-----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, AL9KdMc4xYatFDREIxH4lfgq9G2N0x4C0VwGq4r6MbKujgMJZOiSdDUX39aj1mzc vF4LGe1+Ps/UKPBJCFD1Sg== 0000030419-95-000012.txt : 19951121 0000030419-95-000012.hdr.sgml : 19951121 ACCESSION NUMBER: 0000030419-95-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95589694 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 September 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 October 31, 1995 ______________ Common Stock, par value $1 per share 169,346,670 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 September 30, 1995 and 1994 3 Nine Months Ended September 30, 1995 and 1994 4 Condensed Consolidated Statement of Cash Flows (Unaudited) Nine Months Ended September 30, 1995 and 1994 5 Condensed Consolidated Statement of Financial Position (Unaudited) September 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 10-13 PART II. OTHER INFORMATION ____________________________ Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14 -2- 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 September 30 ________________________ 1995 1994 ________________________ Operating Revenue $1,333.4 $1,203.4 Operating Costs, Selling and Administrative Expenses 1,149.9 953.0 Restructuring (Income)/Expense - Net (77.2) 0.0 ________ ________ Operating Income 260.7 250.4 Interest Expense - Net 8.0 4.3 Other Expense - Net 15.5 13.3 ________ ________ Non-Operating Expense - Net 23.5 17.6 Income Before Provision for Taxes 237.2 232.8 Provision for Income Taxes 65.7 66.1 _______ _______ Net Income $171.5 $166.7 ======= ======= Earnings Per Share of Common Stock $1.01 $0.98 ======= ======= Dividends Paid Per Share of Common Stock $0.66 $0.65 ======= ======= Average Number of Shares Outstanding 169.6 170.0 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)
Nine Months Ended September 30 ________________________ 1995 1994 ________________________ Operating Revenue $3,860.5 $3,487.3 Operating Costs, Selling and Administrative Expenses 3,284.1 2,863.0 Restructuring (Income)/Expense - Net (77.2) 0.0 ________ ________ Operating Income 653.6 624.3 Interest Expense - Net 19.8 4.1 Other Expense - Net 43.9 33.6 ________ ________ Non-Operating Expense - Net 63.7 37.7 Income Before Provision for Taxes 589.9 586.6 Provision for Income Taxes 163.4 166.6 _______ _______ Net Income $426.5 $420.0 ======= ======= Earnings Per Share of Common Stock $2.51 $2.47 ======= ======= Dividends Paid Per Share of Common Stock $1.97 $1.91 ======= ======= Average Number of Shares Outstanding 169.6 170.0 See accompanying notes to the condensed consolidated financial statements (unaudited). -4-
The Dun & Bradstreet Corporation Condensed Consolidated Statement of Cash Flows (Unaudited) Nine Months Ended September 30 1995 1994 (Amounts in millions) _____________________________________________________________________
Cash Flows from Operating Activities: Net Income $426.5 $420.0 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 351.8 309.0 Gain on Sale of Dunsnet Assets 0.0 (36.0) Revaluation of Computer Software and Other Assets 0.0 38.8 Restructuring Gains from Sale of Businesses (90.0) (56.3) Restructuring Provisions 12.8 56.3 Restructuring Payments (77.0) (109.6) Postemployment Benefits Expense 85.7 5.2 Postemployment Benefits Curtailment Loss/(Gain) 4.5 (33.4) Postemployment Benefit Payments (89.6) (124.5) Net Decrease in Accounts Receivable 48.2 75.0 Unearned Subscription Income 65.2 55.6 Income Taxes Paid- Net of Refunds (88.0) (139.7) Net Changes in Other Working Capital Item 39.8 (21.2) ____________________________________________________________________ Net Cash Provided by Operating Activities 689.9 439.2 ____________________________________________________________________ Cash Flows from Investing Activities: Proceeds from Marketable Securities 28.0 123.7 Payments for Marketable Securities (20.0) (153.7) Payments for Acquisition of Businesses (excluding cash and cash equivalents acquired of $1.9 in 1994 (21.4) (181.9) Proceeds from Sale of Businesses 201.0 143.6 Capital Expenditures (209.9) (213.7) Additions to Computer Software and Other Intangibles (151.1) (128.6) Increase in Other Investments and Notes Receivable (12.8) (53.9) Other 6.2 17.4 ______________________________________________________________________ Net Cash Used in Investing Activities (180.0) (447.1) ______________________________________________________________________ Cash Flows from Financing Activities: Payment of Dividends (334.4) (324.8) Payments for Purchase of Treasury Shares (50.7) (59.9) Net Proceeds from Exercise of Stock Options 18.0 19.4 Increase in U.S. Short-term Borrowings 13.2 363.0 Payment of Alaska Native Corp. Obligations 0.0 (166.2) Other (1.1) 30.4 ______________________________________________________________________ Net Cash Used in Financing Activities (355.0) (138.1) ______________________________________________________________________ Effect of Exchange Rate Changes on Cash and Cash Equivalents 10.1 14.0 ______________________________________________________________________ Increase (Decrease) in Cash & Cash Equivalents 165.0 (132.0) Cash and Cash Equivalents, Beginning of Year 335.4 650.9 ________________________________________________________________________ Cash and Cash Equivalents, End of Period $500.4 $518.9 ________________________________________________________________________ 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)
