-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UN2ad//W/y8JEbbJmc1eWtXBJXIx6ED3I+LbpmlL06mLdgky4JlgpetegA7QXEIy u9RZAjU+P7ta+yBIlMhz1w== 0000813917-99-000068.txt : 19991109 0000813917-99-000068.hdr.sgml : 19991109 ACCESSION NUMBER: 0000813917-99-000068 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19991108 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DUN & BRADSTREET CORP /DE/ CENTRAL INDEX KEY: 0001059556 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 133998945 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-55475 FILM NUMBER: 99743388 BUSINESS ADDRESS: STREET 1: ONE DIAMOND HILL RD STREET 2: C/O DUN & BRADSTREET CITY: MURRAY HILL STATE: NJ ZIP: 07974 BUSINESS PHONE: 9086655000 MAIL ADDRESS: STREET 1: ONE DIAMOND HILL RD STREET 2: C/O DUN & BRADSTREET CITY: MURRAY HILL STATE: NJ ZIP: 07974 FORMER COMPANY: FORMER CONFORMED NAME: NEW DUN & BRADSTREET CORP DATE OF NAME CHANGE: 19980728 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HARRIS ASSOCIATES L P CENTRAL INDEX KEY: 0000813917 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 043276558 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 2 NORTH LASALLE STREET STREET 2: SUITE 500 CITY: CHICAGO STATE: IL ZIP: 60602-3790 BUSINESS PHONE: 312-621-0600 MAIL ADDRESS: STREET 1: 2 NORTH LASALLE STREET STREET 2: SUITE 500 CITY: CHICAGO STATE: IL ZIP: 60602-3790 SC 13D/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- SCHEDULE 13D (RULE 13d-101) UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ____3____) DUN & BRADSTREET ______________________________________________________________________________ (Name of Issuer) COMMON STOCK, PAR VALUE $.01 PER SHARE _______________________________________________________________________________ (Title of Class of Securities) 264830100 _______________________________________________________________________________ (CUSIP Number) William Nygren, Henry Berghoef Two North LaSalle Street Suite 500 Chicago, Illinois 60602-5790 (312) 621-0600 _______________________________________________________________________________ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 8, 1999 _______________________________________________________________________________ (Date of Event Which Requires Filing of This Statement) If the Filing Person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box: X NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. SEE Rule 13d-1(a) for other parties to whom copies are to be sent. 1 NAME OF FILING PERSONS SS OR IRS IDENTIFICATION NOS. OF ABOVE PERSONS Harris Associates L.P. 04-3276558 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b) - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES -0- ---------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 20,533,924 ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 7,325,024 ---------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 13,208,900 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH FILING PERSON 20,533,924 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.76% - ------------------------------------------------------------------------------- 14 TYPE OF FILING PERSON* IA - ------------------------------------------------------------------------------- 1 NAME OF FILING PERSONS SS OR IRS IDENTIFICATION NOS. OF ABOVE PERSONS Harris Associates Inc. 04-3276549 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b) - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES -0- ---------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 20,533,924 ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 7,325,024 ---------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 13,208,900 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH FILING PERSON 20,533,924 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.76% - ------------------------------------------------------------------------------- 14 TYPE OF FILING PERSON* CO - ------------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER. Common Stock, $0.01 Par Value Dun & Bradstreet One Diamond Hill Road Murray Hill, NJ 07974 ITEM 2. IDENTITY AND BACKGROUND. (a,b,c) Harris Associates L.P. (Harris), an investment adviser, is a limited partnership organized in the State of Delaware. Its principal office is located at Two N. LaSalle Street, Suite 