and acceptable to you such other
payments or benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within
the meaning of section 280G(b)(4) of the Code in excess of the base amount
within the meaning of section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax, (b) the amount of the Total Payments which
shall be treated as subject to the Excise Tax shall be equal to the lesser
of (1) the total amount of the Total Payments and (2) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after
applying clause (a), above), and (c) the value of any non-cash benefits or
any deferred payments or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections 280G(d)
(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes
at the highest marginal rate of taxation in the state and locality of your
residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the
time of termination of your employment, you shall repay to the Company
within ten (10) days after the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of
<PAGE> 12
[DATE OF HIRE]
Page 12
the Gross-Up Payment attributable to the Excise Tax and federal and state
and local income tax imposed on the Gross-Up Payment being repaid by you
if such repayment results in a reduction in Excise Tax and/or a federal
and state and local income tax deduction) plus interest on the amount of
such repayment at the rate provided in section 1274(b)(2)(B) of the Code.
In the event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of your employment
(including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional gross-up payment in respect of such excess (plus
any interest payable with respect to such excess) within ten (10) days
after the time that the amount of such excess is finally determined.
(v) The payments provided for in Subsections (iii)(b), (c), (d),
(e), (f) and (h) shall be made not later than the fifth day following the
Date of Termination; provided, however, that if the amounts of such
payments cannot be finally determined on or before such day, the Company
shall pay to you on such day an estimate, as determined in good faith by
the Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to you, payable on the fifth day
after demand by the Company (together with interest at the rate provided
in section 1274(b)(2)(B) of the Code).
(vi) Except as provided in Subsections (iii)(g) and (iii)(i) hereof,
you shall not be required to mitigate the amount of any payment provided
for in this Section 4 by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against any amount
claimed to be owed by you to the Company, or otherwise.
5. Successors; Binding Agreement. (i) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
express assumption and agreement at or prior to the effectiveness of any such
succession shall be a
<PAGE> 13
[DATE OF HIRE]
Page 13
breach of this Agreement and shall entitle you to compensation from the Company
in the same amount and on the same terms to which you would be entitled
hereunder if you terminate your employment for Good Reason following a Change in
Control, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the time or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. The obligations of
<PAGE> 14
[DATE OF HIRE]
Page 14
the Company under Section 4 shall survive the expiration of the term of this
Agreement.
8. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
during the term of this Agreement supersedes the provisions of all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto with respect to the subject matter contained
herein.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter,
which will then constitute our agreement on this subject.
Sincerely,
THE DUN & BRADSTREET CORPORATION
BY
Nancy L. Henry
Senior Vice President
and Chief Legal Counsel
Agreed to this [DAY] day
of [MONTH], [YEAR].
- - ---------------------------
[NAME]
<PAGE> 15
[DATE OF HIRE]
Page 15
EXHIBIT A
[TO BE PROVIDED]
<PAGE> 16
EXHIBIT 10(l)-b
[NEW HIRE MASTER 2X]
[DATE OF HIRE]
PERSONAL AND CONFIDENTIAL
[NAME]
[ADDRESS]
[ADDRESS]
Dear [FIRST_NAME]:
The Dun & Bradstreet Corporation (the "Company") considers it
essential to the best interests of its shareholders to foster the continued
employment of key management personnel. In this connection, the Board of
Directors of the Company (the "Board") recognizes that, as is the case with many
publicly held corporations, the possibility of a "Change in Control" (as such
term is defined in Section 2) may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of key management personnel to the detriment of the
Company and its shareholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of key members of
the Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a Change in Control.
In order to induce you to remain in the employ of the Company, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement (the "Agreement") in the event your employment with the Company
is terminated under the circumstances described below subsequent to a Change in
Control. No provision of this letter agreement shall be effective for any
purpose whatsoever except upon the occurrence of either a "Potential Change in
Control" (as such term is defined in Section 2) or a Change in Control.
<PAGE> 17
[DATE OF HIRE]
Page 2
1. Term of Agreement. This Agreement shall commence as of the date
hereof, and shall continue in effect through the third December 31st occurring
after the date hereof; provided, however, that commencing on the January 1st
following such third December 31st, and each January 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than September 30th of the preceding year, the Company or you shall
have given notice to the other that it or you, respectively, does not wish to
extend this Agreement, provided, however, that no such notice shall be effective
if a Change in Control or Potential Change in Control shall have occurred prior
to the date of such notice; and provided, further, that if a Change in Control
shall have occurred during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of not less than twenty-four
(24) months beyond the month in which such Change in Control occurred.
2. Change in Control; Potential Change in Control. (i) No benefits
shall be payable hereunder unless there shall have been a Change in Control, as
set forth below. For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred if
(a) any "Person", as such term is used in Sections 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 company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions 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 20% or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of twenty-four months (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other
than (1) a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(a), (c) or (d) of this Section, (2) a director designated by any Person
(including the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an actual or
threatened proxy contest) which if consummated would constitute a Change
in Control or (3) a director designated by any Person who is the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's
securities) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then
<PAGE> 18
[DATE OF HIRE]
Page 3
still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof;
(c) the shareholders of the 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 and (2) after
which no Person holds 20% or more of the combined voting power of the then
outstanding securities of the Company or such surviving entity; or
(d) the shareholders 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.
(ii) For purposes of this Agreement, a "Potential Change in Control"
shall be deemed to have occurred if:
(a) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(b) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control;
(c) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(iii) You agree that, subject to the terms and conditions of this
Agreement, in the event of a Potential Change in Control, you will remain in the
employ of the Company until the earliest of (a) a date which is 180 days from
the occurrence of such Potential Change in Control, (b) the termination by you
of your employment by reason of Disability as defined in Subsection 3(ii), or
(c) the date on which you first become entitled under this Agreement to receive
the benefits provided in Section 4(iii) below.
3. Termination Following Change in Control. (i) General. If any of
the events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(iii) upon
the subsequent termination of your employment during the term of this
<PAGE> 19
[DATE OF HIRE]
Page 4
Agreement unless such termination is (a) because of your death or Disability,
(b) by the Company for Cause, or (c) by you other than for Good Reason. If your
employment with the Company is terminated prior to a Change in Control at the
request of a Person engaging in a transaction or series of transactions that
would result in a Change in Control, the twenty-four month period set forth in
Section 1 of this Agreement will commence upon the subsequent occurrence of a
Change in Control, your actual termination shall be deemed a termination
occurring during such twenty-four month period and covered by Section 3 of this
Agreement, your Date of Termination shall be deemed to have occurred immediately
following the Change in Control, and Notice of Termination shall have been
deemed to have been given by the Company immediately prior to your actual
termination.
(ii) Disability. If, as a result of your incapacity due to physical
or mental illness or disability, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written notice of termination is thereafter given
you shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability".
(iii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination: (a) upon the willful and continued failure by
you to substantially perform your duties with the Company (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
(as defined in Subsection 3(v)) by you for Good Reason (as defined in Subsection
3(iv)), after a written demand for substantial performance is delivered to you
by the Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties; (b) upon the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise; or (c) upon your conviction
of a felony. For purposes of this Subsection, no act, or failure to act, on your
part shall be deemed "willful" unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your action or omission was in the
best interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
this Subsection and specifying the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement,
<PAGE> 20
[DATE OF HIRE]
Page 5
"Good Reason" shall mean without your express written consent, the occurrence
after a Change in Control of any of the following circumstances unless, in the
case of paragraphs (a), (e), (f), (g) or (h), such circumstances are fully
corrected prior to the Date of Termination (as defined in Section 3(vi))
specified in the Notice of Termination (as defined in Section 3(v)) given in
respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to the Change in
Control, or an adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control;
(b) a reduction by the Company in your annual base salary and/or
guideline bonus and/or perquisites as in effect on the date hereof or as
the same may be increased from time to time except for across-the-board
perquisites reductions similarly affecting all management personnel of the
Company and all management personnel of any Person in control of the
Company;
(c) the relocation of the Company's offices at which you are
principally employed immediately prior to the date of the Change in
Control to a location more than thirty-five (35) miles from such location,
except for required travel on the Company's business to an extent
substantially consistent with your business travel obligations prior to
the Change in Control[; PROVIDED, HOWEVER, THAT A RELOCATION OF THE
COMPANY'S OFFICES AT WHICH YOU ARE PRINCIPALLY EMPLOYED IMMEDIATELY PRIOR
TO THE DATE OF THE CHANGE IN CONTROL TO NEW YORK CITY SHALL NOT CONSTITUTE
"GOOD REASON" FOR PURPOSES OF THIS AGREEMENT] (1);
(d) the failure by the Company to pay to you any portion of your
compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Company within
seven (7) days of the date such compensation is due;
(e) the failure by the Company to continue in effect any material
compensation or benefit plan in which you participated immediately prior
to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue your participation therein
(or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level
of your participation relative to other participants, as
(1) Headquarters agreements only.
<PAGE> 21
[DATE OF HIRE]
Page 6
existed at the time of the Change in Control;
(f) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Company's life insurance, medical, dental, accident, or disability plans
or perquisites in which you were participating at the time of the Change
in Control, the taking of any action by the Company which would directly
or indirectly materially reduce any of such benefits, or the failure by
the Company to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at the time
of the Change in Control;
(g) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements
of Subsection (v) hereof (and, if applicable, the requirements of
Subsection (iii) hereof), which purported termination shall not be
effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(vi) Date of Termination, Etc. "Date of Termination" shall mean (a)
if your employment is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), or (b)
if your employment is terminated pursuant to Subsection (iii) or (iv) hereof or
for any other reason (other than Disability), the date specified in the Notice
of Termination (which, in the case of a termination for Cause shall not be less
than thirty (30) days from the date such Notice of Termination is given, and in
the case of a termination for Good Reason shall not be less than fifteen (15)
nor more than sixty (60) days from the date such
<PAGE> 22
[DATE OF HIRE]
Page 7
Notice of Termination is given; provided, however, that if within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this proviso), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); and provided, further, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue you as a participant in all compensation, benefit
and insurance plans in which you were participating when the notice giving rise
to the dispute was given, until the dispute is finally resolved in accordance
with this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement, and shall not be offset against or
reduce any other amounts due under this Agreement and shall not be reduced by
any compensation earned by you as the result of employment by another employer.
4. Compensation Upon Termination or During Disability. Following a
Change in Control, you shall be entitled to the following benefits during a
period of disability, or upon termination of your employment, as the case may
be, provided that such period or termination occurs during the term of this
Agreement:
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or
mental illness or disability, you shall continue to receive your base
salary at the rate in effect at the commencement of any such period,
together with all compensation payable to you under the Company's
disability plan or program or other similar plan during such period, until
this Agreement is terminated pursuant to Section 3(ii) hereof. Thereafter,
or in the event your employment shall be terminated by reason of your
death, your benefits shall be determined under the Company's retirement,
insurance and other compensation programs then in effect in accordance
with the terms of such programs.
(ii) If your employment shall be terminated by the Company for Cause
or by you other than for Good Reason, the Company shall pay you your full
base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts to which you
<PAGE> 23
[DATE OF HIRE]
Page 8
are entitled under any compensation plan of the Company at the time such
payments are due, and the Company shall have no further obligations to you
under this Agreement.
(iii) If your employment by the Company should be terminated by the
Company other than for Cause or Disability or if you should terminate your
employment for Good Reason, you shall be entitled to the benefits provided
below:
(a) the Company shall pay to you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given, no later than the fifth day following the Date
of Termination, plus all other amounts to which you are entitled
under any compensation plan of the Company, at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you, at the time specified in Subsection (v), a
lump sum severance payment (in addition to the payments provided in
paragraphs (c), (d), (e), (f), (g), (h) and (i) below, the
"Severance Payments") equal to (1) 200% of the greater of (A) your
annual base salary in effect on the Date of Termination or (B) your
annual base salary in effect immediately prior to the Change in
Control, and (2) 200% of your guideline bonus with respect to the
year in which the Change in Control occurs; your annual base salary
and guideline bonus (as taken into account under the first half of
this Subsection (iii)(b)) shall count for two years additional
credited service and be included in final average earnings
calculations for participants in the Company's Retirement Account
Plan, Supplemental Executive Retirement Plan, Pension Benefit
Equalization Plan and any successor or substitute plans thereto, a
sample calculation of which appears in Exhibit A to this Agreement;
(c) in lieu of shares of common stock of the Company ("Common
Shares") issuable upon exercise of outstanding options (other than
options qualifying as incentive stock options ("ISOs") under Section
422A of the Internal Revenue Code of 1986 (the "Code") which ISOs
were granted on or before the date hereof) ("Options"), and stock
appreciation rights ("SARs"), if any, granted to you under the
Company's 1982 Stock Option Plan, 1991 Stock Option Plan or any
successor or substitute plans thereto (except those SARs applicable
to ISOs granted on or before the date hereof) (which Options shall
be cancelled upon the making of the payment referred to below), the
Company shall pay to you, at the time specified in Subsection (v),
an amount in cash equal to the product of (1) the excess of, in
<PAGE> 24
[DATE OF HIRE]
Page 9
the case of an ISO granted after the date hereof, the closing price
of Common Shares as reported on the New York Stock Exchange on or
nearest the Date of Termination (or, if not listed on such exchange,
on a nationally recognized exchange or quotation system on which
trading volume in the Common Shares is highest) and, in the case of
all other Options, the higher of such closing price or the highest
per share price for Common Shares actually paid in connection with
any Change in Control, over the per share option price of each
Option held by you (whether or not then fully exercisable), and (2)
the number of Common Shares covered by each such Option;
(d) in lieu of Common Shares issuable upon the lapse of
restrictions, if any, granted to you under the Company's 1989 Key
Employees Restricted Stock Plan or any successor or substitute
plan(s) thereto, the Company shall pay to you, at the time specified
in Subsection (v), an amount in cash equal to the product of (1) the
closing price of Common Shares as reported on the New York Stock
Exchange on or nearest the Date of Termination (or, if not listed on
such exchange, on a nationally recognized exchange or quotation
system on which trading volume in the Common Shares is highest) or
the highest per share price for Common Shares actually paid in
connection with any Change in Control, whichever is greater (such
price, the "Price"), and (2) the number of Common Shares granted to
you subject to such restrictions;
(e) (1) all outstanding performance units awarded to you under
the Company's Key Employees Performance Unit Plan (the "PUP"),
whether or not vested, shall be cancelled, and you shall receive a
cash payment equal to the amount you would have earned at a 100%
target award valuation; (2) all outstanding restricted stock awarded
to you under the PUP, whether or not vested (and whether or not any
restrictions thereupon have lapsed), shall be cancelled, and you
shall receive a cash payment equal to the product of (A) the number
of cancelled restricted shares and (B) the Price; and (3) all
outstanding unrestricted stock awarded to you under the PUP, whether
or not vested, shall be cancelled, and you shall receive a cash
payment equal to the product of (A) the number of cancelled
unrestricted shares and (B) the Price;
(f) the Company shall provide you with a cash allowance, at
the time specified in Subsection (v), for outplacement counseling
and job search activities in the amount of 15% of your annual salary
and guideline bonus as in effect on the Date of Termination but not
to exceed a maximum allowance of $50,000; and the
<PAGE> 25
[DATE OF HIRE]
Page 10
Company shall pay to you all legal fees and expenses incurred by you
as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder);
(g) for a twenty-four (24) month period after such
termination, the Company shall arrange to provide you with life and
health insurance benefits and perquisites substantially similar to
those which you were receiving immediately prior to the Notice of
Termination. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you pursuant to this
paragraph (g) if an equivalent benefit is actually received by you
during the twenty-four (24) month period following your termination,
and any such benefit actually received by you shall be reported to
the Company;
(h) at the time specified in Subsection (v), the Company shall
pay to you, in lieu of amounts which may otherwise be payable to you
under any bonus plan (a "Bonus Plan"), an amount in cash equal to
(1) your annual target bonus for the year in which the Change in
Control occurs, multiplied by a fraction, (A) the numerator of which
equals the number of full or partial days in such annual performance
period during which you were employed by the Company and (B) the
denominator of which is 365, and (2) the entire target bonus
opportunity with respect to each performance period in progress
under all other Bonus Plans in effect at the time of termination;
and
(i) starting at age 55, you shall receive retiree medical and
life benefits from the Company. Such benefits shall be no less
favorable than the benefits that you would have received had you, at
the time Notice of Termination is given, both (1) attained age 55
and (2) retired from the Company. Notwithstanding the foregoing, any
benefit described in the preceding sentence shall constitute
secondary coverage with respect to retiree medical and life benefits
actually received by you in connection with any subsequent
employment (or self-employment) following your termination.
(iv) In the event that you become entitled to the Severance
Payments, if any of the Severance Payments will be subject to the tax (the
"Excise Tax") imposed by section 4999 of the Code, (or any similar
federal, state or local
<PAGE> 26
[DATE OF HIRE]
Page 11
tax that may hereafter be imposed), the Company shall pay to you at the
time specified in Subsection (v) below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments (as hereinafter defined)
and any federal, state and local income tax and Excise Tax upon the
payment provided for by this subsection, shall be equal to the Total
Payments. For purposes of determining whether any of the Severance
Payments will be subject to the Excise Tax and the amount of such Excise
Tax, (a) any other payments or benefits received or to be received by you
in connection with a Change in Control or your termination of employment
(whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result
in a Change in Control or any Person affiliated with the Company or such
Person) (which, together with the Severance Payments, constitute the
"Total Payments") shall be treated as "parachute payments" within the
meaning of section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel selected
by the Company's independent auditors and acceptable to you such other
payments or benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within
the meaning of section 280G(b)(4) of the Code in excess of the base amount
within the meaning of section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax, (b) the amount of the Total Payments which
shall be treated as subject to the Excise Tax shall be equal to the lesser
of (1) the total amount of the Total Payments and (2) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after
applying clause (a), above), and (c) the value of any non-cash benefits or
any deferred payments or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections 280G(d)
(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes
at the highest marginal rate of taxation in the state and locality of your
residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the
time of termination of your employment, you shall repay to the Company
within ten (10) days after the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of
<PAGE> 27
[DATE OF HIRE]
Page 12
the Gross-Up Payment attributable to the Excise Tax and federal and state
and local income tax imposed on the Gross-Up Payment being repaid by you
if such repayment results in a reduction in Excise Tax and/or a federal
and state and local income tax deduction) plus interest on the amount of
such repayment at the rate provided in section 1274(b)(2)(B) of the Code.
In the event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of your employment
(including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional gross-up payment in respect of such excess (plus
any interest payable with respect to such excess) within ten (10) days
after the time that the amount of such excess is finally determined.
(v) The payments provided for in Subsections (iii)(b), (c), (d),
(e), (f) and (h) shall be made not later than the fifth day following the
Date of Termination; provided, however, that if the amounts of such
payments cannot be finally determined on or before such day, the Company
shall pay to you on such day an estimate, as determined in good faith by
the Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to you, payable on the fifth day
after demand by the Company (together with interest at the rate provided
in section 1274(b)(2)(B) of the Code).
(vi) Except as provided in Subsections (iii)(g) and (iii)(i) hereof,
you shall not be required to mitigate the amount of any payment provided
for in this Section 4 by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against any amount
claimed to be owed by you to the Company, or otherwise.
5. Successors; Binding Agreement. (i) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
express assumption and agreement at or prior to the effectiveness of any such
succession shall be a
<PAGE> 28
[DATE OF HIRE]
Page 13
breach of this Agreement and shall entitle you to compensation from the Company
in the same amount and on the same terms to which you would be entitled
hereunder if you terminate your employment for Good Reason following a Change in
Control, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the time or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. The obligations of
<PAGE> 29
[DATE OF HIRE]
Page 14
the Company under Section 4 shall survive the expiration of the term of this
Agreement.
8. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
during the term of this Agreement supersedes the provisions of all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto with respect to the subject matter contained
herein.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter,
which will then constitute our agreement on this subject.
Sincerely,
THE DUN & BRADSTREET CORPORATION
BY
Nancy L. Henry
Senior Vice President
and Chief Legal Counsel
Agreed to this [DAY] day
of [MONTH], [YEAR].
- - ---------------------------
[NAME]
<PAGE> 30
[DATE OF HIRE]
Page 15
EXHIBIT A
[TO BE PROVIDED]
<PAGE> 1
EXHIBIT 10(m)
SUPPLEMENTAL EXECUTIVE BENEFIT PLAN
OF
THE DUN & BRADSTREET CORPORATION
(as amended effective July 16, 1997)
PREAMBLE
The principal purpose of this Supplemental Executive Benefit
Plan is to ensure the payment of a competitive level of retirement income and
disability benefits in order to attract, retain and motivate selected executives
of the Corporation and its affiliated companies.
SECTION 1
Definitions
1.1 "Affiliate" means any corporation, partnership, division
or other organization controlling, controlled by or under common control with
the Corporation or any joint venture entered into by the Corporation.
1.2 "Average Final Compensation" means the greater of (i) a
Participant's or Vested Former Participant's average final compensation as
defined in The Dun & Bradstreet Corporation Retirement Account as if no
provision were set forth therein incorporating limitations imposed by Sections
401, 415 or any other applicable Section of the Internal Revenue Code, or, (ii)
if the Participant is disabled at the time of his Retirement, the Participant's
Basic Earnings. For purposes of (i), Average Final Compensation will not include
an employee's compensation while the employee is a Vested Former Participant or
a Former Participant and will include compensation from the date of the
Participant's employment with the Corporation or an Affiliate.
1.3 "Basic Disability Plan" means as to any Participant either
(i) the long-term disability plan of the Corporation or an Affiliate pursuant to
which long-term disability benefits are payable to such Participant or, (ii) if
the Affiliate which employs such Participant has not adopted a long-term
disability plan, the long-term disability plan of the Corporation.
<PAGE> 2
1.4 "Basic Disability Plan Benefit" means the amount of
benefits actually payable to a Participant from the Basic Disability Plan or
which would be payable if the Participant were a member of such Plan. For
purposes of determining a Participant's Basic Disability Plan Benefit, a
disability benefit shall not be treated as actually payable to a Participant
unless the Participant is actually covered by a long-term disability plan of the
Corporation or an Affiliate.
1.5 "Basic Earnings" means a Participant's total earnings
received as an employee as salary or wages in the twelve months immediately
preceding the onset of the Participant's disability, including any amounts
deferred under a plan qualified under Section 401(k) of the Internal Revenue
Code, amounts contributed on a Participant's behalf on a salary reduction basis
to a cafeteria plan described in Section 125 of the Internal Revenue Code, cash
bonuses and commissions, but excluding any pension, retainers, severance pay,
income derived from stock options, stock appreciation rights and restricted
stock awards and dispositions of stock acquired thereunder, payments dependent
upon any contingency after the period of Credited Service and other special
remuneration (including performance units).
1.6 "Basic Plan" means as to any Participant or Vested Former
Participant, the defined benefit pension plan of the Corporation or an
Affiliate, which is intended to meet the requirements of Code Section 401(a) and
pursuant to which retirement benefits are payable to such Participant or Vested
Former Participant or to the Surviving Spouse or designated beneficiary of a
deceased Participant or Vested Former Participant.
1.7 "Basic Plan Benefit" means the amount of benefits payable
from the Basic Plan to a Participant or Vested Former Participant.
1.8 "Board" means the Board of Directors of The Dun &
Bradstreet Corporation.
1.9 "Change in Control" means:
(a) Any "person," as such term is used in
Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other
than the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of
the Corporation, or any
<PAGE> 3
Corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the
same proportions as their ownership of stock of the
Corporation), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the
Corporation representing 20% or more of the combined
voting power of the Corporation's then outstanding
securities;
(b) during any period of twenty-four months
(not including any period prior to the effective date
of this provision), individuals who at the beginning
of such period constitute the Board, and any new
director (other than (1) a director designated by a
person who has entered into an agreement with the
Corporation to effect a transaction described in
clause (a), (c) or (d) of this Section) (2) a
director designated by any Person (including the
Corporation) who publicly announces an intention to
take or to consider taking actions (including, but
not limited to, an actual or threatened proxy
contest) which if consummated would constitute a
Change in Control or (3) a director designated by any
Person who is the Beneficial Owner, directly or
indirectly, of securities of the Corporation
representing 10% or more of the combined voting power
of the Corporation's securities) whose election by
the Board or nomination for election by the
Corporation's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning
of the period or whose election or nomination for
election was previously so approved cease for any
reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation
approve a merger or consolidation of the Corporation
with any other company, other than (1) a merger or
consolidation which would result in the voting
securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting
<PAGE> 4
securities of the surviving entity) more than
50% of the combined voting power of the voting
securities of the Corporation or such surviving
entity outstanding immediately after such merger or
consolidation and (2) after which no Person holds 20%
or more of the combined voting power of the then
outstanding securities of the Corporation or such
surviving entity; or
(d) the shareholders of the Corporation
approve a plan of complete liquidation of the
Corporation or an agreement for the sale or
disposition by the Corporation of all or
substantially all of the Corporation's assets.
1.10 "Committee" means the Executive Compensation and Stock
Option Committee of the Board.
1.11 "Corporation" means The Dun & Bradstreet Corporation, a
Delaware corporation, and any successor or assigns thereto.
1.12 "Credited Service" means a Participant's, Former
Participant's or Vested Former Participant's Credited Service as defined in The
Dun & Bradstreet Corporation Retirement Account, except that Credited Service
will include service while the Participant is receiving Disability Benefits and
service from the date the Participant, Former Participant or Vested Former
Participant was employed by the Corporation or an Affiliate, but will not
include service while an employee is a Former Participant or Vested Former
Participant. However, in the case of an acquired company, the Participant's,
Former Participant's or Vested Former Participant's service with that company
prior to the date of acquisition will not be counted unless such service is
recognized for benefit accrual purposes under the relevant Basic Plan.
1.13 "Disability Benefit" means the benefits provided to
Participants and Vested Former Participants pursuant to Section 5 of the Plan.
1.14 "Effective Date" means July 1, 1989.
1.15 "Election" means an election as to the form of benefit
payment made pursuant to Section 4.5 of the Plan.
1.16 "Election Date" means the date that a properly completed
election form with respect to an Election or a Special Election is received by
the Corporation's Treasurer.
<PAGE> 5
1.17 "Former Participant" means an employee who has not
completed five or more years of Credited Service at the time his employment with
the Corporation or an Affiliate terminates or at the time he was removed, upon
written notice by the Chief Executive Officer of the Corporation and with the
approval of the Committee, from further participation in the Plan.