_________________________________________________________________________ September 30 December 31 1995 1994 _________________________________________________________________________ ASSETS Current Assets Cash and Cash Equivalents $500.4 $335.4 Marketable Securities 14.8 26.9 Accounts Receivable - Net 1,212.8 1,256.5 Other Current Assets 377.8 362.2 _______ _______ Total Current Assets 2,105.8 1,981.0 ____________________________________________________________________________ Investments Marketable Securities 144.9 133.1 Other Investments and Notes Receivable 381.8 366.4 _______ _______ Total Investments 526.7 499.5 __________________________________________________________________________ Property, Plant and Equipment - Net 927.6 918.5 __________________________________________________________________________ Other Assets - Net Deferred Charges 371.7 363.1 Computer Software 364.7 335.9 Other Intangibles 216.3 216.0 Goodwill 1,050.6 1,149.9 _______ _______ Total Other Assets - Net 2,003.3 2,064.9 _________________________________________________________________________ Total Assets $5,563.4 $5,463.9 _________________________________________________________________________ Liabilities and Shareowners' Equity Current Liabilities Accounts Payable $307.0 $290.2 Short-term Debt 513.5 500.6 Accrued and Other Current Liabilities 1,171.9 1,300.4 Accrued Income Taxes 124.3 95.4 _______ _______ Total Current Liabilities 2,116.7 2,186.6 ________________________________________________________________________ Unearned Subscription Income 358.4 290.3 Postretirement and Postemployment Benefits 533.1 484.9 Deferred Income Taxes 202.8 209.3 Other Liabilities and Minority Interests 951.8 974.2 ________________________________________________________________________ Total Liabilities $4,162.8 $4,145.3 Shareowners' Equity $1,400.6 $1,318.6 _________________________________________________________________________ Total Liabilities and Shareowners' Equity $5,563.4 $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 - Restructuring and Postemployment Benefit Costs In the third quarter of 1995, the Company completed the sale of Interactive Data Corp. to the Financial Times Group for $201 million in cash. The $90 million restructuring gain on the sale was offset by a restructuring charge of $12.8 million, primarily to write off software for product lines that were discontinued at Sales Technologies. In addition, in the third quarter of 1995, the Company initiated actions to improve future productivity. Costs included a provision of $77.2 million for postemployment benefits, primarily severance, for workforce reductions, which is included in operating costs. In the second quarter of 1994, the Company sold Thomson Directories and the Machinery Information Division of Dataquest. The $56.3 million restructuring gain on the sales were essentially offset by the costs of actions to restructure certain operations and businesses. Note 3 - 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 September 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 4 - 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. -7- Note 5 - 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. 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 September 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 6 - 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. -8- 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 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 has scheduled a hearing on the proposed settlement. The amount of the proposed settlement did not materially affect the Company's 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. -9- Item 2. Management's Discussion and Analysis of Financial __________________________________________________________ Condition and Results of Operations ____________________________________ Reported third-quarter revenue increased by 10.8% to $1,333.4 ______________________________ million from $1,203.4 million a year ago. Revenues increased as a result of a rebound at Moody's Investors Service due to the upswing in corporate