500, Chicago, Il 60602. Harris Associates, Inc., its General Partner, is organized in the State of Delaware. Victor A. Morgenstern, its Chairman and a Director of the General Partner; Robert M. Levy, its CEO and president and a Director; Anita M. Nagler, its Vice President and a Director; Roxanne M. Martino, its Vice President and a Director; Edward S. Loeb, its Vice President; Kristi Rowsell, its Secretary and Treasurer; David G. Herro, a Director; William C. Nygren, a Director; and Robert J. Sanborn, a Director, all are employed at the same address. Peter S. Voss and Neal Litvack, both Directors of the General Partner, are senior executive officers with Nvest Companies, L.P, at 399 Boylston, Boston, MA 02116. Nvest Companies, L.P. is a limited partnership affiliated with Nvest, L.P., a publicly traded reporting company (SEC File No. 1-9468). While Harris is wholly owned by Nvest Companies, L.P., Harris exercises its investment and voting powers independently of Nvest Companies, L.P. and its control persons, which do not have any direct or indirect control over the securities held in Harris accounts. (d) Neither Harris, its General Partner, nor any of its officers or directors, during the last five years, has been convicted in a criminal proceeding (excluding minor traffic violations or similar misdemeanors). (e) Neither Harris, its General Partner, nor any of its officers or directors, during the past five years, has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result, of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of , or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) All of the officers and directors of Harris and its General Partner are American Citizens. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The securities were purchased on behalf of discretionary investment advisory clients, including mutual fund clients, for which Harris is the investment adviser. Therefore, funds used to purchase the securities came from these clients. The total cost to purchase the securities was $508,156,380. ITEM 4. PURPOSE OF TRANSACTION. As disclosed in Amendment No. 4 to Schedule 13G as filed by Harris on February 24, 1999, and its initial and amending Schedules 13D as filed on August 31, 1999, September 21, 1999, and October 21, 1999, respectively, the purchases reported herein were made in the ordinary course of Harris' business and not with the purpose of nor with the effect of changing or influencing the control of the issuer nor in connection with or as a participant in any transaction having such purpose or effect. Harris, may, in the future, purchase additional shares or dispose of additional shares on behalf of its advisory clients, or make recommendations to its clients with regard to such purchases or sales. Neither Harris nor its General Partner have any present plans or proposals which relate to or would result in any matter described in paragraphs (a), (b), or (d) through (j) of Item 4 of Schedule 13D under the Securities Exchange Act of 1934. Harris and its General Partner may, in the future, for any reason and in their sole discretion subject only to their fiduciary and regulatory obligations to Harris' advisory clients, change their plans and proposals as they relate to such matters. On November 8, 1999, Harris distributed the attached materials at a shareholder informational meeting regarding the issuer. Harris believes such materials do not constitute any plan or proposal relating to matters described in paragraph (c) of item 4. Nevertheless, Harris is filing this Amendment to its Schedule 13D without admitting that this filing is required. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) As of November 5, 1999, Harris beneficially owned 20,533,924 shares, which represents 12.76% of the outstanding securities. (b) Number of shares as to which the reporting person has: (i) sole power to vote or to direct the vote: -0- (ii) shared power to vote or to direct the vote: 20,533,924 (iii) sole power to dispose or to direct the disposition: 7,325,024 (iv) shared power to dispose or to direct the disposition: 13,208,900 (c) During the 60 days preceding the date hereof, Harris entered into the following open market transactions on the New York stock exchange on behalf of its advisory clients. Name of