1.18 "Other Disability Income" means (A) the disability
insurance benefit that the Participant is entitled to receive under the Federal
Social Security Act while he is receiving the Basic Disability Plan Benefit and
(B) the disability income payable to a Participant from the following sources:
(a) any supplemental executive disability plan of any
Affiliate; and
(b) any other contract, agreement or other arrangement with
the Corporation or an Affiliate (excluding any Basic Disability Plan) to the
extent it provides disability benefits.
1.19 "Other Retirement Income" means (A)(i) the Social
Security retirement benefit that the Participant or Vested Former Participant is
entitled to receive under the Federal Social Security Act as of the date of his
Retirement or, (ii) if the Participant or Vested Former Participant is not
eligible to receive a Social Security retirement benefit commencing on such
date, the Social Security retirement benefit he is entitled to receive at the
earliest age he is eligible to receive such a benefit, discounted to the date
his Benefit under the Plan actually commences, using the actuarial assumptions
then in use under the relevant Basic Plan, assuming for purposes of (i) and (ii)
above that for years prior to the Participant's employment with the Corporation
and for years following the Participant's termination of employment with the
Corporation up until the Participant attains age 62, the Participant earned
compensation so as to accrue the maximum Social Security benefits, and (B) the
retirement income payable to a Participant or Vested Former Participant from the
following sources:
(a) any retirement benefits equalization
plan of the Corporation or an Affiliate or any former
Affiliate, the purpose of which is to provide the
Participant or Vested Former Participant with the
benefits he is precluded from receiving under any
relevant Basic Plan as a result of limitations under
the Internal Revenue Code; and
<PAGE> 6
(b) any supplemental executive retirement
plan of any Affiliate; and
(c) any other contract, agreement or other
arrangement with the Corporation or an Affiliate
(excluding any Basic Plan and any defined
contribution plan intended to meet the requirements
of Section 401(a) of the Code) to the extent it
provides retirement or pension benefits.
1.20 "Participant" means an employee of the Corporation or an
Affiliate who becomes a participant in the Plan pursuant to Section 2 and has
not been removed pursuant to Section 2.2.
1.21 "Plan" means this Supplemental Executive Benefit Plan of
The Dun & Bradstreet Corporation, as amended from time to time.
1.22 "Potential Change in Control" means:
(a) the Corporation enters into an
agreement, the consummation of which would result in
the occurrence of a Change in Control of the
Corporation;
(b) any person (including the Corporation)
publicly announces an intention to take or to
consider taking actions which if consummated would
constitute a Change in Control of the Corporation;
(c) any person, other than a trustee or
their fiduciary holding securities under an employee
benefit plan of the Corporation (or a Corporation
owned, directly or indirectly, by the stockholders of
the Corporation in substantially the same proportions
as their ownership of stock of the Corporation), who
is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation
representing 9.5% or more of the combined voting
power of the Corporation's then outstanding
securities, increases his beneficial ownership of
such securities by 5% or more over the percentage so
owned by such person; or
<PAGE> 7
(d) the Board adopts a resolution to the
effect that, for purposes of this Plan, a Potential
Change in Control of the Corporation has occurred.
1.23 "Retirement" means the termination, other than at death,
of a Participant's or Vested Former Participant's employment with the
Corporation or an Affiliate (i) after reaching age 55 and completing ten years
of Vesting Service, or (ii) immediately following the cessation of the payment
of Disability Benefits under the Plan to such Participant or Vested Former
Participant while he is still disabled, as such term is defined under the Basic
Disability Plan.
1.24 "Retirement Benefit" means the benefits provided to
Participants and Vested Former Participants pursuant to Section 4 of the Plan.
1.25 "Special Election" means an election as to the form of
benefit payment made pursuant to Section 4.6 of the Plan.
1.26 "Surviving Spouse" means the spouse of a deceased
Participant or Vested Former Participant to whom such Participant or Vested
Former Participant is legally married immediately preceding such Participant or
Vested Former Participant's death.
1.27 "Surviving Spouse's Benefits" mean the benefits provided
to a Participant's or Vested Former Participant's Surviving Spouse pursuant to
Section 6 of the Plan.
1.28 "Vested Former Participant" means an employee who
completed five or more years of Credited Service at the time his employment with
the Corporation or an Affiliate terminated or at the time he was removed, upon
written notice by the Chief Executive Officer of the Corporation and with the
approval of the Committee, from further participation in the Plan.
1.29 The masculine gender, where appearing in the Plan, will
be deemed to include the feminine gender, and the singular may include the
plural, unless the context clearly indicates to the contrary.
<PAGE> 8
SECTION 2
Eligibility and Participation
SECTION 2.1 All key management employees of the Corporation
and its Affiliates who are responsible for the management, growth or protection
of the business of the Corporation and its Affiliates, who are designated by the
Chief Executive Officer of the Corporation in writing, are eligible, upon
approval by the Committee, for participation in the Plan as of the effective
date of such designation.
SECTION 2.2 A Participant's participation in the Plan shall
terminate upon termination of his or her employment. Prior to termination of
employment, a participant may be removed, upon written notice by the Chief
Executive Officer of the Corporation and with the approval of the Committee,
from further participation in the Plan. As of the date of termination or
removal, no further benefits shall accrue to such individual.
SECTION 3
Eligibility For Benefits
SECTION 3.1 Each Participant or Vested Former Participant is
eligible for an annual Retirement Benefit under this Plan upon Retirement, or
upon termination of employment with the Corporation before Retirement after
completing five or more years of Credited Service.
SECTION 3.2 Each Participant is eligible to commence receiving
a Disability Benefit under this Plan upon the actual or deemed commencement of
benefits under the relevant Basic Disability Plan. Notwithstanding the above, a
Participant may not receive a Disability Benefit if he has not previously
enrolled for the maximum disability insurance coverage available under the
relevant Basic Disability Plan.
SECTION 3.3 Notwithstanding any other provision of the Plan to
the contrary, no benefits or no further benefits, as the case may be, shall be
paid to a Participant, Vested Former Participant or Surviving Spouse if the
Committee reasonably determines that such Participant or Vested Former
Participant has:
(a) To the detriment of the Corporation or any Affiliate,
directly or indirectly acquired, without the prior written consent of the
Committee, an interest in any other company,
<PAGE> 9
firm, association, or organization (other than an investment interest of less
than 1% in a publicly-owned company or organization), the business of which is
in direct competition with any business of the Corporation or an Affiliate;
(b) To the detriment of the Corporation or any Affiliate,
directly or indirectly competed with the Corporation or any Affiliate as an
owner, employee, partner, director or contractor of a business, in a field of
business activity in which the Participant or Vested Former Participant has been
primarily engaged on behalf of the Corporation or any Affiliate or in which he
has considerable knowledge as a result of his employment by the Corporation or
any Affiliate, either for his own benefit or with any person other than the
Corporation or any Affiliate, without the prior written consent of the
Committee; or
(c) Been discharged from employment with the Corporation or
any Affiliate for "Cause". "Cause" shall include the occurrence of any of the
following events or such other dishonest or disloyal act or omission as the
Committee reasonably determines to be "cause":
(i) The Participant or Vested Former Participant has
misappropriated any funds or property of the Corporation or any
Affiliate or committed any other act of willful malfeasance or willful
misconduct in connection with his or her employment;
(ii) The Participant or Vested Former Participant
has, without the prior knowledge or written consent of the Committee,
obtained personal profit as a result of any transaction by a third
party with the Corporation or any Affiliate; or
(iii) The Participant or Vested Former Participant
has sold or otherwise imparted to any person, firm, or corporation the
names of the customers of the Corporation or any Affiliate or any
confidential records, data, formulae, specifications and other trade
secrets or other information of value to the Corporation or any
Affiliate derived by his or her association with the Corporation or any
Affiliate.
(iv) The Participant or Vested Former Participant
fails, on a continuing basis, to perform such duties as are requested
by any employee to whom the Participant or Vested Former Participant
reports or the Board; or
<PAGE> 10
(v) The Participant or Vested Former Participant
commits any felony or any misdemeanor involving moral turpitude.
In any case described in this Section 3.3, the Participant, Vested
Former Participant or Surviving Spouse shall be given prior written notice that
no benefits or no further benefits, as the case may be, will be paid to such
Participant, Vested Former Participant or Surviving Spouse. Such written notice
shall specify the particular act(s), or failures to act, on the basis of which
the decision to terminate benefits has been made.
SECTION 3.4 (a) Notwithstanding any other provision of the
Plan to the contrary, a Participant or Vested Former Participant who receives in
a lump sum any portion of his Retirement Benefit pursuant to an Election or
Special Election shall receive such lump sum portion of his Retirement Benefit
subject to the condition that if such Participant or Vested Former Participant
engages in any of the acts described in clause (i) or (ii) of Section 3.3, then
such Participant or Vested Former Participant shall within 60 days after written
notice by the Corporation repay to the Corporation the amount described in
Section 3.4(b).
(b) The amount described under this Section 3.4(b) shall equal
the amount, as determined by the Committee, of the Participant's or Vested
Former Participant's lump sum benefit paid under this Plan to which such
Participant or Vested Former Participant would not have been entitled, if such
lump sum benefit had instead been payable in the form of an annuity under this
Plan and such annuity payments were subject to the provisions of Section 3.3.
SECTION 4
Amount and Form of Retirement Benefits
SECTION 4.1 The Retirement Benefit provided by the Plan is
designed to provide each Participant and Vested Former Participant with an
annual pension from the Plan and certain other sources equal to his Retirement
Benefit as hereinafter specified. Thus, the Retirement Benefits described
hereunder as payable to Participants and Vested Former Participants will be
offset by retirement benefits payable from sources outside the Plan as specified
herein.
SECTION 4.2 (a) The Retirement Benefit of a Participant or
Vested Former Participant upon Retirement shall be an annual benefit equal to
(i) for a Participant or Vested
<PAGE> 11
Former Participant who had attained age fifty and had been credited with at
least ten years of Vesting Service as of January 15, 1997 or a Participant or
Vested Former Participant whose age plus years of Vesting Service is equal to or
greater than 70 as of January 15, 1997, or other individuals designated by the
Chief Executive Officer; 50% of his Average Final Compensation with respect to
his first ten years of Credited Service, plus 2% of such Average Final
Compensation for each year of Credited Service in excess of ten years of
Credited Service, but not to exceed fifteen years of Credited Service, offset by
his Other Retirement Income and his Basic Plan Benefit. A full month is credited
for each completed and partial month of age and Credited Service; (ii) for all
other Participants or Vested Former Participants; 40% of his Average Final
Compensation with respect to his first ten years of credited service, plus 2% of
Average Final Compensation for each year of Credited Service in excess of ten
years of Credited Service, but not to exceed twenty years of Credited Service,
offset by his Other Retirement Income and his Basic Plan Benefit. A full month
is credited for each completed and partial month of Credited Service. If such a
Participant or Vested Former Participant retires before age 60 without the
Corporation's consent, his Retirement Benefit shall be reduced by 3% for each
year or fraction thereof that Retirement commenced prior to reaching age 60.
(b) Any portion of the Retirement Benefit provided under this
Section 4.2 payable in the form of an annuity pursuant to Section 4.4 shall be
payable in monthly installments and will commence on the first day of the
calendar month coinciding with or next following the day the Participant or
Vested Former Participant retires, and any portion of such Retirement Benefit
payable in a lump sum pursuant to Section 4.4 shall be paid on the date that is
sixty days after the date when annuity payments under this Section 4.2 commence,
or would commence if any portion of the Retirement Benefit were payable in the
form of an annuity, or as soon as practicable thereafter, provided the Committee
has approved any such lump sum payments.
SECTION 4.3 (a) Subject to Section 4.3(c), the Retirement
Benefit of a Participant or Vested Former Participant who terminates employment
with the Corporation with five or more years of Credited Service before he is
eligible to retire under the relevant Basic Plan shall be an annual benefit
equal to (i) for a Participant or Vested Former Participant who had
<PAGE> 12
attained age fifty and had been credited with at least ten years of Vesting
Service as of January 15, 1997 or a Participant or Vested Former Participant
whose age plus years of Vesting Service is equal to or greater than 70 as of
January 15, 1997, or other individuals designated by the Chief Executive
Officer; 25% of his Average Final Compensation for his first five years of
Credited Service, plus 5% of Average Final Compensation for each additional year
of Credited Service between six and ten years of Credited Service, plus 2% of
Average Final Compensation for each additional year of Credited Service from 11
to 15 years, offset by his Other Retirement Income and his Basic Plan Benefit. A
full month is credited for each completed and partial month of Credited Service,
and (ii) for all other Participants or Vested Former Participants; 20% of his
Average Final Compensation with respect to his first five years of Credited
Service, plus 4% of Average Final Compensation for each additional year of
Credited Service between six and ten years of Credited Service, plus 2% of
Average Final Compensation for each additional year of Credited Service from 11
to 20 years, offset by his Other Retirement Income and his Basic Plan Benefit. A
full month is credited for each completed and partial month of Credited Service.
(b) Any portion of the Retirement Benefit provided under this
Section 4.3 payable in the form of an annuity pursuant to Section 4.4 shall be
payable in monthly installments and will commence on the first day of the
calendar month coinciding with or next following the day the Participant or
Vested Former Participant reaches age 55 or the date of his termination, if
later, and any portion of such Retirement Benefit payable in a lump sum pursuant
to Section 4.4 shall be paid on the date that is 60 days after the date when
annuity payments under this Section 4.3 commence, or would commence if any
portion of the Retirement Benefit were payable in the form of an annuity, or as
soon as practicable thereafter, provided the Committee has approved any such
lump sum payments.
(c) If a Participant or Vested Former Participant terminates
employment with the Corporation without the Corporation's consent, and the
payment of his Retirement Benefit commences, or would commence if it were
payable in the form of an annuity, before he reaches age 60, his Retirement
Benefit shall be reduced by 10% for each year or fraction thereof that the
payment of his Retirement Benefit commences, or would commence if it were
payable in the form of an annuity, prior to his reaching age 60.
<PAGE> 13
SECTION 4.4 (a) Except as provided under Section 4.4(b) or
Section 4.4(c), a Retirement Benefit under this Plan shall be payable to a
Participant or Vested Former Participant in the form of a straight life annuity
and without regard to any optional form of benefits elected under the Basic
Plan.
(b) If a Participant or a Vested Former Participant makes an
Election while he is a Participant pursuant to Section 4.5 or a Special Election
pursuant to Section 4.6 and such Election or Special Election becomes effective
(i) prior to the date such Participant or such Vested Former Participant retires
or terminates employment with the Corporation or an Affiliate and (ii) while he
was still a Participant, a Retirement Benefit under this Plan shall be payable
to such Participant or such Vested Former Participant in the form or combination
of forms of payment elected pursuant to such Election or Special Election under
Section 4.5 or Section 4.6, as the case may be, and without regard to any
optional form of benefit elected under the Basic Plan. Any lump sum distribution
of a Participant's or Vested Former Participant's Retirement Benefit under the
Plan shall fully satisfy all present and future Plan liability with respect to
such Participant or Vested Former Participant for such portion or all of such
Retirement Benefit so distributed.
(c) Notwithstanding any Election or Special Election made
under Section 4.5 or 4.6, if the lump sum value, determined in the same manner
as provided under Section 4.5(a), of a Participant's or Vested Former
Participant's Retirement Benefit is $10,000 or less at the time such Retirement
Benefit is payable under this Plan, such benefit shall be payable as a lump sum.
(d) If the Retirement Benefit under this Plan is payable to a
Participant or Vested Former Participant in a different form and/or at a
different time than his Other Retirement Income or his Basic Plan Benefits, the
offset provided in this Plan for such Participant's or Vested Former
Participant's Other Retirement Income and Basic Plan Benefit shall be converted,
using actuarial assumptions that are reasonable and appropriate and in
accordance with applicable law at the time the benefit under this Plan is
determined, to the extent required as follows, but solely for purposes of
calculating the amount of such offset:
(i) a percentage of the benefits to be offset equal
to the percentage of such Participant's or Vested Former Participant's
benefits payable in the form of an
<PAGE> 14
annuity under this Plan shall be actuarially converted to the extent
required into the form of a straight life annuity, commencing at the
time such benefits payable under this Plan commence or on the date such
Participant or Vested Former Participant would first become eligible
for the payment of such benefits under this Plan, if earlier; and
(ii) the balance, if any, of the benefits to be
offset shall be actuarially converted to a lump sum payment payable on
the date which is 60 days after the date described in Section
4.4(d)(i).
SECTION 4.5 (a) A Participant may elect, on a form supplied by
the Committee, to receive all, none, or a specified portion, as provided in
Section 4.5(c), of his Retirement Benefit under the Plan in a lump sum and to
receive any balance of such Retirement Benefit in the form of an annuity;
provided that any such Election shall be effective for purposes of this Plan
only if the conditions of Section 4.5(b) are satisfied. A Participant may elect
a payment form different than the payment form previously elected by him under
this Section 4.5(a) by filing a revised election form; provided that any such
new Election shall be effective only if the conditions of Section 4.5(b) are
satisfied with respect to such new Election. Any prior Election made by a
Participant that has satisfied the conditions of Section 4.5(b) remains
effective for purposes of the Plan until such Participant has made a new
Election satisfying the conditions of Section 4.5(b). The amount of any portion
of a Participant's or a Vested Former Participant's Retirement Benefit payable
as a lump sum under this Section 4.5 will equal the present value of such
portion of the Retirement Benefit, and such present value shall be determined
(i) based on a discount rate equal to 85% of the average of the 15-year
non-callable U.S. Treasury bond yields as of the close of business on the last
business day of each of the three months immediately preceding the date the
annuity value is determined and (ii) using the 1983 Group Annuity Mortality
Table.
(b) A Participant's Election under Section 4.5(a) becomes
effective only if the following conditions are satisfied: (i) such Participant
remains in the employment of the Corporation or an Affiliate, as the case may
be, for the full twelve calendar months immediately following the Election Date
of such Election, except in case of death or disability of such
<PAGE> 15
Participant as provided in Section 4.5(d) and (ii) such Participant complies
with the administrative procedures set forth by the Committee with respect to
the making of the Election.
(c) A Participant making an election under Section 4.5(a) may
specify the portion of his Retirement Benefit under the Plan to be received in a
lump sum as follows: 0 percent, 25 percent, 50 percent, 75 percent or 100
percent.
(d) In the event a Participant who has made an Election
pursuant to Section 4.5(a) dies or becomes totally and permanently disabled for
purposes of the relevant Basic Disability Plan while employed by the Corporation
or an Affiliate and such death or total and permanent disability occurs during
the twelve-calendar-month period, as described under Section 4.5(b)(i),
immediately following the Election Date of such Election, the condition under
Section 4.5(b)(i) shall be deemed satisfied with respect to such Participant.
SECTION 4.6 (a) Any Participant (except the Chairman of the
Board of Directors of the Corporation on December 21, 1994) who as of December
31, 1994 (i) is age 54 or older and (ii) has at least 4 years of Credited
Service may elect, on a form supplied by the Committee, to receive all, none, or
a specified portion, in the same percentages as described in Section 4.5(c), of
his Retirement Benefit under the Plan in a lump sum and to receive any balance
of such Retirement Benefit in the form of an annuity; provided that any such
Special Election shall be effective for purposes of this Plan only if such
Participant remains in employment with the Corporation or an Affiliate, as the
case may be, for the one calendar month immediately following the Election Date,
except in the case of death or total and permanent disability as provided in
Section 4.6(b), and complies with the administrative procedures set forth by the
Committee for making such Special Election; and provided further that the
Election Date with respect to any such Special Election is not later than
January 31, 1995. The amount of any portion of a Participant's or a Vested
Former Participant's Retirement Benefit payable as a lump sum under this Section
4.6 will equal the present value of such portion of the Retirement Benefit, and
such present value shall be determined (i) based on a discount rate equal to the
average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the
close of business on the last business day of each of the three months
immediately preceding the date the annuity value is determined and (ii) using
the 1993 Group Annuity Mortality Table.
<PAGE> 16
(b) In the event a Participant who has made a Special Election
pursuant to Section 4.6(a) dies or becomes totally and permanently disabled for
purposes of the relevant Basic Disability Plan while employed by the Corporation
or an Affiliate and such death or total and permanent disability occurs during
the one-calendar-month period, as described under Section 4.6(a) immediately
following the Election Date of such Special Election, the condition under
Section 4.6(a) requiring that such Participant remain employed with the
Corporation or an Affiliate, as the case may be, for the one-calendar-month
period immediately following the Election Date of such Election shall be deemed
satisfied.
SECTION 4.7 Subject to Section 3.1, Section 3.3, Section 3.4
and the foregoing limitations of this Section 4, the Retirement Benefit of each
Participant and Vested Former Participant under the Plan shall at all times be
100% vested and nonforfeitable.
SECTION 4.8 (a) Subject to Section 4.8(c), the Corporation
shall indemnify each Participant, Vested Former Participant and Surviving Spouse
who receives any portion of a Retirement Benefit or Surviving Spouse's Benefit
under this Plan in the form of an annuity for any interest and penalties that
may be assessed by the U.S. Internal Revenue Service (the "Service") with
respect to U.S. Federal income tax on such benefits (payable under the Plan in
the form of an annuity) upon final settlement or judgment with respect to any
such assessment in favor of the Service, provided the basis for the assessment
is that the amendment of the Plan to provide for the Election or the Special
Election causes the Participant, Vested Former Participant or Surviving Spouse,
as the case may be, to be treated as being in constructive receipt of such
benefits prior to the time when such benefits are actually payable under the
Plan.
(b) In case any assessment shall be made against a
Participant, Vested Former Participant or Surviving Spouse as described in
Section 4.8(a), such Participant, Vested Former Participant or Surviving Spouse,
as the case may be (the "indemnified party"), shall promptly notify the
Corporation's Treasurer in writing and the Corporation, upon request of such
indemnified party, shall select and retain an accountant or legal counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party in connection with such assessment and shall pay the fees and expenses of
such an accountant or legal counsel related to such representation, and the
Corporation shall have the right to determine how and when such
<PAGE> 17
assessment by the Service should be settled, litigated or appealed. In
connection with any such assessment, any indemnified party shall have the right
to retain his own accountant or legal counsel, but the fees and expenses of such
accountant or legal counsel shall be at the expense of such indemnified party
unless the Corporation and the indemnified party shall have mutually agreed to
the retention of such accountant or legal counsel.
(c) The Corporation shall not be liable for any payments under
this Section 4.8 with respect to any assessment described in Section 4.8(a) if a
Participant, Vested Former Participant or Surviving Spouse against whom such
assessment is made has not promptly notified or allowed the Corporation to
participate with respect to such assessment in the manner described in Section
4.8(b) or, following demand by the Corporation, has not made the deposit to
avoid additional interest or penalties as described in Section 4.8(d) or has
agreed to, or otherwise settled with the Service with respect to, such
assessment without the Corporation's written consent, provided, however, (i) if
such assessment is settled with such consent or if there is a final judgment for
the Service, (ii) the Corporation has been notified and allowed to participate
in the manner as provided in Section 4.8(b) and (iii) such Participant, Vested
Former Participant or Surviving Spouse has made any required deposit to avoid
additional interest or penalty as described in Section 4.8(d), the Corporation
agrees to indemnify the indemnified party to the extent set forth in this
Section 4.8.
(d) In the event a final settlement or judgment with respect
to an assessment as described under Section 4.8 has been made against a
Participant, Vested Former Participant or Surviving Spouse, such Participant,
Vested Former Participant or Surviving Spouse may elect to receive a portion or
all of his Retirement Benefit or Surviving Spouse's Benefit that is otherwise
payable as an annuity under the Plan in the form of a lump sum in accordance
with procedures as the Committee may set forth, and such lump sum distribution
will be made as soon as practicable after any such election. At the time such
assessment is made against such Participant, Vested Former Participant or
Surviving Spouse (the "assessed party") and prior to any final settlement or
judgment with respect to such assessment, if so directed by the Corporation,
such assessed party shall, as a condition to receiving any indemnity under this
Section 4.8, as soon as practicable after notification of such assessment make a
deposit with the Service to avoid any additional
<PAGE> 18
interest or penalties with respect to such assessment and, upon the request of
such assessed party, the Corporation shall lend, or arrange for the lending to,
such assessed party a portion of his remaining Retirement Benefit or Surviving
Spouse's Benefit under the Plan, not to exceed the lump sum value of such
benefit under the Plan, determined using the actuarial assumptions set forth in
Section 4.5(a), solely for purposes of providing the assessed party with funds
to make a deposit with the Service to avoid any additional interest or penalties
with respect to such assessment.
SECTION 5
Disability Benefits
SECTION 5.1 The Disability Benefit provided by the Plan is
designed to provide each Participant with a disability benefit from the Plan and
certain other sources equal to his Disability Benefit as hereinafter specified.
Thus, Disability Benefits described hereunder as payable to Participants will be
offset by disability benefits payable from sources outside the Plan (other than
benefits payable under the relevant Basic Disability Plan) as specified herein.
SECTION 5.2 In the event that a Participant has become totally
and permanently disabled for the purposes of the relevant Basic Disability Plan,
an annual Disability Benefit shall be payable in monthly installments under this
Plan during the same period as disability benefits are actually or deemed paid
by the relevant Basic Disability Plan, in an amount equal to 60% of the
Participant's Basic Earnings. Such Disability Benefit shall be offset by the
Participant's Other Disability Income, if any. A Participant's Disability
Benefits shall also be offset by the Participant's Basic Plan Benefit, if the
Participant's Basic Disability Plan Benefit does not already include such an
offset.
SECTION 6
Surviving Spouse's Benefits
SECTION 6.1 Upon the death of a Participant or Vested Former
Participant, while employed by the Corporation or an Affiliate, who has
completed at least ten years of Credited Service with the Corporation or an
Affiliate and has attained age 55, his Surviving Spouse will be entitled to a
Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement
Benefit that would have been provided from the Plan had the Participant or
Vested
<PAGE> 19
Former Participant retired from the Corporation or an Affiliate with the
Corporation's consent, on the date of his death.
