<PAGE>
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, 1998
[ ] 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)
ILLINOIS 36-3569514
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 East Monroe Street 60603
Chicago, Illinois (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (312) 368-3100
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, without par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required 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 19, 1999, computed by reference to the last reported
price at which the stock was sold on such date, was $234,810,791.
The number of shares outstanding of the registrant's common stock, without
par value, as of March 19, 1999 was 4,549,229.
Portions of the following documents Part of this Form 10-K into which the
are incorporated by document is incorporated
reference into this Form 10-K: by reference:
- ----------------------------------- --------------------------------------
Duff & Phelps Credit Rating Co.
Proxy Statement dated March 31, 1999 Part III
<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 Anderson LLP, consisting of:
Report of Independent Public Accountants
Statement of Net Assets Available for Plan Benefits -
December 31, 1998
Statement of Changes in Net Assets Available for Plan
Benefits, With Fund Information - For the Year Ended
December 31, 1998
Notes to Financial Statements
3. EXHIBITS
Exhibit
No. Description
- ------- -----------
23 Consent of Arthur Andersen LLP.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized on
the 25th day of June, 1999.
DUFF & PHELPS CREDIT RATING CO.
By /s/ Marie C. Becker
---------------------------
Marie C. Becker
Group Vice President, Accounting & Finance
3
<PAGE>
DUFF & PHELPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULES
AS OF DECEMBER 31, 1998 AND 1997
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, 1998, and 1997, and the related statement of
changes in net assets available for plan benefits, with fund information, for
the year ended December 31, 1998. 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 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
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 net assets available for plan benefits as of
December 31, 1998 and 1997, and the changes in its net assets available for
plan benefits for the year ended December 31, 1998, 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 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.
Chicago, Illinois
June 18, 1999
<PAGE>
DUFF & PHLEPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1998 AND 1997
(EMPLOYER IDENTIFICATION NUMBER 36-3569514, PLAN NUMBER 001)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
INVESTMENTS:
Investments, at fair value (Note 3)-
Company Stock Funds-
Duff & Phelps Credit Rating Co. Common Stock Fund $ 5,170,162 $ 3,718,850
Phoenix Investment Partners, Ltd. Common Stock Fund 221 227,426
Money Market Mutual Funds-
Vanguard Prime Money Market Fund 1,183,271 807,039
Stock Mutual Funds-
Neuberger & Berman Guardian Fund 2,956,276 4,171,302
Fidelity Magellan Fund 1,666,410 919,772
Pioneer Capital Growth Fund 1,047,427 1,036,600
EuroPacific Growth Fund 936,388 923,663
Vanguard Index 500 Fund 1,617,388 0
Bond Mutual Funds-
Vanguard Bond Index Total Bond Fund 1,493,553 1,506,515
Loans to participants 124,523 189,979
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $16,195,619 $13,501,146
----------- -----------
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</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
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, 1998
(PARTICIPANT DIRECTED)
(EMPLOYER IDENTIFICATION NUMBER 36-3569514, PLAN NUMBER 001)
<TABLE>
<CAPTION>
PHOENIX
VANGUARD INVESTMENT
NEUBERGER & PRIME VANGUARD PARTNERS, LTD.
BERMAN FIDELITY PIONEER EUROPACIFIC MONEY BOND INDEX COMMON
GUARDIAN MAGELLAN CAPITAL GROWTH MARKET TOTAL STOCK
FUND FUND GROWTH FUND FUND FUND BOND FUND FUND
----------- ---------- ----------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income-
Net appreciation (depreciation) in
fair value of investments $ (120,479) $ 384,214 $ (29,776) $ 144,390 $ - $ 27,484 $ (37,539)
Dividends 31,990 8,683 997 12,725 47,898 88,824 4,951
Interest - - - - - - -
----------- ---------- ----------- --------- ---------- ----------- ----------
Total investment income (88,489) 392,897 (28,779) 157,115 47,898 116,308 (32,588)
----------- ---------- ----------- --------- ---------- ----------- ----------
Contributions-
Participants' (including rollovers) 250,126 183,765 190,665 123,342 265,278 85,988 -
Employer's 161,621 106,532 41,711 33,814 27,686 32,015 -
----------- ---------- ----------- --------- ---------- ----------- ----------
Total additions 411,747 290,297 232,376 157,156 292,964 118,003 -
----------- ---------- ----------- --------- ---------- ----------- ----------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 522,222 118,077 85,495 87,808 223,322 72,816 436
----------- ---------- ----------- --------- ---------- ----------- ----------
NET INCREASE/(DECREASE) PRIOR TO INTERFUND
TRANSFERS AND LOAN ACTIVITY, net (198,964) 565,117 118,102 226,463 117,540 161,495 (33,024)
INTERFUND TRANSFERS AND LOAN ACTIVITY,
net (1,016,062) 181,521 (107,275) (213,738) 258,692 (174,457) (194,181)
----------- ---------- ----------- --------- ---------- ----------- ----------
Net increase (decrease) (1,215,026) 746,638 10,827 12,725 376,232 (12,962) (227,205)
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year $ 4,171,302 $ 919,772 $ 1,036,600 $923,663 $807,039 $ 1,506,515 $ 227,426
----------- ---------- ----------- --------- ---------- ----------- ----------
End of year $ 2,956,276 $1,666,410 $ 1,047,427 $ 936,388 $1,183,271 $ 1,493,553 $ 221
----------- ---------- ----------- --------- ---------- ----------- ----------
----------- ---------- ----------- --------- ---------- ----------- ----------
<CAPTION>
DUFF & PHELPS
CREDIT RATING CO.