Person Effecting Transaction Date of Transaction No. of Shares Price per Share --------------------- ------------------- ------------- --------------- Buys Harris 9/13 1300 30.9375 Harris 9/16 49300 28.750-30.375 Harris 9/17 1600 29.6875 Harris 9/20 5000 30.00 Harris 9/21 75000 30.1434 Harris 9/24 1700 29.4375-29.6058 Harris 9/27 11300 29.8125-30.00 Harris 9/29 8800 28.625-29.00 Harris 10/6 1500 29.1875 Harris 10/11 2500 29.98 Harris 10/12 7700 29.625 Harris 10/13 200 28.9375 Harris 10/14 1000 28.750 Harris 10/15 1300 26.6875 Harris 10/20 2800 27.6875-28.1875 Harris 10/21 500 27.875 Harris 10/28 2100 29.4375 Harris 11/2 2200 28.50-28.5625 Harris 11/3 1900 28.625-28.9375 Harris 11/5 2100 29.00 Sells Harris 9/9 1300 28.8125-30.0625 Harris 9/16 350 29.00 Harris 9/23 800 29.500 Harris 9/28 650 28.5625 Harris 9/29 500 29.00 Harris 9/30 1700 29.8125 Harris 10/4 700 29.5625 Harris 10/11 300 30.1875 Harris 10/26 4500 29.875 Harris 10/27 2000 29.8125 Harris 11/4 600 29.4375 (d) Persons other than Harris are entitled to receive all dividends and proceeds from the sale of the securities. Of the 13,208,900 shares indicated as shared power to dispose or direct the disposition of, 9,322,500 are owned by the Oakmark Fund, which represents 5.79% of the outstanding shares. (e) Not applicable ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except for advisory agreements with its clients that hold the economic interest in the shares, neither Harris nor its general partner has any contracts, arrangements or understandings or relationships with respect to securities of the issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Materials distributed at the November 8, 1999, shareholder informational meeting regarding the issuer. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. DATED: November 8, 1999 /s/ Robert M. Levy Robert M. Levy President Dun & Bradstreet Shareholder Informational Meeting November 8, 1999 Hosted by Harris Associates L.P. Opening Comments Good afternoon. Welcome to this informational meeting for Dun & Bradstreet Corporation shareholders. We're delighted you've joined us. My name is Henry Berghoef, I'm a partner at Harris Associates in Chicago. With me is my partner Bill Nygren, who manages The Oakmark Select Fund, one of the major owners of DNB stock in our firm. As I'm sure you know, we have filed several Form 13Ds with the SEC calling on our Board to act to maximize shareholder value at Dun and Bradstreet. We have urged the Board to solicit offers for the corporation, for two reasons: first, because we believe the company's value in a transaction is at a significant premium to the stock price and second, because we think it will be difficult for other alternatives to deliver a present value competitive with a transaction. This includes the option of a new CEO, which the board has elected to pursue and which Board members described to us and to many of you in meetings last week. We believe the number of potential CEO's who have the successful track records, intimate knowledge of Dun & Bradstreet, and immediate credibility on Wall Street necessary to implement a quick turnaround is exceedingly small. We applaud the Board for taking the very positive step of accepting the resignation of the former CEO and for expressing their goal of maximizing shareholder value. We agree on the goal but differ on the appropriate tactics. Many Dun & Bradstreet shareholders contacted us asking for more information on what we were doing. Because of that, and as the largest shareholder, we thought it appropriate to organize this "town hall meeting", if you will, as a forum in which the owners can have an open exchange of views on our company. It's difficult to determine exactly how many Dun & Bradstreet shares are represented in this room, but we are very confident, based on our information and the Form 13F filings, that the number is over 47%. Making some educated guesses we believe the actual number likely is 50% or more. We think that's an impressive number. Your attendance tells us, and should demonstrate to the Board, that the owners are concerned about their company and want to explore the challenges and solutions. Our plan this afternoon is to keep our gathering open and informal. Bill and I will present a brief summary of how Harris