SECTION 6.2 Upon the death of a Participant or Vested Former
Participant, while employed by the Corporation or an Affiliate, who has
completed at least five years of Credited Service with the Corporation or an
Affiliate and has not attained age 55, his Surviving Spouse will be entitled to
a Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement
Benefit that would have been provided from the Plan had the Participant or
Vested Former Participant terminated employment with the Corporation or an
Affiliate on the date of his death with the Corporation's consent, and elected
to have the payment of his Basic Plan Benefit commence at age 55 in the form of
a straight life annuity.
SECTION 6.3 Upon the death of a Vested Former Participant
while no longer employed by the Corporation or an Affiliate, who has not
attained age 55, his Surviving Spouse will be entitled to a Surviving Spouse's
Benefit under this Plan equal to 50% of the Retirement Benefit that would have
been provided from the Plan to the Vested Former Participant at age 55, taking
into account whether the Corporation consented to the termination.
SECTION 6.4 Upon the death of a Participant or Vested Former
Participant, while employed by the Corporation or an Affiliate, who has
completed at least five, but less than ten years of Credited Service with the
Corporation or an Affiliate and has attained age 55, his Surviving Spouse will
be entitled to a Surviving Spouse's Benefit under this Plan equal to 50% of the
Retirement Benefit that would have been provided from the Plan had the
Participant or Vested Former Participant terminated employment with the
Corporation or an Affiliate on the date of his death with the Corporation's
consent and his Basic Plan Benefit commenced immediately in the form of a
straight life annuity.
SECTION 6.5 Upon the death of a Vested Former Participant
while he is receiving Retirement Benefits, his Surviving Spouse shall receive a
Surviving Spouse's Benefit equal to 50% of the Retirement Benefit he was
receiving at the time of his death.
SECTION 6.6 Except as provided in Section 6.8, the Surviving
Spouse's Benefit provided under Section 6.1, 6.4 and 6.5 will be payable
monthly, will commence as of the first day of the month coincident with or next
following the month in which the Participant or Vested
<PAGE> 20
Former Participant dies, and will continue until the first day of the month in
which the Surviving Spouse dies.
SECTION 6.7 Except as provided in Section 6.8, the Surviving
Spouse's Benefit provided under Section 6.2 and 6.3 will be payable monthly,
will commence as of the first day of the month coincident with or next following
the month in which the Participant or Vested Former Participant would have
attained age 55, and will continue until the first day of the month in which the
Surviving Spouse dies.
SECTION 6.8 (a) If a Participant or a Vested Former
Participant while he was a Participant has made an Election under Section 4.5 or
a Special Election under Section 4.6 and such Election or Special Election is
effective on the date of such Participant's or Vested Former Participant's
death, the Surviving Spouse's Benefit payable to a Surviving Spouse of such
Participant or Vested Former Participant will be payable in the form or
combination of forms of payment so elected by such Participant or Vested Former
Participant pursuant to such Election or Special Election. The amount of any
lump sum payment under this Section 6.8 shall be the present value of the
applicable portion of the Surviving Spouse's Benefit payable under the Plan, and
such present value shall be determined using the actuarial assumptions set forth
in Section 4.5(a). Any lump sum distribution of a Surviving Spouse's Surviving
Spouse's Benefit under the Plan shall fully satisfy all present and future Plan
liability with respect to such Surviving Spouse for such portion or all of such
Surviving Spouse's Benefit so distributed.
(b) Notwithstanding any Election or Special Election made
under Section 4.5 or 4.6, if the lump sum value, determined in the same manner
as provided under Section 4.5(a), of a Surviving Spouse's Benefit is $10,000 or
less at the time such Surviving Spouse's Benefit is payable under this Plan,
such benefit shall be payable as a lump sum.
(c) Any portion of a Surviving Spouse's Benefit provided under
Section 6.1, 6.4 and 6.5 which is payable as an annuity shall be paid in the
manner and at such time as set forth in Section 6.6, and any such benefit which
is payable as a lump sum shall be paid 60 days after the date when annuity
payments commence, or would commence if any portion of such Surviving Spouse's
Benefit were payable as an annuity as set forth in Section 6.6.
<PAGE> 21
(d) Any portion of a Surviving Spouse's Benefit provided under
Section 6.2 and 6.3 which is payable as an annuity shall be paid in the manner
and at such time as set forth in Section 6.7, and any such benefit which is
payable as a lump sum shall be paid 60 days after the date when annuity payments
commence, or would commence if any portion of such Surviving Spouse's Benefit
were payable as an annuity, as set forth in Section 6.7.
SECTION 6.9 Notwithstanding the foregoing provisions of
Section 6, the amount of a Surviving Spouse's Benefit shall be reduced by one
percentage point for each year (including a half year or more as a full year) in
excess of ten that the age of the Participant or Vested Former Participant
exceeds the age of the Surviving Spouse.
SECTION 7
Committee
SECTION 7.1 The Committee shall be responsible for the
administration of 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 the authority to interpret the provisions
of the Plan and construe all of its terms, to adopt, amend, and rescind rules
and regulations for the administration of the Plan, and generally to conduct and
administer the Plan and to make all determinations in connection with the Plan
as may be necessary or advisable. All such actions of the Committee shall be
conclusive and binding upon all Participants, Former Participants, Vested Former
Participants and Surviving Spouses.
SECTION 8
Miscellaneous
SECTION 8.1 The Board may, in its sole discretion, terminate,
suspend or amend this Plan at any time or from time to time, in whole or in
part. However, no termination, suspension or amendment of the Plan may adversely
affect a Participant's or Vested Former Participant's vested benefit under the
Plan, or a retired Participant's or Vested Former Participant's right or the
right of a Surviving Spouse to receive or to continue to receive a benefit
<PAGE> 22
in accordance with the Plan as in effect on the date immediately preceding the
date of such termination, suspension or amendment.
SECTION 8.2 Nothing contained herein will confer upon any
Participant, Former Participant or Vested Former Participant the right to be
retained in the service of the Corporation or any Affiliate, nor will it
interfere with the right of the Corporation or any Affiliate to discharge or
otherwise deal with Participants, Former Participants or Vested Former
Participants with respect to matters of employment without regard to the
existence of the Plan.
SECTION 8.3 Notwithstanding anything herein to the contrary,
at any time following the termination of service of a Participant or Vested
Former Participant, the Committee may authorize, under uniform rules applicable
to all Participants, Vested Former Participants and Surviving Spouses under the
Plan, a lump sum distribution of a Participant's, Vested Former Participant's
and/or Surviving Spouse's Retirement Benefit or Surviving Spouse's Benefit under
the Plan in an amount equal to the present value of such Retirement Benefit or
Surviving Spouse's Benefit, using the actuarial assumptions then in use for
funding purposes under The Dun & Bradstreet Corporation Retirement Account, in
full satisfaction of all present and future Plan liability with respect to such
Participant, Vested Former Participant and/or Surviving Spouse, if the amount of
such present value is less than $250,000. Such lump sum distribution may be made
without the consent of the Participant, Vested Former Participant or Surviving
Spouse.
SECTION 8.4 (a) Notwithstanding anything in this Plan to the
contrary, if a Participant has less than five years of Credited Service at the
time of a Change in Control, and as a result of the Change in Control, and
before he completes five years of Credited Service, (i) the Plan is terminated,
(ii) the Participant is removed from further participation in the Plan, or (iii)
the Participant is terminated as a result of action initiated directly or
indirectly by the Corporation or any Affiliate, such Participant shall be
entitled to a Benefit of 20% of his Average Final Compensation and the
Corporation will remain obligated to pay all benefits under the Plan.
(b) Notwithstanding anything in this Plan to the contrary,
upon the occurrence of a Change in Control, (i) no reduction shall be made in a
Participant's or Vested Former Participant's Retirement Benefit, notwithstanding
his termination of employment or
<PAGE> 23
Retirement prior to age 60 without the Corporation's consent, (ii) the
provisions of Section 3.3(i) and (ii) shall not apply to any Participant, Vested
Former Participant or Surviving Spouse, (iii) each Participant and Vested Former
Participant already receiving a Retirement Benefit under the Plan shall receive
a lump sum distribution of his unpaid Retirement Benefit and, if he is married,
his Surviving Spouse's Benefit under the Plan within 30 days of the Change of
Control in an amount equal to the present value of such Retirement Benefit and
Surviving Spouse's Benefit in full satisfaction of all present and future Plan
liability with respect to such Participant, Vested Former Participant and
Surviving Spouse, if any, and each Surviving Spouse already receiving a
Surviving Spouse's Benefit under the Plan shall receive a lump sum distribution
of his unpaid Surviving Spouse's Benefit at the same time in an amount equal to
the present value of such Surviving Spouse's Benefit in full satisfaction of
Plan liability to such Surviving Spouse, (iv) each Vested Former Participant who
is not already receiving a Retirement Benefit under the Plan shall receive a
lump sum distribution of his unpaid Retirement Benefit and, if he is married,
his Surviving Spouse's Benefit within 30 days of the Change in Control in an
amount equal to the present value of such Retirement Benefit and Surviving
Spouse's Benefit, and each Surviving Spouse of either a Vested Former
Participant or a Participant with five or more years of Credited Service who is
not already receiving a Surviving Spouse's Benefit under the Plan shall receive
a lump sum distribution of his unpaid Surviving Spouse's Benefit at the same
time in amount equal to the present value of such Surviving Spouse's Benefit,
(v) each Participant with less than five years of Credited Service who is
entitled to a benefit under Section 8.4(a) shall receive a lump sum distribution
of the present value of such Retirement Benefit within 30 days from the earlier
of the date the Plan is terminated, the date he is removed from further
participation in the Plan, or the date his employment with the Corporation is
terminated, and of his Surviving Spouse's Benefit based upon the amount of such
Retirement Benefit if he is married on the applicable date, and (vi) each
Participant who is not included in (v) above and who is not already receiving a
Retirement Benefit under the Plan shall receive (a) within 30 days of the later
to occur of the date of such Change in Control or the date he completes five
years of Credited Service a lump sum distribution of the present value of his
accrued Retirement Benefit under the Plan as of the applicable date and, if he
is married on such date, the present value of his Surviving Spouse's
<PAGE> 24
Benefit, and (b) within 30 days from the earliest of the date of his Retirement
or termination of employment with the Corporation, the date the Plan is
terminated or the date he is removed from further participation in the Plan, a
lump sum distribution of the present value of his additional Retirement Benefit
accrued after the applicable event in (a) computed as of the applicable date
herein set forth in (b) and, if he is married on such applicable date, the
present value of his surviving Spouse's Benefit. In determining the amount of
the lump sum distributions to be paid under this Section 8.4, the following
actuarial assumptions shall be used: (i) the interest rate used shall be the
interest rate used by the Pension Benefit Guaranty Corporation for determining
the value of immediate annuities as of January 1st of either the year of the
occurrence of the Change in Control or the Participant's retirement or
termination of employment, whichever is applicable, (ii) the 1983 Group Annuity
Mortality Table shall be used; and (iii) it shall be assumed that all
Participants retired or terminated employment with the Corporation on the date
of the occurrence of the Change in Control and with the Corporation's consent
for purposes of determining the amount of the lump sum distribution to be paid
upon the occurrence of the Change in Control.
SECTION 8.5 (a) The Plan is unfunded, and the Corporation will
make Plan benefit payments solely on a current disbursement basis, provided,
however, that the Corporation reserves the right to purchase insurance
contracts, which may or may not be in the name of a Participant or Vested Former
Participant, or establish one or more trusts to provide alternative sources of
benefit payments under this Plan, provided, further, however, that upon the
occurrence of a "Potential Change in Control" the appropriate officers of the
Corporation are authorized to make such contributions to such trust or trusts as
are necessary to fund the lump sum distributions to Plan Participants required
pursuant to Section 8.4 of this Plan in the event of a Change in Control. In
determining the amount of the necessary contribution to the trust or trusts in
the event of a Potential Change in Control, the following actuarial assumptions
shall be used: (i) the interest rate used shall be the interest rate used by the
Pension Benefit Guaranty Corporation for determining the value of immediate
annuities as of January 1st of the year of the occurrence of the Potential
Change in Control, (ii) the 1983 Group Annuity Mortality Table shall be used;
and (iii) it shall be assumed that all Participants will retire or terminate
employment
<PAGE> 25
with the Corporation as soon as practicable after the occurrence of the
Potential Change in Control and with the Corporation's consent. The existence of
any such insurance contracts, trust or trusts shall not relieve the Corporation
of any liability to make benefit payments under this Plan, but to the extent any
benefit payments are made from any such insurance contract in the name of the
Corporation or any Affiliate or from any such trust, such payment shall be in
satisfaction of and shall reduce the Corporation's liabilities under this Plan.
Further, in the event of the Corporation's bankruptcy or insolvency, all
benefits accrued under this Plan shall immediately become due and payable in a
lump sum and all Participants, Vested Former Participants and Surviving Spouses
shall be entitled to share in the Corporation's assets in the same manner and to
the same extent as general unsecured creditors of the Corporation.
(b) Members and Vested Former Members shall have the status of
general unsecured creditors of the Corporation and this Plan constitutes a mere
promise by the Corporation to make benefit payments at the time or times
required hereunder. It is the intention of the Corporation that this Plan be
unfunded for tax purposes and for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended and any trust created by the Corporation
in meeting its obligations under the Plan shall meet the requirements necessary
to retain such unfunded status.
SECTION 8.6 If any dispute arises under the Plan between the
Corporation and a Participant, Former Participant, Vested Former Participant or
Surviving Spouse (collectively or individually referred to as "Participant" in
this Section 8.6) as to the amount or timing of any benefit payable under the
Plan or as to the persons entitled thereto, such dispute shall be resolved by
binding arbitration proceedings initiated by either party to the dispute in
accordance with the rules of the American Arbitration Association and the
results of such proceedings shall be conclusive on both parties and shall not be
subject to judicial review. If the disputed benefits involve the benefits of a
Participant who is no longer employed by the Corporation or any Affiliate, the
Corporation shall pay or continue to pay the benefits claimed by the Participant
until the results of the arbitration proceedings are determined unless such
claim is patently without merit; provided, however, that if the results of the
arbitration proceedings are adverse to the Participant, then in such event the
recipient of the benefits shall be obligated to repay the
<PAGE> 26
excess benefits to the Corporation. The Corporation expressly acknowledges that
the amounts payable under the Plan are necessary to the livelihood of
Participants and their family members and that any refusal or neglect to pay
benefits under the preceding sentence prior to the resolution of any dispute
shall be prima facie evidence of bad faith on its part and will be conclusive
grounds for an arbitration award resulting in an immediate lump sum payment to
the Participant, of the Participant's benefits under the Plan then due and
payable to him, unless the arbitrator determines that the claim for the disputed
benefits was without merit. The amount of such lump sum payment shall be equal
to the then actuarial value of such benefits calculated by utilizing the
actuarial assumptions then in use for funding purposes under The Dun &
Bradstreet Corporation Retirement Account. In addition, in the event of any
dispute covered by this Section 8.6 the Corporation agrees to pay the entire
costs of any arbitration proceeding or legal proceeding brought hereunder,
including the fees and expenses of counsel and pension experts engaged by a
Participant and that such expenses shall be reimbursed promptly upon evidence
that such expenses have been incurred without awaiting the outcome of the
arbitration proceedings; provided, however, that such costs and expenses shall
be repaid to the Corporation by the recipient of same if it is finally
determined by the arbitrators that the position taken by such person was without
merit.
SECTION 8.7 To the maximum extent permitted by law, no benefit
under the Plan shall be assignable or subject in any manner to alienation, sale,
transfer, claims of creditors, pledge, attachment or encumbrances of any kind.
SECTION 8.8 The Corporation may withhold from any benefit
under the Plan an amount sufficient to satisfy its tax withholding obligations.
SECTION 8.9 The Plan is established under and will be
construed according to the laws of the State of New York.
<PAGE> 1
EXHIBIT 10(n)
THE DUN & BRADSTREET CORPORATION
RESTRICTED STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS
(AS AMENDED EFFECTIVE JULY 16, 1997)
----------------------------------------------------------------
(FROZEN 11/1/96)
1. PURPOSES OF THE PLAN
The purposes of the Plan are to encourage the Directors of The Dun &
Bradstreet Corporation (the "Company") who are not employees or officers of the
Company to own shares of the Company's Common Stock, thereby aligning their
interests more closely with the interests of other shareholders, to aid the
Company in securing and retaining Directors of outstanding ability, and to
encourage the highest level of Director performance by providing incentive
through the grant of restricted stock awards ("Awards").
2. STOCK SUBJECT TO THE PLAN
The total number of shares of Common Stock of the Company that may be
issued under the Plan is 50,000. The shares may consist, in whole or in part, of
unissued shares or treasury shares. If any shares awarded under the Plan are
reacquired by the Company pursuant to the Plan, such shares may thereafter be
reissued under the Plan.
3. ADMINISTRATION
The Plan shall be administered by the Executive Compensation and Stock
Option Committee (the "Committee") of the Board of Directors. The Committee
shall have the authority, consistent with the Plan, to interpret the Plan and
any agreements
<PAGE> 2
-2-
with participants under the Plan governing the terms of Awards ("Award
Agreements"), to adopt, amend and rescind rules and regulations for the
administration of the Plan and the Awards, 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.
4. PARTICIPATION
Each member of the Board of Directors from time to time who is neither an
officer nor an employee of the Company shall be a participant in the Plan.
5. RESTRICTED STOCK AWARDS
Each participant shall be granted an Award of 300 shares of Common Stock
on the fourth full New York Stock Exchange trading day following the Company's
release of its earnings results for the second quarter of each year, beginning
with the year 1994. Awards granted under this Plan shall be subject to the
following terms and conditions:
(a) The prospective recipient of an Award shall not, with respect to
such Award, be deemed to have become a participant or to have any rights
with respect to such Award until and unless such recipient shall have
executed an Award Agreement or other instrument evidencing the Award and
its terms and conditions and delivered a fully executed copy thereof to
the Company and otherwise complied with the then applicable terms and
conditions under the Plan.
(b) Each participant shall be issued a certificate in respect of
shares of restricted stock awarded under the Plan. Such certificate shall
be registered in the name of the participant, and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Award substantially in the following form:
<PAGE> 3
-3-
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) of The Dun & Bradstreet Corporation
Restricted Stock Plan for Non-Employee Directors and an Agreement
entered into between the registered owner and The Dun & Bradstreet
Corporation. Copies of such Plan and Agreement are on file in the
offices of the Secretary's Department of The Dun & Bradstreet
Corporation."
(c) All certificates for restricted stock delivered under this Plan
shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Company's Common Stock is then listed and any applicable
federal or state securities law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference
to such restrictions.
(d) The Committee may adopt rules which provide that the stock
certificates evidencing such shares may be held in custody by a bank or
other institution, or that the Company may itself hold such shares in
custody until the restrictions thereon shall have lapsed, and may require
as a condition of any Award that the participant shall have delivered a
stock power endorsed in blank relating to the stock covered by such Award.
(e) Recipients of Awards under the Plan are not required to make any
payment or provide consideration other than the rendering of services as
Directors.
6. RESTRICTIONS AND FORFEITURES
The shares of Common Stock awarded pursuant to the Plan shall be subject
to the following restrictions and conditions:
(a) During a period of five years commencing with the date of an
Award (the "Restriction Period"), the participant will not be permitted to
sell, transfer, pledge, assign or otherwise dispose of restricted stock
awarded pursuant to said Award (except by will or the laws of descent and
distribution).
(b) Except as provided in Section 6(a), the participant shall have
with respect to the restricted stock all of the rights of a shareholder of
the Company, including the right to vote the shares and receive dividends
and other distributions.
<PAGE> 4
-4-
(c) Upon a participant's involuntary termination of Board service
for cause by Board or shareholder action during the Restriction Period,
all shares still subject to restriction shall be forfeited by the
participant and will be reacquired by the Company.
(d) Upon a participant's retirement, disability, death, or
involuntary termination of Board service, except for cause, following a
"Change in Control" as defined in Section 7, all restrictions with respect
to such participant's restricted stock shall lapse and such participant or
such participant's beneficiary shall be entitled to receive (if held in
custody by the Company, a bank or other institution) and retain all of the
stock subject to the Awards.
(e) Upon a participant's resignation or other termination of Board
service during the Restriction Period for reasons other than those set
forth in Sections 6(c) and (d), a portion of the shares still subject to
restriction shall be forfeited by the participant and will be reacquired
by the Company. The number of restricted shares of Common Stock forfeited
shall be determined by multiplying the number of shares by a fraction, the
denominator of which is 60 months and the numerator of which is the number
of whole months remaining in the Restriction Period.
7. 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 Awards may
be granted and the number and class of shares under each Award shall be
correspondingly adjusted by the Committee. Except as otherwise specifically
provided in the Award Agreement relating to any Award, in the event of a Change
in Control, merger, consolidation, combination, reorganization or other
transaction in which the shareholders 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
<PAGE> 5
-5-
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 shareholders' vote on such transaction or prior to the expiration date of
the tender or exchange offer (i) accelerate the termination of the Restriction
Period so that all restrictions with respect to a participant's restricted stock
shall immediately lapse without regard to any limitations of time or amount
otherwise contained in the Plan or the Award Agreement and/or (ii) determine
that the Awards shall be adjusted and make such adjustments by substituting for
Common Stock of the Company subject to Awards, 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 number of shares subject to an Award 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 participant if the participant had exchanged all of
such shares in the transaction or sold or exchanged all of such shares pursuant
to the tender or exchange offer. For purposes of this Section 7, "Change in
Control" means:
(a) any "Person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(other than
<PAGE> 6
-6-
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 shareholders of the Company in substantially the
same proportions 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 20% or more of the combined voting power of the Company's
then outstanding securities;
(b) during any period of twenty-four months (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new Director (other
than (1) a Director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(a), (c) or (d) of this Section, (2) a Director designated by any Person
(including the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an actual or
threatened proxy contest) which if consummated would constitute a Change
in Control or (3) a Director designated by any Person who is the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's
securities) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the Directors then still in office who either were Directors at the
beginning of the period or whose election or nomination for election was
previously so approved cease for any reason to constitute at least a
majority thereof;
(c) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, 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 and (2) after
which no Person holds 20% or more of the combined voting power of the then
outstanding securities of the Company or such surviving entity; or
(d) the shareholders 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.
<PAGE> 7
-7-
8. 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 participant under any Award theretofore granted, without the
participant's consent, or which, without the approval of the shareholders of the
Company, would:
(a) except as is provided in Section 7 of the Plan, increase the
total number of shares reserved for the purposes of the Plan;
(b) change the participants (or class of participants) eligible to
receive Awards under the Plan;
(c) materially increase the benefits accruing to participants under
the Plan; or
(d) effect any other amendment to the Plan for which approval by the
shareholders of the Company is required pursuant to any applicable law or
rule.
In addition, no amendment or alteration shall be made more than once every
six months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act or the rules promulgated therewith.
9. EFFECTIVENESS AND TERM OF THE PLAN
The Plan became effective upon its approval by the Board of Directors as
of July 20, 1994. The Plan shall be submitted within one year of such date to
the shareholders of the Company for their approval, and if not so approved
within that period, the Plan and all Awards granted hereunder shall be void and
of no force or effect. If so
<PAGE> 8
-8-
approved by the shareholders, the Plan shall remain in effect until amended or
terminated by action of the Board.
Adopted by Board of
Directors: July 20, 1994
Approved by
Shareholders: April 18, 1995
Amended by Board of
Directors effective: July 16, 1997
<PAGE> 1
EXHIBIT 10(p)
1996 THE DUN & BRADSTREET CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
(AS AMENDED EFFECTIVE DECEMBER 17, 1997)
-------------------------------------------------------------------
1. PURPOSE OF THE PLAN
The purpose of the Plan is to aid the Company in attracting, retaining and
compensating non-employee Directors and to enable them to increase their
ownership of Shares. The Plan will be beneficial to the Company and its
shareholders since it will allow non-employee Directors to have a greater
personal financial stake in the Company through the ownership of Shares, in
addition to underscoring their common interest with shareholders in increasing
the value of the Shares on a long-term basis.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective meanings
set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any
successor thereto.
(b) Awards: Options, Shares of Restricted Stock, Phantom Stock Units
or Performance Shares granted pursuant to the Plan.
(c) Beneficial Owner: As defined in Rule 13d-3 under the Act (or any
successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The occurrence of any of the following
events:
(i) any "Person," as such term is used in Sections 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
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or
<PAGE> 2
-2-
becomes the "Beneficial Owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the
Company's then outstanding securities;
(ii) during any period of twenty-four months (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any
new Director (other than (1) a Director designated by a person who
has entered into an agreement with the Company to effect a
transaction described in clause (a), (c) or (d) of this Section, (2)
a Director designated by any Person (including the Company) who
publicly announces an intention to take or to consider taking
actions (including, but not limited to, an actual or threatened
proxy contest) which if consummated would constitute a Change in
Control or (3) a Director designated by any Person who is the
Beneficial Owner, directly or indirectly, of securities of the
Company representing 10% or more of the combined voting power of the
Company's securities) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose
election or nomination for election was previously so approved cease
for any reason to constitute at least a majority thereof;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, 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 and (2) after which no Person holds 20% or
more of the combined voting power of the then outstanding securities
of the Company or such surviving entity; or
(iv) the shareholders 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.
(f) Code: The Internal Revenue Code of 1986, as amended, or any
successor thereto.
(g) Committee: The Executive Compensation and Stock Option Committee
of the Board.
<PAGE> 3
-3-
(h) Company: The Dun & Bradstreet Corporation, a Delaware
corporation.
(i) Disability: Inability to continue to serve as a non-employee
Director of the Board due to a medically determinable physical or mental
impairment which constitutes a permanent and total disability, as
determined by the Committee (excluding any member thereof whose own
Disability is at issue in a given case) based upon such evidence as it
deems necessary and appropriate. A Participant shall not be considered
disabled 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.
(j) Determination Date: As such term is defined in Section 8(b) of
the Plan.
(k) Effective Date: The date on which the Plan takes effect, as
defined pursuant to Section 15 of the Plan.
(l) Fair Market Value: On a given date, the average of the high and
low prices of the Shares as reported on such date on the Composite Tape of
the principal national securities exchange on which such Shares are listed
or admitted to trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal national
securities exchange on which such Shares are listed or admitted to
trading, or, if the Shares are not listed or admitted on a national
securities exchange, the average of the per Share closing bid price and
per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System (or such
market in which such prices are regularly quoted), or, if there is no
market on which the Shares are regularly quoted, the Fair Market Value
shall be the value established by the Committee in good faith. If no sale
of Shares shall have been reported on such Composite Tape or such national
securities exchange on such date or quoted on the National Association of
Securities Dealers Automated Quotation System on such date, then the
immediately preceding date on which sales of the Shares have been so
reported or quoted shall be used.
