10-K 1 [DESCRIPTION] 1994 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQURIED] For the fiscal year ended December 31, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO REE REQUIRED] 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, Connecticut 06897 _______________________________________ __________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203)834-4200 _____________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ____________________________________ _______________________ Common Stock, par value $1 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X ___ As of January 31, 1995, 169,669,960 shares of Common Stock of The Dun & Bradstreet Corporation were outstanding and the aggregate market value of such Common Stock held by nonaffiliates (based upon its closing transaction price on the Composite Tape on such date) was approximately $8,483 million. (Continued) ======================================================================= Documents Incorporated by Reference PART I ______ ITEM 1 -Business Performance & Outlook, 1994, Pages 35 and 36, Note 15 Operations by Business Segments and page 36, Note 16 Operations by Geographic Area, of the 1994 Annual Report. ITEM 3 -Legal Proceedings Page 33, Note 13 Litigation, of the 1994 Annual Report. PART II ________ ITEM 5 -Market for the Registrant's Page 20, Financial Review, of the Common Equity and Related 1994 Annual Report. Stockholder Matters ITEM 6 -Selected Financial Data Pages 38 and 39, Ten-Year Selected Financial Data, of the 1994 Annual Report. ITEM 7 -Management's Discussion Pages 16 to 20, Financial Review, and Analysis of Financial of the 1994 Annual Report. Condition and Results of Operations ITEM 8 -Financial Statements and Pages 21 to 37 of the 1994 Annual SupplementaryData Report. PART III ________ ITEM 10 -Directors and Executive Pages 2 to 4 of the Company's Officers of the Registrant Proxy Statement dated March 10, 1995. ITEM 11 -Executive Compensation Pages 17 to 27 of the Company's Proxy Statement dated March 10, 1995. ITEM 12 -Security Ownership of Pages 27 to 29 of the Company's Certain Beneficial Proxy Statement dated March 10, Owners and Management 1995. ITEM 13 -Certain Relationships and Pages 27 to 29 of the Company's Related Transactions Proxy Statement dated March 10, 1995. __________________________________________________________ The Index to Exhibits is located on Pages 23 to 25. PART I As used in this report, except where the context indicates otherwise, the term "Company" means The Dun & Bradstreet Corporation and all subsidiaries consolidated in the financial statements contained herein. ITEM 1. BUSINESS (a)(1) The Dun & Bradstreet Corporation was incorporated under the laws of the State of Delaware on February 6, 1973 and became the parent holding company of Dun & Bradstreet, Inc. and its subsidiaries on June 1, 1973. Dun & Bradstreet, Inc. was incorporated under the laws of the State of Delaware in 1930 and is the successor to a business commenced in 1841. (2) Not applicable. (b)(1) The response to this item is incorporated herein by reference to Note 15 Operations by Business Segments on Pages 35 to 36 of the 1994 Annual Report. (2) Not applicable. (c)(1) The Dun & Bradstreet Corporation is a non-operating holding company whose revenue is derived primarily from dividends received from its subsidiaries. Reference should be made to EXHIBIT B, List of Active Subsidiaries as of January 31, 1995, which describes the Company's subsidiaries. A descriptive narrative of the Company's business segments follows item (d). The number of full-time equivalent employees at December 31, 1994 was approximately 47,100. (d) The response to this item is incorporated herein by reference to Note 16 Operations by Geographic Area on Page 36 of the 1994 Annual Report. The Company is the world's leading marketer of information, software and services for business decision making. Its operations can be divided into five business segments: Marketing Information Services, Risk Management and Business Marketing Information Services, Software Services, Directory Information Services and Other Business Services. A narrative description of the Company's operations by business segment follows. MARKETING INFORMATION SERVICES IMS International, Inc. IMS International, Inc. (IMS) provides information and decision support services to the pharmaceutical and healthcare industries. IMS' principal services are sales territory reports, national pharmaceutical-sales audits and national medical audits, as well as a multinational data analysis system. Within each of these product classes, individual country-level reports may differ in one or more important characteristics depending on the circumstances of local pharmaceutical sales and distribution. IMS' reports are provided in printed format, as well as on-line inquiry-batch processing services and as part of electronic customer-site workstations. IMS provides information services covering over 70 countries and maintains offices in 53 countries on six continents, with 69% of total revenue generated outside the U.S. Sales-territory reports measure the effectiveness of pharmaceutical companies' sales forces, by product and product group within a geographic configuration tailored to each client's needs. IMS sales- territory reports are available in 26 countries and account for approximately 40% of IMS' worldwide revenues. New product introductions in 1994 included Xponent and PlanTrak pharmacy and managed-care information services and the Japan Sales Territory Report. Pharmaceutical audits are syndicated reports which measure sales of pharmaceutical products for an entire national market and are primarily used by pharmaceutical companies to understand market dynamics and plan effective business strategies. Pharmaceutical audits are available in over 65 countries. National medical audits are syndicated reports utilizing data from physician practices to provide information on how pharmaceutical products are used, including patient and doctor details, diagnosis and drug therapy. Medical audits are available in over 40 countries. During 1994, IMS acquired Amfac Chemdata in Australia, a leading developer of pharmacy management software, and Emron, a provider of managed-care information, software and marketing services to pharmaceutical manufacturers. The raw data from which IMS' services are generated are derived either from statistically selected panels of drugstores, hospitals, physicians, etc., or from activities such as warehouse shipments or wholesalers sales data. To protect privacy, no individual patient is identified in any IMS medical database. IMS has generally well- established relationships with the sources required to create its databases and in many cases has historical connections with the trade associations and professional societies involved. All major pharmaceutical companies are customers of IMS and many of the companies subscribe to reports and services in several countries. The scope of IMS' customer base enables it to avoid dependence on any single customer. While the services offered by IMS are in many ways unique in their scope and completeness, there is competition in many countries in which it operates from other market research firms, direct mail and information service firms, as well as the in-house capabilities of its customers. Competition has traditionally arisen on a country-by- country basis but one company now provides information services to the pharmaceutical industry in a number