<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1999
COMMISSION FILE NUMBER 1-13286
--------------
DUFF & PHELPS CREDIT RATING CO.
(Exact name of Registrant as specified in its Charter)
ILLINOIS 36-3569514
(State of Incorporation) (I.R.S. Employer
Identification No.)
55 EAST MONROE STREET, CHICAGO, ILLINOIS 60603 (312)368-3100
(Address of principal executive offices) (Registrant's telephone number)
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
--- ---
On August 6, 1999, the registrant had 4,612,326 shares of common stock
outstanding.
- -------------------------------------------------------------------------------
<PAGE>
DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES
Quarter Ended June 30, 1999
Index
<TABLE>
<S> <C>
PART I. - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Condensed Statements of Income 1
Three Months Ended June 30, 1999 and
Three Months Ended June 30, 1998
Consolidated Condensed Statements of Income 2
Six Months Ended June 30, 1999 and
Six Months Ended June 30, 1998
Consolidated Balance Sheets 3
June 30, 1999 and December 31, 1998
Consolidated Statements of Cash Flows 4
Six Months Ended June 30, 1999 and
Six Months Ended June 30, 1998
Notes to the Consolidated Financial Statements 5-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 9-11
AND RESULTS OF OPERATIONS
PART II. - OTHER INFORMATION
ITEM 4. SUBMISSION MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
</TABLE>
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
Three Months Three Months
Ended Ended
June 30, June 30,
1999 1998
----------------- -----------------
<S> <C> <C>
REVENUES (NOTE 1) $23,489 $21,512
EXPENSES
Employment expenses 9,888 8,710
Other operating expenses 3,807 4,202
Name use fee--paid to former parent (Note 2) 500 500
Depreciation and amortization (Note 1) 664 702
----------------- -----------------
Total expenses 14,859 14,114
OPERATING INCOME 8,630 7,398
Other income 121 31
Interest expense (Note 3) 86 52
----------------- -----------------
EARNINGS BEFORE INCOME TAXES 8,665 7,377
Income taxes 3,709 3,170
----------------- -----------------
NET EARNINGS $4,956 $4,207
----------------- -----------------
----------------- -----------------
Basic weighted average shares outstanding
(Note 1) 4,529 4,837
BASIC EARNINGS PER SHARE (NOTE 1) $1.09 $0.87
Diluted weighted average shares outstanding
(Note 1) 4,910 5,290
DILUTED EARNINGS PER SHARE (NOTE 1) $1.01 $0.80
</TABLE>
-1-
The accompanying notes to the consolidated financial statements are
an integral part of these statements.
<PAGE>
DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
Six Months Six Months
Ended Ended
June 30, June 30,
1999 1998
--------------- ----------------
<S> <C> <C>
REVENUES (NOTE 1) $45,684 $43,283
EXPENSES
Employment expenses 19,401 17,520
Other operating expenses 7,253 8,338
Name use fee--paid to former parent (Note 2) 1,000 1,000
Depreciation and amortization (Note 1) 1,344 1,378
--------------- ----------------
Total expenses 28,998 28,236
OPERATING INCOME 16,686 15,047
Other income 250 242
Interest expense (Note 3) 173 194
--------------- ----------------
EARNINGS BEFORE INCOME TAXES 16,763 15,095
Income taxes 7,183 6,482
--------------- ----------------
NET EARNINGS $9,580 $8,613
--------------- ----------------
--------------- ----------------
Basic weighted average shares outstanding
(Note 1) 4,543 4,827
BASIC EARNINGS PER SHARE (NOTE 1) $2.11 $1.78
Diluted weighted average shares outstanding
(Note 1) 4,954 5,241
DILUTED EARNINGS PER SHARE (NOTE 1) $1.93 $1.64
</TABLE>
-2-
The accompanying notes to the consolidated financial statements are
an integral part of these statements.