Associates views the situation. We will then open the gathering to comments or questions from the floor. We will continue that until everyone has said their piece or until we run out of time. Many of us are interested in one on one or small group conversations as well. Those kinds of discussions are valuable and we welcome them after the conclusion of this plenary gathering. To ensure an open exchange of views the press was not admitted to this gathering but following, will be invited into the room to speak with attendees who are so inclined. The meeting is not being recorded. Public companies nowadays have their "safe harbor" disclaimers, and we have one of our own - you can read it here on the screen. To summarize, we are here to exchange views and opinions, or just to listen, and nothing more. - - SLIDE ONE - - In amending the proxy rules of 1992, the SEC specifically endorsed improved communications among shareholders and stated that "the purpose of the proxy rules themselves is better served by promoting free discussion, debate, and learning among shareholders and interested persons..." No one will be asked to make any commitments regarding any further action, no group will be formed and, of course, no proxies will be solicited - the meeting is strictly informational. -Harris Associates Invitation Letter - - SLIDE TWO - - Harris Associates L.P. Chicago-based investment firm founded in 1976 - Utilize a fundamental, value-oriented investment approach - Long-term investment horizon - $14 billion under management, including The Oakmark Family of Funds - - SLIDE THREE - - Harris Associates L.P. Dun & Bradstreet's largest shareholder - Manage, on behalf of clients, over 20 million shares or 12.7% of the shares outstanding - DNB shareholder since 1996 - - SLIDE FOUR - - Harris Associates L.P. Not an "activist" investor, but we felt compelled to become active in DNB - Huge gap between stock price and underlying value - Complete lack of confidence in ability of incumbent leadership to close that gap - Concerned about possible erosion of the franchise without an immediate change of course - - SLIDE FIVE - - Comparable Transactions - Information/Publishing Acquiror Acquired Company Year VNU Nielsen Media Research 1999 - - Transaction Value ($ billions): 2.5 - - Transaction Value/Revenue current year: 5.6x forward year: 5.0x - -Transaction Value/EBITDA current year: 16x forward year: 15x Pearson, PLC Simon & Schuster 1998 - - Transaction Value ($ billions): 4.6 - - Transaction Value/Revenue current year: 2.3 forward year: 2.2 - -Transaction Value/EBITDA current year: 14x forward year: 13x Reed Elsevier Shepard's M. Bender 1998 Transaction Value ($ billions): 1.7 - - Transaction Value/Revenue current year: 7.5 forward year: 7.0 - -Transaction Value/EBITDA current year: 18x forward year: 17x EMAP Peterson Publishing 1998 Transaction Value ($ billions):1.5 - - Transaction Value/Revenue current year: 4.8 forward year: 4.0 - -Transaction Value/EBITDA current year: 16x forward year: 15x M.A.I.D. PLC Dialog 1997 Transaction Value ($ billions):0.4 - - Transaction Value/Revenue current year: 1.0 forward year: 0.9 - -Transaction Value/EBITDA current year: 16x forward year: 15x GUS, PLC Experian 1996 Transaction Value ($ billions):1.7 - - Transaction Value/Revenue current year: 2.8 forward year: 2.5 - -Transaction Value/EBITDA current year: 14x forward year: 12x Wolters Kluwer CCH, Inc. 1995 Transaction Value ($ billions):1.9 - - Transaction Value/Revenue current year: 3.2 forward year: 3.0 - -Transaction Value/EBITDA current year: 20x forward year: 18x Data from various sources and Harris Associates L.P. estimates. - - SLIDE SIX - - Dun & Bradstreet Corporation Valuation (millions) low Avg. Est. 2000 Revenue* $2,083 $2,083 Est. 2000 EBITDA* $679 $679 Assumed Multiple 12x 15x Gross Acquisition value $8,148 $10,185 Less: Est. year-end '99 net debt $250 $250 Net tax liability $250 $250 Plus: Cash from options exercise (16.4 x $25) $410 $410 Net Acquisition value $8,058 $10,095 Share Outstanding: 161MM Options Outstanding: 16MM Total 177MM 177 177 Acquisition value per share $46 $57 Implied Multiple of Revenue 3.9 4.9 *Average of four Wall Street analyst estimates. - - SLIDE SEVEN - - Benjamin Graham on Corporate Governance "[There are]...two pernicious doctrines in the field of corporate administration. The first is that directors have no responsibility for, or interest in, the market price of their securities. The second is that outside stockholders know nothing about the business and hence their views deserve no consideration unless sponsored by the management. ...The two together afford management perfect protection against the necessity of justifying to their stockholders the continuance of the business when the weight of sound opinion points to better results for owners through liquidation [sale]." "[directors]...