of countries. However, no competitor has the global presence nor offers the range of services that IMS does. Nielsen Nielsen participates in the global consumer marketing information services market. Nielsen is the world's largest marketing information and services supplier. Nielsen supplies a wide range of services that help consumer-goods manufacturers screen, plan, test and evaluate their individual brands and marketing programs. Comprehensive information is supplied on sales volume, shares, trends, pricing, promotion, distribution and inventory levels. Nielsen is a leader in providing these services to numerous industries including the grocery, beverage and health and beauty care industries. An extensive range of test- marketing services, innovative applications, analytical services and software tools is also provided. Nielsen offers services to consumer- goods marketers in 90 countries worldwide, with approximately three- quarters of its revenues generated outside the U.S. Nielsen provides a measurement of the consumer response at the actual point of sale -- the final result of the manufacturer's and retailer's production and marketing efforts. From a sample of retail stores, Nielsen collects point-of-sale information via electronic means such as scanning of universal product codes (UPC) and store visits by professional auditors. In the U.S. and other countries where electronic point-of-sale data are available, weekly reporting of product sales and related marketing information is the primary product offering along with value-added analysis, such as market-response modeling and promotion effectiveness studies. In the audit environment, store purchases are combined with change-of-stock-on- hand data to produce data on sales to consumers, retail inventories, brand distribution, out-of-stock items, prices and displays. Nielsen has established a unit devoted to Efficient Consumer Response (ECR), an emerging trend in the consumer packaged goods industry to streamline distribution and sales processes, eliminate waste and deliver products to consumers faster and at a lower cost. Nielsen has formed several strategic alliances to enhance its capabilities in ECR and to begin instituting best practices in the industry. Through the addition of Nielsen's household-panel data, information is not only provided on what stores are selling, but also on what cooperating households are buying. Nielsen Household Services provide manufacturers and retailers with detailed consumer-behavior analyses that help identify target audiences and assess advertising and marketing effectiveness. These data, coupled with advertising and promotion stimuli, by household, provide a powerful addition to Nielsen's retail-store databases. Household data are available in many countries including the U.S. Through Nielsen's decision-support and software services, customers can retrieve data and analyze information via personal computers and terminals installed in their offices. Customers can access information in a number of ways, including on-line connection to mainframes or downloading data into the customer's personal computer or internal management information systems. Nielsen provides a number of analytic applications that assist customers in a more productive and efficient use of their own and Nielsen's information. The Nielsen Workstation, an innovative Windows-based software system, allows marketing and sales managers to integrate and evaluate information from a wide array of sources. Nielsen Spotlight is an expert system that -2- enables users to access a database to find the most important facts related to volume and share changes for a brand and searches for the key factors that influence these share changes. Opportunity Explorer helps manufacturers' marketing and sales force personnel understand category dynamics and pinpoint opportunities for increasing sales. Promotion Simulator takes the analysis to the next stage by helping the sales force evaluate and plan promotion strategies with the retailers. The SPACEMAN space management family of products offers a hierarchy of integrated solutions for analyzing merchandising variables and producing automated "planograms." Nielsen Solution System will provide a faster and more efficient method of accessing and analyzing information. The increased flexibility and functionality of Nielsen Solution System provides for greater depth and breadth of information analysis. During 1994, Nielsen acquired Survey Research Group (SRG), the premier supplier of market research information throughout Asia. This acquisition will build upon Nielsen's commitment to provide customers worldwide a full range of solution services including advanced software, advertising expenditure measurement, customized research, household panel information, readership research, retail and wholesale tracking, scanning and television audience measurement. This acquisition gives Nielsen a strong position in one of the most rapidly expanding markets in the world. Nielsen's products and services are subject to direct and indirect competition from rival marketing research, information services and software companies, marketing research departments of advertisers, advertising agencies and consulting firms, as well as the in-house operations of a number of large manufacturers and publishers. There are six major competitors worldwide, located in the U.S., Europe, Latin America and the Far East, but none has the global depth and breadth of coverage that Nielsen provides. Nielsen Media Nielsen Media measures television audiences and reports this and related information to advertisers, advertising agencies, syndicators, broadcast networks, cable networks, cable operators, television stations and station representatives in order to increase the effectiveness of television advertising and programming. This syndicated information is offered on a subscription basis. Custom or ad-hoc analyses of the data are also offered. The information is then used by subscribers to buy, sell, plan and price television time and to make programming and scheduling decisions. In 1994, advertisers spent approximately $33.7 billion on television advertising, including $2.2 billion on cable television advertising, according to McCann-Erickson Worldwide, to bring a variety of programs and advertising messages to approximately 95.4 million U.S. television households. These data underscore the need for television stations, networks, advertisers, advertising agencies and others to obtain reports on how many households and types of people are reached by such programming. Nielsen Media measures television audiences and reports data through six services: Nielsen Television Index, Nielsen Syndication Services, Nielsen Homevideo Index, Nielsen Station Index, Nielsen Hispanic Television Index and Nielsen Hispanic Station Index. Nielsen Television Index provides daily audience measurement and demographic estimates for all national broadcast network-television programs through the use of the Nielsen People Meter. Nielsen Syndication Services provides reports and services on both the local and national levels to the program syndication segment of the television industry. Nielsen Homevideo Index provides viewing measurement of cable, pay cable and other newer television technologies. Nielsen Station Index provides television audience measurement information in over 200 local markets and daily information in 32 markets through set meters in the U.S. Nielsen Hispanic Television Index provides