<PAGE>
DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
June 30, December 31,
ASSETS 1999 1998
---------------- ----------------
<S> <C> <C>
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,614 $ 618
Accounts receivable, net of allowance for doubtful
accounts of $574 and $494, respectively 15,108 11,611
Other current assets 1,285 1,197
---------------- ----------------
Total current assets 18,007 13,426
OFFICE FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
net of accumulated depreciation of $6,310 and $5,422,
respectively (Note 1) 4,622 4,880
OTHER ASSETS:
Goodwill and organization costs, net (Note 1) 21,409 21,742
Intangible assets, net (Note 1) 1,574 1,710
Other long-term investments 2,347 2,316
Other long-term assets 90 133
---------------- ----------------
TOTAL ASSETS $48,049 $44,207
---------------- ----------------
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued compensation and employment taxes $6,318 $10,767
Accounts payable 4,116 3,154
Current maturities of line of credit borrowings (Note 3) 3,000 1,500
Advance service fee billings to clients (Note 1) 723 1,166
Accrued income taxes (7) 228
Other current liabilities 23 5
---------------- ----------------
Total current liabilities 14,173 16,820
OTHER LONG-TERM LIABILITIES 3,906 2,585
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 3,000 shares authorized,
zero outstanding 0 0
Common stock, no par value; 15,000 shares authorized, 4,565 and
4,544 shares issued and outstanding, respectively 1,723 0
Retained earnings 28,247 24,802
---------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 29,970 24,802
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $48,049 $44,207
---------------- ----------------
---------------- ----------------
</TABLE>
-3-
The accompanying notes to the consolidated financial statements are
an integral part of these statements.
<PAGE>
DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
((Unaudited)
<TABLE>
Six Months Six Months
Ended Ended
June 30, June 30,
1999 1998
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 9,580 $ 8,613
Increase in accounts receivable (3,496) (3,925)
Decrease in accrued compensation and employment taxes (4,448) (1,801)
Increase (decrease) in advance service fee billings (443) 828
Depreciation and amortization 1,344 1,378
Increase in accrued income taxes 3,818 397
Increase in other assets and liabilities - net 2,265 591
-------------- ---------------
Cash provided by operating activities 8,620 6,081
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in other long-term investments (43) (150)
Purchase of office furniture, equipment
and leasehold improvements-net of retirements (630) (1,203)
-------------- ---------------
Cash used in investing activities (673) (1,353)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to shareholders (274) (289)
Decrease in deferred financing costs 16 11
Issuances of common stock 2,878 399
Repurchases of common stock (11,071) 0
Increase in line of credit borrowings 11,500 8,000
Decrease in line of credit borrowings (10,000) (13,500)
-------------- ---------------
Cash used in financing activities (6,951) (5,379)
-------------- ---------------
NET CHANGE IN CASH 996 (651)
-------------- ---------------
CASH, BEGINNING OF PERIOD 618 955
-------------- ---------------
CASH, END OF PERIOD $ 1,614 $ 304
-------------- ---------------
-------------- ---------------
</TABLE>
-4-
The accompanying notes to the consolidated financial statements are
an integral part of these statements.
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 SIGNIFICANT ACCOUNTING POLICIES:
GENERAL
Duff & Phelps Credit Rating Co. (the "Company") is an internationally
recognized credit rating agency that provides ratings and research on corporate,
structured and sovereign financings, as well as insurance claims paying ability.
The Company has offices in Chicago, New York, London, Hong Kong and Singapore
and operates directly or through international partners in North America, South
America, Europe, Asia and Africa.
On October 31, 1994, the spin-off of the Company from its former parent
company, Phoenix Investment Partners, Ltd., formerly Duff & Phelps Corporation
("D&P"), was finalized. The Company's shares, held by D&P, were distributed
October 31, 1994, to D&P shareholders of record on October 26, 1994, as a
tax-free distribution for which a favorable tax ruling was obtained from the
Internal Revenue Service. D&P shareholders received one of the Company's shares
for every three shares held of D&P common stock, and cash payments were made in
lieu of fractional shares. The distribution resulted in the Company operating as
a free-standing entity whose common stock is publicly traded on the New York
Stock Exchange under the ticker symbol "DCR."
