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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1996
[ ] 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 1-13286
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DUFF & PHELPS CREDIT RATING CO.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
ILLINOIS 36-3569514
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
55 East Monroe Street 60603
Chicago, Illinois (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (312) 368-3100
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Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of each class Name of each exchange on which registered
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Common Stock, without par value 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 to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 21, 1997, computed by reference to the last reported
price at which the stock was sold on such date, was $127,244,843.
The number of shares outstanding of the registrant's common stock, without
par value, as of March 21, 1997 was 5,084,416.
<TABLE>
<S> <C>
Portions of the following documents are incorporated Part of this Form 10-K into which the document
by reference into this Form 10-K: is incorporated by reference:
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Duff & Phelps Credit Rating Co.
Proxy Statement dated March 28, 1997 Part III
</TABLE>
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. FINANCIAL STATEMENTS
(a) Duff & Phelps Credit Rating Co. Employees Savings Plan Financial
Statements
The Financial Statements of Duff & Phelps Credit Rating Co.
Employees Savings Plan together with the report thereon of Arthur
Andersen LLP, consisting of:
Report of Independent Public Accountants
Statement of Net Assets Available for Plan Benefits - December
31, 1996
Statement of Changes in Net Assets Available for Plan Benefits,
With Fund Information - For the Year Ended December 31, 1996
Notes to Financial Statements
3. EXHIBITS
Exhibit No. Description
----------- ------------
23 Consent of Arthur Andersen LLP.
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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 on the 27th day
of June, 1997.
DUFF & PHELPS CREDIT RATING CO.
By /s/ Ernest T. Elsner
------------------------------------------
Ernest T. Elsner
Executive Vice President & General Counsel
3
<PAGE>
DUFF & PHELPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULES
AS OF DECEMBER 31, 1996
TOGETHER WITH AUDITORS' REPORT
EMPLOYER IDENTIFICATION NUMBER: 36-3569514
PLAN NUMBER: 001
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Benefit Committee of
Duff & Phelps Credit Rating Co.:
We have audited the accompanying statement of net assets available for plan
benefits of the DUFF & PHELPS CREDIT RATING CO. EMPLOYEES SAVINGS PLAN (the
"Plan") as of December 31, 1996, and the related statement of changes in net
assets available for plan benefits, with fund information, for the year then
ended. These financial statements and the schedules referred to below are
the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audit.
We conducted our audit 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
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Duff &
Phelps Credit Rating Co. Employees Savings Plan as of December 31, 1996, and
the changes in its net assets available for plan benefits for the year then
ended in conformity with generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements take as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for
the purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The fund
information in the statement of changes in net assets available for plan
benefits, with fund information, is presented for the purposes of additional
analysis rather than to present the changes in net assets available for plan
benefits of each fund. The supplemental schedules and fund information have
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 24, 1997
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DUFF & PHLEPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
As of December 31, 1996
INVESTMENTS:
Investments, at fair value (Note 3)-
Company Stock Funds-
Duff & Phelps Credit Rating Co. Common
Stock Fund $ 2,194,364
Phoenix Duff & Phelps Corp. Common Stock
Fund 297,306
Money Market Mutual Funds-
Vanguard Prime Money Market Fund 818,546
Stock Mutual Funds-
Neuberger & Berman Guardian Fund 3,246,100
Fidelity Magellan Fund 431,679
Pioneer Capital Growth Fund 923,086
EuroPacific Growth Fund 627,018
Bond Mutual Funds-
Vanguard Bond Index Total Bond Fund 1,246,714
Loans to participants 160,213
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 9,945,026
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The accompanying notes are an integral part of this statement.