COMMON VANGUARD
STOCK INDEX 500 LOANS TO
FUND FUND PARTICIPANT TOTAL
---------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income-
Net appreciation (depreciation) in
fair value of investments $ 1,321,571 $ 239,027 $ - $ 1,928,892
Dividends 11,383 7,318 - 214,769
Interest - - 3,065 3,065
----------- ------------ ---------- ------------
Total investment income 1,332,954 246,345 3,065 2,146,726
----------- ------------ ---------- ------------
Contributions-
Participants' (including rollovers) 334,344 9,137 - 1,442,645
Employer's 121,726 34,207 - 559,312
----------- ------------ ---------- ------------
Total additions 456,070 43,344 - 2,001,957
----------- ------------ ---------- ------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 311,596 - - 1,421,772
----------- ------------ ---------- ------------
NET INCREASE/(DECREASE) PRIOR TO INTERFUND
TRANSFERS AND LOAN ACTIVITY, net 1,477,428 289,689 3,065 2,726,911
INTERFUND TRANSFERS AND LOAN ACTIVITY,
net (26,116) 1,327,699 (68,521) (32,438)
----------- ------------ ---------- ------------
Net increase (decrease) 1,451,312 1,617,388 (65,456) 2,694,473
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year $ 3,718,850 - $ 189,979 $ 13,501,146
----------- ------------ ---------- ------------
End of year $ 5,170,162 $ 1,617,388 $ 124,523 $ 16,195,619
----------- ------------ ---------- ------------
----------- ------------ ---------- ------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
DUFF & PHELPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1998 AND 1997
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 Investment Partners, Ltd. ("D&P"), formerly Phoenix Duff
& Phelps Corporation, 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 to the Plan in a tax-free rollover.
PLAN ELIGIBILITY
Company employees who complete at least 501 hours of service in the plan
year are eligible to receive the Company matching contributions. There are
no service requirements 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 1998, this maximum
contribution was $10,000. 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 1998, the amount of eligible compensation was limited to
$160,000, per participant.
VESTING
Employees vest immediately upon commencement of service.
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.
<PAGE>
-2-
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 (the "Trustee").
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 November 6, 1996, the Plan received a favorable determination letter
from the Internal Revenue Service ("IRS") stating that the Plan, as
written, is in compliance with the requirements of the IRS for a
tax-exempt plan. On July 21, 1998 the Plan was amended and was reviewed by
the Plan's administrator who believes that the amended document is in
compliance with applicable plan design qualification requirements.
3. ACCOUNTING POLICIES AND PROCEDURES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method
of accounting.
VALUATION OF INVESTMENTS
Investments in mutual funds are carried at fair market value as determined
by each mutual fund's net asset value per unit on December 31. Investments
in common stocks are carried at fair market value as determined by the
stock's quoted market value on a recognized securities exchange on
December 31. Loans to participants are carried at their unpaid principal
balance.
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.