viewing measurement of national Hispanic audiences, while Nielsen Hispanic Station Index provides viewing measurement of local Hispanic audiences. Television audience research services based on techniques similar to those described above are also provided in Canada, Finland, Sweden, Poland, South Africa, Australia, New Zealand, Columbia, Argentina, Brazil, Ecuador, Japan, Singapore, China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Taiwan and Thailand. Nielsen Media has maintained a strong leadership position in relation to its competitors. Arbitron, a former competitor, discontinued its syndicated broadcast and cable television ratings service as of December 31, 1993. A television ratings project funded by the Committee on Nationwide Television Audience Measurement (CONTAM) and designed and operated by Statistical Research, Inc., is developing a national television ratings laboratory, with testing planned for late 1995, that could give rise to a national competitor. On the local level, ADCOM, an emerging competitor, has announced plans to offer individual cable system measurement. Arbitron continues to develop its passive people meter technology and could use this to re- enter the television audience measurement business. Indirectly, on both a national and local basis, competition stems from other marketing research services offering product movement and television audience data and services. During 1994, Nielsen Media -3- again expanded its local market television services and continued to invest to enhance product value, technical competencies and data quality. Significant investments are being made to upgrade the company's computer and metering technologies. Nielsen, IMS and Nielsen Media are subject to the usual risks inherent in carrying on business in certain countries outside the U.S., including currency fluctuations, possible nationalization, expropriation, price controls or other restrictive government actions. Management believes that the risk of nationalization or expropriation is reduced because its basic service is the delivery of information, rather than the production of products which require manufacturing facilities or the use of natural resources. RISK MANAGEMENT AND BUSINESS MARKETING INFORMATION SERVICES Dun & Bradstreet Information Services Dun & Bradstreet Information Services (DBIS) is the world's largest supplier of business, commercial-credit and business- marketing information services, with operations in more than 30 countries and a worldwide database covering more than 38 million businesses. DBIS also provides receivables management services worldwide and credit insurance in the U.S. and Canada. DBIS is organized into three regions: North America, Europe and Asia-Pacific, Canada, Latin America. Dun & Bradstreet Information Services U.S. Dun & Bradstreet Information Services, U.S. provides business information, marketing information, receivable management and credit insurance services through U.S. Credit Information Services, Receivable Management Services, Business Marketing Services and American Credit Indemnity Company, which are described below: U. S. Credit Information Services U. S. Credit Information Services provides its customers with access to a database on more than 10 million U.S. businesses. Its core product services include the Business Information Report, Payment Analysis Report, Credit Scoring and reference services. Value-added solutions are provided through Specialized Industry Services, Predictive Scoring Services, Industry and Financial Consulting Services, Business Development Services, Analytical Services and Monitoring Services. Customers can order and receive information in a variety of ways, including mail, phone, fax, from personal computers and through a variety of customized high-volume connections between Dun & Bradstreet and customer computer systems. U.S. Credit Information Services sells directly to customers. It also distributes its information via a number of other firms, including leading vendors of on-line services. Subscribers to Credit Information Services (approximately 63,000 contract customers and over 165,000 non-contract customers in the U.S.) use this information in making decisions to extend commercial credit, approve loans and leases, underwrite insurance, evaluate vendors, and make other financial and risk assessment decisions. Credit Information Services' largest customers are major manufacturers and wholesalers, insurance companies, banks and other credit and financial institutions. The Business Information Report contains commercial credit information on specific businesses. This report includes the D&B Rating and the PAYDEX score, a dollar-weighted numerical score of the company's payment performance. Both the D&B Rating and the PAYDEX score are based on information in the Dun & Bradstreet database. The Business Information Report also includes summary information and detailed payment data, as well as financial, banking, public filing, historical and operational data. The Dun & Bradstreet Reference Book of American Business contains listings on approximately 3 million businesses in the United States and Puerto Rico. This reference book also contains the D&B Rating, which reflects the credit and financial strength of a business. The Payment Analysis Report provides information on a company's payment record and includes the PAYDEX score, the 90-day PAYDEX score, historical trends and industry comparisons. Predictive Credit Scoring services combine advanced statistical modeling with Dun & Bradstreet's database to help customers automate their risk management processes. D&B Express and other mass market services provide non-contract customers who have an occasional need for business information with data on a specific company. Credit Information Services also markets other specialized reports and business information. -4- Credit Information Services is believed to be the largest commercial credit reporting agency in the world. However, it faces competition both from in-house operations of the businesses it seeks as customers and from other general and specialized credit reporting services. It believes the principal methods of competition to be based on information quality, availability, service and price. Receivable Management Services Receivable Management Services (RMS) provides its customers with a full range of accounts receivable management services, including third party collection of accounts, letter demand services and receivable outsourcing programs. These services substitute and/or enhance the customer's own internal management of accounts receivable. RMS collects delinquent receivables primarily from commercial establishments on behalf of more than 35,000 customers, including commercial and insurance enterprises and government agencies. Collection services are provided throughout the U.S. with charges generally contingent upon collection. RMS also provides receivable outsourcing programs, letter demand services and customer training programs on a fixed-fee or contract basis. Certain states require that RMS, or in some instances an individual associate of RMS who is responsible for the conduct of relevant operations in the respective state, be licensed in connection with collection operations. The laws under which such licenses are granted generally provide for annual license renewals, as well as denials, suspensions or revocations for improper actions or other factors. RMS is considered to be the leader in the commercial collection