bond-market volumes, and strong reported revenue growth at A.C. Nielsen (Nielsen), IMS International (IMS), Nielsen Media Research, Gartner Group and Dataquest. Dun & Bradstreet Information Services (DBIS) maintained good topline performance, while D&B Software's reported revenue growth hit double digits on the strength of client/server sales. Excluding the effects of acquisitions, divestitures and a weaker U.S. dollar, third-quarter revenue growth was 7.8%, up from 5% in the first half of 1995. In the first nine months of 1995, reported revenue increased 10.7% to $3,860.5 million from $3,487.3 million a year ago. Excluding the effects of acquisitions, divestitures and a weaker U.S. dollar,revenue for the period was up 6%. Earnings per share in the third quarter rose 3.1% to $1.01 per __________________ share,in line with expectations, reflecting previously announced plans to increase investment spending. Earnings were held down by weakness in DBIS' international operations, including the impact of integrating certain acquisitions and the effects of economic conditions in Latin America. Third- quarter profits also were dampened by several insolvencies that resulted in substantial losses at American Credit Indemnity (ACI). Based on long-term business requirements in Nielsen, D&B committed substantial dollars in the second half of 1995 to its European operations. The goal is to accelerate the transition from audit to scanning technology for fast-moving consumer goods, coupled with the introduction of the proven Household Panel Services in France and Germany. Earnings per share in the first nine months were $2.51, up 1.6% from $2.47 per share a year ago. Net income in the third quarter grew 2.9% to $171.5 million from ___________ $166.7 million a year ago. Net income for the nine months ended September 30,1995 increased 1.5% to $426.5 million from $420.0 million a year ago. Operating income in the third quarter increased 4.1% to $260.7 ________________ million from $250.4 million a year ago. Growth in operating income was held down by the increase in investment spending and the factors that held down earnings, as discussed above. Operating income in the first nine months increased 4.7% to $653.6 million from $624.3 million a year ago Growth in operating income for the nine months ended September 30, 1995 was held down by the substantial increase in investment spending on new revenue initiatives, the cyclical decline at Moody's during the first half of 1995, losses at ACI due to an increase in receivable-loss claims related to several insolvencies, and the effects on DBIS' operations of economic conditions in Latin America. Operating income for the period included a one-time $28 million gain reported in the first quarter of 1995, which was related to the sale of warrants received in connection with the divestiture of Donnelley Marketing in 1991. -10- In the third quarter of 1995, the Company completed the sale of Interactive Data Corp. to the Financial Times Group for $201 million in cash. The $90 million restructuring gain on the sale was offset by actions to improve future productivity. Costs included a provision of $77.2 million for postemployment benefits, primarily severance, for workforce reductions and $12.8 million primarily to write off software for product lines that were discontinued at Sales Technologies. Consequently, the sale and actions will not have a material effect on the Company's financial condition or 1995 results of operations. Several non-recurring gains and significant changes in costs were included in the third quarter of 1994. As a result of the decision to outsource communications services, the assets of DunsNet were sold for a pre-tax gain of $36.0 million. Dun & Bradstreet Plan Services was divested with no gain recorded. The Company also took proactive measures to improve D&B's future performance by accelerating the introduction of newer technologies, though this resulted in a charge of $38.8 million. The charge principally reflected the revaluation of certain computer software and other intangible assets that will be replaced or no longer be used at DBS, IMS, DBIS and Nielsen. In addition, a change in eligibility requirements for the Company's postretirement medical plan resulted in a curtailment gain of approximately $25.7 million, which was largely offset by a substantial increase in spending for new- product development. Non-operating expense-net in the third quarter was $23.5 million, _________________________ compared with $17.6 million a year ago. Non-operating expense-net in the third 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 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. Non-operating expense-net for the nine months ended September 30, 1995 was $63.7 million compared with non-operating expense-net of $37.7 million a year ago, primarily as a result of the factors noted above. The Company's effective tax rate for the first nine months of 1995 was 27.7%, compared with 28.4% for the comparable period in 1994. Business Segment Highlights ___________________________ Marketing Information Services reported 16.4% growth in third-quarter ______________________________ revenue to $598 million. Excluding the impact of a weaker U.S. dollar and acquisitions (Survey Research Group, AGB Australia/New Zealand and Amfac Chemdata), revenue growth for the segment was 9%. IMS' revenue rose 16% to $202 million on a reported basis, and 7% on an underlying basis. Revenue growth for the quarter was boosted by strong sales of new products and client winbacks in the U.S. Nielsen's revenue was up 16% to $322 million on a reported basis, and up 6% on an underlying basis. Nielsen Media Research posted strong underlying revenue growth in the third quarter, spurred by a robust advertising economy, additional broadcast and cable network subscribers and new services, such as local Hispanic audience measurement. Risk Management and Business Marketing Information Services ____________________________________________________________ reported third-quarter revenue growth of 9.3% to $428 million. Excluding the impact of a weaker U.S. dollar and the acquisition of Orefro L'Informazione in Italy and S&W in France, segment revenue increased 7%. Moody's Investors Service rebounded sharply in the third quarter, posting a strong gain in revenue driven by increased volume in the corporate bond market. DBIS' revenue was up 9% to -11- $340 million on a reported basis, and rose 3% on an underlying basis Revenue at DBIS U.S. increased 5% to $194 million, driven mainly by new products, such as Credit Scoring, Risk Assessment Manager and Database Marketing, as well as by an increase in new customers targeted by the unit's revamped sales force. While DBIS Europe's third-quarter revenue increased 16% on a reported basis, underlying revenue was down slightly due to weakness in several countries. Software Services reported a 12.4% increase in third-quarter ________________ revenue to $106 million. Excluding the impact of the weaker dollar and the acquisition of Pilot Software, underlying revenue growth was 8%. D&B Software (DBS) posted a double- digit increase in revenue growth, reflecting DBS' growing momentum in the rapidly expanding client/ server marketplace. For the full year, DBS' client/server revenue is expected to increase more than 150% to over $100 million. Directory Information Services reported a 2.1% increase in third- ______________________________ quarter revenue to $104 million. Growth for the quarter was helped by timing of directory publications, but held down by changes in commission rates and other contractual arrangements with telephone companies. Underlying third-quarter sales of Directory Information Services yellow pages directories were up slightly. Other Business Services reported a 4.5% increase in third-quarter _______________________ revenue to $98 million. Excluding the divestiture of D&B Plan Services, segment revenue rose 27%. Gartner Group and Dataquest both posted excellent growth in third-quarter revenue. NCH Promotional Services reported a decrease in revenue for the quarter, reflecting a decline in worldwide coupon redemptions and competitive pricing in the industry. Changes in Financial Condition at September 30, 1995 ____________________________________________________ Compared with December 31, 1994 _______________________________ Goodwill decreased to $1,050.6 million at September 30, 1995 from ________ $1,149.9 million at December 31, 1994, primarily reflecting amortization and the sale of Interactive Data Corp. Unearned Subscription Income increased to $358.4 million at ____________________________ September 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 ______________________________________________ Nine Months Ended September 30, 1995 and 1994 _____________________________________________ Net cash provided by operating activities for the nine months ended September 30, 1995 totaled $689.9 million compared with $439.2 million for the comparable period in 1994. The increase of $250.7 million reflected higher non-cash charges for depreciation and amortization ($42.8 million), lower restructuring and postemployment benefit payments ($67.5 million) and higher postemployment benefits expense ($80.5 million). The current period also included higher deferred revenue ($25.8 million) at D&B Software (included in net changes in other working capital items) and a decrease in income taxes paid-net of refunds ($52.1 million). These favorable variances were