(m) Option: A stock option granted pursuant to Section 6 of the
Plan.
(n) Option Price: The purchase price per Share of an Option, as
determined pursuant to Section 6(b) of the Plan.
(o) Participant: Any director of the Company who is not an employee
of the Company or any Subsidiary of the Company as of the date that an
Award is granted.
(p) Performance Period: The calendar year.
<PAGE> 4
-4-
(q) Performance Share: An annual bonus award, payable in
unrestricted Shares, granted pursuant to Section 9(a) of the Plan.
(r) Person: As such term is used in Section 13(d) or 14(d) of the
Act (or any successor section thereto).
(s) Phantom Stock Unit: A bookkeeping entry, equivalent in value to
one Share, credited in accordance with Section 8(a) of the Plan.
(t) Plan: The 1996 The Dun & Bradstreet Corporation Non-Employee
Directors' Stock Incentive Plan.
(u) Restricted Stock: A Share of restricted stock granted pursuant
to Section 7 of the Plan.
(v) Retirement: Termination of service with the Company after such
Participant has attained age 70, regardless of the length of such
Participant's service.
(w) S&P Index: The Standard & Poor's 500 Index.
(x) Service Date: The first date on which a Participant commences
service as a Director of the Company.
(y) Shares: Shares of common stock, par value $1.00 per share, of
the Company.
(z) Subsidiary: A subsidiary corporation, as defined in Section
424(f) of the Code (or any successor section thereto).
3. SHARES SUBJECT TO THE PLAN
The total number of Shares which may be issued under the Plan is 200,000. Shares
may consist, in whole or in part, of unissued Shares or treasury Shares. The
issuance of Awards shall reduce the total number of Shares available under the
Plan.
<PAGE> 5
-5-
4. ADMINISTRATION
The Plan shall be administered by the Committee, which may delegate its duties
and powers in whole or in part to any subcommittee thereof consisting solely of
at least two "non-employee directors" within the meaning of Rule 16b-3 under the
Act (or any successor rule thereto). The Committee is authorized to interpret
the Plan, to establish, amend and rescind any rules and regulations relating to
the Plan, and to make any other determinations that it deems necessary or
desirable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan in the
manner and to the extent the Committee deems necessary or desirable. Any
decision of the Committee in the interpretation and administration of the Plan,
as described herein, shall lie within its sole and absolute discretion and shall
be final, conclusive and binding on all parties concerned (including, but not
limited to, Participants and their beneficiaries or successors).
5. ELIGIBILITY
All Participants shall be eligible to participate under the Plan.
6. TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan shall be non-qualified stock options for federal
income tax purposes, as evidenced by the related Option agreements, 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:
<PAGE> 6
-6-
(a) Annual Grant of Options. At each December meeting of the Board
or on such later date as the Committee may determine, each Participant who
is expected to serve on the Board for the following calendar year shall
receive an Option to purchase a number of Shares with a nominal grant
value based on competitive pay levels, as determined by the Board in its
sole discretion.
(b) Option Price. The Option Price per Share shall equal the Fair
Market Value of one Share on the date on which an Option is granted.
(c) Exercisability of Options. An Option granted under the Plan
shall be fully exercisable on the first anniversary of the date on which
such Option is granted. An Option shall expire on the tenth anniversary of
the date on which it is granted.
(d) Exercise of Options. Except as otherwise provided in the Plan or
in a related Option agreement, an 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
Participant (i) in cash, (ii) in Shares having a Fair Market Value equal
to the aggregate 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. No Participant shall have
any rights to dividends or other rights of a shareholder with respect to
Shares subject to an Option until the Participant has given written notice
of exercise of the Option, paid in full for such Shares and, if
applicable, has satisfied any other conditions imposed by the Committee
pursuant to the Plan.
(e) Exercisability Upon Termination of Service by Death. If a
Participant's service with the Company and its Subsidiaries terminates by
reason of death after the first anniversary of the date on which an Option
is granted, the unexercised portion of such Option may thereafter be
exercised during the shorter of (A) the remaining term of the Option or
(B) five years after the date of death.
(f) Exercisability Upon Termination of Service by Disability or
Retirement. If a Participant's service with the Company and its
Subsidiaries terminates by reason of Disability or Retirement after the
first anniversary of the date on which an Option is granted, the
unexercised portion of such Option may thereafter be exercised during the
shorter of (A) the remaining term of the Option or (B) five years after
the date of such termination of service; provided, however, that if a
Participant dies within a period of five years after such termination of
service, the unexercised portion of the Option may thereafter be
exercised, during the shorter of (i) the remaining term of the Option or
(ii) the period that is the longer of (A) five years after the date of
such termination of service or (B) one year after the date of death.
<PAGE> 7
-7-
(g) Effect of Other Termination of Service. If a Participant's
service with the Company and its Subsidiaries terminates by reason of
Disability or Retirement prior to the first anniversary of the date on
which an Option is granted (as described above), then, to the extent the
Committee, in its sole discretion, so permits, such Option may be
exercised thereafter, during the shorter of (A) the remaining term of such
Option or (B) five years after the date of such termination of service,
for a prorated number of Shares (rounded down to the nearest whole number
of Shares), equal to (i) the number of Shares subject to such Option
multiplied by (ii) a fraction the numerator of which is the number of days
the Participant served on the Board subsequent to the date on which such
Option was granted and the denominator of which is 365. The portion of
such Option which is not so exercisable shall terminate as of the date of
Disability or Retirement. If a Participant's service with the Company and
its Subsidiaries terminates for any other reason prior to the first
anniversary of the date on which an Option is granted (as described
above), such Option shall thereupon terminate. If a Participant's service
with the Company and its Subsidiaries terminates for any reason other than
death, Disability or Retirement after the first anniversary of the date on
which an Option is granted (as described above), the unexercised portion
of such Option shall thereupon terminate.
(h) Nontransferability of Stock Options. Except as otherwise
provided in this Section 6(h), a stock option shall not be transferable by
the optionee otherwise than by will or by the laws of descent and
distribution and during the lifetime of an optionee an option shall be
exercisable only by the optionee. An option exercisable after the death of
an optionee or a transferee pursuant to the following sentence may be
exercised by the legatees, personal representatives or distributees of the
optionee or such transferee. The Committee may, in its discretion,
authorize all or a portion of the options previously granted or to be
granted to an optionee to be on terms which permit irrevocable transfer
for no consideration by such optionee to (i) any or all of the spouse,
children or grandchildren of the optionee ("Immediate Family Members"),
(ii) a trust or trusts for the exclusive benefit of the optionee and/or
any or all of such Immediate Family Members, or (iii) a partnership in
which the optionee and/or any or all of such Immediate Family Members are
the only partners, provided that subsequent transfers of transferred
options shall be prohibited except those in accordance with the first
sentence of this Section 6(h). Following transfer, any such options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. The events of termination of service of
Sections 6(e), 6(f) and 6(g) hereof shall continue to be applied with
respect to the original optionee, following which the options shall be
exercisable by the transferee only to the extent, and for the periods
specified, in Sections 6(e), 6(f) and 6(g). The Committee may delegate to
the Administrative Committee the authority to authorize transfers,
establish terms and conditions upon which transfers may be
<PAGE> 8
-8-
made and establish classes of optionees eligible to transfer options, as
well as to make other determinations with respect to option transfers.
7. TERMS AND CONDITIONS OF RESTRICTED STOCK
Restricted Stock granted under the Plan shall be subject to the following terms
and conditions and to such other terms and conditions, not inconsistent
therewith, as the Committee shall determine:
(a) One-Time Grant of Restricted Stock to New Directors. Each
Participant who commences service with the Company on or after November 1,
1996 shall, on his or her Service Date, receive a one-time grant of
Restricted Stock consisting of a number of Shares equal to (i) the annual
retainer in effect on such Participant's Service Date, divided by (ii) the
Fair Market Value of one Share on such Participant's Service Date.
(b) Restrictions. Restricted Stock granted under the Plan may not be
sold, transferred, pledged, assigned or otherwise disposed of under any
circumstances; provided, however, that the foregoing restrictions shall
elapse on the fifth anniversary of a Participant's Service Date.
(c) Forfeiture of Grants. All Shares of Restricted Stock as to which
restrictions have not previously elapsed pursuant to Section 7(b) of the
Plan shall be forfeited upon the termination of a Participant's service
with the Company for any reason (including, without limitation, by reason
of death, Disability or Retirement).
(d) Other Provisions. During the period prior to the date on which
the foregoing restrictions elapse, (i) Shares of Restricted Stock shall be
registered in the Participant's name and (ii) such Participant shall have
voting rights and receive dividends with respect to such Restricted Stock.
8. TERMS AND CONDITIONS OF PHANTOM STOCK UNITS
(a) One-Time Conversion of Accrued Benefits into Phantom Stock
Units. Each Participant who serves on the Board as of January 1, 1997
shall have Phantom Stock Units credited to a Phantom Stock Unit account
maintained for him or her on the books of the Company. The number of
Phantom Stock Units to be
<PAGE> 9
-9-
credited shall equal (i) the present value as of December 31, 1996 of the
Participant's accrued future retirement benefit under the Company's Plan
for Compensating Directors for Post Retirement Availability and Service
(calculated in accordance with (A) the assumptions used to calculate
lump-sum distributions under such plan, (B) an interest rate equal to 85%
of the three-month average yield on 15-year Treasury bonds and (C)
information from the 1983 Group Annuity Mortality table), divided by (ii)
the average Fair Market Value of one Share during the last ten trading
days of 1996, rounded down to the nearest whole number of Phantom Stock
Units. For purposes of the foregoing calculation, the non-accrued future
retirement benefits of Participants with more than three but less than
five years of service shall be accelerated to December 31, 1996. Phantom
Stock units shall be credited with dividend equivalents when dividends are
paid on Shares, and such dividend equivalents shall be converted into
additional Phantom Stock Units (including fractional Phantom Stock Units)
based on the Fair Market Value of Shares on the date credited.
(b) Payment in Cash Upon Termination of Service. On the second
business day of the calendar year (the "Payment Day") immediately
following the calendar year containing the date on which a Participant
terminates service with the Company (the "Termination Date"), the
Participant shall receive a lump sum payment in cash equal to the Fair
Market Value (determined as of the business day immediately preceding the
Payment Day (the "Determination Day")) of the number of Phantom Stock
Units (including fractional Phantom Stock Units) credited to the
Participant's Phantom Stock Unit account on the Determination Day. Between
the Termination Date and the Determination Day the Participant's Phantom
Stock Units shall continue to be credited with dividend equivalents when
dividends are paid on Shares, and such dividend equivalents shall continue
to be converted into additional Phantom Stock Units (including fractional
Phantom Stock Units) based on the Fair Market Value of Shares on the date
credited. As an alternative to receiving such payment on the Payment Day,
the Participant may elect to receive his or her payment in such form of
payments (and on such terms and conditions) as are established by the
Committee in its sole discretion.
(c) Crediting of Stock Dividends. When non-cash dividends are paid
on Shares, a Participant's Phantom Stock Units shall be credited with
dividend equivalents by crediting the Participant's account with a
bookkeeping entry that will at all times equal the then current value of
the non-cash dividend (including any dividends on such dividend, any
dividends on such dividends, etc.). Such value shall be determined in the
same manner that the Fair Market Value of Shares is determined.
<PAGE> 10
-10-
9. TERMS AND CONDITIONS OF PERFORMANCE SHARES
(a) Establishment of Annual Performance Target Levels and Number of
Performance Shares. In the December immediately preceding a given
Performance Period, the Board shall establish performance target levels of
total shareholder return for the Company for such Performance Period,
expressed as target percentiles of the total shareholder return of the S&P
Index. The Board shall also establish the number of Performance Shares
that would be payable to Participants upon the attainment of various
performance target levels during such Performance Period. The Board, in
its sole discretion, may adjust performance target levels and the number
of Performance Shares payable upon attainment of such target levels in
December of each year with respect to the subsequent Performance Period to
reflect changes in Share prices and/or competitive pay levels.
(b) Payment in Unrestricted Shares. On the first trading day
following the third Wednesday in February in the year following a given
Performance Period, Participants shall receive unrestricted Shares equal
to the number of Performance Shares earned by such Participant during such
Performance Period. A Participant who did not serve on the Board during an
entire Performance Period shall receive a prorated number of Shares
(rounded down to the nearest whole number of Shares) based upon (i) the
number of days during the Performance Period during which such Participant
served on the Board and (ii) the actual total shareholder return results.
(c) Authorization for Committee to Permit Deferral. Notwithstanding
Section 9(b) of the Plan, a Participant may, if and to the extent
permitted by the Board, elect to defer payment of any unrestricted Shares
payable as a result of any Performance Shares earned by such Participant;
provided, however, that any such election must be made (i) no later than
June 30 of the year immediately preceding the year in which any such
unrestricted Shares are to be paid and (ii) in accordance with such terms
and conditions as are established by the Committee in its sole discretion.
10. ADJUSTMENTS UPON CERTAIN EVENTS
Notwithstanding any other provisions in the Plan to the contrary, the following
provisions shall apply to all Awards granted under the Plan:
<PAGE> 11
-11-
(a) Generally. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off,
combination or exchange of Shares or other corporate exchange, or any
distribution to shareholders of Shares other than regular cash dividends,
the Committee, in its sole discretion and without liability to any person,
may make such substitution or adjustment, if any, as it deems to be
equitable, as to (i) the number or kind of Shares or other securities
issued or reserved for issuance pursuant to the Plan or pursuant to
outstanding Awards, (ii) the Option Price and/or (iii) any other affected
terms of such Awards.
(b) Change in Control. Upon the occurrence of a Change in Control,
(i) all restrictions on Shares of Restricted Stock shall lapse, (ii) all
Phantom Stock Units shall become payable to Participants in cash, (iii)
each Participant shall receive the target number of Performance Shares for
the Performance Period in which the Change in Control occurs (or, if no
target number has been established for such Performance Period, the target
number for the immediately preceding Performance Period shall be used) and
(iv) all Stock Options shall vest and become exercisable.
11. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of the Company and a
Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.
12. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no amendment, alteration
or discontinuation shall be made which would impair the rights of any
Participant under any Award theretofore granted without such Participant's
consent.
<PAGE> 12
-12-
13. NONTRANSFERABILITY OF AWARDS
Except as provided in Section 6(h) of the Plan, an Award shall not be
transferable or assignable by the Participant otherwise than by will or by the
laws of descent and distribution. During the lifetime of a Participant, an Award
shall be exercisable only by such Participant. An Award exercisable after the
death of a Participant may be exercised by the legatees, personal
representatives or distributees of the Participant. Notwithstanding anything to
the contrary herein, the Committee, in its sole discretion, shall have the
authority to waive this Section 13 (or any part thereof) to the extent that this
Section 13 (or any part thereof) is not required under the rules promulgated
under any law, rule or regulation applicable to the Company.
14. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed in the State
of New York.
<PAGE> 13
-13-
15. EFFECTIVENESS OF THE PLAN
The Plan shall be effective as of November 1, 1996.
Adopted by the
Board of Directors: December 18, 1996
Amended by the Board
of Directors effective: January 15, 1997
July 16, 1997
December 17, 1997
<PAGE> 1
EXHIBIT 10(q)
THE DUN & BRADSTREET CORPORATION 1998
SPECIAL CORPORATE MANAGEMENT INCENTIVE PLAN
The Executive Compensation and Stock Option Committee (the "Committee")
of the Board of Directors (the "Board") of The Dun & Bradstreet Corporation
(along with its subsidiaries, the "Company") currently anticipates that during
1998 the Company will be distributing to its shareholders the voting securities
of an entity ("Newco") which is currently wholly owned by the Company. The
purpose of this Plan is to promote the interests of the shareholders and all
others who benefit by the continuing success of the Company by providing
incentive to those executives (the "Executives") whose decisions and actions
most significantly affect the growth and profitability of the Company, and whose
employment with the Company is expected to continue following the date on which
the voting securities of Newco are distributed to the Company's shareholders
(the "Spin-off Date").
1. PARTICIPANTS
The participants in this Plan will be those Executives whose decisions
and actions most significantly affect corporate growth and profitability. The
senior officers of the Company shall recommend to the Chief Executive Officer
Executives for participation in the Plan and the amount of guideline bonus
opportunity for each of them under the Plan.
To be recommended, an Executive will normally (1) be earning in excess
of $100,000 gross compensation, and (2) be an officer of the Company or have a
reporting relationship to an officer, or (3) be a general manager of a Company
subsidiary, profit center, resource unit or profit center group or have a
reporting relationship to a general manager.
Such recommended Executives as are approved by the Chief Executive
Officer shall then be
<PAGE> 2
2
recommended to the Committee by the Chief Executive Officer as participants in
this Plan as of January 1, 1998.
2. INCENTIVE AWARDS
Each participant's guideline bonus opportunity shall be stated as a
dollar amount. Participants may earn amounts ("awards") equal to, greater than
or less than guideline bonus opportunity as follows:
(a) Participants who are or who report to officers of the Company
(excluding operating unit general managers), shall earn their award on the basis
of one or more of (1) the following performance measures (the "corporate
performance measures") established by the Committee: earnings per share, net
income, operating income, revenue, working capital, return on equity, return on
assets, total return to shareholders, average sales growth and cash flow, each
of which may be on a corporate-wide basis or with respect to one or more
operating units, divisions, acquired businesses, minority investments,
partnerships or joint ventures; and (2) priority objectives or other qualitative
measures.
(b) Participants who are or who report to operating unit executives or
senior vice presidents (or their functional equivalent) shall earn their award
on the basis of a combination of corporate and operating unit or individual
performance measures established by the Committee.
(c) Participants who are or who report to division, profit center or
resource unit general managers shall earn their award on the basis of a
combination of corporate and operating unit or individual performance measures
as recommended by the operating unit executive or senior vice presidents of the
Company and as approved by the Chief Executive Officer.
(d) The Chief Executive Officer shall recommend to the Committee for
its approval (1) a minimum amount ("floor"), a target amount ("target") and, if
desired, a maximum amount
<PAGE> 3
3
("ceiling") for the corporate performance measures, and (2) minimum, target and,
if desired, ceiling, performance measures for each Company division, profit
center and/or resource unit having employees who are participants in the Plan,
provided that the Committee may delegate to the Chief Executive Officer the
establishment of the performance measures referred to in this clause (2).
Performance measures for individual divisions, profit centers and/or resource
units may be consolidated, as appropriate, for the purpose of establishing
corporate, operating unit or sub-unit measures. The floor, target and ceiling
figures may, but need not, be based upon budgeted operating results, and will be
established solely for the purpose of administering the Plan.
(e) Awards shall be earned as follows in relation to the
pre-established performance measures approved by the Committee: no award will be
earned unless the performance floor for that portion of the award is exceeded;
the guideline bonus opportunity is earned if the target amount is achieved; an
amount greater or less than the guideline bonus opportunity can be earned for a
level of performance above the performance floor as determined by established
performance measures.
(f) The Chief Executive Officer may adjust individual awards earned
under the performance measures upward or downward, by an amount of up to 20% of
the participant's guideline bonus opportunity, to account for demonstrated
quality of performance or the occurrence of unusual or unforeseen circumstances.
The total of Plan awards may not exceed 110% of the total earned amount.
(g) The sole performance period for the purposes of this Plan shall
commence on January 1, 1998 and terminate on the earlier of December 31, 1998 or
the Spin-off Date.
3. MISCELLANEOUS
(a) Each participant will be notified in writing at the time of his or
her approval as a participant, of the amount and terms of his or her salary and
guideline bonus opportunity.
<PAGE> 4
4
(b) Payment of any awards earned by participants will be made as soon
as practicable after the end of the performance period.
(c) If a participant dies, retires, is assigned to a different
position, is granted a leave of absence or if the participant's employment is
otherwise terminated (except with cause by the Company), a pro rata share of the
participant's award based on the period of actual participation may, at the
Committee's discretion, be paid to the participant after the end of the
performance period if it would have become earned and payable had the
participant's employment status not changed.
(d) The Chief Executive Officer may approve participation for promoted,
transferred or newly-hired Executives.
(e) At the end of the performance period, the Committee, on the
recommendation of the Chief Executive Officer, may increase or decrease the
amount of award payments to any or all participants if in its sole judgment
there have been extraordinary occurrences, not anticipated when awards were
approved, which have significantly affected earnings or other performance
measures.
(f) This 1998 Special Corporate Management Incentive Plan became
effective December 16, 1997, and shall terminate following the payment of awards
(as described in Section 3(b)).
4. AMENDMENTS
The Committee may amend or discontinue this Plan, but no amendment or
discontinuation shall be made which would impair the rights of a participant
without the participant's consent.
<PAGE> 1
EXHIBIT 10(s)
EXECUTION COPY
AMENDMENT NO. 1, dated as of July 14, 1997 ("Amendment No. 1"), to the
Amended and Restated Agreement of Limited Partnership of D&B Investors L.P.,
dated as of April 1, 1997 (the "PARTNERSHIP AGREEMENT"), among Duns Investing
VII Corporation, Dun & Bradstreet, Inc., Duns Holding, Inc., Utrecht-America
Finance Co. and Leiden, Inc.
WHEREAS, the parties hereto desire to amend the terms of the Partnership
Agreement to reflect certain additional understandings.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1 AMENDMENT TO DEFINITION OF "PERMITTED SECURITIES." The definition of
"Permitted Securities" shall be amended by deleting the amount "$15,000,000" set
forth in clause (v) thereof and inserting "$50,000,000" in lieu thereof.
2 AMENDMENT TO DEFINITION OF "PRIORITY RETURN." The definition of
"Priority Return" shall be amended by deleting the reference to "Section
4.02(a)" set forth therein and inserting "Section 4.01" in lieu thereof.
3 AMENDMENT TO SECTION 4.01. Section 4.01 shall be amended by (i) deleting
the reference to "Section 4.02(a)" set forth therein and inserting "Section
4.02" in lieu thereof, and (ii) deleting the reference to "Section 4.01(a)" set
forth therein and inserting "Section 4.01" in lieu thereof.
4 REAFFIRMATION. Except as expressly amended by this Amendment No. 1, the
Partnership Agreement is and shall continue to be in full force and effect as
originally written.
5 EXECUTION IN COUNTERPARTS; EFFECTIVENESS. This Amendment No. 1 may be
executed in any number of counterparts and by any combination of the parties
hereto in separate counterparts, each of which counterpart shall be an original
and all of which when taken together shall constitute one and the same Amendment
No. 1. This Amendment No. 1 shall become effective as of the date first above
written when and if counterparts of this Amendment No. 1 shall have been
executed by the parties hereto.
On and after the effective date of this Amendment No. 1, each
reference in the Partnership Agreement to "this Agreement," "hereunder,"
"hereof" or words of like import referring to the Partnership Agreement shall
mean and be a reference to the Partnership Agreement as amended by this
Amendment No. 1.
6 GOVERNING LAW. This Amendment No. 1 shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Delaware, without
reference to its conflicts of law principles.
<PAGE> 2
S-1
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 as
of the day and year first above written.
DUNS INVESTING VII CORPORATION
By /s/ Kenneth J. Kubacki
------------------------------
Kenneth J. Kubacki
Executive Vice President and
Assistant Treasurer
DUNS HOLDING, INC.
By /s/ Kenneth J. Kubacki
------------------------------
Kenneth J. Kubacki
Executive Vice President and
Assistant Treasurer
DUN & BRADSTREET, INC.
By /s/ Philip C. Danford
-----------------------------
Philip C. Danford
Vice President and Treasurer
THIS IS A SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
D&B INVESTORS L.P.
<PAGE> 3
S-2
UTRECHT-AMERICA FINANCE CO.
By /s/ David I. Dietz
-----------------------------
Name: David I. Dietz
Title: Assistant Treasurer
By /s/ J. W. den Baas
-----------------------------
Name: J. W. den Baas
Title: Vice President
LEIDEN, INC.
By /s/ J. W. den Bass
-----------------------------
Name: J. W. den Bass
Title: Vice President
By /s/ David I. Dietz
-----------------------------
Name: David I. Dietz
Title: Assistant Treasurer
THIS IS A SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
D&B INVESTORS L.P.
<PAGE> 1
EXHIBIT 13
The Dun & Bradstreet
Corporation
and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
On December 17, 1997, The Dun & Bradstreet Corporation (the "Company")
announced a plan to separate into two publicly traded independent companies, The
Dun & Bradstreet Corporation and The Reuben H. Donnelley Corporation. The
transaction is subject to a ruling from the Internal Revenue Service, with
respect to the tax-free treatment of the distribution, and approval from the
Board of Directors. The Dun & Bradstreet Corporation will consist of-Dun &
Bradstreet, the operating company ("D&B"), and Moody's Investors Service
("Moody's"). The Reuben H. Donnelley Corporation ("Donnelley") will consist
of-Reuben H. Donnelley, the operating company, and the DonTech partnership. The
transaction is expected to be completed in the summer of 1998.
On November 1, 1996, The Dun & Bradstreet Corporation reorganized into
three publicly traded independent companies by spinning off through a tax-free
distribution (the "Distribution") two new companies, (1) Cognizant Corporation
("Cognizant") and (2) ACNielsen Corporation ("ACNielsen"), to shareholders. In
conjunction with the reorganization, the Company also disposed of Dun &
Bradstreet Software ("DBS") and NCH Promotional Services ("NCH"). After the
transaction was completed, The Dun & Bradstreet Corporation's continuing
operations consisted of D&B, Moody's and Donnelley. For purposes of effecting
the transaction and governing certain of the ongoing relationships among the
Company, Cognizant and ACNielsen after the Distribution and to provide for an
orderly transition, the three new companies entered into various agreements, as
described in Note 2 to the consolidated financial statements.
Pursuant to Accounting Principles Board Opinion ("APB") No. 30,
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," the 1995 consolidated financial statements of the
Company have been reclassified to reflect the 1996 reorganization. Accordingly,
1996 and 1995 revenues, costs and expenses and cash flows of Cognizant,
ACNielsen, DBS and NCH have been excluded from the respective captions in the
Consolidated Statements of Operations and Consolidated Statements of Cash Flows.