industry. RMS faces competition from numerous other commercial collection agencies, attorneys who receive claims directly from clients and companies that conduct commercial collections in-house. In addition, RMS faces potential competition from the expansion of large consumer agencies into the commercial marketplace. Business Marketing Services Business Marketing Services (BMS) provides marketing information for business-to-business and educational marketers. BMS consists of Dun's Marketing Services and Market Data Retrieval. BMS units provide comprehensive information and related services used to plan, execute and evaluate the results of marketing programs; model, target and reach prospects; and track sales activities. This information is derived from a proprietary database covering more than 36 million businesses in over 200 countries. Information is delivered in print, on diskette, magnetic tape, CD-ROM and on-line formats. Market Data Retrieval offers services that help businesses sell to the educational market. The products provided include information about course offerings, facilities, teachers and administrators in primary and secondary schools, school districts, preschools, libraries, colleges and universities. BMS, while a market leader in its industry, faces competition from other data providers in competitive distribution channels, delivery formats and data quality enhancements. American Credit Indemnity Company American Credit Indemnity Company (ACI) insures manufacturers, wholesalers and other businesses against excessive credit losses from commercial accounts. ACI also provides credit-risk management services for business credit-insurance policyholders. ACI's services are distributed through its own dedicated agency force with offices throughout the U.S. and Canada. ACI's policy terms are generally for twelve months. Coverage with respect to a particular credit risk being insured can be canceled at any time by ACI as to future shipments, upon notice to the policyholder. A business credit insurance specialist since 1893, ACI enjoys a substantial market position with regard to credit insurance policies which are issued in the U.S. and Canada. Competition arises from other providers of business-credit insurance and from providers of other financial services such as factoring. At the same time, however, the potential market for credit insurance is not deeply penetrated by ACI or other credit insurers. -5- Dun & Bradstreet Information Services Europe/Middle East/Africa and Dun & Bradstreet Information Services Asia-Pacific, Canada, Latin America Dun & Bradstreet Information Services Europe/Middle East/Africa and Asia-Pacific, Canada, Latin America (DBIS Europe and Asia-Pacific, Canada, Latin America, respectively) opened their first overseas office in 1857 and today conduct operations in offices and branches located throughout Europe, Latin America, Africa, the Middle East, Asia, Japan, the Pacific Rim and Canada. DBIS Europe and DBIS Asia-Pacific, Canada, Latin America provide substantially the same business information, marketing information and receivable management services globally outside the United States as those provided by Dun & Bradstreet Information Services, U.S. The Business Information Report contains background and financial information on businesses located throughout the world obtained from D&B offices in the 35 countries where there are full operations and from Dun & Bradstreet correspondents in over 200 other countries. DBIS Europe and Asia-Pacific, Canada, Latin America's other major products or services include analytical tools to help improve business decisions, local and international credit-reference publications, marketing publications, marketing information systems, consumer- credit information, as well as receivable-management services. Customers can receive information through a direct link to the computer, in printed form, by fax, on CD-ROM, or through third parties. During 1994, DBIS Europe expanded its European market share in credit information and receivable management services by acquiring a number of businesses, including S&W, a business information company located in France; Orefro, a business information company located in Italy; and Novinform, a business information company located in Switzerland. DBIS Europe also extended its geographic presence by entering into a joint venture with the European Bank for Reconstruction and Development (EBRD) to start-up business information companies in Hungary, the Czech Republic and Poland. In addition, DBIS Europe expanded its business information capabilities by further investments in data and systems. In 1994, Dun & Bradstreet Japan (D&B Japan) and Japan's second largest credit information provider, Tokyo Shoko Research, Ltd. (TSR) announced their intent to form a marketing, technology and database alliance. The alliance will result in the utilization of TSR's capabilities and resources in the Japan market and D&B Japan's resources as a global information provider. DBIS Europe and DBIS Asia-Pacific, Canada, Latin America's operations are subject to the usual risks inherent in carrying on business in certain countries outside of the U.S., including currency fluctuations, possible nationalization, expropriation, price controls, changes in the availability of data from public sector sources, limits on providing information across borders or other restrictive government action. Management believes that the risk of nationalization or expropriation is reduced because its basic service is the delivery of information, rather than the production of products which require manufacturing facilities or the use of natural resources. DBIS Europe and DBIS Asia-Pacific, Canada, Latin America face competition from banks, credit insurance companies, application software developers and in-house operations of businesses as well as direct competition from businesses providing similar services. DBIS Europe is the largest single supplier of credit information services in Europe. The competition is primarily local and there are no competitors offering a comparable range of global services or capabilities as DBIS Europe. Moody's Investors Service, Inc. Moody's Investors Service, Inc. (Moody's) assigns ratings to fixed income securities and publishes a wide variety of business and financial information. Moody's business extends to over 60 countries and its customers include corporations, stockbrokers, governments, municipalities, banks, libraries, institutions and individuals. Moody's assigns ratings to various corporate and governmental obligations, Eurosecurities, structured finance transactions and commercial paper issuers, for which it charges most issuers a fee. At the end of 1994, Moody's had outstanding ratings on approximately 47,000 corporate and 51,000 municipal obligations. Corporate, municipal and government ratings are disseminated to the public through a variety of electronic and print media. A detailed description both of the issue which is rated and of the issuer, along with a summary of the rating rationale for the assignment of the specific rating, also appears in various Moody's publications. -6- In addition to revenues derived from ratings, Moody's provides comprehensive historical and current business, financial, investment and marketing information on over 34,000 major U.S. and non-U.S. entities and on over 23,000 municipalities and governments and their securities. This information is available in eight Manuals and on CD-ROM, tapes and other