partially offset by higher restructuring gains, net of restructuring provisions ($77.2 million). -12- Net cash used in investing activities for the nine months ended September 30, 1995 totaled $180.0 million compared with $447.1 million for the comparable period in 1994. The decrease in cash usage of $267.1 million primarily reflected lower payments for acquisition of businesses ($160.5 million), lower payments for equity investments($41.1 million), included in other investments and notes receivable and higher proceeds from sale of businesses ($57.4 million). Net cash used in financing activities was $355.0 million for the nine months ended September 30, 1995 compared with net cash used in financing activities of $138.1 million for the comparable period in 1994. The increase in cash usage of $216.9 million primarily reflected lower U.S. short-term borrowings ($349.8 million) and lower non-U.S. borrowings ($31.5 million) included in other financing, partially offset by the absence of payments to an Alaska Native Corporation ($166.2 million). Other _____ Regarding 1995, the Company's fourth quarter outlook shows a continuation of the current revenue momentum. The Company is cautiously optimistic that this may generate a slightly better full-year revenue performance than originally anticipated. However, increased investment spending, the adverse trends at ACI and weakness at DBIS' international operations are expected to hold earnings growth slightly below mid- single-digit. Item 6. Exhibits and Reports on Form 8-K. _________________________________________ (a) Exhibits: (10) Material Contracts. (x) Agreement and Release, dated July 20, 1995, between Registrant and Edwin A. Bescherer, Jr. (27) Financial Data Schedule for the period ended September 30, 1995 (b) Reports on Form 8-K: None. -13- 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: November 10, 1995 By: \s\ NICHOLAS L. TRIVISONNO Nicholas L. Trivisonno Executive Vice President - Finance and Chief Financial Officer Date: November 10, 1995 By: \s\ THOMAS W. YOUNG Thomas W. Young, Senior Vice President and Controller -14- Index to Exhibits Regulation S-K ______________ Exhibit Number Page Number ______________ ____________ 10. Memorandum of Agreement, dated 16 July 20, 1995, between Registrant and Edwin A. Bescherer, Jr. 27. Financial Data Schedule (Filed electronically) -- -15- EX-27 2
5 1000 9-MOS DEC-31-1995 SEP-30-1995 500417 14672 1212761 0 0 2105802 1995989 1068423 5563347 2116708 0 188417 0 0 1212136 5563347 0 3860465 0 3206913 43861 0 19822 589869 163394 426475 0 0 0 426475 2.51 2.51
EX-10 3 Exhibit 10 AGREEMENT AND RELEASE THIS AGREEMENT AND RELEASE, made by and between Edwin A. Bescherer, Jr. (hereinafter referred to as "Employee"), and The Dun & Bradstreet Corporation (hereinafter deemed to include its worldwide subsidiaries and affiliates and referred to as "the Company"). WITNESSETH THAT: WHEREAS, Employee has been employed by the Company since the date specified in the Appendix; and WHEREAS, the parties to this Agreement desire to enter into an agreement in order to provide certain benefits and salary continuation to Employee; NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter provided and of the actions taken pursuant thereto, the parties agree as follows: 1. Employee will resign as Executive Vice President-Finance and Chief Financial Officer of the Company and from any other titled positions held by him with the Company upon the naming of a new Chief Financial Officer of the Company. 2. Effective on March 1, 1996, Employee will be entitled to the benefits provided under The Dun & Bradstreet Executive Transition Plan (the "Plan"), a copy of which Employee hereby acknowledges receipt, subject to the terms and conditions of such Plan and in accordance with the Summary of Benefit Entitlements specified in the Appendix. Effective on that same date, Employee will retire under the provisions of the Retirement Plan, the Pension Benefit Equalization Plan and the Supplemental Executive Benefit Plan (SEBP). For the purpose of determining benefits under the SEBP, Employee will be deemed to have terminated his employment with the consent of the Company. No amendment to the Plan shall affect the rights of Employee hereunder. 3. Through the Termination Date specified in the Appendix, Employee will be reasonably available to consult on matters, and will cooperate fully with respect to any claims, litigations or investigations, relating to the Company. 