BASIS OF PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates affect the reported amounts of assets, liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements. In addition, they affect the reported amounts of revenues and
expenses during the period. Actual results could differ from these estimates.
The accompanying consolidated financial statements have been prepared
in accordance with generally accepted accounting principles and include those
assets, liabilities, revenues and expenses directly attributable to the
Company's operations in the periods presented. Certain reclassifications have
been made to prior year financial statements to conform with the current
presentation.
PRINCIPLES OF CONSOLIDATION
During July 1994, the Company organized a U.S. subsidiary, Duff &
Phelps Credit Rating Co. of Europe, with an office located in London, England.
In July 1996, the Company organized a U.S. subsidiary, Duff & Phelps Credit
Rating Co. of Asia, which has offices in Hong Kong and Singapore. The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries, Duff & Phelps Credit Rating Co. of Europe and Duff &
Phelps Credit Rating Co. of Asia. All significant intercompany balances and
transactions have been eliminated.
EARNINGS PER SHARE
Earnings per share were computed using the weighted average number of
shares of common stock and common stock equivalents outstanding for each of the
periods presented. Common stock equivalents are based on outstanding stock
options under a non-qualified stock option plan.
-5-
<PAGE>
Following is a reconciliation of the denominator used to calculate
basic earnings per share to the denominator used to calculate diluted earnings
per share for the six month periods ended June 30 (in thousands):
<TABLE>
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Basic Weighted Average Shares Outstanding 4,543 4,827
Stock Options Outstanding 1,084 1,137
Reduction in Shares for Treasury Stock Proceeds (673) (723)
----- -----
Diluted Weighted Average Shares Outstanding 4,954 5,241
----- -----
----- -----
- -------------------------------------------------------------------------------
</TABLE>
REVENUE RECOGNITION
Rating revenues are typically recognized when services rendered for
credit ratings are complete, generally when billed. Revenues are dependent, in
large part, on levels of debt issuance. The Company's fee schedule depends on
the type and amount of securities rated and the complexity of securities issued.
Research revenues are billed in advance and amortized over the subscription
period. Certain monitoring fees are billed in advance and are amortized over the
length of the life of the security.
GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets are shown net of accumulated
amortization. Goodwill is amortized over its estimated remaining life of
approximately 29 years, and intangible assets are amortized over remaining lives
of one through 10 years.
The Company periodically evaluates whether significant events have
occurred that may require a revision of the estimated useful life of goodwill
and intangible assets or an impairment of the recoverability of remaining
balances. The Company uses an estimate of future undiscounted cash flows over
the remaining useful life of goodwill and intangible assets to measure
recoverability. Management believes that the full amount of goodwill and
intangible assets is recoverable.
DEPRECIATION AND AMORTIZATION
Office furniture and equipment are stated at cost less accumulated
depreciation and are depreciated on a straight-line basis over the estimated
remaining lives of the assets, typically three to 10 years. Leasehold
improvements are amortized over the remaining lives of the related leases which
are one to 10 years.
2 RELATED PARTIES:
NAME USE FEES PAID TO D&P
A name use fee agreement in effect between the Company and the former
parent requiring payment of $2.0 million per year is included in the Company's
financial results for the periods presented. Effective September 30, 2000, the
name use fee reduces to $10,000 per year.
SERVICE FEES PAID TO THE COMPANY
The Company provides the former parent with fixed-income research
services for an annual fee of $0.9 million. For the periods presented, the
fixed-income research fees are included in revenue. The fixed-income research
agreement expires on September 30, 2000.
-6-
<PAGE>
3 LINE OF CREDIT AND LONG-TERM DEBT:
At June 30, 1999, the Company had current debt obligations of $3.0
million, at an approximate interest rate of 5.5 percent due on December 31,
1999, under the Company's $20.0 million revolving credit facility. At June 30,
1998, long-term debt totaled $1.5 million at a weighted average interest rate of
approximately 6.1 percent.
