0000030419-95-000010.txt : 19950818 0000030419-95-000010.hdr.sgml : 19950818 ACCESSION NUMBER: 0000030419-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUN & BRADSTREET CORP CENTRAL INDEX KEY: 0000030419 STANDARD INDUSTRIAL CLASSIFICATION: 8700 IRS NUMBER: 132740040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07155 FILM NUMBER: 95561251 BUSINESS ADDRESS: STREET 1: 187 DANBURY ROAD CITY: WILTON STATE: CT ZIP: 06897 BUSINESS PHONE: 2032224200 MAIL ADDRESS: STREET 1: 187 DANBURY ROAD STREET 2: 34TH FLOOR CITY: WILTON STATE: CT ZIP: 06897 FORMER COMPANY: FORMER CONFORMED NAME: DUN & BRADSTREET COMPANIES INC DATE OF NAME CHANGE: 19790429 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark one) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 ------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to _________________ Commission file number 1-7155 THE DUN & BRADSTREET CORPORATION (Exact name of registrant as specified in its charter) Delaware 13-2740040 (State of Incorporation) (I.R.S. Employer Identification No.) 187 Danbury Road, Wilton, CT 06897 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 834-4200 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Shares Outstanding Title of Class at July 31, 1995 - --------------- ----------------- Common Stock, par value $1 per share 169,464,462 THE DUN & BRADSTREET CORPORATION INDEX TO FORM 10-Q PART I. FINANCIAL INFORMATION PAGE - ----------------------------- ------ Item 1. Financial Statements Condensed Consolidated Statement of Income (Unaudited) Three Months Ended June 30, 1995 and 1994 3 Six Months Ended June 30, 1995 and 1994 4 Condensed Consolidated Statement of Cash Flows (Unaudited) Six Months Ended June 30, 1995 and 1994 5 Condensed Consolidated Statement of Financial Position (Unaudited) June 30, 1995 and December 31, 1994 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II. OTHER INFORMATION - ---------------------------- Item 4. Submission of Matters to a Vote of Security Holders 12-13 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 15 PART I. FINANCIAL INFORMATION - ----------------------------- Item I. FINANCIAL STATEMENTS THE DUN & BRADSTREET CORPORATION Condensed Consolidated Statement of Income (Unaudited) (In millions except per share amounts)
Three Months Ended June 30 ________________________ 1995 1994 ________________________ Operating Revenue $1,307.4 $1,184.7 Operating Costs, Selling and Administrative Expenses 1,087.4 970.6 ________ ________ Operating Income 220.0 214.1 Interest Expense - Net (5.3) (3.9) Other Expense - Net (12.6) (8.3) ________ ________ Non-Operating Expense - Net (17.9) (12.2) Income Before Provision for Taxes 202.1 201.9 Provision for Income Taxes 56.0 57.3 _______ _______ Net Income $146.1 $144.6 ======= ======= Earnings Per Share of Common Stock $0.86 $0.85 ======= ======= Dividends Paid Per Share of Common Stock $0.66 $0.65 ======= ======= Average Number of Shares Outstanding 169.6 170.1 See accompanying notes to the condensed consolidated financial statements (unaudited).
-3- THE DUN & BRADSTREET CORPORATION Condensed Consolidated Statement of Income (Unaudited) (In millions except per share amounts)
Six Months Ended June 30 ________________________ 1995 1994 ________________________ Operating Revenue $2,527.0 $2,283.9 Operating Costs, Selling and Administrative Expenses 2,134.2 1,910.0 ________ ________ Operating Income 392.8 373.9 Interest (Expense) Income - Net (11.8) .1 Other Expense - Net (28.3) (20.3) ________ ________ Non-Operating Expense - Net (40.1) (20.2) Income Before Provision for Taxes 352.7 353.7 Provision for Income Taxes 97.7 100.4 _______ _______ Net Income $255.0 $253.3 ======= ======= Earnings Per Share of Common Stock $1.50 $1.49 ======= ======= Dividends Paid Per Share of Common Stock $1.31 $1.26 ======= ======= Average Number of Shares Outstanding 169.6 170.1 See accompanying notes to the condensed consolidated financial statements (unaudited).