electronic formats. The Manuals are published annually and are supplemented by news reports issued on a weekly basis. Moody's also publishes a variety of investment guides. Moody's international operations have continued to grow due to the expansion of international debt markets in recent years. Moody's maintains offices in nine countries outside of the U.S. Moody's non- U.S. operations are subject to the usual risks inherent in carrying on business in countries outside the U.S., including currency fluctuations, possible nationalization, expropriation, price controls and/or other restrictive government actions. Management believes that the risks of nationalization or expropriation are negligible. Moody's business is not solely dependent on non-U.S. office operations as these offices are supported by the intensive travel schedule of an internationally-focused staff. As one of the two largest ratings agencies in the U.S., Moody's provides opinions on debt instruments and other obligations of both U.S. and non-U.S. issuers. Internationally, a large number of national and international ratings agencies have been created over the last several years as the value of the ratings process has become better nderstood and utilized abroad. However, Moody's believes that its long-standing reputation for high quality and its pre-eminent position in the marketplace leaves it well positioned to take advantage of the growth in ratable debt. Moody's publishing business is a viable competitor in the large and highly-segmented print market for financial information. Moody's intends to maintain this well-established franchise in the print market through enhancements of its databases and by further expansion into the electronic market for financial information as a data provider. Moody's is registered as an investment adviser under the Investment Advisers Act of 1940 and the laws of a number of states. Interactive Data Corporation Interactive Data Corporation's (Interactive) principal business is to provide securities information, including latest pricing and descriptive data, corporate actions and announcements for most types of securities, domestic and international. This information is delivered soon after close-of-market for securities accounting applications, including mutual fund and unit investment trust pricing. Interactive also provides investment analysis software and related computer services to financial organizations. Databases offered by Interactive include price, volume and other data on corporate equities and options, corporate bonds, U.S. Government and agency securities, municipal bonds and other securities, as well as company financial information such as revenues, earnings and assets. Financial data are available on more than 12,000 U.S. and non-U.S. companies, while securities data are available on more than 111,000 North American equity securities, as well as numerous North American government and municipal securities, and over 90,000 securities traded outside North America. Data are updated daily, monthly, quarterly or annually as new information becomes available. A wide range of database management and applications software is also offered to retrieve, manipulate, screen, download and analyze Interactive's and the customer's data. Delivery mechanisms available to suit individual customer's needs include direct mainframe-to-mainframe transmission, on-line telecommunication to a microcomputer or terminal and computer tape delivered to the customer by courier or mail. Services are distributed directly to end-user customers and by direct sales distributors of value-added applications and other data delivery companies. Interactive's services mainly target the banking, brokerage, insurance, mutual fund and money manager customer segments. End users include operations managers, money managers, portfolio managers, research analysts and pension fund sponsors. Interactive receives the data from public sources or under license agreements from other organizations which collect data and creates its own evaluations for delivery to customers. Although certain licenses are important to the business, Interactive believes that it could continue to conduct the business without these licenses, although at a greater expense. Interactive has three or four major competitors in each of its business lines. The principal areas of competition are in quality of service, primarily accuracy, quality of data, coverage and price, and, in the case of software, functionality. -7- SOFTWARE SERVICES Dun & Bradstreet Software Services, Inc. Dun & Bradstreet Software Services, Inc. (D&B Software) is a worldwide leader in the marketplace for client/server and mainframe software for financial, human-resource and manufacturing applications and decision support. D&B Software products are installed throughout the world on a wide range of computer hardware platforms, including Data General, Digital Equipment Corporation, Fujitsu, Hewlett-Packard, IBM, ICL and SUN. D&B Software's products consist of an extensive line of applications software packages for business management as well as related implementation and education services. In addition, D&B Software provides application tools which enable users to customize their own applications, link mainframe and microcomputers and perform sophisticated report writing. Revenues are derived primarily from sales of perpetual non- exclusive licenses to use D&B Software's products, annual maintenance fees for such products and customer education and consulting services related to implementation of license products. Most of the license and services revenue is generated by a direct sales force. Maintenance fees and professional services currently comprise approximately 64% and 21% of D&B Software's revenues, respectively. Approximately 32% of total revenue is generated from operations outside of the U.S. During 1994, D&B Software continued to broaden and enhance its new client/server product line. SmartStream 3.0, a major new release of the SmartStream suite of products, was released in November. This release included the first releases of StreamBuilder and Manufacturing Stream along with upgrades of Financial Stream, HR Stream and SmartStream Decision Support. During 1994, D&B Software released eight new products which are supported by four new platforms and are in two foreign languages. SmartStream 3.0 enhancements include improved information delivery, purchasing and allocations modules, and a business process orientation based on workflow and agent technologies. These improvements address enterprise-wide information management requirements. D&B Software has strategic alliances with Powersoft, Sybase and Cognos and incorporates software developed by alliance partners in its client/server decision support software and application offerings. D&B Software also has strategic alliances with hardware vendors such as Hewlett Packard, IBM, SUN and Digital Equipment Corporation. D&B Software incurs significant costs in enhancing its existing product line as well as developing new client/server applications. As the company continues to invest in and build technologically emerging client/server solutions, D&B Software will face new risks including the ability to build new client/server products and related after- market products, migrate customers to new applications and manage changes in capabilities required to install and support new products and manage strategic alliance relationships. D&B Software faces numerous existing as well