The credit agreement contains financial covenants that require the
Company to maintain certain ratios and satisfy certain financial tests,
including restrictions on the ability to incur indebtedness and limitations on
the amount of capital expenditures, common stock dividends and advances to
subsidiaries. The Company was in compliance with such covenants for all periods
presented.
4 LITIGATION MATTERS:
The Company and its subsidiaries are from time to time parties to
various legal actions arising in the normal course of business. Management
believes that there are no proceedings pending against the Company or any of its
subsidiaries which, if determined adversely, would have a material adverse
effect on the financial condition or results of operations of the Company.
5 SEGMENT INFORMATION:
The primary business of the Company is to provide credit ratings on
domestic and international corporate bonds, sovereign bonds, preferred stocks,
commercial paper, certificates of deposit, structured financings and insurance
company claims paying ability. To assess performance of the Company, executive
management regularly reviews the financial statements on a consolidated basis.
In addition, executive management reviews revenues by major service type on a
consolidated basis.
The following table presents, on an enterprise wide-basis, revenues by
service type and revenues and long-lived assets by geographic area for the
six-month periods ended June 30 (in thousands):
<TABLE>
1999 1998
- ----------------------------------------------------------------
<S> <C> <C>
REVENUES BY SERVICE TYPE
Corporate Rating Revenues $21,264 $20,518
Structured Finance Rating Revenues 22,814 21,150
Research Revenues 1,606 1,615
------- -------
Consolidated Total 45,684 43,283
------- -------
------- -------
GEOGRAPHIC REVENUES
United States 37,149 35,802
International 8,535 7,481
------- -------
Consolidated Total 45,684 43,283
------- -------
------- -------
LONG-LIVED ASSETS
United States 29,191 30,363
International 851 864
------- -------
Consolidated Total 30,042 31,327
------- -------
------- -------
- ----------------------------------------------------------------
</TABLE>
-7-
<PAGE>
6 SUPPLEMENTAL CASH FLOW INFORMATION:
For purposes of the consolidated statements of cash flows, the Company
considers investments with maturities of three months or less to be cash
equivalents.
Net cash interest and fees paid were $0.2 million for the six months
ended June 30, 1999 and 1998.
Income taxes paid were $3.3 million in the first half of 1999 and $6.1
million in the first half of 1998.
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999, COMPARED WITH THREE MONTHS ENDED JUNE 30, 1998
Revenues for the three months ended June 30, 1999, were $23.5 million,
an increase of 9 percent from the $21.5 million recorded in 1998. Corporate
rating revenues totaled $10.8 million, and structured finance rating revenues
increased to $11.9 million, while other revenues were $.8 million.
Structured finance revenues increased 13 percent in the second quarter
of 1999 versus 1998, while corporate rating revenues increased 7 percent.
Structured finance revenues were driven by high levels of asset-backed and
commercial mortgage-backed transactions. Corporate rating revenue increases were
primarily the result of additional financing activity by financial corporations
and strength in global power business. International revenues, which are
included in the above comparisons, increased 17 percent as a result of strong
growth in DCR's European market and an improvement in the Asian economic
environment.
Operating expenses for the three months ended June 30, 1999, were $14.9
million, an increase of $0.8 million or 5 percent from the comparable 1998
period. This primarily reflected higher compensation costs due to business
growth offset by lower general and administrative expenses.
Operating income for the three months ended June 30, 1999, was $8.6
million, an increase of $1.2 million, or 16 percent, over the $7.4 million
recorded in 1998.
Interest expense increased slightly for the second quarter 1999, due to
a higher debt balance in 1999 versus 1998. Other income increased nominally and
is derived from the Company's international partnerships.
Income tax expense increased proportionately with pre-tax income.
Net earnings totaled $5.0 million for the period ended June 30, 1999, a
$0.8 million, or 19 percent, increase over last year. Diluted earnings per share
increased 26 percent to $1.01 versus $0.80 in 1998. Basic earnings per share
increased to $1.09 in 1999 versus $0.87 in 1998. Earnings per share gains are
the result of the performance described above in addition to the reduction in
weighted average shares outstanding as a result of the Company's stock
repurchases.