-4- The Dun & Bradstreet Corporation Condensed Consolidated Statement of Cash Flows (Unaudited) Six Months Ended June 30 1995 1994 (Amounts in millions) _________________________________________________________________________
Cash Flows from Operating Activities: Net Income $255.0 $253.3 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 234.5 202.6 Restructuring Gains from Sale of Business 0.0 (56.3) Restructuring Provisions 0.0 56.3 Restructuring Payments (56.6) (50.1) Postemployment Benefit Payments (61.4) (79.4) Net Decrease in Accounts Receivable 20.7 25.1 Unearned Subscription Income 107.2 89.9 Income Taxes Paid- Net of Refunds (62.4) (104.0) Net Changes in Other Working Capital Items (12.8) (77.8) ___________________________________________________________________________ Net Cash Provided by Operating Activities 424.2 259.6 ___________________________________________________________________________ Cash Flows from Investing Activities: Payments for Marketable Securities - Net (0.8) (99.4) Payments for Acquisition of Businesses (excluding cash and cash equivalents acquired of $.8 in 1994) (4.9) (42.7) Proceeds from Sale of Businesses 0.0 72.6 Capital Expenditures (142.3) (134.3) Additions to Computer Software and Other Intangibles (97.8) (79.6) Increase in Other Investments and Notes Receivable (3.0) (22.6) Other (8.1) 8.2 ___________________________________________________________________________ Net Cash Used in Investing Activities (256.9) (297.8) ___________________________________________________________________________ Cash Flows from Financing Activities: Payment of Dividends (223.5) (214.4) Payments for Purchase of Treasury Shares (35.4) (44.1) Net Proceeds from Exercise of Stock Options 13.0 10.4 Increase in U.S. Short-term Borrowings 151.2 257.9 Payment of Alaska Native Corp. Obligations 0.0 (166.2) Other 21.6 16.5 ___________________________________________________________________________ Net Cash Used in Financing Activities (73.1) (139.9) ___________________________________________________________________________ Effect of Exchange Rate Changes on Cash and Cash Equivalents 20.8 5.9 ___________________________________________________________________________ Increase (Decrease) in Cash & Cash Equivalents 115.0 (172.2) Cash and Cash Equivalents, Beginning of Year 335.4 650.9 ___________________________________________________________________________ Cash and Cash Equivalents, End of Period $450.4 $478.7 ___________________________________________________________________________ See accompanying notes to the condensed consolidated financial statements (unaudited). -5-
THE DUN & BRADSTREET CORPORATION CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) (Amounts in millions)
___________________________________________________________________________ June 30 December 31 1995 1994 ___________________________________________________________________________ ASSETS Current Assets Cash and Cash Equivalents $450.4 $335.4 Marketable Securities 18.3 26.9 Accounts Receivable - Net 1,261.8 1,256.5 Other Current Assets 404.1 362.2 _______ _______ Total Current Assets 2,134.6 1,981.0 ____________________________________________________________________________ Investments Marketable Securities 132.2 133.1 Other Investments and Notes Receivable 378.8 366.4 _______ _______ Total Investments 511.0 499.5 ____________________________________________________________________________ Property, Plant and Equipment - Net 932.3 918.5 ____________________________________________________________________________ Other Assets - Net Deferred Charges 390.3 363.1 Computer Software 351.2 335.9 Other Intangibles 218.2 216.0 Goodwill 1,142.7 1,149.9 _______ _______ Total Other Assets - Net 2,102.4 2,064.9 ___________________________________________________________________________ Total Assets $5,680.3 $5,463.9 ___________________________________________________________________________ Liabilities and Shareowners' Equity Current Liabilities Accounts Payable $ 328.1 $290.2 Short-term Debt 672.9 500.6 Accrued and Other Current Liabilities 1,127.7 1,300.4 Accrued Income Taxes 119.6 95.4 _______ _______ Total Current Liabilities 2,248.3 2,186.6 ___________________________________________________________________________ Unearned Subscription Income 399.0 290.3 Postretirement and Postemployment Benefits 475.8 484.9 Deferred Income Taxes 202.7 209.3 Other Liabilities and Minority Interests 991.8 974.2 ___________________________________________________________________________ Total Liabilities $4,317.6 $4,145.3 Shareowners' Equity 1,362.7 1,318.6 ___________________________________________________________________________ Total Liabilities and Shareowners' Equity $5,680.3 $5,463.9 ___________________________________________________________________________ See accompanying notes to the condensed consolidated financial statements (unaudited). -6-
THE DUN & BRADSTREET CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - Interim Consolidated Financial Statements These interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and related notes of The Dun & Bradstreet Corporation (the "Company" or "D&B") 1994 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. Certain prior-year amounts have been reclassified to conform with the 1995 presentation. Note 2 - Financial Instruments with Off-Balance-Sheet Risk The Company is a party to financial instruments with off-balance-sheet- Risk, which are entered into in the normal course of business to reduce exposure to fluctuations in interest and foreign exchange rates. Interest rate swap agreements are entered into primarily as hedges against variable interest rate exposures. During the first quarter of 1995, the Company executed swap agreements which effectively fixed interest rates on an additional $100 million of variable rate debt. As a result, at June 30, 1995, the Company had swap agreements outstanding to fix interest rates on a total of $400 million of variable rate debt through fiscal 2004. The weighted average fixed rate payable under these agreements is 7.07%. The differential interest to be paid or received under these agreements is included in interest expense over the life of the debt. Note 3 - Short-term Borrowing Agreements The Company maintains short-term borrowing agreements with several banks. During the second quarter, the Company increased its U.S. credit lines to $750 million, all of which support a commercial paper program. Note 4 - Investment Partnerships During 1993, three of the Company's subsidiaries contributed assets and third-party investors contributed cash ($125 million) to a limited partnership. One of the Company's subsidiaries serves as general partner. All of the other partners, including the third- party investors, hold limited partner interests. The partnership, which is a separate and distinct legal entity, is in the business of licensing database assets and computer software. In addition, during 1993, the Company participated in the formation of a limited partnership to invest in various securities including those of the Company. One of the company's subsidiaries serves as managing general partner. Third-party investors hold limited partner