[should] recognize that if the business is not worth its realizable value as a going concern it should be wound up." "The conclusion stands out that liquidation [sale] is peculiarly an issue for the stockholders. Not only must it be decided by their independent judgment and preference, but in most cases the initiative and pressure to effect liquidation must emanate from stockholders not on the board of directors." Excerpts from "Is American Business Worth More Dead Than Alive" by Benjamin Graham from Forbes, July 1, 1932. Reprinted in The Rediscovered Benjamin Graham, Selected Writings of the Wall Street Legend by Janet Lowe, John Wiley & Sons, 1999. - - SLIDE EIGHT - Moody's Facts - - One of two dominant participants in the global credit rating business - - Very high barriers to entry - - Revenues have compounded by 17% per year since 1980 - - Operating Margins about 45% - - Minimal reinvestment requirements - - Huge free cash flow - - SLIDE NINE - - Moody's 1998 Revenue Distribution Corporate Ratings - 29% Structured Product Ratings - 29% Banking/Sovereign Financial Institutions Ratings - 18% Research/Risk Management - 11% Public Finance Ratings - 13% Source: Dun & Bradstreet 1998 Annual Report - - SLIDE TEN - - Moody's Our beliefs - - Growth prospects, especially abroad (28% of current revenue), continue to be very good. - - Value of Moody's is being masked by corporate parent's problems - - A strategic buyer could pay nearly DNB's current market value for Moody's alone ($290 mm EBITDA x 15 = $4.4 billion) - - SLIDE ELEVEN - - DNB Operating Company Facts - - The leading global repository and provider of business information - - High barriers to entry - - U.S. operating margins of about 30%, significant free cash flow - - Non-U.S. operations produced $516 MM revenue ('98), but generated losses - - SLIDE TWELVE - - DNB Operating Company Our beliefs The operating company has substantial untapped growth opportunities: - - DNB's database and the DUNS number have huge potential for B2B applications worldwide in procurement, marketing, risk management and electronic transactions, via electronic interchange of information - - Non-U.S. operations can produce significant profits - - The highly recognized Dun & Bradstreet brand can be extended and leveraged into other information areas DNB's franchise is intact. But DNB must move with speed and urgency to preserve and expand it - - SLIDE THIRTEEN - - Comparison of DNB Operating Company, Moody's and Nielsen Media Research Opco Opco US Foreign Moody's NMR 1998 Financial Profile Revenue Growth 8% 0% 17% 11% EBIT Margins 30% -2% 45% 23% EBITDA- CE Margins 30% 4% 47% 15% Improvement Potential Reevenue Growth High High Low Moderate Margins High Very High Low- Moderate Moderate Fcf Margins High Very High Low- Moderate Moderate Intangibles Name Value High Moderate Very High High Franchise Grade A C A+ A Source: Harris Associates L.P. - - SLIDE FOURTEEN - - DNB stock price vs. the S&P 500 Original page contained graph which reflected a 669.8% rise in the price of the S&P 500 from December 31, 1984 to November 5, 1999, as compared to a 139.9% rise in the stock price of DNB during the same period. - - SLIDE FIFTEEN - - DNB stock price relative to the S&P 500 since 11/96 Split Up Original page contained graph which reflected that DNB's stock price underperformed the S&P 500 by 20% since its November 1997 split up. - - SLIDE SIXTEEN - - DNB and NMR stock price relative to the S&P 500 Original page contained graph which reflected that DNB's stock price underperformed the S&P 500 by 20% since January 2, 1998, as compared to NMR's stock price which outperformed the S&P 500 by 145% since its June 1998 split up. -----END PRIVACY-ENHANCED MESSAGE-----