SIX MONTHS ENDED JUNE 30, 1999, COMPARED WITH
SIX MONTHS ENDED JUNE 30, 1998
Revenues for the six months ended June 30, 1999, were $45.7 million, an
increase of 6 percent or $2.4 million, over the $43.3 million recorded in the
corresponding period in 1998. Corporate rating revenues totaled $21.3 million
and structured rating revenues totaled $22.8 million for the first six months of
1999, while other revenues totaled $1.6 million.
Revenues in the first half of 1999 increased despite the tremendous
growth experienced in the first half of 1998. Rating revenues were favorably
impacted by an 8 percent increase in structured rating revenues and a 4 percent
increase in corporate rating revenues. International rating revenues, which are
incorporated in the above comparisons and contributed to the overall gains,
increased 14 percent over last year.
-9-
<PAGE>
Operating expenses for the first half of 1999, were $29.0 million, an
increase of $0.8 million over $28.2 million reported in 1998. This increase
primarily reflects higher compensation costs due to business growth offset in
part by lower professional service fees and travel and bad debt expenses. The
latter cost was impacted by weaknesses in the developing markets which
necessitated a higher receivable reserve in the 1998 period.
Operating income for the six months ended June 30, 1999, was $16.7
million, an increase of $1.6 million or 11 percent over the $15.1 million
recorded in 1998.
Interest expense decreased nominally in the first half of 1999
primarily due to a lower interest rate. Income tax expense increased in line
with pre-tax income.
Net earnings totaled $9.6 million for the six months ended June 30,
1999, a $1.0 million or 11 percent increase over last year. Diluted earnings per
share increased 18 percent to $1.93 versus $1.64 in 1998. Basic earnings per
share increased to $2.11 in 1999 versus $1.78 in 1998. Earnings per share gains
are primarily the result of the performance described above in addition to the
reduction in weighted average shares outstanding due to the Company's stock
repurchase of 347,355 common shares in 1998 and 206,300 shares in the first six
months of 1999. Since the inception of the Company's repurchase program, a total
of 1,730,884 shares have been repurchased as of June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company has typically financed its operations, which do not require
significant amounts of working capital or capital expenditures, through funds
provided by operations.
For the six months ended June 30, 1999 and 1998, capital expenditures,
net of retirements totaled $0.6 million and $1.2 million, respectively. These
capital expenditures were primarily for leasehold improvements, computer
equipment and office furniture. The Company expects capital expenditures to
approximate $2.0 million in 1999. Other cash investments for the second quarter
included payments for ownership shares in certain joint ventures.
Financing activities for the six months ended June 30, 1999, included
stock repurchases of 206,300 common shares amounting to $11.1 million and
dividend payments totaling approximately $0.3 million. Future share repurchases
are contingent upon the Company's financial condition, capital requirements and
earnings, as well as the market price and availability of the Company's common
stock.
The Company has in place a $20.0 million revolving bank credit
agreement that expires December 31, 1999. At June 30, 1999, $3.0 million was
outstanding and current at a weighted average interest rate of 5.5 percent. At
June 30, 1998, long-term debt totaled $1.5 million at a weighted average
interest rate of 6.1 percent. Commitment fees are accrued on the unused facility
at an annual rate of 0.25 percent and are paid quarterly.
The Company is currently in the process of renegotiating the credit
line due to its upcoming expiration.
The bank credit agreement contains the following financial covenants
among others: (i) a minimum net worth test; (ii) a maximum leverage test; and
(iii) a limitation on indebtedness and capital expenditures. The Company is
currently in compliance with such covenants. The bank credit agreement also
imposes certain restrictions on sale of assets, mergers or consolidations,
creation of liens, investments, leases and loans and certain other matters.
The Company believes that funds provided by operations and amounts
available under its credit agreement will provide adequate liquidity for the
foreseeable future.
-10-
<PAGE>
SEGMENT REPORTING
The primary business of the Company is to provide credit ratings on
domestic and international corporate bonds, sovereign bonds, preferred stocks,
commercial paper, certificates of deposit, structured financings and insurance
company claims paying ability. To assess performance of the Company, executive
management regularly reviews the financial statements on a consolidated basis.