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DUFF & PHLEPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VANGUARD
NEUBERGER & PRIME
BERMAN FIDELITY PIONEER EUROPACIFIC MONEY
GUARDIAN MAGELLAN CAPITAL GROWTH MARKET
FUND FUND GROWTH FUND FUND FUND
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income-
Net appreciation (depreciation) in
fair value of investments $ 217,853 $ 3,935 $ 6,185 $ 27,201 $ -
Dividends 389,267 23,428 28,834 19,968 42,321
Interest - - - - -
---------- --------- --------- -------- --------
607,120 27,363 35,019 47,169 42,321
---------- --------- --------- -------- --------
Contributions-
Transfer from previous plan (Note 1) 3,249,446 - - - 678,345
Participants' (including rollovers) 269,857 257,598 271,561 148,045 83,125
Employer's 75,363 69,531 74,988 40,084 23,368
--------- -------- -------- -------- --------
Total additions 4,201,786 354,492 381,568 235,298 827,159
--------- -------- -------- -------- --------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants 323,559 17,314 5,927 1,011 11,291
--------- -------- -------- ------- --------
NET INCREASE PRIOR TO INTERFUND
TRANSFERS AND LOAN ACTIVITY, net 3,878,227 337,178 375,641 234,287 815,868
INTERFUND TRANSFERS AND LOAN
ACTIVITY, net (632,127) 94,501 547,445 392,731 2,678
----------- --------- -------- ------- ---------
Net increase 3,246,100 431,679 923,086 627,018 818,546
NET ASSETS AVAILABLE FOR PLAN
BENEFITS:
Beginning of year - - - - -
---------- -------- -------- -------- --------
End of year $3,246,100 $431,679 $923,086 $627,018 $818,546
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
PHOENIX DUFF & DUFF & PHELPS
VANGUARD PHELPS CORP. CREDIT RATING CO.
BOND INDEX COMMON COMMON
TOTAL STOCK STOCK PARTICIPANT
BOND FUND FUND FUND LOANS TOTAL
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income-
Net appreciation (depreciation) in
fair value of investments $ (21,744) $ (7,458) $ 766,419 $ - $ 992,391
Dividends 66,704 11,745 8,356 - 590,623
Interest - - - 14,781 14,781
---------- -------- ---------- -------- ----------
44,960 4,287 774,775 14,781 1,597,795
---------- -------- ---------- -------- ----------
Contributions-
Transfer from previous plan (Note 1) 1,388,508 463,803 1,018,819 200,353 6,999,274
Participants' 78,130 - 238,200 - 1,346,516
Employer's 31,283 - 85,554 - 400,171
---------- -------- ---------- -------- ----------
Total additions 1,542,881 468,090 2,117,348 215,134 10,343,756
---------- -------- ---------- -------- ----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants 10,507 2,660 18,522 7,939 398,730
---------- -------- ---------- -------- ----------
NET INCREASE PRIOR TO INTERFUND
TRANSFERS AND LOAN ACTIVITY, net 1,532,374 465,430 2,098,826 207,195 9,945,026
INTERFUND TRANSFERS AND LOAN
ACTIVITY, net (285,660) (168,124) 95,538 (46,982) -
---------- -------- ---------- -------- ----------
Net increase 1,246,714 297,306 2,194,364 160,213 9,945,026
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year - - - - -
---------- -------- ---------- -------- ----------
End of year $1,246,714 $297,306 $2,194,364 $160,213 $9,945,026
---------- -------- ---------- -------- ----------
---------- -------- ---------- -------- ----------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
DUFF & PHELPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. PLAN DESCRIPTION
The Duff & Phelps Credit Rating Co. Employees Savings Plan (the "Plan") was
established effective January 1, 1996, by Duff & Phelps Credit Rating Co.
(the "Company"), as a defined contribution plan covering substantially all
employees of the Company. The following description of the Plan provides
only general information. Participants should refer to the Plan document
for a more complete description of the Plan's provisions.
CONVERSION FROM PHOENIX DUFF & PHELPS CORPORATION
On October 31, 1994, the spin-off of the Company from its former parent
company, Phoenix Duff & Phelps Corporation ("D&P") was finalized. Until
December 31, 1995, employees of the Company were eligible to participate in
D&P's defined contribution savings plan. On January 1, 1996, the Duff &
Phelps Credit Ratings Co. Employees Savings Plan was created, and all
Company participant accounts within D&P's plan were transferred in a tax-
free rollover to the Plan.