The net operating results of these entities have been reported, net of
applicable income taxes, as "Income (Loss) from Discontinued Operations," and
the net cash flows of these entities have been reported as "Net Cash (Used In)
Provided by Discontinued Operations."
RESULTS OF OPERATIONS
1997 VERSUS 1996
CONSOLIDATED RESULTS
The Company's basic earnings per share in 1997 were $.94, up $1.20 from a loss
of $.26 per share reported in 1996. On a diluted basis, the Company reported
earnings per share of $.93 compared with a loss of $.26 in 1996. The 1997
results include a one-time, non-cash charge for the cumulative effect of
accounting changes ($.88 per share basic, $.87 per share diluted), with respect
to certain of the Company's revenue recognition methods. Effective January 1,
1997, the Company changed its revenue recognition method for its Credit
Information Services business and changed certain of its revenue recognition
methods in the Marketing Information Services, Receivables Management Services
and Moody's businesses. In accordance with APB No. 20, "Accounting Changes," the
cumulative effect of these accounting changes resulted in a pre-tax non-cash
charge of $254.7 million ($150.6 million after-tax). Excluding the impact of the
cumulative effect of accounting changes (see Note 1 to the consolidated
financial statements), basic earnings per share in 1997 were $1.82, which
included a $.02 per share gain ($9.4 million pre-tax and $4.0 million after-tax)
relating to the sale of the East Coast proprietary operations of Donnelley
("P-East"), compared with a loss of $.16 per share (both basic and diluted) from
continuing operations in 1996. The 1996 loss included all corporate overhead
expenses associated with the Company prior to the 1996 reorganization and
certain transaction-related expenses.
Operating revenues for the year ended December 31, 1997, of $2,154.4
million were slightly lower than the $2,159.2 million reported in 1996.
Excluding the results of businesses divested in 1997 and 1996, 1997 revenues
increased 3.9% to $2,076.4 million from $1,999.1 million. Full-year revenue
performance for the Company reflects significant growth at Moody's, moderate
growth at D&B and a decline at Donnelley. 1997 revenue growth was lower by
approximately 2%, due to the negative impact of foreign currency fluctuations.
Operating income in 1997 of $547.9 million increased $350.3 million.
1997 operating income included a non-recurring gain of $9.4 million relating to
the sale of P-East. 1996 operating income included $161.2 million in transaction
costs incurred in conjunction with the Company's 1996 reorganization and $96.7
million of losses relating to the sales of the West Coast proprietary operations
of Donnelley in Southern California ("P-West") ($28.5 million) and American
Credit Indemnity ("ACI") ($68.2 million). Excluding these non-recurring items
and the results of divested businesses, 1997 operating income would have been
$527.5 million, up 20.7% from $436.9 million in 1996. Operating income growth
reflected strong growth at Moody's and growth in D&B U.S., partially offset by
declines in the international operations of D&B and at Donnelley.
F-1
<PAGE> 2
The Dun & Bradstreet
Corporation
and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
1997 operating costs and selling and administrative expenses increased
by 3.0% to $1,413.2 million, excluding the one-time gain on the sale of P-East
and corporate expenses. For comparability, 1996 excludes the effects of
divestitures (P-West and ACI) and corporate expenses. 1996 corporate expenses
included costs associated with the corporate structure prior to the
Distribution.
Non-operating expense-net of $71.3 million in 1997, which primarily
included interest expense on notes payable, and minority interest costs
(included in other expense-net), was essentially unchanged compared with 1996.
Interest expense in 1997, included a $3.2 million charge to mark-to-market
certain interest rate swaps and a $2.9 million charge as a result of interest
rate swap cancellations. These charges were offset by lower financing costs in
1997.
In 1997, the Company's effective tax rate was 34.7% compared with
121.6% in 1996 from continuing operations. The higher 1996 tax rate primarily
reflected tax implications associated with the 1996 reorganization and divested
businesses. The 1997 effective tax rate also included slightly higher taxes
associated with the non-recurring gain on the sale of P-East.
Income from discontinued operations, net of income taxes, was $141.1
million in 1996. Also recorded in 1996 was a loss on the disposition of DBS of
$220.6 million ($158.2 million after-tax). Additionally, the Company sold NCH in
the fourth quarter of 1996. No gain or loss resulted from the sale.
SEGMENT RESULTS
Risk Management Services reported 1997 revenue growth of 1.6% to $1,811.0
million from $1,781.7 million in 1996. Excluding the results of ACI, which was
divested in 1996, revenue growth would have increased 5.4% from 1996. Moody's
reported revenues of $457.4 million in 1997, up 18.7% from 1996, driven by gains
in corporate bonds, increased coverage in the mortgage-backed market and
continued expansion outside the U.S. Corporate bonds displayed strong volume
growth, especially in the high-yield market, where volumes were 30% above the
prior year. D&B's 1997 revenues were up 1.7% to $1,353.6 million. U.S. revenues
were up 6.4%, including increases in Marketing Information Services of 14.3% and
Receivables Management Services of 9.9%. Europe's 1997 revenues of $426.1
million were 4.3% lower than 1996, resulting from the increased strength of the
U.S. dollar. Excluding the impact of foreign exchange, Europe would have
reported a 4.0% increase in revenues. Other regions reported an 8.8% decrease in
operating revenues to $93.8 million from $102.8 million, primarily as a result
of phasing out certain unprofitable operations in Latin America. Operating
income for the Risk Management Services segment was $452.5 million, up 38.3%
from 1996, which included a $68.2 million loss attributable to the sale of ACI.
Excluding the ACI loss, operating income would have increased 14.3%.
Directory Information Services reported revenues of $343.4 million in
1997 compared with $377.5 million in 1996, a 9.1% decrease. Excluding revenues
for P-East for both 1997 and 1996 and revenues for P-West for 1996, reported
revenues would have decreased 5.3% to $265.4 million in 1997. Decreased revenues
resulted from lower revenues at DonTech as a result of the final contractual
reduction in Donnelley's partnership share, the termination of the Cincinnati
Bell contract during 1997 and a change in the timing of servicing certain Bell
Atlantic yellow page directories from 1997 to 1998. 1997 operating income
increased 2.2% to $144.2 million from $141.1 million in 1996. Excluding income
from P-East in both 1997 and 1996, the gain on the sale of P-East in 1997 and
the loss on the sale of P-West in 1996, operating income would have decreased
17.7% to $123.8 million in 1997. The operating income decline reflects the
impact of lower revenues as discussed above as well as start-up costs for the
proprietary directory in Cincinnati, Ohio, and full-year costs related to the
new production facility in Raleigh, North Carolina.
During July 1997, Donnelley signed a series of agreements with Ameritech
advertising services, changing the structure of the existing partnership by
appointing DonTech as the exclusive sales agent in perpetuity for yellow page
directories published by Ameritech in Illinois and Northwest Indiana (see Note
16 to the consolidated financial statements).
1996 VERSUS 1995
CONSOLIDATED RESULTS
The Company incurred a loss from continuing operations in 1996 of $27.3 million,
or $.16 per share (both basic and diluted) compared with earnings of $217.5
million, or $1.28 basic earnings per share ($1.27 diluted earnings per share) in
1995. 1996 results included all corporate overhead expenses associated with the
Company prior to the Distribution and certain transaction-related expenses. 1995
results included certain non-recurring charges and gains.
Operating revenues from continuing operations for the year ended
December 31, 1996, of $2,159.2 million were essentially unchanged from $2,158.2
million for 1995. Excluding the results of divested businesses, revenues from
continuing operations increased 5.2% from $1,989.0 million in 1995 to $2,092.3
million in 1996.
Operating income in 1996 of $197.6 million decreased from $398.6 million
in the prior year. Included in operating income in 1996 was $161.2 million in
transaction costs incurred in connection with
F-2
<PAGE> 3
the Company's 1996 reorganization. These costs included $75.0 million for
professional and consulting fees and $86.2 million primarily for settlement of
executive compensation plans and retention bonuses. Also included in 1996
operating income were the losses incurred as a result of the sales of P-West and
ACI. The sales were completed in May and October of 1996, respectively. In
connection with these divestitures, the Company recorded within operating costs
a charge of $96.7 million ($28.5 million for P-West and $68.2 million for ACI).
1995 operating costs included gains on both the sales of Interactive Data
Corporation ("IDC") of $90.0 million and warrants received in connection with
the previous divestiture of Donnelley Marketing of $28.0 million, offset by a
non-recurring charge of $206.2 million recorded in the fourth quarter of 1995.
This charge primarily reflected an impairment loss in connection with the
adoption of the provisions of 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" ($100.9 million), a provision for
postemployment benefits ($58.1 million) under the Company's severance plan, an
accrual for contractual obligations that have no future economic benefits and
for penalties to cancel certain contracts ($23.1 million), and other asset
revaluations ($24.1 million).
Operating costs and selling and administrative expenses, excluding the
effects of divestitures, transaction costs associated with the 1996
reorganization and the fourth-quarter non-recurring charge, increased 9.7% in
1996 compared with 1995. The increase reflects the Company's investments in new
products and services.
The Company reported 1996 non-operating expense-net of $71.2 million
compared with non-operating expense-net of $68.0 million in 1995. The increase
was attributable, in part, to lower interest income earned due to the high cash
requirements of the 1996 reorganization and the sale of ACI, which held $111.5
million of marketable securities at the date of the sale.
Despite lower reported pre-tax income, the provision for income taxes
was $153.7 million, 35.9% higher than the prior year. The Company's effective
tax rate was 121.6% in 1996 and 34.2% in 1995. In 1996, the higher effective tax
rate primarily reflected the non-deductibility of certain transaction costs,
lower tax benefits on losses from divested businesses and certain foreign taxes
incurred in connection with the 1996 reorganization. The underlying effective
tax rate, excluding these one-time items for 1996, was approximately 34%.
Income from discontinued operations, net of income taxes, was $141.1
million in 1996 compared with $103.3 million in the prior year. The Company also
reported a loss on the disposition of DBS,
which was completed in the fourth quarter of 1996, of $220.6 million ($158.2
million after tax). Additionally, the Company sold NCH in the fourth quarter of
1996, with no resulting gain or loss recorded on the disposition. The 1995
results were affected by the fourth-quarter non-recurring charge of $188.6
million after tax.
SEGMENT RESULTS
Risk Management Services reported 1996 revenue growth of 2.7% to $1,781.7
million from $1,734.1 million in 1995. Excluding the results of divested
businesses, revenue growth would have increased 6.6% from 1995. Moody's reported
revenues of $385.3 million in 1996, up 16.9% from 1995, driven by strong
corporate and municipal bond market volumes during the year. D&B's 1996 revenues
were up 4.0% to $1,331.5 million. U.S. revenues were up 4.0%, including
increases in Marketing Information Services of 9.7% and Receivables Management
Services of 12.2%. Europe and other regions were up 3.1% and 7.8%, respectively.
Operating income for the segment was $327.1 million in 1996 compared with $449.5
million in 1995. Operating income in 1996 included a $68.2 million loss on the
sale of ACI, while in 1995, operating income included a $90.0 million gain on
the sale of IDC partially offset by $45.6 million attributable to the
fourth-quarter non-recurring charge.
Directory Information Services reported a 10.9% decrease in operating
revenues to $377.5 million from $423.7 million in 1995. Excluding the results of
P-West, operating revenues would have been flat. Operating income decreased
24.3% to $141.1 million from $186.3 million in 1995 due to a reduction in the
contractual share of earnings in the DonTech partnership and lower commission
rates. Included in 1996 operating income was a $28.5 million loss on the sale of
P-West. Additionally, higher costs associated with the transition to the new
Raleigh, North Carolina, production facility negatively affected 1996 operating
income. Operating income in 1995 included $17.7 million of the fourth-quarter
non-recurring charge.
ADOPTION OF STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings per Share" ("SFAS No. 128"), which simplifies existing
computational guidelines, revises disclosure requirements and increases the
comparability of earnings per share data on an international basis. The Company
adopted the statement in 1997, which required restatement of all prior-period
per share data presented.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"), which establishes standards for reporting and
displaying comprehensive income and its components in a full set of
general-purpose financial statements. This statement is effective for fiscal
years beginning after December 15,
F-3
<PAGE> 4
The Dun & Bradstreet
Corporation
and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
1997, and requires reclassification of prior-period financial statements. The
Company is currently considering the various presentation options of SFAS No.
130.
Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS No. 131"), which
revises disclosure requirements about operating segments and establishes
standards for related disclosures about products and services, geographic areas
and major customers. SFAS No. 131 requires that public business enterprises
report financial and descriptive information about their reportable operating
segments. The statement is effective for fiscal years beginning after December
15, 1997, and requires restatement of prior years in the initial year of
application. SFAS No. 131 is expected to affect the Company's segment
disclosures, but will not affect the Company's results of operations, financial
position or cash flows. The Company is in the process of evaluating the
disclosure requirements.
NON-U.S. OPERATING AND MONETARY ASSETS
The Company has operations in 38 countries. The Company's non-U.S. operations
generated approximately 26% of total revenues, including approximately 22% from
European operations. Thirty-two percent of the Company's assets are located
outside the U.S., and no one country had a significant concentration of cash.
At December 31, 1997, the Company had approximately $117 million in
forward foreign exchange contracts outstanding, with various expiration dates
through March 1998 (see Note 5 to the consolidated financial statements).
MARKET RISK SENSITIVE INSTRUMENTS
The Company funds its operations primarily through its commercial paper program
and other short-term bank lines of credit. As the Company operates in 38
countries, the Company is exposed to market risk from changes in interest rates
and foreign exchange rates which could affect its results of operations and
financial condition. In order to reduce the risk from fluctuations in interest
rates and foreign currencies, the Company uses interest rate swap agreements and
forward foreign exchange contracts. These derivative financial instruments are
viewed by the Company as risk management tools that are entered into for hedging
purposes only. The Company does not use derivative financial instruments for
trading or speculative purposes.
The Company also has investments in fixed income marketable securities.
Consequently, the Company is exposed to fluctuations in rates on these
marketable securities. Market risk associated with investments in marketable
securities is immaterial and has been excluded from the sensitivity discussions.
A discussion of the Company's accounting policies for derivative
financial instruments is included in the Summary of Significant Accounting
Policies in Note 1 to the consolidated financial statements, and further
disclosure relating to financial instruments is included in Note 5-Financial
Instruments with Off-Balance Sheet Risks.
The following analysis presents the sensitivity of the fair value of the
Company's market risk sensitive instruments to changes in market rates and
prices.
INTEREST RATE RISK
The Company is exposed to market risk through its commercial paper program,
where it borrows at prevailing short-term commercial paper rates, and through
its variable-rate short-term bank borrowings.
The Company enters into interest rate swap agreements to manage exposure
to changes in interest rates. Specifically, the Company is exposed to
fluctuations in both short-term commercial paper and short-term bank rates.
Interest rate swaps allow the Company to raise funds at floating rates and
effectively swap them into fixed rates that are lower than those available to it
if fixed-rate borrowings were made directly. At December 31, 1997, the Company
had $300.0 million of these interest rate swaps.
The fair value for interest rate risk is calculated by the Company
utilizing estimates of the termination value of the Company's interest rate
swaps, commercial paper borrowings and short-term bank borrowings based upon a
10% increase, or decrease in interest rates from their December 31, 1997,
levels. Fair values are the present value of projected future cash flows based
on the market rates and prices chosen. At December 31, 1997, the unrealized fair
value of the interest rate swaps was a loss of $11.1 million. Assuming an
instantaneous parallel upward shift in the yield curve of 10% from December 31,
1997, levels, the unrealized fair value of the Company's interest rate swaps,
commercial paper borrowings and short-term bank borrowings would result in a
loss of $2.5 million. Assuming an instantaneous parallel downward shift in the
yield curve of 10% from December 31, 1997, levels, the unrealized fair value of
the Company's interest rate swaps, commercial paper borrowings and short-term
bank borrowings would result in a loss of $20.5 million.
FOREIGN EXCHANGE RISK
The Company follows a policy of hedging substantially all cross-border
intercompany transactions denominated in a currency other than the functional
currency applicable to each of its various subsidiaries. The Company only uses
forward foreign exchange contracts to implement its hedging strategy. Typically,
these contracts have maturities of 12 months or less. These forward contracts
are executed with creditworthy institutions and are denominated primarily in
British Pound, German Mark, Swedish Krona and Japanese Yen.
F-4
<PAGE> 5
The fair value of foreign currency risk is calculated by using estimates
of the cost of closing out all outstanding forward foreign exchange contracts
given a 10% increase or decrease in forward rates from December 31, 1997,
levels. At December 31, 1997, net unrealized gains related to the Company's
forward contracts were $1.1 million. If forward rates increased by 10% from
December 31, 1997, levels, the unrealized loss on these contracts would be $4.7
million. If forward rates decreased by 10% from December 31, 1997, levels, the
unrealized gain on these contracts would be $6.9 million. However, the estimated
potential gain or loss on forward contracts is expected to be offset by changes
in the underlying transactions. Therefore, the impact of a 10% movement in
foreign exchange rates will be immaterial.
LIQUIDITY AND FINANCIAL POSITION
The Company generates significant, predictable cash flows from its business
operations. Management believes that these cash flows are sufficient to fund its
operating needs, service debt and pay dividends. At December 31, 1997, cash and
cash equivalents totaled $81.8 million, a decrease from $127.9 million in 1996.
Net cash provided by operating activities increased by $233.4 million to $488.0
million in 1997. This increase is primarily due to the absence of transaction
and divestiture-related costs as a result of the 1996 reorganization.
Net cash used in investing activities totaled $3.6 million in 1997,
compared with $86.0 million in 1996. In 1997, the Company received proceeds from
the sale of P-East of $122.0 million that were offset by spending for capital
expenditures, computer software and other intangibles of $145.8 million. In
1996, proceeds received from the sales of ACI and P-West were $115.2 million,
and spending for capital expenditures, computer software and other intangibles
totaled $170.1 million.
The Company utilizes the commercial paper market as its primary source
of financing. The Company has two committed bank facilities that support the
commercial paper borrowings. One facility permits borrowings of up to $750
million and matures in August 2001; the other permits borrowings of up to $150
million and matures in August 1998. The Company has the ability to borrow under
these facilities at prevailing short-term interest rates. The Company also has
available non-committed lines of credit of $111 million. As of December 31,
1997, $29.9 million was borrowed against these facilities.
On April 1, 1997, the Company completed a $300.0 million minority
interest financing. Funds raised by this financing were used to repay a portion
of the outstanding short-term debt in April 1997. Also during the second quarter
of 1997, the Company reentered the commercial paper market and used the proceeds
to repay the additional amounts outstanding on the short-term debt facility. The
Company had $421.6 million in commercial paper outstanding at December 31, 1997.
The Company has interest rate swap agreements, which effectively fix
interest rates on $300.0 million of variable-rate debt through January 2005, at
a weighted average fixed rate of 6.84% (see Note 5 to the consolidated financial
statements). Currently, a portion of the swaps are marked-to-market through
earnings.
The Company has announced that in mid-1998 it will separate into two
publicly traded independent companies. Management estimates that one-time cash
outlays of approximately $25 million to $30 million will be required to complete
the 1998 reorganization of the Company. These costs will be recorded as
incurred.
While the capital structures of the two independent companies have not
been finalized, it is expected that approximately $450 million of debt will be
allocated to Donnelley. It is expected that financing arrangements and cash
generated from operations will be more than sufficient to meet the needs of the
two companies.
In January 1997, the Company announced a continuation of its systematic
stock repurchase plan, authorizing the purchase of up to 9.8 million shares of
common stock. The stock was held in treasury and issued upon exercise of
employee stock options and for compensation plans. Under this plan, the Company
repurchased 2,271,851 shares of its common stock for $60.1 million in 1997. The
Company also paid dividends of $150.6 million during 1997.
YEAR 2000
The Company relies on computer hardware, software and related technology,
together with data, in the operation of its businesses. Such technology and data
are used in creating and delivering the Company's products and services, as well
as in the Company's internal operations, such as billing and accounting. The
Company has initiated an enterprise-wide program to prepare for the year 2000.
The Company has created a Year 2000 program office, reporting to the Chief
Executive Officer and to the Chief Information Officer, to coordinate and
oversee the Company's Year 2000 program. In addition, responsible Year 2000
executives have been appointed, and
F-5
<PAGE> 6
The Dun & Bradstreet
Corporation
and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
Year 2000 teams have been established at each of the Company's operating units.
The Company has evaluated the technology and data used in the creation and
delivery of its products and services and in its internal operations, has
identified Year 2000 issues related thereto and developed and has begun to
implement a plan to remediate such Year 2000 issues. The plan includes
remediating the Company's Year 2000 issues that are related to its customers,
suppliers and distributors, but there can be no assurances that such third
parties will successfully remediate their own Year 2000 issues over which the
Company has no control. The Company believes that it will substantially complete
the implementation of its Year 2000 plan prior to the commencement of the year
2000, and that upon substantial completion of such implementation, and assuming
that the Company's customers, suppliers and distributors successfully remediate
their own Year 2000 issues over which the Company has no control, the Company
will have no material business risk from such Year 2000 issues. The total cost
of the Company's Year 2000 program is estimated to be $75 million to $80
million. Of this amount, approximately $11 million was incurred in 1997. It is
estimated that approximately $40 million, $20 million to $25 million and $4
million will be incurred in 1998, 1999 and 2000, respectively. Maintenance and
modification costs are expensed as incurred, while the costs of new hardware and
software purchased by the Company are capitalized.
DIVIDENDS
The Company paid a quarterly dividend of $.22 per share in 1997, resulting in a
full-year dividend per share of $.88, a decline of 51.6% from the 1996 dividend
of $1.82 per share. In 1996, the Company reorganized into three publicly traded
independent companies: The Company, Cognizant and ACNielsen. Consequently, the
Company paid quarterly dividends of $.66 per share for the first half of 1996,
and in the second half of 1996, the Company paid quarterly dividends of $.25 per
share, reflecting the revised dividend policies of each of the three companies.
Of the $.25 per share dividend declared for the third and fourth quarters of
1996, $.22 was attributable to the Company and $.03 was attributable to
Cognizant.
On December 17, 1997, the Board of Directors approved a first-quarter
1998 dividend of $.22 per share, payable March 10, 1998, to shareholders of
record at the close of business February 20, 1998. Subject to Board of Directors
approval, the Company anticipates that its current dividend policy will be
maintained for 1998; however, the allocation between the two independent
companies is currently being formulated.
COMMON STOCK INFORMATION
The Company's common stock (symbol DNB) is listed on the New York, London and
Swiss stock exchanges. The number of shareholders of record was 11,449 at
January 30, 1998.
The following table summarizes price and cash dividend information for
the Company's common stock as reported in the periods shown. The decline in
price per share during the fourth quarter of 1996 reflects the special stock
dividend of shares of Cognizant and ACNielsen.
<TABLE>
<CAPTION>
PRICE PER SHARE ($) DIVIDENDS
-------------------------------------- PAID
1997 1996 PER SHARE ($)
-------------------------------------- ------------------
HIGH LOW HIGH LOW 1997 1996
- - -------------------------------------- ------------------ ------------------
- - -------------------------------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter 271/2 231/8 693/4 593/8 .22 .66
Second Quarter 273/8 233/4 653/4 573/4 .22 .66
Third Quarter 293/4 255/8 625/8 561/4 .22 .25
Fourth Quarter 311/4 251/4 627/8 207/8 .22 .25
YEAR 311/4 231/8 693/4 207/8 .88 1.82
</TABLE>
FORWARD-LOOKING STATEMENTS
Certain statements in Management's Discussion and Analysis of Financial
Condition and Results of Operations and certain other sections of this Annual
Report are forward-looking. These may be identified by the use of
forward-looking words or phrases such as "believe," "expect," "anticipate,"
"should," "planned,""estimated" and "potential," among others. These
forward-looking statements are based on the Company's reasonable current
expectations. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for such forward-looking statements. In order to comply with the
terms of the safe harbor, the Company notes that a variety of factors could
cause the Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in such forward-looking
statements. The risks and uncertainties that may affect the operations,
performance, development and results of the Company include: (1) the complexity
and uncertainty regarding the development of new high-technology products; (2)
the loss of market share through competition; (3) the introduction of competing
products or technologies by other companies; (4) pricing pressures from
competitors and/or customers; (5) changes in the business information, risk
management and yellow pages industries and markets; (6) the Company's inability
to protect proprietary information and technology or to obtain necessary
licenses on commercially reasonable terms; (7) the Company's inability to
complete the implementation of its Year 2000 plans timely; (8) the loss of key
employees to investment or commercial banks or elsewhere; and (9) fluctuations
in foreign currency exchange rates.
F-6
<PAGE> 7
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF THE DUN & BRADSTREET
CORPORATION:
We have audited the accompanying consolidated balance sheets of The Dun &
Bradstreet Corporation and Subsidiaries at December 31, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the years ended December 31, 1997, 1996 and 1995. 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 at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1997, 1996 and 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, the
Company changed certain revenue recognition accounting policies in 1997.
/s/ Coopers & Lybrand LLP
New York, New York
February 13, 1998
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 29 to 56. The
consolidated financial statements, which include amounts based on the 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 personnel and a program of internal audits.
The independent accountants are engaged to conduct an audit of and
render an opinion on the financial statements in accordance with generally
accepted auditing standards. These standards include an assessment of the
systems of internal controls and tests of transactions to the extent considered
necessary by them to support their opinion.
The Board of Directors, through its Audit Committee consisting solely
of outside directors of the Company, is responsible for reviewing and monitoring
the Company's financial reporting and accounting practices. 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.