and special investors interests totaling $500 million. The special investors are entitled to a specified return on their investments. Funds raised by the partnership provided a source of the financing for the Company's repurchase in 1993 of 8.3 million shares of its common stock. -7- For financial reporting purposes, the assets, liabilities, results of operations and cash flows of the partnerships described above are included in the Company's consolidated financial statements. The third-parties investments in these partnerships at June 30, 1995 and December 31, 1994 totaled approximately $625 million, and are reflected in other liabilities and minority interests. Third-parties share of partnerships results of operations, including specified returns, is reflected in other expense-net. Note 5 - Litigation The Company and its subsidiaries are involved in legal proceedings, claims and litigation arising in the ordinary course of business. In addition, in March and April 1989, five purported class actions were commenced by certain shareowners (the "Shareowner Class Actions") against the Company and up to three members of its Board of Directors (two of whom are also officers) in various United States District Courts, each alleging violations of the federal securities laws and seeking unspecified damages arising out of an asserted failure to make public disclosure of information relating to allegedly improper practices (the "alleged practices") of the Company's wholly owned subsidiary, Dun & Bradstreet, Inc., in connection with the selling of commercial-credit information services. The Shareowner Class Actions were later consolidated in the United States District Court for the Southern District of New York. In February 1990, an amended consolidated Shareowner Class Action complaint was served on the defendants, alleging additional violations of the securities laws arising out of an asserted failure to make public disclosure of the effect that the alleged practices would have on the Company's future sales and income, and in September 1992, the District Judge granted a motion to permit this Action to be maintained as a class action. On April 16, 1993, attorneys for the defendants and attorneys for the plaintiffs entered into a memorandum of intent to settle the Shareowner Class Action for an amount between $15 million and $20 million. On January 14, 1994, a judgment was entered by the Court approving the proposed settlement. The exact amount of the settlement will depend on the monetary amount of claims filed by shareowners who are part of the class. As a result of contribution to the settlement by the Company's insurance carrier and provisions previously recorded by the Company, the amount of the settlement did not materially affect the Company's earnings. On June 9, 1993, American Credit Indemnity ("ACI"), a company of which the Company owns 95% of the outstanding common stock, received a summons and a consolidated amended class action complaint (the "Amended Complaint") in a purported class action pending in the United States District Court for the Southern District of New York captioned "In re Towers Financial Corporation Noteholders Litigation." The Amended Complaint named 17 defendants, including various subsidiaries and controlling persons of Towers Financial Corporation ("Towers"), as well as ACI, in addition to a "Broker-Dealer Defendant Class," alleged to consist of more than 75 members. The Amended Complaint was brought by an alleged class of persons who bought promissory notes issued by Towers between -8- February 15, 1989 and February 9, 1993. It alleged that Towers, now operating under Chapter 11 of the Bankruptcy Code, sold nearly $215 million of such notes to more than 2,800 investors and sought damages from all the defendants in at least that amount, as well as punitive damages. The Amended Complaint asserted claims against ACI for negligent misrepresentation, negligence and fraud under common law and for violations of Section 10(b) (and Rule 10b-5 thereunder) of the Securities Exchange Act of 1934 (the "Exchange Act"). The Amended Complaint alleged that offering documents for the notes mischaracterized insurance policies issued by ACI to Towers with respect to accounts receivable securing or backing the notes. It further alleged that ACI issued policies with limited scope of coverage and for exorbitant premiums with knowledge that they would be used by Towers to fraudulently market the notes. ACI answered the Amended Complaint, denying its material terms, and moved for judgment on the pleadings. While ACI's motion was pending, the Supreme Court of the United States decided the case of Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., holding that a private plaintiff may not maintain an aiding and abetting suit under Section 10(b) of the Exchange Act. Thereafter, plaintiffs filed a Second Consolidated Amended Class Action Complaint (the "Second Amended Complaint"), in which they asserted a primary liability claim against ACI and others under Section 10(b) of the Exchange Act, and certain common law claims. ACI subsequently moved to dismiss the Second Amended Complaint. On September 2, 1994, while ACI's motion to dismiss remained pending, ACI and counsel for the plaintiffs entered into an agreement to settle all claims that were or could have been asserted against ACI in the Towers Class Action for $1.25 million. The United States District Court has granted its preliminary approval to the settlement, entered an order providing notice to the class plaintiffs, and will schedule a hearing on the proposed settlement. The amount of the proposed settlement did not materially affect the Company's 1994 earnings. In the opinion of management, the outcome of all current proceedings, claims and litigation could have a material effect on quarterly or annual operating results when resolved in a future period. However, in the opinion of management, these matters will not materially affect the Company's consolidated financial position. Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations Reported second-quarter revenue increased by - --------------------- 10.4% to $1,307.4 million from $1,184.7 million a year ago, marking the second consecutive quarter of sustained accelerated revenue growth, driven by aggressive investments in new revenue growth initiatives. Excluding the effects of acquisitions, divestitures and a weaker U.S. dollar, second-quarter revenue growth was 6%. Strong reported revenue growth was achieved by A.C. Nielsen, Dun & Bradstreet Information Services, IMS International, Nielsen Media Research, Gartner Group and Dataquest. For the second quarter in a row, both D&B Software and Nielsen U.S. posted modest revenue gains versus last year. Excluding Moody's, D&B achieved underlying revenue growth of 7% and reported growth of 12%. In the first six months of 1995, reported revenue increased 10.6% to $2,527.0 million from $2,283.9 million a year ago. Excluding the effects of acquisitions, divestitures and a weaker U.S. dollar, first-half revenue for D&B's current portfolio of businesses was up about 5%. - -9- Earnings per share in the second quarter were $.86, up 1.2% from $.85 - ------------------ per share a year ago, reflecting previously announced plans to increase investment spending company-wide in 1995 and a significant cyclical decline at Moody's Investors Service. For the first six months of 1995, D&B reported earnings per share of $1.50, up 0.7% from $1.49 per share in the first six months of 1994. Net income in the second quarter grew 1.1% to $146.1 million from - ---------- $144.6 million a year ago. First-half net income increased 0.7% to $255.0 million from $253.3 million in the first half of 1994. Operating income in the second quarter increased 2.8% to $220.0 - ---------------- million from $214.1 million a year ago. Growth in operating income was held down by the substantial increase in investment spending on new revenue initiatives, the decline at Moody's and a decline at American Credit Indemnity due to a significant increase in receivable-loss claims related to several major insolvencies. Operating income in the first six months increased 5.1% to $392.8 million from $373.9 million. First-half operating income included a one-time $28 million gain reported in the first quarter of 1995, which was related to the 1991 divestiture of Donnelley Marketing. Growth in first half operating income was held down by the substantial increase in investment spending on new revenue initiatives and the decline at Moody's. Non-operating expense-net in the second quarter was $17.9 million, - ------------------------- compared with $12.2 million of expense a year ago. Non-operating expense-net in the second quarter of 1995 increased, in part, due to a lower cash position as a result of the use of cash for acquisitions and past restructuring and severance programs, higher interest rates paid on increased U.S. short-term borrowings, and higher minority interest expense related to both Gartner Group's increased income and to a previously disclosed limited partnership. First half non-operating expense-net of $40.1 million compared with non- operating expense-net of $20.2 million a year ago primarily as a result of the factors noted above. The Company's tax rate for the first half was 27.7%, compared with the first half 1994 tax rate of 28.4%. Business Segment Highlights - --------------------------- Marketing Information Services reported a 21.4% increase in - ------------------------------ second-quarter revenue to $587.4 million from $483.8 million a year ago. Excluding the impact of a weaker U.S. dollar and acquisitions, including Survey Research Group (SRG), AGB Australia/New Zealand and Amfac Chemdata, second-quarter revenue growth for the segment was about 9%. IMS International reported second-quarter revenue of $191 million, up 16% on a reported basis and up 8%, excluding the impact of acquisitions and the dollar. For the full year, the Company continues to expect IMS' underlying revenue growth to be in the double-digits, driven by new product roll-outs in the second half of the year. A.C. Nielsen reported second-quarter revenue of $329 million, up 28% on a reported basis and up about 8%, excluding the impact of acquisitions and the dollar. Nielsen Media Research had strong underlying revenue growth in the second quarter. -10- Risk Management and Business Marketing Information Services - ----------------------------------------------------------- reported second-quarter revenue growth of 8.7% to $426.1 million from $392.0 million a year ago. Excluding the impact of a weaker U.S. dollar and the acquisition of Orefro L'Informazione in Italy, S&W in France and Novinform in Switzerland, segment revenue increased by about 4%. Moody's posted a significant decrease in revenue, principally due to the continued decline in public-debt refundings. Dun & Bradstreet Information Services reported revenue of $341 million, up 14% from the same year-ago period. Excluding the impact of acquisitions and the dollar, DBIS's revenue was up 7%. DBIS U.S. had second-quarter revenue of $183 million, up by about 6% and fueled in part by strong growth in business marketing services products. Second-quarter sales of U.S. credit services increased in the mid-single digits. DBIS Europe's second-quarter revenue increased by 28% on a reported basis. Excluding the impact of acquisitions and the dollar, DBIS Europe's revenue increased by 5%. Software Services reported a 9.2% increase in second-quarter revenue - ----------------- to $108.2 million from $99.1 million a year ago. Excluding the impact of the dollar and the acquisition of Pilot Software, underlying revenue decreased slightly due to a decline at Sales Technologies. D&B Software's second-quarter 1995 underlying revenue increased modestly from a year ago. Positive customer response to D&B Software's new client/server products, a new management team, an enhanced marketing program and renewed focus on the extensive base of mainframe customers continues to result in significantly improved performance. Directory Information Services reported second-quarter revenue of - ------------------------------ $89.9 million, down 12.9% from $103.2 million a year ago, due to changes in commission rates and other contractual arrangements with telephone companies, as well as timing factors. Excluding the impact of timing, revenue declined modestly for the quarter. Underlying second-quarter sales of Directory Information Services yellow pages directories showed a moderate increase. Other Business Services reported second-quarter revenue of $95.7 - ----------------------- million down 10.2% from $106.6 million a year ago. Excluding acquisitions, divestitures and timing factors, segment revenue increased about 23%. Gartner Group had excellent growth in second-quarter revenue. Dataquest achieved substantial growth in second-quarter revenue. Dataquest achieved substantial growth for the quarter. NCH Promotional Services reported a decrease in second-quarter revenue, reflecting a decline in worldwide coupon redemptions and competitive pricing in the industry. Changes in Financial Condition at June 30, 1995 - ----------------------------------------------- Compared with December 31, 1994 - ------------------------------- Short-term Debt increased to $672.9 million at June 30, 1995 from - -------------- $500.6 million at December 31, 1994, primarily reflecting increased U.S. short-term borrowings ($151.2 million). Unearned Subscription Income increased to $399.0 million at June 30, - ---------------------------- 1995 from $290.3 million at December 31, 1994, reflecting the cyclical pattern of higher subscription sales in the first quarter. Condensed Consolidated Statement of Cash Flows - ---------------------------------------------- Six Months Ended June 30, 1995 and 1994 - --------------------------------------- Net cash provided by operating activities for the six months ended June 30, 1995 totaled $424.2 million compared with $259.6 million for the comparable period in 1994. The increase of -11- $164.6 million included increased deferred revenue ($23.9 million) at D&B Software (included in net changes in other working capital items) and a decrease in income taxes paid-net of refunds ($41.6 million). Net cash used in financing activities for the six months ended June 30, 1995 