4. Employee agrees that until the Termination Date Employee 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 and the Employee's ownership interest is not in excess of 2% of the company whose shares are being purchased), employee, officer, director or consultant of or to a corporation, 16 or a member or an employee of or a consultant to a partnership or any other business or firm, which competes with any of the businesses owned or operated by the Company; nor if Employee becomes associated with a company, partnership or individual which company, partnership or individual acts as a consultant to businesses in competition with the Company will Employee provide services to such competing businesses. The restrictions contained in this paragraph shall apply whether or not Employee accepts any form of compensation from such competing entity or consultant. Employee also agrees that until the Termination Date Employee will not recruit or solicit any customers of the Company to become customers of any business entity which competes with any of the businesses owned or operated by the Company. In addition, Employee agrees that until the Termination Date neither Employee, nor any company or entity Employee controls or manages, shall recruit or solicit any employee of the Company to become an employee of any business entity. 5. If Employee performs services for an entity other than the Company at any time prior to the Termination Date (whether or not such entity is in competition with the Company), Employee shall notify the Company on or prior to the commencement thereof. To "perform services" shall mean employment or services, on a full-time basis, as an employee, partner, associate, agent or otherwise on behalf of any person, principal, partnership, firm or corporation. For purposes of this paragraph 5 only, "Company" shall mean The Dun & Bradstreet Corporation and any other affiliated entity more than 50% of the voting interests of which are owned, directly or indirectly, by The Dun & Bradstreet Corporation and which has elected to participate in The Dun & Bradstreet Career Transition Plan by action of its board of directors. 6. Employee agrees that Employee shall not directly or indirectly disclose any proprietary or confidential information, records, data, formulae, specifications or other trade secrets owned by the Company, whether oral or written, to any person or use any such information, except pursuant to court order (in which case Employee will first provide the Company with written notice of such). All records, files, drawings, documents, models, disks, equipment and the like relating to the businesses of the Company shall remain the sole property of the Company and shall not be removed from the premises of the Company. Employee further agrees to return to the Company any property of the Company which Employee may have, no matter where located, and, where applicable, not to keep any copies or portions thereof. 7. Employee shall not make any derogatory statements about the Company and shall not make any written or oral statement, news release or other announcement relating to Employee's employment by the Company or relating to the Company, its subsidiaries, customers or personnel, which is designed to embarrass or criticize any of the foregoing. 8. Employee agrees that in the event of any breach of the covenants contained in paragraphs 3, 4, 5, 6 or 7 in addition to any remedies that may be available to the Company, the Company may cease all payments required to be made to Employee under the Plan and recover all such payments previously made to Employee pursuant to the Plan. 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. 9. Employee, for Employee, Employee's family, representatives, successors and assigns releases and forever discharges the Company and its successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents and trustees or administrators of any Company plan from any and all claims, demands, debits, damages, injuries, actions or rights of action of any nature whatsoever, whether know or unknown, which Employee had, now has or may have against the Company, its successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents and trustees or administrators of any 17 Company plan, from the beginning of Employee's employment to and including the date of this Agreement relating to or arising out of Employee's employment with the Company or the termination of such employment other than a claim with respect to (i) a vested right Employee may have to receive benefits under any plan maintained by the Company; (ii) a right to indemnification by the Company regarding conduct of the Employee prior to the Termination Date; or (iii) rights arising under this Agreement. Employee represents that Employee has not filed any action, complaint, charge, grievance or arbitration against the Company or any of its successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents and trustees or administrators of any Company plan. 10. Employee covenants that neither Employee, nor any of Employee's respective heirs, representatives, successors or assigns, will commence, prosecute or cause to be commenced or prosecuted against the Company or any of its successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents and trustees or administrators of any Company plan 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 Employee seek to challenge the validity of this Agreement, except that this covenant not to sue does not affect Employee's future right to enforce appropriately the terms of this agreement in a court of competent jurisdiction. 