/s/ Volney Taylor
Volney Taylor
Chairman and Chief Executive Officer
/s/Frank S. Sowinski
Frank S. Sowinski
Senior Vice President and Chief Financial Officer
F-7
<PAGE> 8
The Dun & Bradstreet
Corporation
and Subsidiaries
CONSOLIDATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN MILLIONS,
YEARS ENDED DECEMBER 31, EXCEPT PER SHARE DATA 1997 1996 1995
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RESULTS OF OPERATING REVENUES $ 2,154.4 $ 2,159.2 $ 2,158.2
OPERATIONS
Operating Costs 526.5 693.6 708.3
Selling and Administrative Expenses 926.1 949.4 886.8
Depreciation and Amortization 153.9 157.4 164.5
Reorganization Costs - 161.2 -
----------- ----------- -----------
OPERATING INCOME 547.9 197.6 398.6
----------- ----------- -----------
Interest Income 1.8 4.4 10.2
Interest Expense (53.4) (37.1) (37.3)
Other Expense-Net (19.7) (38.5) (40.9)
----------- ----------- -----------
Non-Operating Expense-Net (71.3) (71.2) (68.0)
----------- ----------- -----------
Income from Continuing Operations before Provision for Income Taxes 476.6 126.4 330.6
Provision for Income Taxes 165.6 153.7 113.1
----------- ----------- -----------
Income (Loss) from Continuing Operations 311.0 (27.3) 217.5
----------- ----------- -----------
Discontinued Operations:
Income from Discontinued Operations, Net of Income Taxes
of $155.9 and $9.7 for 1996 and 1995, respectively - 141.1 103.3
Loss on Disposal, Net of Income Tax Benefit of $62.4 - (158.2) -
=========== =========== ===========
Income (Loss) from Discontinued Operations - (17.1) 103.3
----------- ----------- -----------
Income (Loss) before Cumulative Effect of Accounting Changes 311.0 (44.4) 320.8
Cumulative Effect of Accounting Changes, Net of Income
Tax Benefit of $104.1 (150.6) - -
----------- ----------- -----------
NET INCOME (LOSS) $ 160.4 $ (44.4) $ 320.8
=========== =========== ===========
BASIC EARNINGS Continuing Operations $ 1.82 $ (.16) $ 1.28
(LOSS) PER SHARE Discontinued Operations - (.10) .61
OF COMMON STOCK ----------- ----------- -----------
Before Cumulative Effect of Accounting Changes 1.82 (.26) 1.89
Cumulative Effect of Accounting Changes (.88) - -
----------- ----------- -----------
Basic Earnings (Loss) Per Share of Common Stock $ .94 $ (.26) $ 1.89
----------- ----------- -----------
DILUTED EARNINGS Continuing Operations $ 1.80 $ (.16) $ 1.27
(LOSS) PER SHARE Discontinued Operations - (.10) .60
OF COMMON STOCK ----------- ----------- -----------
Before Cumulative Effect of Accounting Changes 1.80 (.26) 1.87
Cumulative Effect of Accounting Changes (.87) - -
----------- ----------- -----------
Diluted Earnings (Loss) Per Share of Common Stock $ .93 $ (.26) $ 1.87
SHARE DATA Weighted Average Number of Shares Outstanding-Basic 170,765,000 170,017,000 169,522,000
=========== =========== ===========
Weighted Average Number of Shares Outstanding-Diluted 172,552,000 171,576,000 171,608,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
<PAGE> 9
The Dun & Bradstreet
Corporation
and Subsidiaries
CONSOLIDATED
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA 1997 1996
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT Cash and Cash Equivalents $ 81.8 $ 127.9
ASSETS Accounts Receivable-Net of Allowance of $43.4 in 1997 and $38.1 in 1996 583.7 600.7
-------- --------
Other Current Assets 232.8 188.8
-------- --------
TOTAL CURRENT ASSETS 898.3 917.4
NON-CURRENT Investments and Notes Receivable 179.4 292.2
ASSETS Property, Plant and Equipment 342.7 373.1
Prepaid Pension Costs 200.2 172.1
Computer Software 160.1 150.7
Goodwill 194.6 218.4
Other Non-Current Assets 176.6 170.3
-------- --------
Total Non-Current Assets 1,253.6 1,376.8
-------- --------
Total Assets $2,151.9 $2,294.2
-------- --------
-----------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES Notes Payable $ 451.5 $1,120.7
Accrued and Other Current Liabilities 536.6 599.9
Unearned Subscription Income 573.5 297.0
-------- --------
TOTAL CURRENT LIABILITIES 1,561.6 2,017.6
-------- --------
Postretirement and Postemployment Benefits 402.0 354.1
Other Non-Current Liabilities 376.6 354.2
Minority Interest 301.9 -
SHAREHOLDERS' Preferred Stock, par value $1 per share, authorized-10,000,000
SHARES; outstanding-none Equity Common Stock, par value $1 per share,
authorized-400,000,000 shares; issued-188,420,996 shares for 1997 and 1996 188.4 188.4
Capital Surplus 80.2 72.6
Retained Earnings 405.2 480.3
Treasury Stock, at cost, 17,853,652 and 17,612,776 shares for 1997
and 1996, respectively (964.0) (1,019.7)
Cumulative Translation Adjustment (162.6) (153.3)
Minimum Pension Liability Adjustment (37.4) -
-------- --------
Total Shareholders' Equity (490.2) (431.7)
-------- --------
Total Liabilities and Shareholders' Equity $2,151.9 $2,294.2
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-9
<PAGE> 10
The Dun & Bradstreet
Corporation
and Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31, Dollar amounts in millions 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS Net Income (Loss) $ 160.4 $ (44.4) $ 320.8
FROM OPERATING Less: Income (Loss) from Discontinued Operations - (17.1) 103.3
ACTIVITIES -------- -------- --------
Income (Loss) from Continuing Operations 160.4 (27.3) 217.5
Reconciliation of Net Income (Loss) to Net Cash Provided By
Operating Activities:
Cumulative Effect of Accounting Changes, Net of Income Tax Benefit 150.6 - -
Depreciation and Amortization 153.9 157.4 164.5
(Gain) Loss from Sale of Businesses, Net of Income Taxes (4.0) 82.2 (118.0)
Dividends Received in Excess of (Less Than) Equity Earnings 66.7 (14.9) (10.4)
Decrease (Increase) in Notes Receivable 48.4 (41.2) -
Non-Recurring Charge - - 206.2
Restructuring Payments - (50.7) (68.9)
Postemployment Benefit Payments (30.6) (50.3) (60.0)
Net Increase in Accounts Receivable (52.7) (47.5) (60.4)
Deferred Income Taxes (6.6) 118.1 (66.3)
Accrued Income Taxes (44.1) 50.4 (57.6)
Increase in Long-Term Liabilities 38.7 58.3 3.0
Net Decrease in Other Working Capital Items 52.7 33.3 55.0
Other (45.4) (13.2) 28.4
-------- -------- --------
Net Cash Provided By Operating Activities 488.0 254.6 233.0
-------- -------- --------
CASH FLOWS Proceeds from Sales of Marketable Securities 27.2 17.6 34.1
FROM INVESTING Payments for Marketable Securities (27.1) (2.4) (22.9)
ACTIVITIES Proceeds from Sale of Businesses 122.0 115.2 230.0
Capital Expenditures (59.4) (73.9) (116.8)
Additions to Computer Software and Other Intangibles (86.4) (96.2) (118.4)
Other 20.1 (46.3) 36.6
-------- -------- --------
Net Cash (Used In) Provided By Investing Activities (3.6) (86.0) 42.6
-------- -------- --------
CASH FLOWS Payment of Dividends (150.6) (310.8) (446.1)
FROM FINANCING Payments for Purchase of Treasury Shares (60.1) (25.6) (72.3)
ACTIVITIES Net Proceeds from Exercise of Stock Options 40.8 63.7 42.2
Increase (Decrease) in Commercial Paper Borrowings 421.6 (405.0) (38.7)
Increase in Minority Interest 300.0 - -
(Decrease) Increase in Other Short-Term Borrowings (1,090.6) 1,116.2 -
Payment of Redeemable Partnership Interests - (575.0) -
Other 9.2 1.6 (1.6)
-------- -------- --------
Net Cash Used In Financing Activities (529.7) (134.9) (516.5)
-------- -------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents (.8) (2.1) 4.0
-------- -------- --------
(Decrease) Increase in Cash and Cash Equivalents (46.1) 31.6 (236.9)
Net Cash (Used In) Provided By Discontinued Operations - (50.8) 261.9
Cash and Cash Equivalents, Beginning of Year 127.9 147.1 122.1
======== ======== ========
Cash and Cash Equivalents, End of Year $ 81.8 $ 127.9 $ 147.1
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-10
<PAGE> 11
The Dun & Bradstreet
Corporation
and Subsidiaries
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
THREE YEARS ENDED DECEMBER 31, 1997 DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
- - -----------------------------------------------------------------------------------------------------------------------------------
MINIMUM
COMMON CUMULATIVE PENSION TOTAL
STOCK CAPITAL RETAINED TREASURY TRANSLATION LIABILITY SHAREHOLDERS'
($1 PAR VALUE) SURPLUS EARNINGS STOCK ADJUSTMENT ADJUSTMENT EQUITY
-------------- ------- -------- ----- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 $188.4 $ 67.2 $2,323.7 $(1,077.2) $(183.5) $ - $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) 8.0 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 2,208.7 (1,107.3) (177.3) - 1,182.5
------ ------ -------- --------- ------- ------ --------
Net Loss (44.4) (44.4)
Cash Dividends ($1.82 per share) (310.8) (310.8)
Stock Dividend to Shareholders of
Cognizant and ACNielsen,
Including 800,000 Treasury Shares (1,370.2) 49.5 79.8 (1,240.9)
Treasury Shares Reissued Under Stock
Options and Deferred Compensation
Plans (1,525,935) 2.6 59.0 61.6
Treasury Shares Reissued Under
Restricted Stock Plan (16,410) 4.7 4.7
Treasury Shares Acquired (923,199) (25.6) (25.6)
Change in Cumulative Translation Adjustment (55.8) (55.8)
Unrealized Losses on Investments (3.0) (3.0)
------ ------ -------- --------- ------- ------ --------
BALANCE, DECEMBER 31, 1996 188.4 72.6 480.3 (1,019.7) (153.3) - (431.7)
------ ------ -------- --------- ------- ------ --------
Net Income 160.4 160.4
Cash Dividends ($.88 per share) (150.6) (150.6)
Adjustment to Stock Dividend to Shareholders
of Cognizant and ACNielsen (11.3) (11.3)
Treasury Shares Reissued Under Stock
Options and Deferred Compensation
Plans (2,010,091) 7.6 (72.4) 115.6 50.8
Treasury Shares Reissued Under
Restricted Stock Plan (20,884) .2 .2
Treasury Shares Acquired (2,271,851) (60.1) (60.1)
Change in Cumulative Translation Adjustment (9.3) (9.3)
Minimum Pension Liability Adjustment (37.4) (37.4)
Unrealized Losses on Investments (1.2) (1.2)
------ ------ -------- --------- ------- ------ --------
BALANCE, DECEMBER 31, 1997 $188.4 $ 80.2 $ 405.2 $ (964.0) $(162.6) $(37.4) $ (490.2)
------ ------ -------- --------- ------- ------ --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-11
<PAGE> 12
The Dun & Bradstreet
Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
include those of The Dun & Bradstreet Corporation (the "Company") and
its subsidiaries and investments in which the Company has a controlling
interest. Investments in companies over which the Company has
significant influence but not a controlling interest are carried on an
equity basis. The effects of all significant intercompany transactions
have been eliminated.
The financial statements of subsidiaries outside the United
States and Canada reflect a fiscal year ending November 30 to
facilitate timely reporting of the Company's consolidated financial
results.
As discussed more thoroughly in Note 2, Cognizant Corporation
("Cognizant"), ACNielsen Corporation ("ACNielsen"), Dun & Bradstreet
Software ("DBS") and NCH Promotional Services ("NCH") are presented as
discontinued operations.
CASH EQUIVALENTS. Marketable securities that mature within 90 days of
purchase date are considered cash equivalents and are stated at cost,
which approximates fair value.
MARKETABLE SECURITIES. In accordance with Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," marketable securities at
December 31, 1997 and 1996, are classified as "available for sale" and
are reported at fair value, with net unrealized gains and losses
reported in shareholders' equity.
The fair value of current and non-current marketable
securities was estimated based on quoted market prices. Realized gains
and losses on marketable securities are determined on the specific
identification method.
The Company's marketable securities, $53.0 million and $46.1
million at December 31, 1997 and 1996, respectively, consisted
primarily of debt securities of the U.S. Government and its agencies.
PROPERTY, PLANT AND EQUIPMENT. Buildings, machinery and equipment are
depreciated principally using the straight-line method over a period of
three to 40 years. Leasehold improvements are amortized on a
straight-line basis over the shorter of the term of the lease or the
estimated useful life of the improvement.
COMPUTER SOFTWARE, GOODWILL AND INTANGIBLE ASSETS. Certain computer
software costs are capitalized in accordance with SFAS No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed," and are reported at the lower of unamortized cost
or net realizable value. Costs in connection with business process
reengineering are expensed as incurred. Other intangibles result from
acquisitions and database enhancements.
Computer software and other intangibles are being amortized, using
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 five 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" ("SFAS No. 121") 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 an impairment loss is then based on the fair value
of the asset (see Note 3).
At each balance sheet date, the Company reviews the
recoverability of goodwill, not identified with long-lived assets,
based on estimated undiscounted future cash flows from operating
activities compared with the carrying value of goodwill, and recognizes
any impairment on the basis of such comparison. The recognition and
measurement of goodwill impairment is assessed at the business unit
level.
REVENUE RECOGNITION. The Company recognizes revenue as services are
performed, information is delivered and products and services are used
by its customers. Amounts billed for service and subscriptions are
credited to unearned subscription income and reflected in operating
revenues over the subscription term, which is generally one year.
Revenues from directory advertising sales are recognized when sold.
ACCOUNTING CHANGES. Effective January 1, 1997, the Company changed its
revenue recognition method for its Credit Information Services business
to recognize revenue as products and services are used by its
customers. Previously, the Company recognized revenue ratably over the
contract period. This change is consistent with the Company's change in
focus from a sales contract basis to a product usage basis in order to
drive revenue growth and increase customer satisfaction.
Additionally, the Company changed certain of its revenue
recognition methods in the Marketing Information Services, Receivables
Management Services and Moody's Investors Service ("Moody's")
businesses to recognize revenue over the service period from previously
recognizing revenues and costs at the time
F-12
<PAGE> 13
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of shipment or billing. In the opinion of management, these accounting
changes bring revenue recognition methods more in line with the
economics of the business and provide a better measure of operating
results.
In accordance with Accounting Principles Board Opinion ("APB")
No. 20, "Accounting Changes," the cumulative effect of changing the
accounting for certain of the Company's revenue recognition policies
resulted in a pre-tax, non-cash charge of $254.7 million ($150.6
million after tax or $.88 per share basic, $.87 per share diluted). On
a pro-forma basis these changes would have increased 1996 and decreased
1995 net income by $3.7 million and $7.5 million, respectively. The
impact on basic and diluted earnings per share would have been an
increase in 1996 of $.02 per share and a decrease in 1995 of $.04 per
share.
FOREIGN CURRENCY TRANSLATION. For all operations outside the United
States where the Company has designated the local currency as the
functional currency, assets and liabilities are translated using the
end-of-year exchange rates, and revenues and expenses are translated
using average exchange rates for the year. For these countries,
currency translation adjustments are accumulated in a separate
component of shareholders' equity, whereas realized transaction gains
and losses are recognized in other 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. The Company adopted SFAS No. 128,
"Earnings per Share," ("SFAS No. 128"), in 1997. As required by the
statement, the Company restated all prior-period per share data
presented. SFAS No. 128 requires presentation of both basic and diluted
earnings per share. Basic earnings per share are calculated based on
the weighted average number of shares of common stock outstanding
during the reporting period. Diluted earnings per share are calculated
giving effect to all potentially dilutive common shares, assuming such
shares were outstanding during the reporting period.
FINANCIAL INSTRUMENTS. At times, the Company uses forward foreign
exchange contracts and interest rate swaps to hedge existing assets,
liabilities and firm commitments. The Company does not use any
derivatives for trading or speculative purposes.
Gains and losses on forward foreign exchange contracts that
qualify as hedges of existing assets or liabilities are included in the
carrying amounts of those assets or liabilities and are ultimately
recognized in income as part of those carrying amounts. Gains and
losses related to qualifying hedges of firm commitments are also
deferred and are recognized in income or as adjustments of carrying
amounts when the hedged transactions occur. For forward foreign
exchange contracts, the risk reduction is assessed on a transaction
basis, and contract amounts and terms are matched to existing
intercompany transactions.
The Company uses interest rate swaps to hedge interest rate
risk on commercial paper. Settlement accounting is accorded to the
swaps that have contractual, periodic payment terms considered to be
aligned to the expected future commercial paper issuances. The
commercial paper issuances are expected to continue through the term of
the existing interest rate swaps. Periodic swap payments and receipts
under the interest rate swaps are recorded as part of interest expense.
Neither the swap contracts nor the gains or losses on these contracts,
which are designated and effective as hedges, are recognized in the
financial statements.
If a hedging instrument is sold or terminated prior to
maturity, gains and losses will continue to be deferred until the
hedged item is recognized in income. If a hedging instrument ceases to
qualify for settlement accounting, any subsequent gains and losses are
recognized currently in income.
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ
from those estimates. Estimates are used in the determination of
allowances for doubtful accounts, depreciation and amortization,
computer software, employee benefits plans, taxes and contingencies,
among others.
RECLASSIFICATIONS. As discussed in Note 2, the consolidated financial
statements for 1995 have been reclassified to identify separately the
results of operations and cash flows of the Company's discontinued
operations. In addition, certain prior-year amounts have been
reclassified to conform to the 1997 presentation.
F-13
<PAGE> 14
The Dun & Bradstreet
Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 2 REORGANIZATION AND DISCONTINUED OPERATIONS
On November 1, 1996, the Company reorganized into three publicly traded
independent companies by spinning off through a tax-free distribution
two of its businesses to shareholders (the "Distribution"). The
Distribution resulted in the following three companies: 1) The Dun &
Bradstreet Corporation, consisting of Dun & Bradstreet, the operating
company ("D&B"), Moody's and Reuben H. Donnelley ("Donnelley"); 2)
ACNielsen; and 3) Cognizant, consisting of IMS International, Inc.
("IMS"), Gartner Group, Nielsen Media Research, Pilot Software,
Cognizant Technology Solutions Corporation, Cognizant Enterprises and
Erisco. In connection with the Distribution, DBS and NCH were sold. On
October 10, 1996, following receipt of a ruling from the Internal
Revenue Service that the transaction would be tax-free to the Company
and its U.S. shareholders, the Company's Board of Directors declared a
dividend distribution to shareholders of record on October 21, 1996,
consisting of one share of Cognizant common stock for each share of the
Company's common stock and one share of ACNielsen common stock for
every three shares of the Company's common stock held on such record
date. The Distribution was effected on November 1, 1996. These
transactions resulted in a non-cash dividend that reduced shareholders'
equity by $1,240.9 million. During 1997, adjustments to the dividend of
$11.3 million were recorded, primarily as a result of employee benefits
plan revisions.
For purposes of governing certain of the ongoing relationships
among the Company, Cognizant and ACNielsen as a result of the
Distribution, the three new companies entered into various agreements,
including a Distribution Agreement, Tax Allocation Agreement, Employee
Benefits Agreement, Indemnity and Joint Defense Agreement, Intellectual
Property Agreement, Shared Transaction Services Agreement, Data
Services Agreement and a Transition Services Agreement. These
agreements set forth the principles to be applied in allocating certain
related costs and specified portions of contingent liabilities to be
shared if certain amounts are exceeded, which by their nature, cannot
be predicted at this time, but could be significant.
Pursuant to APB No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions," the 1995 consolidated financial statements of the
Company have been reclassified to reflect the dispositions of the
companies that comprised the Company's Marketing Information Services,
Software Services and Other Business Services business segments. These
segments included the companies that made up Cognizant and ACNielsen,
along with DBS and NCH. Accordingly, the revenues, costs and expenses
and cash flow of Cognizant, ACNielsen, DBS and NCH have been excluded
from the respective captions in the Consolidated Statements of
Operations and Consolidated Statements of Cash Flows for 1996 and 1995.
The net operating results of these entities have been reported, net of
applicable income taxes, as "Income (Loss) from Discontinued
Operations;" and the net cash flows of these entities have been
reported as "Net Cash (Used-In) Provided by Discontinued Operations"
for 1996 and 1995.
For the years ended December 31, 1996 and 1995, operating
revenues of the discontinued operations were $2,761.6 million and
$3,256.9 million, respectively. 1996 revenues include the results of
Cognizant, ACNielsen and DBS for the 10 months ended October 31, 1996,
and the results of NCH for the full year.
The Company completed the sale of DBS on November 1, 1996, for
proceeds of $191.3 million, including a note of $41.2 million,
resulting in a pre-tax loss of $220.6 million ($158.2 million
after-tax). Pursuant to the Distribution Agreement, the cash proceeds
from the sale were transferred to Cognizant. During the third quarter
of 1997, cash was received from the buyer to satisfy the note
receivable, which was due in May 1998.
The sale of NCH was completed on December 31, 1996. Pursuant
to the Distribution Agreement, the proceeds of $20.5 million from the
sale of NCH, which included a note of $8.5 million, were transferred to
Cognizant. At December 31, 1996, the Company recorded a receivable of
$20.5 million from the buyer of NCH and a corresponding payable to
Cognizant. These transactions were settled in January 1997. The Company
did not incur a gain or loss on the sale.
Also included in 1996 results, within discontinued operations,
are tax costs allocated to discontinued operations of $49.1 million.
F-14
<PAGE> 15
NOTE 3 NON-RECURRING ITEMS
In 1997, included in the Company's operating results was a pre-tax gain
of $9.4 million ($4.0 million after tax), related to the sale of the
East Coast proprietary operations of Donnelley ("P-East").
The 1996 results for the Company reflect after-tax
non-recurring charges of $284.7 million, incurred as a result of the
Distribution and the sales of the West Coast proprietary operations of
Donnelley ("P-West") and American Credit Indemnity ("ACI"). Of the
$284.7 million, $257.9 million was recorded in pre-tax income and a net
tax cost of $26.8 million was recorded in the provision for income
taxes. The $257.9 million represents reorganization costs of $161.2
million (professional and consulting fees of $75.0 million and
settlement of executive compensation plans and retention bonuses of
$86.2 million) and $96.7 million resulting from the losses incurred on
the sales of P-West and ACI. The sales of P-West and ACI were completed
in May and October of 1996, respectively.
In the fourth quarter of 1995, the Company recorded within
operating costs a charge of $206.2 million. This charge primarily
reflected an impairment loss in connection with the adoption of the
provisions of SFAS No. 121 ($100.9 million), a provision for
postemployment benefits ($58.1 million) under the Company's severance
plan, an accrual for contractual obligations that have no future
economic benefits and for penalties to cancel certain contracts ($23.1
million) and other asset revaluations ($24.1 million).
This non-recurring charge evolved from the Company's annual
budget and strategic planning process, which included a review of the
Company's underlying cost structure, products and services, and assets
used in the business. Based upon such analysis, management, having the
authority to approve such business decisions, committed in December
1995 to a plan to discontinue certain product lines and dispose of
certain other assets, resulting in the charge. These decisions were not
reversed or modified as a result of the Company's reorganization plan,
which was reviewed and approved by the Board of Directors on January 9,
1996.
Also in 1995, the Company recorded in operating costs a $28.0
million gain related to the sale of warrants received in connection
with the divestiture of Donnelley Marketing and a $90.0 million gain
relating to the sale of Interactive Data Corporation ("IDC").
NOTE 4 RECONCILIATION OF WEIGHTED AVERAGE SHARES
<TABLE>
<CAPTION>
SHARE DATA IN THOUSANDS 1997 1996 1995
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted Average Number of Shares-Basic 170,765 170,017 169,522
Dilutive effect of shares issuable as of year-end under stock options,
restricted stock and performance unit plans 1,629 1,430 2,061
Adjustment of shares applicable to stock options
exercised during the year and performance unit plans 158 129 25
------- ------- -------
Weighted Average Number of Shares-Diluted 172,552 171,576 171,608
------- ------- -------
</TABLE>
As required by SFAS No. 128, the Company has provided a reconciliation of basic
weighted average shares to diluted weighted average shares within the table
outlined above. The conversion of diluted shares has no impact on the Company's
operating results. Options to purchase 3.1 million, 4.4 million and 3.2 million
shares of common stock were outstanding at December 31, 1997, 1996 and 1995,
respectively, but were not included in the computation of diluted earnings per
share because the options' exercise prices were greater than the average market
price of the Company's common stock. The Company's options generally expire 10
years after the initial grant date.
F-15
<PAGE> 16
The Dun & Bradstreet
Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 5 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS
The Company uses interest rate swap agreements and forward foreign
exchange contracts to reduce exposure to fluctuations in interest and
foreign exchange rates. The Company does not use derivative financial
instruments for trading or speculative purposes. If a hedging
instrument ceases to qualify as a hedge, any subsequent gains and
losses are recognized currently in income. Collateral is generally not
required for these types of instruments.
By their nature, all such instruments involve risk, including
the credit risk of non-performance by counterparties. However, at
December 31, 1997 and 1996, in management's opinion there was no
significant risk of loss in the event of non-performance of the
counterparties to these financial instruments. The Company controls its
exposure to credit risk through monitoring procedures.
INTEREST RATE SWAP AGREEMENTS
The Company enters into interest rate swap agreements to manage
exposure to changes in interest rates. Interest rate swaps allow the
Company to raise funds at floating rates and effectively swap them into
fixed rates that are lower than those available to it if fixed-rate
borrowings were made directly. These agreements involve the exchange of
floating-rate for fixed-rate payments without the exchange of the
underlying principal amount. Fixed-interest-rate payments are at rates
ranging from 6.67% to 7.02%. Floating-rate payments received are based
on rates tied to prevailing short-term interest rates. If the Company
terminates a swap agreement, the gain or loss is amortized over the
shorter of the remaining original life of the debt or the swap. In the
first quarter of 1997, $2.9 million was recorded in connection with the
termination of swaps and corresponding debt. At December 31, 1997, the
unrealized fair value of the interest rate swaps was a loss of $11.1
million, of which $3.2 million has been recorded in 1997 relating to
swaps which do not qualify for settlement accounting. At December 31,
1996, the unrealized fair value of the interest rate swaps was a loss
of $15.8 million.
The following table indicates the type of swaps in use at
December 31, 1997 and 1996, and their weighted average interest rates.
Average variable rates are those in effect at the reporting date and
may change significantly over the lives of the contracts.
<TABLE>
<CAPTION>
1997% 1996%
-----------------------------------------------------------------------
<S> <C> <C>
Variable to fixed swaps-
Notional amount $ 300.0% $ 600.0%
Average pay (fixed) rate 6.84% 6.94%
Average receive (variable) rate 5.75% 5.57%
</TABLE>
The swap contracts expire from August 31, 2001, through January 15,
2005.