totaled $73.1 million compared with $139.9 million for the comparable period in 1994. The decrease in net cash used in financing activities primarily reflected the absence of payments to an Alaska Native Corporation ($166.2 million) partially offset by lower U.S. short-term borrowings ($106.7 million). Other - ----- Regarding 1995, the Company has reaffirmed its expectations for underlying revenue growth in the mid-single digits, and growth in earnings per share at or nearly at D&B's underlying topline Performance. Reported revenue growth for 1995 is expected to be in the high-single digits. Subsequent Event - ----------------- On July 20, 1995 the Company announced that it had entered into a definitive agreement to sell its Interactive Data Corporation business to the Financial Times Group of Pearson PLC for a price of $201 million. The Company expects the transaction to close in the third quarter of 1995. The transaction will result in a pre-tax gain for D&B of about $90 million. The Company anticipates taking certain actions to improve future productivity, the cost of which will largely offset the $90 million gain. Costs are expected to include a provision for increased post-employment benefits, primarily severance, for workforce reductions. Consequently, the sale and actions together are not expected to have a material effect on the Company's financial condition or 1995 results of operations. PART II. OTHER INFORMATION - --------------------------- Item 4. Submission of Matters to a Vote of Security Holders - ------- The Annual Meeting of Shareowners of The Dun & Bradstreet Corporation was held on April 18, 1995. The following nominees for director named in the Proxy Statement dated March 10, 1995 were elected at the Meeting by the votes indicated. For Withheld ---- --------- Clifford L. Alexander, Jr. 144,106,599 1,105,058 Mary Johnston Evans 144,169,037 1,042,620 John R. Meyer 144,116,812 1,094,845 James R. Peterson 144,067,965 1,143,692 The votes in favor of the election of the nominees represent at least 99.2% of the shares voted for each of the nominees. -12- The proposal to vote upon the Company's Corporate Management Incentive Plan was approved by the following vote: For Against Abstain ------ ------- -------- Number of shares 134,236,103 9,884,194 1,091,360 The proposal to vote upon the Company's Key Employees Performance Unit Plan was approved by the following vote: For Against Abstain ------ -------- -------- Number of shares 129,645,034 14,520,768 1,045,855 The proposal to amend the Company's 1991 Key Employees Stock Option Plan was approved by the following vote: For Against Abstain Non-Votes Number of shares 115,134,158 17,862,084 1,201,363 1,014,052 The proposal to amend the Company's 1982 Key Employees Stock Option Plan was approved by the following vote: For Against Abstain ----- -------- --------- Number of shares 122,274,371 21,738,343 1,198,943 The proposal to amend the Company's 1989 Key Employees Restricted Stock Plan was approved by the following vote: For Against Abstain Non-Votes --- ------- ------- ---------- Number of shares 111,854,578 21,136,233 1,206,794 11,014,052 The proposal to vote upon The Dun & Bradstreet Corporation Restricted Stock Plan for Non-Employee Directors was approved by the following vote: For Against Abstain Non-Votes --- ------- ------- --------- Number of shares 98,960,398 33,391,547 1,845,360 11,014,352 Approval of the appointment of Independent Public Accountants was approved by the following vote: For Against Abstain --- -------- --------- Number of shares 143,772,697 1,108,014 330,946 The proposal on implementation of the MacBride Principles in Northern Ireland was defeated by the following vote: For Against Abstain Non-Votes --- -------- --------- --------- Number of shares 17,456,969 105,975,909 10,765,927 11,012,852 -13- Item 6. Exhibits and Reports on Form 8-K. - ----------------------------------------- (a) Exhibits: (10) Material Contracts. (x) Memorandum of Agreement, dated April 13, 1995, between Registrant and Serge Okun (27) Financial Data Schedule for the period ended June 30, 1995 (b) Reports on Form 8-K: None. -14- SIGNATURES ------------ 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. THE DUN & BRADSTREET CORPORATION Date: August 10, 1995 By: /s/EDWIN A. BESCHERER, JR. --------------------------- Edwin A. Bescherer, Jr., Executive Vice President - Finance and Chief Financial Officer Date: August 10, 1995 By: /s/THOMAS W. YOUNG -------------------- Thomas W. Young, Senior Vice President and Controller -15- Index to Exhibits Regulation S-K - -------------- Exhibit Number Page Number 10. Memorandum of Agreement, dated April 13, 1995, between Registrant and Serge Okun 17 27. Financial Data Schedule (Filed electronically) -16- EX-27 2
5 1000 6-MOS DEC-31-1995 JUN-30-1995 450,426 18,287 1,261,804 0 0 2,134,645 2,019,999 1,087,743 5,680,279 2,248,298 0 188,417 0 0 1,174,287 5,680,279 0 2,527,058 0 2,134,194 28,326 0 11,813 352,725 97,705 255,020 0 0 0 255,020 1.50 1.50
EX-10 3 Exhibit 10 MEMORANDUM OF AGREEMENT THIS AGREEMENT, made by and between Serge Okun, (hereinafter to referred to as "Okun"), on the one hand, and The Dun & Bradstreet Corporation, (hereinafter, unless the context indicates to the contrary, deemed to include its worldwide subsidiaries and affiliates and referred to as"D&B" or "the Company"), on the other hand. WITNESSETH THAT: WHEREAS, Okun has been employed by the Company since 1971; and WHEREAS, the parties to this Agreement desire to enter into an agreement in order to provide benefits and compensation to Okun until February 28, 1998; NOW, THEREFORE, in consideration of the premises and in consideration of the mutual covenants and promises hereinafter provided and of the actions taken pursuant thereto, the parties agree as follows: 1. Okun has resigned as Executive Vice President, as an officer of the Company and from any other D&B, IMS or A.C. Nielsen positions (other than as an employee) held by him with D&B, IMS or A.C. Nielsen effective February 17, 1995. 2. The Company will continue Okun as an employee on the active payroll of the Company until the earlier of the close of business on February 28, 1998, or his death, when his employment with the Company shall terminate. 