PLAN ELIGIBILITY
Company employees who complete at least 501 hours of service in the plan
year are eligible to contribute to the Plan.
EMPLOYEE CONTRIBUTIONS
Participants may contribute between 1% and 15% of their pre-tax
compensation to the Plan, up to a maximum amount determined by Internal
Revenue Code (the "IRC") section 401(k). For 1996, this maximum
contribution was $9,500. Participants cannot make further "voluntary"
contributions to the Plan.
COMPANY CONTRIBUTIONS
Company contributions are made by matching 100% of each participant's
contributions, up to 3% of the participants eligible compensation per the
IRC. For 1996, the amount of eligible compensation was $150,000.
VESTING
Employees vest immediately upon commencement of service.
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BENEFIT DISTRIBUTIONS
Benefits are distributed upon the earliest of either termination, death, or
disability in a single lump-sum payment or in installment payments over the
life expectancy of the participant, as elected by the participant or the
participant's beneficiary.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan. In the event of termination, the participants will be
entitled to receive the vested balances in their accounts after payment of
all expenses.
TRUSTEE
The Plan's trustee is the Wilmington Trust Company. Substantially all of
the Plan's assets have been allocated to and invested in selected fixed
income, equity and company stock funds at the discretion of each
participant.
2. TAX STATUS
On September 13, 1996, the Plan requested a determination letter from the
Internal Revenue Service stating that the Plan, as written, is in
compliance with the requirements of the IRC. The Plan's management and
administrator believes that the Plan is currently designed and operated in
compliance with the applicable requirements of the IRC and is tax-exempt.
3. ACCOUNTING POLICIES AND PROCEDURES
The accompanying financial statements and schedules have been prepared in
conformity with generally accepted accounting principles, and the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The books and
records of the Plan are maintained on the accrual basis of accounting.
Investments in mutual funds are carried at fair market value as determined
by each mutual fund's net asset value. Investments in common stocks are
carried at fair market value as determined by the stock's quoted market
value on a recognized securities exchange. Loans to participants are
carried at their unpaid principal balance.
All of the costs of administration of the Plan are paid by the Company.
Benefit payments to eligible participants are made by the trustee upon
instruction from the plan administrator.
Net realized and unrealized appreciation (depreciation) is recorded in the
accompanying statement of changes in net assets available for plan
benefits, with fund information, as net appreciation (depreciation) in fair
value of investments.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2
<PAGE>
4. INVESTMENTS
The contract or fair value of individual investments that represent 5% or
more of net Plan assets as of December 31, 1996, are as follows:
Mutual Funds-
Vanguard Prime Money Market Fund $ 818,546
Vanguard Bond Index Total Bond Fund $ 1,246,714
Neuberger & Berman Guardian Fund $ 3,246,100
Pioneer Capital Growth Fund $ 923,086
EuroPacific Growth Fund $ 627,018
Common Stock Funds-
Duff & Phelps Credit Rating Co. Common Stock Fund $ 2,194,364
5. INVESTMENT FUND DESCRIPTION
The amounts contributed by the Company and participants are invested in the
following investment fund alternatives as selected by participants:
a. VANGUARD PRIME MONEY MARKET FUND--This fund seeks the maximum current
income that is consistent with the preservation of capital and
liquidity.
b. VANGUARD BOND INDEX TOTAL BOND FUND--This fund seeks to replicate the
total return of the Lehman Brothers Aggregate Bond Index.
c. NEUBERGER & BERMAN GUARDIAN FUND--This fund provides an opportunity for
capital appreciation through investments in well-established companies.
d. FIDELITY MAGELLAN FUND--This fund seeks capital appreciation through
investments in a mix of large, medium and small company stocks.
e. PIONEER CAPITAL GROWTH FUND--This fund seeks capital appreciation
through investments in small stocks that may have a potential value
exceeding their current price.
f. EUROPACIFIC GROWTH FUND--This fund seeks long term capital growth
through investments in non-U.S. companies primarily in Europe and the
Pacific Basin.
g. DUFF & PHELPS CREDIT RATING CO. STOCK FUND--This fund invests solely in
the common stock of Duff & Phelps Credit Rating Co.
h. PHOENIX DUFF & PHELPS CORP. STOCK FUND--This fund invests solely in the
common stock of Phoenix Duff & Phelps Corp. and consists entirely of
investments transferred from the Phoenix Duff & Phelps Corp. Employees
Savings Plan into the Plan. Participants may not contribute additional
funds to this fund.