FOREIGN EXCHANGE
In order to reduce the risk of foreign currency exchange rate
fluctuations, the Company follows a policy of hedging substantially all
cross-border intercompany transactions denominated in a currency other
than the functional currency applicable to each of its various
subsidiaries. The financial instruments used to hedge these
cross-border intercompany transactions are forward foreign exchange
contracts with maturities of six months or less. These forward
contracts are executed with creditworthy institutions and are
denominated primarily in the British Pound, German Mark, Swedish Krona
and Japanese Yen. The gains and losses on these forward contracts are
recorded to income or expense and are essentially offset by the gains
and losses on the underlying foreign currency transactions. The Company
does not enter into forward foreign exchange contracts for speculative
or trading purposes.
At December 31, 1997 and 1996, the Company had
approximately $117 million and $114 million, respectively, of forward
foreign exchange contracts outstanding with various expiration dates
through March 1998 and March 1997, respectively. At December 31, 1997,
unrealized gains on these contracts were $1.5 million and the
unrealized losses were $.4 million. At December 31, 1996, unrealized
gains on these contracts were $3.5 million and the unrealized losses
were $1.3 million.
NOTE 6 PENSION AND POSTRETIREMENT BENEFITS
PENSION PLANS
The Company has pension plans covering substantially all associates in
the United States. The benefits to be paid to associates under these
plans were based on years of credited service and average final
compensation. Pension costs are determined actuarially and funded in
accordance with the Internal Revenue Code. Supplemental and excess
plans in the United States are maintained to provide retirement
benefits in excess of levels allowed by ERISA.
Effective January 1, 1997, the Company's Retirement Plan was amended to
provide retirement income based on a percentage of annual compensation,
rather than final pay. The percentage of compensation allocated
annually to a retirement account ranges from 3.0% to 12.5%, based on
age and service. Amounts allocated under the plan also receive interest
credits based on 30-year Treasury Bonds with a minimum interest credit
rate of 3.0%. Associates close to or eligible for retirement as of
January 1, 1997, will receive the higher of benefits provided by the
final pay formula or retirement account formula.
F-16
<PAGE> 17
NOTE 6 PENSION AND POSTRETIREMENT BENEFITS PENSION PLANS (CONTINUED)
In accordance with SFAS No. 87, "Employers' Accounting for Pensions,"
the Company has recorded an additional minimum pension liability for
each benefits plan for which the accumulated benefits obligation
exceeds plan assets. This amount has been recorded as a long-term
liability with an offsetting intangible asset. To the extent that these
additional liabilities exceeded related unrecognized prior service cost
and net transition obligation, the increase in liabilities is charged
directly to shareholders' equity. At December 31, 1997, $37.4 million
was reported as a separate reduction of shareholders' equity.
The Company has retained the obligation for pension benefits
for personnel who retired prior to November 1, 1996, from the
businesses that comprise discontinued operations.
The Company's non-U.S. subsidiaries provide retirement
benefits for associates consistent with local practices, primarily
using defined benefits or termination indemnity plans.
The components of net periodic pension costs for the years
ended December 31, which included both continuing and discontinued
operations for 1996 and 1995, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-----------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 18.4 $ 34.8 $ 43.1
Interest cost 83.4 87.4 108.5
Actual return on
plan assets (242.8) (173.2) (248.1)
Net amortization
and deferral 137.5 67.3 126.8
------- ------- -------
Net periodic pension
(income) cost $ (3.5) $ 16.3 $ 30.3
------- ------- -------
</TABLE>
Discontinued operations were allocated pension expense of $10.4 million
and $11.1 million in 1996 and 1995, respectively.
The status of pension plans at December 31, 1997 and 1996, is as
follows:
<TABLE>
<CAPTION>
FUNDED UNFUNDED
-------------------- --------------------------------------------
U.S.(1) NON-U.S.
-------------------- --------------------
1997 1996 1997 1996 1997 1996
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fair value of plan assets $1,328.7 $1,146.5 $ -- $ -- $ -- $ --
-------- -------- -------- -------- -------- --------
Actuarial present value of benefits obligations:
Vested benefits 954.5 811.8 162.0 95.8 6.3 7.1
Non-vested benefits 18.4 35.7 3.4 4.6 -- --
-------- -------- -------- -------- -------- --------
Accumulated benefits obligations 972.9 847.5 165.4 100.4 6.3 7.1
Effect of projected future salary increases 69.3 89.7 18.3 60.5 -- --
-------- -------- -------- -------- -------- --------
Projected benefits obligations 1,042.2 937.2 183.7 160.9 6.3 7.1
-------- -------- -------- -------- -------- --------
Plan assets in excess of (less than) projected
benefits obligations 286.5 209.3 (183.7) (160.9) (6.3) (7.1)
Unrecognized net (loss) gain (59.0) .5 55.8 30.2 -- --
Unrecognized prior service cost 9.9 6.7 23.9 22.8 -- --
Unrecognized net transition (asset) obligation (37.2) (44.4) 1.2 1.6 -- --
Adjustment to recognize minimum liability -- -- (62.6) (6.4) -- --
-------- -------- -------- -------- -------- --------
Prepaid (accrued) pension cost $ 200.2 $ 172.1 $ (165.4) $ (112.7) $ (6.3) $ (7.1)
-------- -------- -------- -------- -------- --------
</TABLE>
(1) Represents supplemental and excess plans for which grantor
trusts (with assets of $57.4 million and $58.9 million at
December 31, 1997 and 1996, respectively) have been
established to pay plan benefits.
F-17
<PAGE> 18
The Dun & Bradstreet
Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 6 PENSION AND POSTRETIREMENT BENEFITS PENSION PLANS (CONTINUED)
The weighted average expected long-term rate of return on pension plan
assets was 9.70% for 1997 and 9.75% for 1996 and 1995. At December 31,
1997 and 1996, the projected benefits obligations were determined using
weighted average discount rates of 7.01% and 7.77%, respectively, and
weighted average rates of increase in future compensation levels of
4.46% and 5.15%, respectively. Plan assets are invested in diversified
portfolios that consist primarily of equity and debt securities.
POSTRETIREMENT BENEFITS
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 benefits plans, although
most participants are covered by government sponsored or administered
programs. The cost of Company sponsored postretirement benefits plans
outside the U.S. is not significant.
The Company has retained the obligation for postretirement
benefits for personnel who retired prior to November 1, 1996, from the
businesses that comprise discontinued operations.
The components of net periodic postretirement benefits costs
other than pensions for the years ended December 31, which included
both continuing and discontinued operations for 1996 and 1995, are
summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 3.5 $ 5.9 $ 5.1
Interest cost 14.6 15.4 16.0
Net amortization and
deferral (4.5) (4.8) (5.0)
----- ----- -----
Net periodic postretirement
benefits cost $13.6 $16.5 $16.1
----- ----- -----
</TABLE>
Discontinued operations were allocated net periodic postretirement
benefits costs of $4.4 million and $4.8 million in 1996 and 1995,
respectively.
The status of postretirement benefits plans other than
pensions at December 31, 1997 and 1996, is as follows:
<TABLE>
<CAPTION>
1997 1996
-----------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefits obligation:
Retirees and dependents $(175.6) $(165.9)
Active associates-eligible (18.9) (15.7)
Active associates-not yet eligible (22.0) (15.0)
------- -------
Accumulated postretirement
benefits obligation (216.5) (196.6)
Unrecognized net loss (gain) 18.0 (.2)
Unrecognized prior service credit (7.3) (11.9)
------- -------
Accrued postretirement benefits obligation $(205.8) $(208.7)
======= =======
</TABLE>
Benefits are paid as incurred from general corporate assets.
The accumulated postretirement benefits obligation at December
31, 1997 and 1996, was determined using discount rates of 7.0% and
7.75%, respectively. The assumed rate of future increases in per capita
cost of covered health-care benefits is 7.3% in 1998, 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
benefits obligation by $22.3 million and would increase annual
aggregate service and interest costs by $1.9 million.
NOTE 7 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. Under the plans, the options
vest ratably over a four-year period and expire 10 years from the date
of the grant. The 1991 Key Employees Stock Option Plan provides for the
granting of up to 17 million shares.
In November 1996, in conjunction with the Distribution, those
individuals who became employees of Cognizant or ACNielsen were granted
substitute awards in the stock of their new employer, and any stock
awards or options held by them in respect of the Company were reflected
as surrendered in the following table. For the remaining holders of
unexercised options, including employees of the Company, retirees and
certain other former employees of the Company, the number of shares
subject to options and the option
F-18
<PAGE> 19
NOTE 7. EMPLOYEE STOCK PLANS (CONTINUED)
exercise price were adjusted immediately following the Distribution to preserve,
as closely as possible, the economic value of the options that existed prior to
the Distribution.
The Company applies APB No. 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for the stock option
plans. The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"). Had compensation
cost for the Company's stock option plan been determined based on the fair value
at the grant date for awards in 1997, 1996 and 1995 consistent with the
provisions of SFAS No. 123, the Company's income (loss) from continuing
operations and earnings (loss) per share would have been reduced to the
pro-forma amounts indicated below:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Income (loss) from
continuing operations
As reported $ 311.0 $ (27.3) $ 217.5
Pro-forma $ 307.1 $ (31.2) $ 217.5
Basic earnings (loss) per share
of common stock from
continuing operations
As reported $ 1.82 $ (.16) $ 1.28
Pro-forma $ 1.80 $ (.18) $ 1.28
Diluted earnings (loss) per share
of common stock from
continuing operations
As reported $ 1.80 $ (.16) $ 1.27
Pro-forma $ 1.78 $ (.18) $ 1.27
------- ------- -------
</TABLE>
The pro-forma disclosures shown are not representative of the effects on income
(loss) and earnings (loss) per share in future years.
The fair value of the Company's stock options used to compute pro-forma
income (loss) and earnings (loss) per share disclosures is the estimated present
value at grant date using the Black-Scholes option-pricing model. The weighted
average assumptions used for 1997 were as follows: dividend yield of 3.3%,
expected volatility of 20%, risk-free interest rate of 5.73%, and an expected
holding period of 4.5 years. The following weighted average assumptions were
used to value grants made prior to the Distribution: dividend yield of 4.7%,
expected volatility of 15%, a risk-free interest rate of 6.08%, and an expected
holding period of five years. The incremental fair value of the Company's
options converted on October 31, 1996, used to compute pro-forma income (loss)
and earnings (loss) per share disclosures and the value of new grants after
November 1, 1996, was determined using the Black-Scholes option-pricing model
with the following weighted average assumptions: dividend yield of 3.7%,
expected volatility of 17%, a risk-free interest rate of 5.85%, and an expected
holding period of 4.5 years.
Options outstanding at December 31, 1997, were granted during the years
1988 through 1997 and are exercisable over periods ending not later than 2007.
At December 31, 1997, 1996 and 1995, options for 8,133,155 shares, 8,313,166
shares and 4,859,596 shares of common stock, respectively, were exercisable and
1,450,195 shares, 4,240,772 shares and 10,306,592 shares, respectively, were
available for future grants under the plans.
Changes in stock options for the three years ended December 31, 1997,
are summarized as follows:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Shares Price ($)
----------- -----------
<S> <C> <C>
Options outstanding,
January 1, 1995 8,733,172 53.57
Granted 1,821,780 63.35
Exercised (736,145) 46.11
Surrendered or expired (671,079) 56.63
----------- -----------
Options outstanding,
December 31, 1995 9,147,728 55.90
Granted 10,704 60.25
Exercised (977,042) 51.09
Surrendered or expired (689,297) 59.10
----------- -----------
Options outstanding,
October 31, 1996 7,492,093 56.23
Attributable to discontinued
operations (2,958,686) 57.08
----------- -----------
Options outstanding,
October 31, 1996 4,533,407 55.68
----------- -----------
Options converted,
November 1, 1996 11,958,980 21.10
Granted 4,452,250 22.96
Exercised (543,354) 21.02
Surrendered or expired (451,416) 22.87
----------- -----------
Options outstanding,
December 31, 1996 15,416,460 21.59
Granted 3,151,980 30.01
Exercised (2,008,234) 20.38
Surrendered or expired (840,878) 22.97
Options outstanding,
December 31, 1997 15,719,328 23.36
----------- -----------
</TABLE>
The weighted average fair value of options granted during 1997, 1996 and 1995
was $5.52, $3.61 and $7.61, respectively.
F-19
<PAGE> 20
The Dun & Bradstreet
Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 7. EMPLOYEE STOCK PLANS (CONTINUED)
The following table summarizes information about stock options outstanding at
December 31, 1997:
<TABLE>
<CAPTION>
STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE
---------------------------------------------------- -------------------------------
WEIGHTED
AVERAGE
REMAINING WEIGHTED WEIGHTED
CONTRACTUAL AVERAGE AVERAGE
RANGE OF EXERCISE PRICES SHARES LIFE EXERCISE PRICE SHARES EXERCISE PRICE
<S> <C> <C> <C> <C> <C>
$15.73-$22.55 5,705,704 4.2 Years $ 19.74 5,270,726 $ 19.68
$22.75-$30.22 10,013,624 8.9 Years $ 25.42 2,862,429 $ 23.50
15,719,328 8,133,155
</TABLE>
The plans also provide for the granting of stock appreciation rights and limited
stock appreciation rights in tandem with stock options to certain key employees.
At December 31, 1997, there were 34,048 stock appreciation rights attached to
stock options outstanding and 1,154,495 limited stock appreciation rights
("LSARs") attached to stock options, which are exercisable only if, and to the
extent that, the related option is exercisable and, in the case of LSARs, only
upon the occurrence of specified contingent events.
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 1997, 1996 and 1995, restricted shares of 20,000,
19,779 and 184,465, respectively, were awarded under the plan. Forfeitures in
1996 and 1995 totaled 6,877 and 10,365, respectively. There were no forfeitures
during 1997. The restrictions on the majority of such shares lapse over a period
of three years from the date of the grant, and the cost is charged to
compensation expense ratably.
Under the 1997 Key Employees Performance Unit Plan, key associates may
be granted shares of the Company's stock based on the achievement of two-year
revenue growth goals or other key operating objectives, where appropriate. At
the end of the performance period, company performance at target will yield the
targeted amount of shares, while company performance above or below target will
yield larger or smaller share awards, respectively. During 1997, 471,644 shares
were granted at fair value of $30.94 per share. Recorded in selling and
administrative expenses in 1997 was compensation expense of $14.6 million for
the plan.
NOTE 8 INCOME TAXES
Income before provision for income taxes consisted of:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
U.S. $466.0 $125.1 $356.4
Non-U.S 10.6 1.3 (25.8)
------ ------ ------
$476.6 $126.4 $330.6
------ ------ ------
</TABLE>
The provision for income taxes consisted of:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Current tax provision:
U.S. Federal $ 99.5 $ 43.3 $121.3
State and local 51.1 (21.6) 29.2
Non-U.S. 21.6 13.9 28.9
------ ------ ------
Total current tax
provision 172.2 35.6 179.4
------ ------ ------
Deferred tax (benefit)
provision:
U.S. Federal 21.0 86.9 (30.6)
State and local (21.3) 15.7 (23.8)
Non-U.S (6.3) 15.5 (11.9)
------ ------ ------
Total deferred tax
(benefit) provision (6.6) 118.1 (66.3)
------ ------ ------
Provision for income taxes $165.6 $153.7 $113.1
------ ------ ------
</TABLE>
F-20
<PAGE> 21
NOTE 8. INCOME TAXES (CONTINUED)
The following table summarizes the significant differences between the U.S.
Federal statutory tax rate and the Company's effective tax rate for financial
statement purposes.
<TABLE>
<CAPTION>
1997 1996 1995
---- ----- ----
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
State and local taxes,
net of U.S. Federal
tax benefit 4.1 (3.0) 1.7
Non-U.S. taxes 3.2 12.8 5.1
Recognition of capital
and ordinary losses (7.2) (14.3) (13.2)
Non-recurring
reorganization costs -- 34.9 --
Non-deductible capital
losses -- 24.0 --
Repatriation of foreign
earnings -- 30.1 --
Other (.4) 2.1 5.6
---- ----- ----
Effective tax rate 34.7% 121.6% 34.2%
---- ----- ----
</TABLE>
Income taxes paid were $170.3 million, $170.2 million and $119.9 million in
1997, 1996 and 1995, respectively. Income taxes refunded were $37.6 million,
$140.9 million and $17.8 million in 1997, 1996 and 1995, respectively.
Deferred tax assets (liabilities) consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Deferred tax assets:
Operating losses $ 53.7 $ 34.6
Postretirement benefits 88.6 83.6
Postemployment benefits 16.1 24.1
Reorganization and
restructuring costs 5.4 13.1
Bad debts 14.3 11.2
Other -- 18.0
------ ------
Total deferred tax assets 178.1 184.6
Valuation allowance (53.7) (34.6)
------ ------
Net deferred tax asset 124.4 150.0
------ ------
Deferred tax liabilities:
Intangibles (42.1) (63.3)
Revenue recognition (45.8) (65.4)
Tax-leasing transactions (22.1) (37.8)
Depreciation (14.3) (1.1)
Other (11.1) --
------ ------
Total deferred tax liability (135.4) (167.6)
------ ------
Net deferred tax liability $(11.0) $(17.6)
------ ------
</TABLE>
At December 31, 1997, undistributed earnings of non-U.S. subsidiaries aggregated
$98.1 million. Deferred tax liabilities have not been recognized for these
undistributed earnings because it is management's intention to reinvest such
undistributed earnings outside the U.S. If all undistributed earnings were
remitted to the U.S., the amount of incremental U.S. Federal and foreign income
taxes payable, net of foreign tax credits, would be $39.3 million. During 1996,
$467.9 million of non-U.S. earnings, primarily from the Cognizant and ACNielsen
businesses, were repatriated by the Company in order to facilitate its 1996
reorganization.
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 benefits from tax deductions
in excess of taxable income for Federal income tax purposes. These amounts are
included in deferred income taxes.
F-21
<PAGE> 22
The Dun & Bradstreet
Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 9 NOTES PAYABLE
Notes payable consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Commercial paper $ 421.6 $ --
Bank notes 29.9 1,120.7
-------- --------
$ 451.5 $1,120.7
-------- --------
</TABLE>
The Company had commercial paper borrowings of $421.6 million at December 31,
1997. Interest rates on these borrowings ranged from 5.62% to 6.10%.
The Company has two committed bank facilities that support the
Company's commercial paper borrowings. One of the facilities permits borrowings
of up to $750 million and matures in August 2001. The second facility permits
borrowings of up to $150 million and matures in August 1998. Under these
facilities the Company has the ability to borrow at prevailing short-term
interest rates. At December 31, 1997, there was no outstanding balance against
these facilities. At December 31, 1996, $880.0 million was borrowed against
these facilities. The Company also had non-committed lines of credit of $111
million at December 31, 1997. At year-end 1997, $29.9 million was borrowed
against these non-committed facilities. At December 31, 1996, $240.7 million was
borrowed against non-committed facilities of $305 million. None of these
arrangements had material commitment fees or compensating balance requirements.
The weighted average interest rates on commercial paper and notes
payable at December 31, 1997 and 1996 were 5.97% and 5.78%, respectively.
Interest paid totaled $49.6 million, $43.2 million and $28.3 million
for the years ended December 31, 1997, 1996 and 1995, respectively.
NOTE 10 INVESTMENT PARTNERSHIPS
During 1993, the Company participated in the formation of a limited partnership
to invest in various securities, including those of the Company. Third-party
investors held limited-partner and special investors interests totaling $500.0
million. Funds raised by the partnership provided a source of financing for the
Company's repurchase in 1993 of 8.3 million shares of its common stock. During
the fourth quarter of 1996, the Company redeemed these partnership interests.
This redemption was financed with short-term borrowings.
The partnership is presently engaged in the business of licensing
database assets and computer software. One of the Company's subsidiaries serves
as managing general partner, and two subsidiaries hold limited-partner
interests. In April 1997, the partnership raised $300.0 million of minority
interest financing from a third-party investor. The Company's subsidiaries
contributed assets to the partnership, and the third-party investor contributed
cash ($300.0 million) in exchange for a limited-partner interest. Funds raised
by the partnership were loaned to the Company and used to repay existing
short-term debt in April 1997. At December 31, 1997, the third-party investment
in this partnership was included in minority interest.
For financial reporting purposes, the results of operations, assets,
liabilities and cash flows of the partnership described above are included in
the Company's consolidated financial statements.
NOTE 11 CAPITAL STOCK
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
that 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 10.0 million shares of
$1 par value preferred stock. The preferred stock can be issued with varying
terms, as determined by the Board of Directors.
F-22
<PAGE> 23
NOTE 12 LEASE COMMITMENTS
Certain of the Company's operations are conducted from leased facilities, which
are under operating leases that expire over the next 10 years. The Company also
leases certain computer and other equipment under operating leases that expire
over the next five years. These leases are frequently renegotiated or otherwise
changed as advancements in computer technology produce opportunities to lower
costs and improve performance. Additionally, the Company has agreements with
various third parties to purchase certain data processing and telecommunications
services extending beyond one year. Rental expenses under operating leases were
$91.8 million, $117.6 million and $121.9 million for the years ended December
31, 1997, 1996 and 1995, respectively. Future minimum lease payments under
noncancelable leases at December 31, 1997, are as follows:
<TABLE>
<CAPTION>
There-
1998 1999 2000 2001 2002 after Total
- - ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
$84.8 $69.5 $45.4 $33.4 $27.7 $50.8 $311.6
- - ----- ----- ----- ----- ----- ----- ------
</TABLE>
NOTE 13 LITIGATION
The Company and its subsidiaries are involved in legal proceedings, claims and
litigation arising in the ordinary course of business. In the opinion of
management, the outcome of such current legal proceedings, claims and litigation
could have a material effect on quarterly or annual operating results or cash
flows when resolved in a future period. However, in the opinion of management,
these matters will not materially affect the Company's consolidated financial
position.
INFORMATION RESOURCES
On July 29, 1996, Information Resources, Inc. ("IRI") filed a complaint
in the United States District Court for the Southern District of New York,
naming as defendants the Company, A.C. Nielsen Company (a subsidiary of
ACNielsen) and IMS International, Inc.
The complaint alleges various violations of United States antitrust
laws, including alleged violations of Section 1 and 2 of the Sherman Act. The
complaint also alleges a claim of tortious interference with a contract and a
claim of tortious interference with a prospective business relationship. These
claims relate to the acquisition by defendants of Survey Research Group Limited
("SRG"). IRI alleges SRG violated an alleged agreement with IRI when it agreed
to be acquired by the defendants and that the defendants induced SRG to breach
that agreement.
On October 15, 1996, defendants moved for an order dismissing all
claims in the complaint. On May 6, 1997, the United States District Court for
the Southern District of New York issued a decision dismissing IRI's claim of
attempted monopolization in the United States, with leave to replead within 60
days. The Court denied defendants' motion with respect to the remaining claims
in the complaint. On June 3, 1997, defendants filed an answer denying the
material allegations in IRI's complaint, and A.C. Nielsen Company filed a
counterclaim alleging that IRI has made false and misleading statements about
its services and commercial activities. On July 7, 1997, IRI filed an Amended
and Restated Complaint repleading its alleged claim of monopolization in the
United States and realleging its other claims. By notice of motion dated August
18, 1997, defendants moved for an order dismissing the amended claim. On
December 1, 1997, the Court denied the motion and, on December 16, 1997,
defendants filed a supplemental answer denying the remaining material
allegations of the amended complaint.
IRI's complaint alleges damages in excess of $350 million, which amount
IRI asked to be trebled under antitrust laws. IRI also seeks punitive damages in
an unspecified amount.
In connection with the IRI action, Cognizant, ACNielsen and the Company
entered into an Indemnity and Joint Defense Agreement (the "Indemnity and Joint
Defense Agreement") pursuant to which they have agreed (i) to certain
arrangements allocating potential liabilities ("IRI Liabilities") that may arise
out of or in connection with the IRI Action and (ii) to conduct a joint defense
of such action. In particular, the Indemnity and Joint Defense Agreement
provides that ACNielsen will assume exclusive liability for IRI Liabilities up
to a maximum amount to be calculated at such time such liabilities, if any,
become payable (the "ACN Maximum Amount"), and that the Company and Cognizant
will share liability equally for any amounts in excess of the ACN Maximum
Amount. The ACN Maximum Amount will be determined by an investment banking firm
as the maximum amount that ACNielsen is able to pay after giving effect to (i)
any plan submitted by such investment bank which is designed to maximize the
claims-paying ability of ACNielsen without impairing the investment banking
firm's ability to deliver a viability opinion (but which will not require any
action
F-23
<PAGE> 24
The Dun & Bradstreet
Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 13 LITIGATION (CONTINUED)
requiring stockholder approval) and (ii) payment of related fees and expenses.
For these purposes, financial viability means the ability of ACNielsen, after
giving effect to such plan, the payment of related fees and expenses and the
payment of the ACN Maximum Amount, to pay its debts as they become due and to
finance the current and anticipated operating and capital requirements of its
business, as reconstituted by such plan, for two years from the date any such
plan is expected to be implemented.
Management is unable to predict at this time the final outcome of the
IRI Action or whether the resolution of this matter could materially affect the
Company's results of operations, cash flows or financial position.
NOTE 14 SUPPLEMENTAL FINANCIAL DATA
Other Current Assets:
<TABLE>
<CAPTION>
At December 31, 1997 1996
------ ------
<S> <C> <C>
Deferred taxes $ 20.5 $ 27.3
Prepaid expenses 200.3 136.5
Other 12.0 25.0
------ ------
$232.8 $188.8
------ ------
</TABLE>
Property, Plant and Equipment-Net, carried at cost:
<TABLE>
<CAPTION>
At December 31, 1997 1996
------ ------
<S> <C> <C>
Buildings $203.2 $199.3
Machinery and equipment 503.5 499.9
------ ------
706.7 699.2
Less: accumulated depreciation 427.2 390.7
------ ------
279.5 308.5
Leasehold improvements, less:
accumulated amortization
of $54.1 and $49.2 34.3 35.6
Land 28.9 29.0
------ ------
$342.7 $373.1
------ ------
</TABLE>
Computer Software and Goodwill:
<TABLE>
<CAPTION>
Computer
Software Goodwill
------- -------
<S> <C> <C>
January 1, 1996 $ 100.7 $ 295.6
Additions at cost 84.5 .8
Amortization (37.9) (16.5)
Other deductions and reclassifications 3.4 (61.5 )(1)
------- -------
December 31, 1996 150.7 218.4
Additions at cost 76.0 --
Amortization (60.4) (5.2)
Other deductions and reclassifications (6.2) (18.6)(2)
------- -------
December 31, 1997 $ 160.1 $ 194.6
------- -------
</TABLE>
(1) Sale of ACI in 1996.