3. Okun will be compensated on a regular payroll basis at an annual rate of $530,000 until February 28, 1998. In addition, in February, 1996 he will receive a bonus for 1995 of $450,000. He will also receive a bonus of $450,000 in February, 1997 for 1996 and a bonus of $450,000 in February, 1998 for 1997. Okun will not be eligible for any other bonus payments, nor will he earn any vacation subsequent to February 17, 1995. Creditable compensation for benefit plan purposes shall include salary and annual bonus payments (not allowances, unit awards or other payments described herein) as defined in the respective plan documents. The Company agrees that Okun will continue to receive quarterly overbase expatriate allowances until December 31, 1997 in the total gross amount of $50,000 per calendar quarter, payable during the last month of the quarter, commencing with a payment in March 1995 and terminating with the final quarterly payment in December 1997. In addition, Okun shall have no further obligations with respect to his relocation loan in the amount of 50,000 Swiss francs. Okun may also retain his current Company-owned automobile, as to which the Company shall continue to pay for insurance and regularly scheduled maintenance,until February 28, 1998 at which time Okun shall return the automobile in good condition to the Company, or purchase it at a mutually agreed price. Okun may retain his portable cellular phone and the home computer and fax system. Within 30 days of signing this Agreement Okun will receive a one-time cash allowance in the gross amount of U.S. $200,000 to cover currency fluctuations related to overseas assignment salary payments made to him by the Company in the three (3)calendar years 1992, 1993 and 1994. All payments provided for herein shall be less required statutory deductions, if any. If Okun should die prior to the payment of all monies specified in this Paragraph or in any other Paragraphs of this Agreement, the Company will make the remaining -17- payments on the dates specified directly to his surviving spouse or to the legal representative of his estate in the event that his spouse pre - -deceases him. 4. Until February 28, 1998, Okun will report directly to the Chief Executive Officer of the Company, and will be reasonably available, from time to time, to consult on matters relating to the Company, and will perform such mutually agreed to services for and on behalf of the Company as shall be reasonably assigned to him. During this period and for a reasonable period thereafter, if necessary, Okun will also cooperate fully with respect to any claims, litigations or investigations currently pending or to be brought by or against the Company as to which Okun may have knowledge of the facts and circumstances. It is understood that no reimbursement for business expenses shall be made to Okun after the date of this Agreement unless specifically documented in this Agreement or authorized in advance by the Company. 5. Okun will be eligible to receive all employee benefits, including medical, disability, dental and life insurance, made available to active employees of the Company under the terms of the Company's employee group benefit plans in which he participates on the date this Agreement is signed until February 28, 1998. The Company will also provide him with office space and reasonable secretarial support services for up to twenty-four (24) months at a mutually agreed upon location in the Zurich, Switzerland area. In addition, the Company will make available to Okun and pay for the services of a mutually agreed upon executive level career counselling firm, or, in lieu of such services, will pay Okun upon his written request a one-time allowance of $50,000, less required statutory deductions, if any. 6. Okun will continue as a participant in The Dun & Bradstreet Supplemental Executive Benefit Plan until February 28, 1998. Commencing August 1, 2001, the first of the month following the date Okun attains age 55, in addition to the benefit Okun will be entitled to receive from The Dun & Bradstreet Retirement Plan and the Pension Benefit Equalization Plan, Okun will receive a benefit from the Dun & Bradstreet Supplemental Executive Benefit Plan in accordance with the provisions of that Plan in effect on February 28, 1998, and for the purpose of determining such benefit, he will be deemed to have terminated his employment with the Company with the Company's consent. Retirement benefit calculation estimates are shown on Exhibit I, attached hereto. At least one year prior to August 1, 2001 Okun may elect to receive his D&B retirement benefit in the form of: (1) an annual lifetime annuity, or (2) a one-time lump sum payment, or (3) a combination of an annual lifetime annuity and a lump sum payment. 7. Stock option grants made to Okun prior to the date of this Agreement shall be exercisable or become exercisable in accordance with the provisions of the stock option and the Dun & Bradstreet Key Employees Stock Option Plan. In lieu of IMS or D&B Performance unit grants made to Okun prior to the date of this Agreement Okun shall receive the following severance payments: in February, 1996, a payment of $300,000; in February, 1997, a payment of $400,000, and in February, 1998, a payment of $450,000. In lieu of restricted stock grant opportunities, Okun will receive cash severance payments in the gross amounts of $300,000 in September, 1998 and $300,000 in March, 1999. 8. Restrictions on the restricted stock awards made to Okun prior to February 17, 1995 under The Dun & Bradstreet Key Employees Restricted Stock Plan shall lapse in accordance with the provisions of that Plan. 9. It is understood that subsequent to February 17, 1995, Okun will not be eligible for any additional stock option, performance unit and/or restricted stock grants. 10. This Agreement shall terminate in its entirety the Change in Control Severance Agreement between the Company and Okun dated September 19, 1994 which provides Okun with compensation and benefits in the event of the actual or constructive termination of his employment following a Change in Control of the Company and Okun's sole remedy for any non-performance of this Agreement by the Company shall be under this Agreement. At the time of the execution of this Agreement, Okun will deliver his copy of the Change in Control Severance Agreement to the Company, together with a letter from him acknowledging that such Agreement has been terminated. The Company that it shall cause a successor company, or companies, should there be a change in control of the Company before all payments and benefits are honored under this Agreement, to make such payments and provide such benefits to Okun as stated herein. 11. All payments provided under this Agreement are in lieu of any severance payments or any other payments to which Okun may be entitled in the United States and any other country and it is understood that, with the exception of the performance of the benefits and payments as provided in this Agreement, and benefits under any Company benefit plans in which Okun is a vested participant as of February 28, 1998, Okun specifically waives any and all rights to any other payments or benefits normally given to employees of the Company in the United States or any other country. Okun also represents that he is not now an employee of any French company, nor does he have any previous oral or written employment or severance agreements with a French company. 