as potential competitors. Most competitors operate as niche players in particular segments of the marketplace. However, SAP, Oracle and PeopleSoft are often encountered in competitive situations. As in the past, D&B Software anticipates that the field of competitors will change dramatically, resulting from technological changes and shifts in customer needs. The management of D&B Software believes the quality of software and related customer support are important competitive factors in this industry. Sales Technologies, Inc. Sales Technologies, Inc. (ST), a leader in the field of sales automation solutions, develops, installs and supports networked systems that enable organizations to improve sales force effectiveness, productivity, communication and customer satisfaction. ST's products focus on managing sales-force opportunities. Designed to improve communication between corporate and field offices, ST's products allow multiple personnel access to customer and prospect information--fully supporting the team-selling environment. Through a key feature called "transactions," synchronized net changes are communicated between corporate and field databases to ensure each individual is working with up-to-date information. As a market leader, ST provides customers with a unique combination of expertise in vertical industries, training, consulting, selling methodologies, implementation and roll-out. ST's services staff can also integrate many customers' existing applications. -8- ST offers its customers competitive advantage in many areas, due to ST's organizational size, strength, alliances with key data providers and number of years in the sales automation business. In particular, the linkages with other Dun & Bradstreet databases are of increasing value to customers. ST also provides superior implementation, system integration, management consulting, user training, help desk, hardware repair and replacement, database design and facilities management services, resulting in turnkey solutions. Although there are hundreds of other sales automation niche vendors, ST believes its strength lies in working with its customers to provide a total, integrated solution to actual business problems in the pharmaceutical, consumer packaged foods, high-technology manufacturing and financial services industries, as well as other business-to-business markets. Pilot Software, Inc. Pilot Software, Inc. (Pilot), acquired in late 1994, is a leader in software solutions for on-line analytical processing (OLAP). Its business intelligence systems offer powerful tools to access and analyze data in an intuitive, visually appealing manner. Pilot's software products include graphical front-end, middleware and data server tools that are designed to easily accommodate changes in both decentralized and centralized business structures and enable the integration of new technologies for expanding businesses. The LightShip Suite, a client/server family of software solutions, includes LightShip Professional, LightShip Server and the LightShip Sales and Marketing Intelligence System (SMIS). LightShip Professional encompasses LightShip, a graphical user interface; LightShip Lens, a computation engine that provides fast access to multidimensional views of data; and LightShip Link, which provides a common access tool to relational data sources. LightShip Server is the industry's first multidimensional, time-series data server. LightShip SMIS is a set of tools that enable sales and marketing professionals to quickly and easily process critical business information and is the first complete solution based on the latest OLAP technology. Pilot faces several competitors. However, Pilot's software solutions offer distinct advantages in terms of data access and analysis. The power of Pilot's solutions lies in the software's ability to deliver views with consistently fast, interactive response and access data sources on the leading platforms. These advantages lead to high usage and reliability of business intelligence systems, creating value for a better-informed organization. Pilot has a strong international presence, with offices throughout North and South America, Europe and the Pacific Rim. Pilot operates wholly-owned subsidiaries and sales offices in the UK, Germany, Italy, France, Australia, Belgium, Netherlands and Sweden and has distribution operations worldwide. Revenues are derived primarily from sales of licenses to use Pilot's products, annual renewal fees and consulting and training services related to implementation of the products. Approximately 57% of total revenue is generated from operations outside of the U.S. D&B Software's and Pilot's non-U.S. operations are subject to the usual risks inherent in carrying on business in certain countries outside of the U.S., including currency fluctuations, possible nationalization, expropriation, price controls or other restrictive government actions. Management believes that the risk of nationalization or expropriation is reduced because its products are software and services, rather than the production of products which require manufacturing facilities or the use of natural resources. Erisco, Inc. Erisco, Inc. (Erisco) develops and markets proprietary software applications and services used primarily in the administration of health care benefits. Its primary markets include managed-care organizations, insurance carriers, third party administrators and self-administered corporations. Erisco has successfully completed the second of three phases of its new Facets product, which has a targeted market of advanced managed-care organizations requiring client/server technology. This highly advanced state-of-the-art system is unique in the marketplace as it combines the latest technology with advanced managed care business functionality. Erisco faces competition from a variety of software vendors in both traditional indemnity, as well as the new managed-care markets. The current climate of health-care reform represents both an opportunity and some uncertainty, as the new complexion of health-care reform unfolds. -9- DIRECTORY INFORMATION SERVICES The Reuben H. Donnelley Corporation The Reuben H. Donnelley Corporation (RHD) compiles, publishes or serves as sales and marketing representative of Yellow Pages and other directories for 16 telephone company clients throughout the U.S. RHD provides these services for more than 400 directories in 17 states and the District of Columbia, and is one of the largest marketers of yellow pages in the U.S. RHD serves the Yellow Pages marketing needs of over 600,000 business and service organizations who purchase Yellow Pages advertising space in the U.S. Products include consumer and business-to-business Yellow Pages, neighborhood directories and street address directories. RHD Yellow Pages product and marketing enhancements include Talking Yellow Pages, Yellow Pages Television, Touch Four, audiotex, expanded Community Action Pages and Restaurant Menu Advertising Units. RHD acts in different capacities, depending upon specific contracts and markets. These capacities include sales agent, partner, proprietary publisher and publisher and/or compiler. Proprietary Operations publishes proprietary Yellow Pages directories in Delaware, Maryland, New Jersey, Pennsylvania, Virginia, the District of Columbia and southern California. The unit also participates in the management of directory activity of RHD's C-Don partnership with Commonwealth Telephone Company to serve customers in northeastern Pennsylvania, and