3
<PAGE>
6. FAIR VALUES OF FINANCIAL INSTRUMENTS
Since all of the investments held by the Plan are based on either quoted
market value (for common stock held) or quoted net asset value (for mutual
funds), the fair value of investments held equals their carrying value in
the financial statements.
4
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SCHEDULE I
DUFF & PHELPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of December 31, 1996
(Employer Identification Number 36-3569514)
<TABLE>
<CAPTION>
HISTORICAL CURRENT
INVESTMENT UNITS COST VALUE
<S> <C> <C> <C>
Vanguard Money Market Fund* 816,120.32 $ 818,546 $ 818,546
Vanguard Bond Index Total Bond Fund* 126,004.651 $ 1,259,891 $ 1,246,714
Neuberger & Berman Guardian Fund* 126,652.075 $ 3,033,008 $ 3,246,100
Fidelity Magellan Fund 5,352.508 $ 422,312 $ 431,679
Pioneer Capital Growth Fund* 44,892.194 $ 919,698 $ 923,086
EuroPacific Growth Fund* 24,079.029 $ 600,031 $ 627,018
Duff & Phelps Credit Rating Co. Common Stock
Fund* ** 90,842 $ 1,018,730 $ 2,194,364
Phoenix Duff & Phelps Corp. Common Stock
Fund* 41,686 $ 331,233 $ 297,306
Loans to Participants (interest rates ranging
from 6.0% to 9.0%) - $ 160,213 $ 160,213
</TABLE>
* Represents more than 5% of net assets available for Plan benefits
as of December 31, 1996.
** Party in interest
<PAGE>
Schedule II
DUFF & PHELPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1996
(Employer Identification Number 36-3569514)
<TABLE>
<CAPTION>
NET
NUMBER OF PURCHASE SELLING COST OF GAIN
INVESTMENT TRANSACTIONS PRICE PRICE ASSET (LOSS)
<S> <C> <C> <C> <C> <C>
Vanguard Prime Money Market
Fund 52 $1,006,241 $ 211,065 $ 211,063 $ 2
Vanguard Bond Index Total Bond
Fund 51 $1,572,054 $ 341,790 $ 350,388 $(8,598)
Neuberger & Berman Guardian
Fund 64 $3,916,605 $1,037,805 $1,013,210 $24,595
Fidelity Magellan Fund 71 $ 425,351 $ 70,125 $ 75,556 $(5,431)
Pioneer Capital Growth Fund 83 $ 963,674 $ 75,598 $ 72,810 $ 2,788
EuroPacific Growth Fund 79 $ 579,546 $ 19,813 $ 19,599 $ 214
Duff & Phelps Credit Rating Co.
Common Stock Fund* 93 $ 476,236 $ 123,864 $ 56,522 $67,342
</TABLE>
* Party in interest
NOTE: This schedule was prepared in accordance with the rules and
regulations of the Employee Retirement Income Security Act
of 1974 to report all transactions involving the same issue
which individually or in the aggregate exceed 5% of the net
assets of the Plan at the beginning of the year. The
original cost for purchases and proceeds for sales equaled
the current market value of such investments as of the
transaction date.
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated June 24, 1997, on Duff & Phelps Credit Rating Co. Employees
Savings Plan's financial statements, included in this Form 10-K/A, into Duff
& Phelps Credit Rating Co.'s previously filed Registration Statement File No.
33-88186.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 24, 1997