(2) Impact of foreign currency fluctuations.
NOTE 15 REORGANIZATION PLAN
On December 17, 1997, the Company announced a plan to separate into two publicly
traded independent companies-The Dun &Bradstreet Corporation and The Reuben H.
Donnelley Corporation. The transaction is subject to a ruling from the Internal
Revenue Service, with respect to the tax-free treatment of the distribution, and
approval from the Board of Directors. The Dun & Bradstreet Corporation will
consist of-Dun & Bradstreet, the operating company and Moody's Investors
Service. The Reuben H. Donnelley Corporation will consist of-Reuben H.
Donnelley, the operating company and the DonTech partnership. The transaction
is expected to be completed in the summer of 1998.
F-24
<PAGE> 25
NOTE 16 SEGMENT INFORMATION
The Company, operating in 38 countries, delivers information services
principally through two business segments referenced below. Risk Management
Services (D&B and Moody's) provides commercial credit and business marketing
information, receivables management services and debt rating and financial
information for investors. Directory Information Services provides sales,
marketing and publishing services for yellow pages and other directory products.
Intersegment sales are immaterial.
BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Years Ended December 31, 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Operating Revenues
Risk Management Services(1) $1,811.0 $1,781.7 $1,734.1
Directory Information Services 343.4 377.5 423.7
Corporate and Other -- -- .4
-------- -------- --------
Total $2,154.4 $2,159.2 $2,158.2
-------- -------- --------
Operating Income (Expense)
Risk Management Services(2) $ 452.5 $ 327.1 $ 449.5
Directory Information Services(3) 144.2 141.1 186.3
Corporate and Other(4) (48.8) (270.6) (237.2)
-------- -------- --------
Total 547.9 197.6 398.6
Non-Operating Expense-Net (71.3) (71.2) (68.0)
-------- -------- --------
Income from Continuing Operations before Provision for Income Taxes $ 476.6 $ 126.4 $ 330.6
-------- -------- --------
Depreciation and Amortization(5)
Risk Management Services $ 124.4 $ 130.5 $ 113.6
Directory Information Services 22.0 16.8 16.6
Corporate and Other 7.5 10.1 34.3
-------- -------- --------
Total $ 153.9 $ 157.4 $ 164.5
-------- -------- --------
Capital Expenditures
Risk Management Services $ 45.5 $ 50.7 $ 75.0
Directory Information Services 9.1 16.0 19.3
Corporate and Other 4.8 7.2 22.5
-------- -------- --------
Total $ 59.4 $ 73.9 $ 116.8
-------- -------- --------
Assets
Risk Management Services $1,221.0 $1,272.9 $1,491.7
Directory Information Services 399.2 527.9 539.7
Corporate and Other 531.7 493.4 484.4
Discontinued Operations -- -- 1,207.3
-------- -------- --------
Total $2,151.9 $2,294.2 $3,723.1
-------- -------- --------
</TABLE>
(1) Operating Revenues from worldwide Credit Information Services was
$976.8 million, $979.6 million and $965.8 million in 1997, 1996 and
1995, respectively.
(2) 1996 Operating Income included a loss on the sale of ACI of $68.2
million, and 1995 included a fourth-quarter non-recurring charge of
$45.6 million offset by a gain on the sale of IDC of $90.0 million.
(3) 1997 Operating Income included a gain on the sale of P-East of $9.4
million, 1996 included a loss on the sale of P-West of $28.5 million
and 1995 included a fourth-quarter non-recurring charge of $17.7
million.
(4) 1996 Operating Expense included reorganization costs of $161.2 million.
1995 included a fourth-quarter non-recurring charge of $142.9 million,
partially offset by a $28.0 million gain on the sale of warrants
received in connection with the sale of Donnelley Marketing.
(5) Includes depreciation and amortization of Property, Plant and
Equipment, Computer Software, Goodwill and Other Intangibles.
F-25
<PAGE> 26
The Dun & Bradstreet
Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 16 SEGMENT INFORMATION (CONTINUED)
GEOGRAPHIC SEGMENTS
<TABLE>
<CAPTION>
Years Ended December 31, 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
OPERATING REVENUES
United States $1,583.9 $1,564.0 $1,582.6
Europe 467.6 481.6 465.5
Other Non-U.S 102.9 113.6 110.1
-------- -------- --------
Total $2,154.4 $2,159.2 $2,158.2
-------- -------- --------
OPERATING INCOME (LOSS)
United States(1) $ 540.6 $ 182.2 $ 406.4
Europe(2) 8.8 12.9 3.5
Other Non-U.S.(3) (1.5) 2.5 (11.3)
-------- -------- --------
Total 547.9 197.6 398.6
-------- -------- --------
Non-Operating Expense-Net (71.3) (71.2) (68.0)
Income from Continuing Operations before Provision for Income Taxes $ 476.6 $ 126.4 $ 330.6
ASSETS
United States $1,466.6 $1,511.2 $1,691.4
Europe 583.6 660.0 774.1
Other Non-U.S 101.7 123.0 50.3
Discontinued Operations -- -- 1,207.3
-------- -------- --------
Total $2,151.9 $2,294.2 $3,723.1
-------- -------- --------
</TABLE>
(1) 1997 Operating Income included a gain on the sale of P-East of $9.4
million. 1996 included losses on the sales of ACI and P-West of $68.2
million and $28.5 million, respectively, and reorganization costs of
$161.2 million. 1995 included a fourth-quarter non-recurring charge of
$184.7 million partially offset by gains on the sale of IDC of $90.0
million and the sale of warrants received in connection with the sale
of Donnelley Marketing of $28.0 million.
(2) 1995 Operating Income included a fourth-quarter non-recurring charge of
$8.4 million.
(3) 1995 Operating Loss included a fourth-quarter non-recurring charge of
$13.1 million.
The Directory Information Services segment includes the results of Donnelley and
DonTech (a partnership between Donnelley and Ameritech advertising services).
During July 1997, Donnelley signed a series of agreements with
Ameritech advertising services changing the structure of the existing
partnership by appointing DonTech the exclusive sales agent in perpetuity for
yellow page directories published by Ameritech in Illinois and Northwest
Indiana. Under the new sales agency agreement, DonTech performs the advertising
sales function for the directories and earns a commission, while Ameritech
serves as the directories' publisher. As a result of the transfer of publishing
services to Ameritech, Donnelley receives a revenue participation interest from
Ameritech.
The Company's share of partnership earnings, which is included in
operating revenues, was $61.3 million, $122.4 million and $127.7 million in
1997, 1996 and 1995, respectively. At December 31, 1997, DonTech's assets and
liabilities were as follows: current assets $303.2 million, other assets $4.9
million and current liabilities $40.0 million. At December 31, 1996, DonTech's
assets and liabilities were as follows: current assets $414.3 million, other
assets $6.6 million and current liabilities $24.7 million. DonTech's gross
revenues totaled $356.8 million, $468.5 million and $472.8 million for 1997,
1996 and 1995, respectively. Pre-tax income was $128.9 million, $226.7 million
and $232.2 million for 1997, 1996 and 1995, respectively. At December 31, 1997
and 1996, the Company's investment in DonTech was $152.1 million and $215.3
million, respectively.
F-26
<PAGE> 27
NOTE 17 QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 YEAR
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1997 (1) (2)
Operating Revenues $ 455.4 $ 505.0 $ 551.2 $ 642.8 $ 2,154.4
--------- --------- --------- --------- ---------
Operating Income (3) $ 75.6 $ 98.9 $ 144.6 $ 228.8 $ 547.9
--------- --------- --------- --------- ---------
Income before Cumulative Effect of Accounting Changes $ 34.9 $ 54.0 $ 85.2 $ 136.9 $ 311.0
Cumulative Effect of Accounting Changes, Net of Income Tax Benefit (150.6) -- -- -- (150.6)
--------- --------- --------- --------- ---------
Net Income (Loss) $ (115.7) $ 54.0 $ 85.2 $ 136.9 $ 160.4
--------- --------- --------- --------- ---------
Basic Earnings (Loss) Per Share of Common Stock:
Before Cumulative Effect of Accounting Changes $ .20 $ .32 $ .50 $ .80 $ 1.82
Cumulative Effect of Accounting Changes (.88) -- -- -- (.88)
--------- --------- --------- --------- ---------
Basic Earnings (Loss) Per Share of Common Stock $ (.68) $ .32 $ .50 $ .80 $ .94
--------- --------- --------- --------- ---------
Diluted Earnings (Loss) Per Share of Common Stock (4):
Before Cumulative Effect of Accounting Changes $ .20 $ .31 $ .49 $ .79 $ 1.80
Cumulative Effect of Accounting Changes (.87) -- -- -- (.87)
--------- --------- --------- --------- ---------
Diluted Earnings (Loss) Per Share of Common Stock $ (.67) $ .31 $ .49 $ .79 $ .93
--------- --------- --------- --------- ---------
1996(2)(5)
Operating Revenues $ 450.4 $ 505.1 $ 509.8 $ 693.9 $ 2,159.2
--------- --------- --------- --------- ---------
Operating Income (Loss) (6) $ 52.3 $ (14.2) $ 76.0 $ 83.5 $ 197.6
--------- --------- --------- --------- ---------
Income (Loss):
Continuing Operations, Net of Income Taxes $ 21.9 $ (43.9) $ 24.3 $ (29.6) $ (27.3)
Discontinued Operations, Net of Income Taxes 42.3 .3 26.6 (86.3) (17.1)
--------- --------- --------- --------- ---------
Net Income (Loss) $ 64.2 $ (43.6) $ 50.9 $ (115.9) $ (44.4)
--------- --------- --------- --------- ---------
Basic Earnings (Loss) Per Share of Common Stock:
Continuing Operations $ .13 $ (.26) $ .14 $ (.17) $ (.16)
Discontinued Operations .25 -- .16 (.51) (.10)
--------- --------- --------- --------- ---------
Basic Earnings (Loss) Per Share of Common Stock $ .38 $ (.26) $ .30 $ (.68) $ (.26)
--------- --------- --------- --------- ---------
Diluted Earnings (Loss) Per Share of Common Stock:
Continuing Operations $ .13 $ (.26) $ .14 $ (.17) $ (.16)
Discontinued Operations .25 -- .16 (.51) (.10)
--------- --------- --------- --------- ---------
Diluted Earnings (Loss) Per Share of Common Stock $ .38 $ (.26) $ .30 $ (.68) $ (.26)
--------- --------- --------- --------- ---------
</TABLE>
(1) In 1997, the Company changed its revenue recognition methods as
discussed in Note 1. This resulted in a one-time non-cash cumulative
effect charge of $150.6 million, after tax, effective January 1, 1997.
As a result of this accounting change, results for the first three
quarters of 1997 have been restated as follows: revenue decreased by
$3.6 million, increased by $6.8 million and decreased by $2.7 million;
Operating Income decreased by $4.7 million, increased by $5.8 million
and decreased by $3.8 million; Net Income (Loss) decreased by $153.6
million, increased by $3.8 million and decreased by $2.5 million,
respectively.
(2) In connection with the Company's adoption of SFAS No. 128, all
prior-period earnings per share data were restated to reflect basic and
diluted earnings per share.
(3) Operating Income included a $9.4 million gain on the sale of P-East in
the quarter ended December 31, 1997.
(4) The number of weighted average shares outstanding changes as common
shares are issued for employee plans and other purposes or as shares
are repurchased. For this reason, the sum of quarterly earnings per
common share may not be the same as earnings per common share for the
year.
(5) In the fourth quarter of 1996, the Company changed its revenue
recognition methods in connection with its Directory Information
Services segment, effective January 1, 1996. The Company changed to the
predominant industry practice of recognizing revenue and related
expenses at the time the yellow page directories are published.
Previously, revenue and related expenses were reported ratably during
the year consistent with historic publishing patterns. This accounting
change had no impact on the full-year results. As a result of this
accounting change, results for the first three quarters of 1996 were
restated.
(6) Operating Income (Loss) included reorganization costs of $1.4 million,
$7.6 million, $18.9 million and $133.3 million incurred in the quarters
ended March 31, June 30, September 30 and December 31, 1996,
respectively; loss on the sale of ACI of $63.8 million and $4.4 million
for quarters ended June 30 and September 30, 1996, respectively; and
loss on the sale of P-West of $25.0 million and $3.5 million in the
quarters ended June 30 and September 30, 1996, respectively.
F-27
<PAGE> 28
The Dun & Bradstreet
Corporation
and Subsidiaries
FIVE-YEAR
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
TABULAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA 1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Results of Operating Revenues $ 2,154.4 $ 2,159.2 $ 2,158.2 $ 2,124.9 $ 2,127.0
Operations Costs and Expenses(1) 1,606.5 1,961.6 1,759.6 1,530.0 1,794.2
--------- --------- --------- --------- ---------
Operating Income 547.9 197.6 398.6 594.9 332.8
Non-Operating (Expense) Income-Net (71.3) (71.2) (68.0) (35.0) 1.8
--------- --------- --------- --------- ---------
Income from Continuing Operations before Provision
for Income Taxes 476.6 126.4 330.6 559.9 334.6
Provision for Income Taxes 165.6 153.7 113.1 191.3 122.7
--------- --------- --------- --------- ---------
Income (Loss) from:
Continuing Operations 311.0 (27.3) 217.5 368.6 211.9
Discontinued Operations, Net of Income Taxes(2) -- (17.1) 103.3 260.9 72.6
Income (Loss) before Cumulative Effect of
Accounting Changes 311.0 (44.4) 320.8 629.5 284.5
Cumulative Effect of Accounting Changes-
Net of Income Tax Benefit(3) (150.6) -- -- -- (246.4)
--------- --------- --------- --------- ---------
Net Income (Loss) $ 160.4 $ (44.4) $ 320.8 $ 629.5 $ 38.1
--------- --------- --------- --------- ---------
Basic Earnings Continuing Operations $ 1.82 $ (.16) $ 1.28 $ 2.17 $ 1.20
(Loss) Per Share Discontinued Operations -- (.10) .61 1.53 .41
of Common Stock --------- --------- --------- --------- ---------
Before Cumulative Effect of Accounting Changes 1.82 (.26) 1.89 3.70 1.61
Cumulative Effect of Accounting Changes(3) (.88) -- -- -- (1.38)
--------- --------- --------- --------- ---------
Basic Earnings (Loss) Per Share of Common Stock $ .94 $ (.26) $ 1.89 $ 3.70 $ .23
--------- --------- --------- --------- ---------
Diluted Earnings Continuing Operations $ 1.80 $ (.16) $ 1.27 $ 2.15 $ 1.18
(Loss) Per Share Discontinued Operations -- (.10) .60 1.52 .41
of Common Stock --------- --------- --------- --------- ---------
Before Cumulative Effect of Accounting Changes 1.80 (.26) 1.87 3.67 1.59
Cumulative Effect of Accounting Changes(3) (.87) -- -- -- (1.37)
--------- --------- --------- --------- ---------
Diluted Earnings (Loss) Per Share of Common Stock $ .93 $ (.26) $ 1.87 $ 3.67 $ .22
--------- --------- --------- --------- ---------
Other Data Dividends Per Share $ .88 $ 1.82 $ 2.63 $ 2.56 $ 2.40
--------- --------- --------- --------- ---------
Dividends Paid $ 150.6 $ 310.8 $ 446.1 $ 435.2 $ 423.0
--------- --------- --------- --------- ---------
Weighted Average Number of Shares Outstanding-Basic 170.8 170.0 169.5 169.9 177.2
--------- --------- --------- --------- ---------
Weighted Average Number of Shares Outstanding-Diluted 172.6 171.6 171.6 171.7 179.1
--------- --------- --------- --------- ---------
Balance Sheet Total Assets(4) $ 2,151.9 $ 2,294.2 $ 3,723.1 $ 3,849.2 $ 3,651.2
--------- --------- --------- --------- ---------
Shareholders' Equity $ (490.2) $ (431.7) $ 1,182.5 $ 1,318.6 $ 1,111.3
--------- --------- --------- --------- ---------
</TABLE>
(1) 1997 included a gain of $9.4 million on the sale of P-East. 1996
included one-time charges of $161.2 million for reorganization costs
and losses on sales of $68.2 million and $28.5 million for ACI and
P-West, respectively. 1995 included a fourth-quarter non-recurring
charge of $206.2 million partially offset by gains of $90.0 million and
$28.0 million for the sale of IDC and warrants received in connection
with the sale of Donnelley Marketing, respectively. 1994 included
restructuring expense and a non-recurring charge of $67.9 million
offset by gains on the sale of Thomson Directories Ltd. and DunsNet of
$33.2 million and $36.0 million, respectively. 1993 included
restructuring expense of $173.8 million partially offset by gains of
$13.6 million for the redemption of preferred shares received from the
1991 sale of Donnelley Marketing, $9.5 million on the sale of Donnelley
Marketing and $8.9 million for the redemption of notes related to the
1992 sale of Datastream International.
(2) Income taxes on Discontinued Operations were $93.5 million, $9.7
million, $58.4 million and $36.7 million in 1996, 1995, 1994 and 1993,
respectively.
(3) 1997 included the impact of a change in revenue recognition (see Note
1). 1993 included the impact of $130.9 million or $.73 per share (basic
and diluted) for the adoption of SFAS No. 112 and $115.5 million or
$.65 per share basic and $.64 per share diluted for the adoption of
SFAS No. 106.
(4) Included Net Assets of Discontinued Operations of $1,207.3 million,
$1,342.3 million and $1,186.4 million in 1995, 1994 and 1993,
respectively.
F-28
<PAGE> 1
EXHIBIT 18
February 13, 1998
The Dun & Bradstreet Corporation
One Diamond Hill Road
Murray Hill, New Jersey 07974
We are providing this letter to you for your inclusion as an exhibit to
your Form 10-K filing pursuant to Item 601 of Regulation S-K.
We have read management's justification for the change in accounting in the
Company's Credit Information Services business to recognize revenue as products
and services are used by its customers from recognizing revenue ratably over the
contract period, and in the Company's Marketing Information Services,
Receivables Management Services and Moody's Investors Service businesses to
recognize revenue over the service period from recognizing revenues and costs at
time of shipment or billing, as contained in the Company's Form 10-K for the
year ended December 31, 1997. Based on our reading of the data and discussions
with Company officials of the business judgments and business planning factors
relating to these changes, we believe management's justification to be
reasonable. Accordingly, we concur that the newly adopted accounting principles
described above are preferable in the Company's circumstances to the methods
previously applied.
/s/ COOPERS & LYBRAND L.L.P.
<PAGE> 1
EXHIBIT 21
THE DUN & BRADSTREET CORPORATION
LIST OF ACTIVE SUBSIDIARIES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
STATE OR OTHER % OWNERSHIP
JURISDICTION OF (100% EXCEPT
NAME ORGANIZATION AS NOTED)
---- ------------------------ ------------
<S> <C> <C>
D&B ESPANA S.A. Spain
DUN & BRADSTREET (SWITZERLAND) AG Delaware/Switzerland
DUN & BRADSTREET COMPUTER LEASING, INC. Delaware
Fillupar Leasing Partnership Delaware 98.00
DUN & BRADSTREET, INC. Delaware
Dun & Bradstreet RMS Franchise Corporation Delaware
Duns Holding, Inc. Delaware
D&B Acquisition Corp. Delaware
Corinthian Leasing Corporation Delaware
DUN & BRADSTREET INFORMATION SERVICES INDIA PVT. LTD. India
DUN & BRADSTREET INTERNATIONAL, LTD. Delaware
Dun & Bradstreet S.A. Argentina
Dun & Bradstreet (Australia) Holdings Pty. Australia
Dun & Bradstreet (Australia) Group Pty.
Ltd. Australia
Arrebnac Pty. Ltd. Australia
D&B Pty. Ltd. (Australia) Australia
College Mercantile Pty. Ltd. Australia
Dun & Bradstreet
(Australia) Pty.
Limited Australia
Dun & Bradstreet Unit Trust Australia
Moody's Investors Service Pty.
Limited Australia
Dun & Bradstreet Information Services Ges.mbH Austria
Dun & Bradstreet Canada Holding, Ltd. Canada
The D&B Companies of Canada Ltd. Canada
Dun & Bradstreet Do Brasil, Ltda. Delaware/Brazil
N.V. Dun & Bradstreet-Eurinform S.A. Delaware/Belgium
Dun & Bradstreet International Consultant
(Shanghai) Co. Ltd. China
D&B Group, Ltd. Delaware
D&B Europe Limited England
Dun & Bradstreet Limited England
Dun & Bradstreet
Limited Ireland
Dun &
Bradstreet
Finance Ltd. England
Dun & Bradstreet (U.K.) Ltd. England
Dun & Bradstreet
Pension Trustees
Ltd. England
Moody's Investors Service Ltd. England
Dun & Bradstreet Credit Control, Ltd. Delaware
Dun & Bradstreet (HK) Limited Hong Kong
Dun & Bradstreet Deutschland GmbH Germany
D&B Schimmelpfeng Unterstutzungskasse
GmbH Germany
Dun & Bradstreet Holdings B.V. The Netherlands
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
STATE OR OTHER % OWNERSHIP
JURISDICTION OF (100% EXCEPT
NAME ORGANIZATION AS NOTED)
---- ------------------------ ------------
<S> <C> <C>
DUN & BRADSTREET INTERNATIONAL, LTD. (CONTINUED)
</TABLE>
<TABLE>
STATE OR OTHER % OWNERSHIP
JURISDICTION OF (100% EXCEPT
NAME ORGANIZATION AS NOTED)
---- ------------------------ ------------
<S> <C> <C>
Dun & Bradstreet Kosmos S.p.A. Italy
Argus Situazioni Aziendali
S.r.1. Italy
Data Tech S.r.1. Italy
Orefro L'Informazione S.p.A. Italy
Consorzio
Manifatturieri
S.r.1. Italy
Ore. Tel S.r.L. Italy
Orefro Data S.r.1. Italy
Te.ma.Tel S.r.1. Italy
Dun & Bradstreet B.V. The Netherlands
Perfect Data International
N.V. The Netherlands Antilles
Perfect Data
Services B.V. The Netherlands
Dun & Bradstreet Holding (Norway) A/S Norway
Dun & Bradstreet Norge A/S Norway
Dun & Bradstreet Soliditet A/S Norway
Dun & Bradstreet (C&EE) Holding B.V. The Netherlands 80.00
Dun & Bradstreet spol s r.o. Czech Republic 80.00
Dun & Bradstreet Hungaria
Informacio Szogaltato
Korlatolt Felelosegu Tarasag Hungary 80.00
Dun & Bradstreet Poland sp.
zo.o. Poland 80.00
Dun & Bradstreet S.C.S. France
D&B Management S.A.S. France
Moody's France S.A. France
S&W S.A.S. France
Dun & Bradstreet Danmark Holding A/S Denmark
Dun & Bradstreet Denmark A/S Denmark
Dun & Bradstreet (Israel) Ltd. Israel
Dun & Bradstreet Japan Ltd. Japan
D&B Information Services (M) Sdn. Bhd. Malaysia
Dun & Bradstreet de Mexico S.A. de C.V. Mexico
Dun & Bradstreet (New Zealand) Limited New Zealand
Dun & Bradstreet S.A. Peru
Dun & Bradstreet Portugal, Ltda. Portugal
Dun & Bradstreet (Singapore) Pte. Ltd. Singapore
Dun & Bradstreet Nordic AB Sweden
Dun & Bradstreet Finland OY Finland
Dun & Bradstreet Sverige AB Sweden
Beheer en Beleggingsmaatschappij Stivaco B.V. The Netherlands
Dun & Bradstreet Zimbabwe (Private)
Limited Zimbabwe
DUNS INVESTING VII CORPORATION Delaware
DUNSNET INC. Delaware
Dun & Bradstreet Marketing Pty. Ltd. Australia
MOODY'S INVESTORS SERVICE, INC. Delaware
Financial Proformas, Inc. Delaware
Moody's Overseas Holdings, Inc. Delaware
Moody's Interbank Credit Services
Limited Cyprus
Moody's America Latina Ltda. Brazil
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
STATE OR OTHER % OWNERSHIP
JURISDICTION OF (100% EXCEPT
NAME ORGANIZATION AS NOTED)
---- ------------------------ ------------
<S> <C> <C>
MOODY'S INVESTORS SERVICE, INC. (CONTINUED)
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
PALMETTO ASSURANCE LTD. Bermuda
THE REUBEN H. DONNELLEY CORPORATION Delaware
Am-Don Partnership Illinois 50.00
The CenDon Partnership Illinois 50.00
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT 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, 33-64317, 333-15255,
333-40079 and 333-46615) and Form S-3 (File No. 333-40081) of our reports, which
include an explanatory paragraph regarding the Company's change in certain
revenue recognition accounting policies, dated February 13, 1998, on our audits
of the consolidated financial statements and financial statement schedule of The
Dun & Bradstreet Corporation at December 31, 1997 and 1996 and for the years
ended December 31, 1997, 1996 and 1995, which reports are incorporated by
reference or included in this Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND L.L.P.
New York, New York
March 19, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 81,838
<SECURITIES> 1,296
<RECEIVABLES> 583,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 898,276
<PP&E> 824,017
<DEPRECIATION> 481,335
<TOTAL-ASSETS> 2,151,849
<CURRENT-LIABILITIES> 2,135,063
<BONDS> 0
0
0
<COMMON> 188,421
<OTHER-SE> (678,590)
<TOTAL-LIABILITY-AND-EQUITY> 2,151,849
<SALES> 0
<TOTAL-REVENUES> 2,154,359
<CGS> 0
<TOTAL-COSTS> 526,442
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,415
<INCOME-PRETAX> 476,587
<INCOME-TAX> 165,606
<INCOME-CONTINUING> 310,981
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (150,557)
<NET-INCOME> 160,424
<EPS-PRIMARY> 0.94
<EPS-DILUTED> 0.93
</TABLE>