11. Employee acknowledges that (a) Employee has been advised to consult with an attorney at Employee's own expense before executing this Agreement and that Employee has been advised by an attorney or has knowingly waived Employee's right to do so, (b) Employee has had a period of at least twenty-one (21) days within which to consider this Agreement, (c) Employee has a period of seven (7) days from the date that Employee 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) Employee fully understands the terms and contents of this Agreement and freely, voluntarily, knowingly and without coercion enters into this Agreement, (e) Employee is receiving greater consideration hereunder than Employee would receive had Employee not signed this Agreement and that the consideration hereunder is given in exchange for all of the provisions hereof and (f) the waiver or release by Employee of rights or claims Employee may have under Title VII of the Civil Rights Act of 1964, The Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Fair Labor Standards Act, the Americans with Disabilities Act, the Rehabilitation Act, the Worker Adjustment and Retraining Act (all as amended) and/or any other local, state or federal law dealing with employment or the termination thereof is knowing and voluntary and, accordingly, that it shall be a breach of this Agreement to institute any action or to recover any damages that would be in conflict with or contrary to this acknowledgment or the releases Employee has granted hereunder. Employee understands and agrees that the Company's payment of money and other benefits to Employee and Employee's signing of this Agreement does not in any way indicate that Employee has any viable claims against the Company or that the Company admits any liability whatsoever. 18 12. This Agreement constitutes the entire agreement of the parties and all prior negotiations or representations are merged herein. 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, this Agreement supersedes any prior employment or compensation agreement, whether written, oral or implied in law or implied in fact between Employee and the Company, other than those contracts and agreements excepted from the application of section 5.7 of the Plan pursuant to the terms of such section, which prior agreements are hereby terminated. 13. If for any reason 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, 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. 14. Upon Employee's resignation as set forth in paragraph 1 hereof, the Change in Control Severance Agreement between the Company and Employee shall terminate in its entirety. 15. This Agreement shall be construed in accordance with the internal laws of the State of New York, except to the extent superseded by applicable federal law. IN WITNESS WHEREOF, Employee and The Dun & Bradstreet Corporation, by its duly authorized agent, have hereunder executed this Agreement. Dated: July 20, 1995 \s\Edwin A. Bescherer, Jr. --------------------------- Employee THE DUN & BRADSTREET CORPORATION \s\Earl H. Doppelt ----------------------------- Senior Vice President and General Counsel Appendix Summary of Benefit Entitlements Under The Dun & Bradstreet Executive Transition Plan Employment with Company Since: July 31, 1978 Effective Date of Commencement of Benefits: March 1, 1996 Termination Date: February 28, 1998 Salary Continuation: Salary - $810,000 per year Period of Time - 104 weeks Welfare Benefit Continuation: The Dun & Bradstreet Corporation Medical, Dental and Life Insurance Plans Annual Bonus Payment: 100% of the annual bonus for 1995;2/12 of the annual bonus for 1996 at time of normal payment Long-Term Award: 100% of the long-term awards otherwise payable for the 1993-1995; 1994-1996; and 1995-1997 cycles at time of normal payment Financial Planning/Counseling: As previously provided by the Company (through 2/28/98) Profit Participation Plan Participation: Through February 29, 1996 Exercisability of Stock Options: As provided in the applicable Stock Option Plan upon retirement Restrictions on Restricted Stock: To lapse upon retirement in accordance with the applicable Restricted Stock Plan -----END PRIVACY-ENHANCED MESSAGE-----