12. Okun agrees that for the period from the date of the execution of this Agreement until March 31, 2000 he will not become a stockholder (unless such stock is listed on a national securities exchange or traded on a daily basis in the over-the-counter market), employee, officer, director, or consultant of or to a corporation or a member or an employee of or a consultant to a partnership or any other business or firm which, at the time Okun were to take such action, competes with any of the businesses then owned or operated by the Company; nor will he become associated with a company, partnership, or individual, which company, partnership, or individual acts as a consultant to businesses in competition with the Company at the time Okun were to take such action. Further, Okun agrees that the restrictions contained in this paragraph shall apply to him whether or not he accepts any form of compensation from such competing entity or business consultant. Okun also agrees that for the period from the execution of this Agreement until March 31, 2000 he will not recruit or solicit, any customers of the Company to become customers of any business entity which, at the time Okun were to take such action, competes with any of the businesses owned or operated by the Company. In addition, Okun agrees that for the period from the date of the execution of this Agreement until January 1, 1997 neither Okun, nor any company or entity he controls or manages, shall hire, or cause to be hired, any employees of the Company. It is understood that any or all of the restrictions set forth in this paragraph may be waived with the written consent of the Company. Nothing in this Agreement shall preclude Okun from any employment or consulting not prohibited by this paragraph. 13. Okun agrees that he will not directly or indirectly disclose any confidential records, data, formulae, specifications and other trade secrets owned by the Company to any person or use any such information, except pursuant to court order or as a result of valid government order (in the case of such disclosure, Okun will provide the Company with written notice of such.) All records, files, drawings, documents, models, equipment and the like relating to the businesses of the Company, which Okun has used, prepared or came in contact with during his employment by the Company, shall be and remain the sole property of the Company and shall not be removed from the premises of the Company without its written consent. 14. From the date this Agreement is signed until March 31, 2000 Okun shall not originate any written or oral statement, news release, or other public announcement or publication, relating to his employment by the Company or relating to the Company its subsidiaries, its customers, its personnel, or agents without the prior written approval of the Company, except that Okun may disclose the fact of his prior employment with the Company and provide a factual description of his job titles and responsibilities with the Company in accordance with the Curriculum Vitae approved by the parties. Such factual description shall be limited to objective facts that are not subject to dispute and have been publicly disclosed prior thereto. In no event shall Okun attribute comments or opinions to the Company or disclose or discuss strategies or issues regarding the Company or its businesses. The Company agrees that it shall make no statement that personally or professionally disparages Okun. 15. Okun covenants that from the date of execution of this Agreement to forever refrain from disclosing to any third party (other than immediate family members, attorneys and advisors) or other entity any or all of the terms of this Agreement and covenants not to disclose same to any third party except pursuant to a court order or other valid governmental authority and only after giving the Company at least ten (10) days written notice of such proposed disclosure. 16. Okun agrees that in the event of any breach of the covenants contained in paragraphs 12, 13, 14 or 15, in addition to any remedies that may be available to the Company, the Company may cease all payments required to be made to Okun under this Agreement and/or recover all such payments previously made to Okun pursuant to the terms of this Agreement. The parties agree that any such breach would cause injury to the Company which cannot reasonably or adequately be quantified and that such relief does not constitute in any way a penalty or a forfeiture. Further, should such breach not be cured within five (5) calendar days after written notice of such has been received by Okun, Okun consents to an immediate injunction in a court of competent jurisdiction enjoining such breach pending a determination or resolution of the merits of such dispute. 17. Each of the parties, for themselves, their families, representatives, successors and assigns, except for the performance of the undertakings as provided for herein, covenants to forever refrain from instituting, maintaining, pressing, collecting or in any way aiding and proceeding upon, and releases and forever discharges one another and heirs, representatives, successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents, and trustees or administrators under any Company plans, from any and all claims, demands, debts, damages, injuries, actions or rights of action of any nature whatsoever, whether known or unknown, which one party had, now has or may have against the other party, its heirs, representatives, successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents, trustees or administrators under any Company plans, from the beginning of Okun's employment to and including the date of this Agreement, on account of, or arising out of any matter related to Okun's employment with the Company, or the termination of his employment. 18. Except for the performance of the undertakings as provided for herein, each party covenants that neither party, nor any of their respective heirs, representatives, successors and assigns, subsidiaries or affiliates will commence, prosecute, or cause to be commenced or prosecuted against the other party or any of its officers, employees, directors, agents, trustees, administrators, representatives, subsidiaries, affiliates, heirs, successors or assigns any action or other proceeding based upon any claims, demands, causes of action, obligations, damages or liabilities which are being released by this Agreement nor will any party seek to challenge the validity of this Agreement; and that each party will hold the other party and its officers, employees, directors, agents, trustees, administrators, heirs, representatives, subsidiaries, affiliates, successors, and assigns harmless from and against any and all claims for damages, judgments, court costs, attorney's fees, or expenses asserted against the other party or any of its officers, employees, directors, agents, trustees, administrators, heirs, representatives, subsidiaries, affiliates, successors or assigns as a result of or in connection with any proceeding brought by the other party, its subsidiaries, affiliates, heirs, representatives, successors, assigns, directors, officers, attorneys, or other persons under its or his control contrary to this Agreement. 19. The parties expressly understand and agree that the performance of this Agreement as provided for herein is in full accord, satisfaction and discharge of any and all claims by Okun against the Company and the directors, officers, employees, attorneys or agents of the Company, and that this Agreement has been executed with the express intention of extinguishing all obligations the Company has to Okun and all claims and rights that Okun has or could assert against the Company and/or the directors, officers, employees, attorneys or agents of the Company. 