the directory activity of three joint venture agreements between RHD and North Pittsburgh Telephone Company, Conestoga Telephone and Telegraph, and Denver and Ephrata Telephone and Telegraph Company in Pennsylvania. NYNEX Operations manages the Directory Services Agreement with NYNEX Information Resources Company for customers in New York. Cincinnati Operations manages the Directory Services Agreement with Cincinnati Bell for customers in Ohio and northern Kentucky. Sprint Operations manages the CenDon partnership agreement and contracts with several of Sprint's operating subsidiaries to publish, manufacture and distribute classified telephone directories in Florida, Illinois, Nevada, North Carolina and Virginia. In addition, Sprint Operations manages the UniDon partnership agreement to serve customers and advertisers in central Florida markets. DonTech, a partnership between RHD and Ameritech, is responsible for publishing telephone directories throughout Illinois and northwestern Indiana. DonTech also publishes Street Address Directories in Illinois, Michigan and Indiana, and operates a fulfillment center which markets telephone directories primarily throughout Illinois. RHD's interest in Thomson Directories, a partnership with T.I.S. (Directories) Limited that publishes Yellow Pages directories in the United Kingdom, was divested in the second quarter of 1994. The units of RHD face increasing competition from other Yellow Pages publishers and other media, including newspapers, radio, direct mail, on-line information services and television. OTHER BUSINESS SERVICES Gartner Group, Inc. Gartner Group, Inc. (Gartner Group) is the leading independent provider of subscription-based research and analysis of the computer hardware and software, communications and related technology industries. Gartner Group targets as its customers corporate and other users of information technology ("IT") through a worldwide distribution network. These client organizations utilize Gartner Group's research and analysis for strategic planning of long-term IT needs and as a basis for systems purchasing decisions. Gartner Group believes that its products can provide significant benefits to clients through more effective long-term planning, improved productivity, reduced costs and better terms from vendors. These services are also used by vendors of IT systems and products as a source of information on new markets, competitive products, buying trends and evolving market needs. -10- Gartner Group's principal products are annually renewable subscription services, called Continuous Services, which highlight industry developments, review new products and technologies and analyze industry trends within a particular technology or market sector. There are currently 43 principal Continuous Services products. Each service is supported by a team of research staff members with substantial experience in the covered segment or topic of the IT industry. Gartner Group also provides a number of other products and services including individual reports on industry topics, private speaking engagements and, most notably, consulting services and events. As of September 30, 1994, Gartner Group had approximately 14,800 client interfaces, defined as an individual IT professional at a client who receives directly all printed materials relating to a particular Continuous Service. At such date, Gartner Group had an aggregate of approximately 4,460 client organizations, including most of the companies in Fortune 500. Gartner Group is focusing extensive marketing attention on increasing its sales penetration into Fortune 1000 companies, of which approximately one-third are current client companies, and selling additional Continuous Service products to existing customers. Client organizations currently subscribe to an average of three Continuous Services each, with certain clients subscribing to more than 20 services. No single client organization accounted for over two percent of revenues at September 30, 1994. Gartner Group has made a substantial investment in recent years in the expansion of its distribution network and has expanded its direct sales force in the United States from a total of 26 sales people at the start of fiscal year 1990 to 160 sales people as of September 30, 1994. At September 30, 1994, Gartner Group had 56 locations worldwide. Sales to customers outside the United States constituted 37% of revenues in 1994. Gartner Group's non-U.S. operations are subject to the risks inherent in carrying on business in certain countries outside the U.S., including currency fluctuations, possible nationalization, expropriation, price controls or other restrictive government actions. Management believes that the risk of nationalization or expropriation is reduced because its products are services, rather than production of products which require manufacturing facilities or the use of natural resources. Gartner Group's products and services are subject to direct and indirect competition from other independent providers of similar services as well as the internal marketing and planning organizations of its customers and other information providers, including electronic and print media companies and consulting firms, many of whom have substantially greater financial information gathering and marketing resources than Gartner Group. In addition, although Gartner Group believes that it has established a significant market presence, there are few barriers to entry into the market and new competitors could readily seek to compete against Gartner Group in one or more market segments addressed by its Continuous Service products. Increased competition, direct and indirect, could adversely effect operating results through pricing pressure and loss of market share. NCH Promotional Services NCH Promotional Services (NCH) is a worldwide supplier of coupon processing and promotional-information management. NCH provides a range of promotional services including processing of coupons and coupon-related administration, research and analytical services for manufacturers and retailers both domestically and internationally. Internationally, NCH also provides a promotion service for manufacturer's coupon-and-cash-refund programs. NCH derives approximately 58% of its revenues from U.S. operations. Coupons are distributed throughout the U.S. in various forms of print media, in and on packages and through direct mail. Retailers of varying sizes are offered coupon processing services using laser scanning technology, Smartscan, to consolidate and ship all of their coupons, regardless of type or issuing manufacturer, to NCH where their coupons will be validated, scanned, counted, sorted and reimbursed to them in a single check. Various coupon activity reports are also supplied. Convenience and economy are furnished to the retailer. In turn, NCH consolidates shipments received from many retailers and bills the manufacturers, which reduces the manufacturers' coupon redemption cost and simplifies their coupon handling. Validation of coupon claims, timely payment and redemption activity report services are provided for manufacturers through NCH's Process 2000 System. A wide range of customized marketing reports are available in various data formats, which allows for manufacturers to receive financial and promotional information related to coupons processed in a format suited to their individual requirements. -11- NCH's foreign operations are subject to the usual risks inherent in carrying on business