EXPENSES AND BENEFIT PAYMENTS
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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and
changes therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
<PAGE>
-3-
4. INVESTMENTS
The fair value of individual investments that represent 5% or more of Plan
net assets as of December 31, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ------------
<S> <C> <C>
Mutual Funds-
Vanguard Prime Money Market Fund $ 1,183,271 $ 807,038
Vanguard Bond Index Total Bond Fund 1,493,553 1,506,516
Vanguard Index 500 Fund 1,617,388 -
Neuberger & Berman Guardian Fund 2,956,276 4,171,303
Pioneer Capital Growth Fund 1,047,427 1,036,601
Fidelity Magellan Fund 1,666,410 919,773
EuroPacific Growth Fund 936,388 923,663
Common Stock Funds-
Duff & Phelps Credit Rating Co. Common Stock Fund $ 5,170,162 $ 3,718,815
</TABLE>
5. INVESTMENT FUND DESCRIPTIONS
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. COMMON STOCK FUND--This fund invests
solely in the common stock of Duff & Phelps Credit Rating Co.
h. PHOENIX INVESTMENT PARTNERS, LTD. COMMON STOCK FUND--This fund
invests solely in the common stock of D&P and consists solely of
investments transferred from the D&P Employee Savings Plan into the
Plan. Participants may not contribute additional funds to this fund.
Earnings and dividends earned by this fund are invested in the
Vanguard Money Market Fund. This fund was closed during 1998.
i. VANGUARD INDEX 500 FUND--This fund became active as of October, 1998
and seeks to track the performance of the Standard & Poor's 500
Composite Stock Price Index, which emphasizes stocks of large U.S.
companies.
<PAGE>
-4-
6. FAIR VALUES OF FINANCIAL INSTRUMENTS
Since all of the investments held by the Plan are based on either quoted
market value (for common stocks) or quoted net asset value per unit (for
mutual funds), the fair value of investments held equals their carrying
value in the financial statements. The carrying value (unpaid principal
balance) of loans to participants approximates their fair value.
<PAGE>
SCHEDULE I
DUFF & PHELPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
(EMPLOYER IDENTIFICATION NUMBER 36-3569514, PLAN NUMBER 001)
<TABLE>
<CAPTION>
UNITS OR HISTORICAL FAIR
INVESTMENT SHARES COST VALUE
- -------------------------------------------------------------------- ------------- ------------ ------------
<S> <C> <C> <C>
Vanguard Prime Money Market Fund* 1,183,271.180 $ 1,183,271 $ 1,183,271
Vanguard Bond Index Total Bond Fund* 144,699.772 1,455,846 1,493,553
Vanguard Index 500 Fund* 14,193.844 1,382,607 1,617,388
Neuberger and Berman Guardian Fund* 131,858.893 3,205,182 2,956,276
Fidelity Magellan Fund* 13,792.523 1,289,800 1,666,410
Pioneer Capital Growth* 55,069.745 1,114,756 1,047,427
EuroPacific Growth Fund* 32,971.403 868,404 936,388
Duff & Phelps Credit Rating Co. Common Stock Fund** 94,210.000 2,000,918 5,170,162
Phoenix Investment Partners, Ltd. Common Stock Fund - 221 221
Loans to participants (interest rates ranging from 6.0% to 9.0%) - 124,523 124,523
------------- -------------
Total assets held for investment purposes $ 12,625,528 $ 16,195,619
------------- -------------
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</TABLE>
* Represents more than 5% of net assets available for Plan benefits as of
December 31, 1998
** Party in interest
The accompanying notes are an integral part of this schedule.
<PAGE>
SCHEDULE II
DUFF & PHELPS CREDIT RATING CO.
EMPLOYEES SAVINGS PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(EMPLOYER IDENTIFICATION NUMBER 36-3569514, PLAN NUMBER 001)
<TABLE>
<CAPTION>
NUMBER OF PURCHASE SELLING COST OF NET
INVESTMENT TRANSACTIONS PRICE PRICE ASSET GAIN (LOSS)
- ----------------------------------- ------------ ------------ --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Vanguard Prime Money
Market Fund 167 $ 1,246,454 $ 821,119 $ 821,119 $ -
Vanguard Bond Index Total
Bond Fund 111 492,960 496,217 483,161 13,056
Vanguard Index 500 Fund 26 1,382,750 167 142 25
Neuberger & Berman
Guardian Fund 159 1,798,641 1,828,138 1,950,964 (122,826)
Fidelity Magellan Fund 140 824,623 338,512 299,680 38,832
Pioneer Capital Growth
Fund 146 509,673 421,118 407,807 13,311
EuroPacific Growth Fund 119 496,173 585,275 547,457 37,818
Duff & Phelps Credit Rating
Co. Common Stock Fund* 160 923,307 689,975 268,263 419,915
------------ ------------ --------- ---------- -----------
Totals 1,028 $ 7,674,581 $5,180,521 $4,778,593 $ 400,131
------------ ------------ --------- ---------- -----------
------------ ------------ --------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of this schedule.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report, included in this form 10-K/A, into the Company's previously filed
Registration Statement File No. 33-88186.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 28, 1999