20. Okun acknowledges that (a) he has been advised to consult with an attorney at his own expense before executing this Agreement and that he has been advised by an attorney or has knowingly waived his right to do so, (b) he has had a period of at least twenty - -one (21) days within which to consider this Agreement, (c) he has a period of seven (7) days from the date that he signs this Agreement within which to revoke it and that this Agreement will not become effective or enforceable until the expiration of this seven (7) day revocation period, (d) he fully understands the terms and contents of this Agreement and freely, voluntarily knowingly and without coercion enters into this Agreement, (e) he acknowledges that he is receiving greater consideration hereunder than he would receive had his employment been terminated and that the consideration hereunder is given in exchange for all of the provisions hereof, and (f) he agrees and acknowledges that the waiver or release by him of rights or claims he may have under Title VII of the Civil Rights Act of 1964, as amended, The Employee Retirement Income Security Act, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act and/or any other local, state or federal law dealing with employment or the termination thereof up to the date of this Agreement, is knowing and voluntary and, accordingly, that it shall be a breach of this Agreement, other than to sue for the non- performance of the obligations hereunder, to institute any action or to recover any damages that would be in conflict with or contrary to this acknowledgment or the releases he has granted hereunder. 21. This Agreement constitutes the entire agreement of the parties and all prior negotiations or representations are merged herein or replaced hereby. It shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and legal representatives, but neither this Agreement nor any rights hereunder shall be assignable by either party without the other party's consent. In addition, except as provided herein, it is understood that this Agreement supersedes any prior employment or compensation agreement(s) in the United States or any other country whether written, oral or implied in law or implied in fact between Okun and The Dun & Bradstreet Corporation, IMS International or A.C. Nielsen, which prior agreement(s) are hereby terminated. Further, that except as provided herein, neither Okun nor the Company has any other legal obligation to one another. 22. The parties agree that any claim arising from the relationship between the parties, including their relationship under this Agreement, shall be brought and litigated in the state or federal court in the State of New York. The parties consent to the exclusive jurisdiction of those courts and waive all rights, if any, to raise objections in those courts on the basis of lack of subject matter jurisdiction, personal jurisdiction, venue, inconvenience or any other ground. This Agreement shall be interpreted in accordance with the internal laws of the State of New York. 23. If, for any reason whatsoever, any one or more of the provisions of this Agreement shall be held or deemed to be inoperative, unenforceable or invalid by a court of competent jurisdiction in a particular case or in all cases, such circumstances shall not have the effect of rendering such provision invalid in any other case or rendering any other provisions of this Agreement inoperative, unenforceable or invalid. IN WITNESS WHEREOF, Okun and The Dun & Bradstreet Corporation, by its duly authorized agent, have hereunder executed this Agreement. Dated: April 13, 1995 /s/ Serge Okun _____________ Serge Okun THE DUN & BRADSTREET CORPORATION /s/ Earl H. Doppelt ________________ Earl H. Doppelt Senior Vice President and General Counsel The Dun & Bradstreet Corporation Estimated Executive Benefit Compensation for Serge Okun Data Used in Calculation: Date of Birth: 07/18/46 Date of Hire: 02/02/71 Date of Retirement (DOR) 08/01/2001 Credited Service for Retirement Plan and PBEB 25.6667 Compensation:
Year Number of Months Amount 1993 10 $395,833.33 1994 12 960,000.00 1995 12 833,157.00 1996 12 980,000.00 1997 12 980,000.00 1998 2 538,333.33 ________________________________________________________________________ $4,687,323.66 Final Average Earnings $937,464.72 Percentage of Final Average Earnings for SEBP: 60.00%
Summary of Plan Benefits - -----------------------------------------------------------------------------
Lump Sum Amounts Payable 60 Days After DOR __________________________________________ Life Annuity Estimated Estimated Estimated Payable Annually Interest Rate Interest Rate Interest Rate Plan Beginning at DOR less 1/2% 6.82% plus 1/2% - ------------------------------------------------------------------------------ Retirement Plan 32,359.22 N/A N/A N/A - ------------------------------------------------------------------------------ Pension Benefit Equalization Plan 119,117.41 1,507,943.83 1,435,813.31 1,369,729.18 - ------------------------------------------------------------------------------ Supplemental Executive Benefit Plan 404,043.49 5,384,116.23 5,126,574.08 4,890,620.55 - ------------------------------------------------------------------------------ Total 555,520.12 - ----------------------------- Social Security Benefit 6,958.71 - ----------------------------- Grand Total 562,478.83 _____________________________ The Interest rate used to calculate lump sums is defined to be 85% of three- month average of the yields on 15-year coupon U.S. Treasury Bonds. These rates are determined on the last business day of each month for the three months immediately preceding retirement or termination. Please Note: Annual life annuity estimate is $555,520.12, plus a Social Security benefit from either the United States or from another country.
Calculation of Benefits: Retirement Plan and Pension Benefit Equalization Plan - ----------------------------------------------------- (a) 1.7% x Final Average Earnings x Credited Service up to 25 years x Early Retirement Factor = 1.7% x $937,464.72 x 25.0000 (b) 1.0% x Final Average Earnings x Credited Service over 25 years x Early Retirement Factor = 1.0% x $937,464.72 x 0.6667 (c) 1.7% x Social Security Benefit x Credited Service up to 25 years = 1.7% x $14,124 x 25.0000 (d) 0.5% x Social Security Benefit x Credited Service over 25 years and up to 40 years = 0.5% x $14,124 x 0.6667 Early Retirement Factor = 0.3800 Total Benefit Based on Retirement Plan Formula = ( (a)+(b) - (c)-(d) ) x Early Retirement Factor = $151,476.63 Retirement Plan = IRS Limit = $32,359.22 Pension Benefit Equalization Plan = Total Benefit Based on Retirement Plan Formula - Retirement Plan = $119,117.41 Supplemental Executive Benefit Plan - ------------------------------------ (a) 50% x Final Average Earnings = 50% x $937,464.72 (b) 2.0% x Final Average Earnings x Credited Service over 10 years and up to 15 years - 2.0% x $937,464.72 x 5.0000 (c) Social Security Benefit (as defined by the Supplemental Executive Benefit Plan) = $6,959 (d) Total Benefit Based on Retirement Plan Formula = $151,476.63 Early Retirement Factor = 1.0000 Supplemental Executive Benefit Plan = ( (a) + (b) - (c) - (d) ) x Early Retirement Factor = $404,043.49