In addition, executive management reviews revenues by major service type on a
consolidated basis. See Note 5 to the Consolidated Financial Statements, Segment
Information, for the Company's disclosures regarding segment reporting.
MARKET RISK
As of June 30, 1999, only 10 percent of the Company's total assets were
located outside of the United States. International revenues totaled
approximately 18 percent of the Company's total revenues for the first half
1999. The majority of the revenue was invoiced in U.S. dollars. The Company
feels that any exposure to loss due to foreign exchange rate fluctuations is
minimal and immaterial to the financial statements at this time; therefore, the
Company has not entered into any hedging transactions.
The Company's exposure to changes in interest rates is limited to
borrowings under the current line of credit. Management believes that any
potential losses due to interest rate fluctuations would be minimal and
immaterial to the financial statements based on current loan levels; therefore,
the Company has not entered into any interest rate swap agreements.
YEAR 2000
The Year 2000 issue is the result of computer programs using a
two-digit format instead of four digits to indicate years, which could cause a
system failure or other computer errors in connection with Year 2000 computing.
The Company is taking steps to ensure that all systems will be fully compliant
with Year 2000 requirements. The Company has adopted a Year 2000 compliance
program and is currently in the assessment and renovation phases of such
program. Certain material software applications, including all internally
developed mission critical systems, are already fully compliant. The Company has
fully replaced or updated nearly all non-compliant systems provided by third
parties and used within the Company.
The Company is soliciting written assurances from outside vendors and
other third parties that their software and other products will be
century-compliant.
Ultimately, critical vendors who cannot give adequate reassurances of
their readiness will be replaced. The Company believes that substantially all
its systems will be in compliance prior to the commencement of the Year 2000.
Nevertheless, the Company is currently developing a contingency plan. The cost
to ensure compliance is estimated to be immaterial to the results of operations
at this time.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains forward-looking statements that are subject to
risks and uncertainties, including but not limited to the following: the
Company's performance is highly dependent on corporate debt issuances and
structured finance transactions, which may decrease for any number of reasons,
including changes in interest rates and adverse economic conditions; the
Company's performance is affected by the demand for and market acceptance of the
Company's services; and the Company's performance may be impacted by changes in
the performance of the financial markets and general economic conditions.
Accordingly, actual results may differ materially from those set forth in the
forward-looking statements. Attention is also directed to other risk factors set
forth in documents filed by the Company with the Securities and Exchange
Commission.
-11-
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On May 11, 1999 an annual meeting of stockholders was held.
(b) Each of the five nominees for director were elected by a majority of
shareholders' votes to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified.
The directors elected were Paul J. McCarthy, Philip T. Maffei, Milton
L. Meigs, Jonathan Ingham and Robert N. Westerlund.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
Exhibit No. Description
<S> <C>
27 Financial Data Schedule
</TABLE>
-12-
<PAGE>
SIGNATURE
Pursuant to the requirements 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.
Duff & Phelps Credit Rating Co.
August 13, 1999
/s/ Marie C. Becker
--------------------------------------------
Marie C. Becker
Group Vice President, Accounting & Finance
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENT OF OPERATION FOUND ON
PAGES 1 & 2 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,614
<SECURITIES> 0
<RECEIVABLES> 15,108
<ALLOWANCES> 574
<INVENTORY> 0
<CURRENT-ASSETS> 18,007
<PP&E> 4,622
<DEPRECIATION> 6,310
<TOTAL-ASSETS> 48,049
<CURRENT-LIABILITIES> 14,713
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,970
<TOTAL-LIABILITY-AND-EQUITY> 48,049
<SALES> 0
<TOTAL-REVENUES> 45,684
<CGS> 0
<TOTAL-COSTS> 28,998
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 173
<INCOME-PRETAX> 16,763
<INCOME-TAX> 7,183
<INCOME-CONTINUING> 9,580
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,580
<EPS-BASIC> 2.11
<EPS-DILUTED> 1.93
</TABLE>