in certain countries outside of the U.S., including currency fluctuations, possible nationalization, expropriation, price controls or other restrictive government actions. Management believes that the risk of nationalization or expropriation is reduced by the fact that its basic products are services and the delivery of information, rather than the production of products which require manufacturing facilities or the use of natural resources. NCH is believed to be the world's largest coupon processor and promotion-information supplier. Numerous rival coupon clearing houses, billing services, manufacturer redemption agents and manufacturers who handle their own redemption services provide competition. Competition in the retailer service business largely focuses on price. The manufacturer business competes on a combination of price and service, namely timeliness, misredemption control and redemption analysis. NCH provides the widest array of value-added products in the industry for the analysis of redemption information. Dataquest Incorporated Dataquest Incorporated (Dataquest) is a global market research and consulting company serving the high-technology sector. The company is regionally organized into four business units: North America, Europe, Japan and Asia Pacific. In November 1994, Dataquest acquired Research Asia, a market research firm headquartered in Hong Kong with operations in Southeast Asia, greatly enhancing Dataquest's presence in Asia Pacific. Dataquest's Worldwide Services Group provides worldwide market coverage on the computer systems and peripherals, document management, semiconductors, services, software and telecommunications sectors of the information technology industry. Each of the six groups offers a wide range of products and services, including annual-subscription services, consulting and primary research, conferences, reports and newsletters. Dataquest's Invitational Computer Conferences Group produces regional trade shows covering the areas of computer peripherals and computer connectivity. Dataquest's Machinery Information Division, which serves the heavy-machinery sector, was divested in the second quarter of 1994. As a leader in high-technology market research, Dataquest faces direct competition from a few large competitors as well as a number of small competitors and consultants. In addition, Dataquest faces indirect competition from companies that perform their own in-house market research. Dun & Bradstreet Pension Services, Inc. Dun & Bradstreet Pension Services, Inc. provides pension administration and benefit consulting for small to medium-sized businesses throughout the U.S. The market for pension administration services is fragmented among many competitors, none of which has a significant share of the market. D&B Enterprises, Inc. D&B Enterprises, Inc. invests in emerging and established businesses in the information industry as a limited partner in Information Partners Capital Fund, a venture capital limited partnership, as well as through direct investments. RESOURCE GROUP Worldwide Shared Transaction Services Worldwide Shared Transaction Services (STS) began operations in 1994 as an internal service business that leads the ongoing "reengineering" of Dun & Bradstreet business processes within internal divisions and operates shared services centers for accounting, finance, payroll, employee benefits and related functions. These STS Centers provide centralized services formerly supplied within each Dun & Bradstreet division but at lower cost with the same or higher levels of service. -12- STS now operates in North America, Europe and Japan, with fully- operational STS Centers established in the U.S. and the U.K. Other Centers are currently being launched in Belgium, France, Germany, Italy, Japan and The Netherlands (costs are included in all business segments) These Centers process all internal transactions according to standard processes, both manual and electronic. In some instances, STS manages the contractual performance of outside vendors to supply transactional services to Dun & Bradstreet divisions and employees. Dun & Bradstreet Data Services Dun & Bradstreet Data Services (Data Services) is an organization established during 1994, composed of primarily mainframe and selected distributed processing functions for the Company's North American and European business units. The objectives of Data Services, in line with other Dun & Bradstreet synergistic initiatives launched during 1994, are to reduce overhead expenses and improve operations through the integration of individual data centers into regional "mega" centers and to leverage economies of scale in purchasing for the collective capacity requirements of all divisions. By sharing common personnel resources, management intends to maximize the quality and integrity of information systems through the standardization of best practices and establishment of uniform production processes. Most data center integrations will continue during 1995, with additional opportunities being identified as the organization matures. The names of the Company's products are trademarks or registered trademarks of The Dun & Bradstreet Corporation or one of its subsidiaries. ITEM 2. PROPERTIES The principal properties of the Company, by business segment, are set forth below. The executive offices of The Dun & Bradstreet Corporation are located at 187 Danbury Road, Wilton, Connecticut in an owned property and at 299 Park Avenue, New York, New York in a leased facility. Property of the Company is geographically distributed to meet sales and operating requirements worldwide. The properties of the Company are generally considered to be both suitable and adequate to meet current operating requirements and virtually all space is being utilized. Marketing Information Services Owned properties located within the U.S. include eight facilities. Three properties are located in Omaha, Nebraska and one property each in Dunedin, Florida; Fond du Lac, Wisconsin; Totowa, New Jersey; Plymouth Meeting and West Norriton, Pennsylvania. Owned properties located outside the U.S. include fifteen facilities: two properties in Lisbon, Portugal; and one property each in Ontario, Canada; Sao Paulo, Brazil; Espoo, Finland; Mexico City, Mexico; Buenos Aires, Argentina; Crows Nest and Artarmon, Australia; Innsbruck, Austria; Santiago, Chile; London, Oxford and Pinner, England; and Caracas, Venezuela. The operations of this segment are also conducted from sixty-two leased offices located throughout the U.S. and 123 non-U.S. locations. Risk Management and Business Marketing Information Services Owned properties located within the U.S. include two office buildings in Berkeley Heights, New Jersey and one each in Murray Hill and Parsippany, New Jersey and New York, New York. Owned properties located outside the U.S. are located in Melbourne, Australia; Curitiba, Rio de Janeiro and Sao Paulo, Brazil; Santiago, Chile; Mexico City, Mexico; Caracas and Maracaibo, Venezuela; High Wycombe, England; and six properties within Italy. The operations of this segment are also conducted from 119 leased offices located throughout the U.S. and 131 non-U.S. office locations. -13- Software Services Operations are conducted from forty-one leased offices located throughout the U.S. and thirty-one non-U.S. office locations. Directory Information Services Owned property located within the U.S. consists of an office building in Terre Haute, Indiana. Operations are also conducted from thirty-eight leased office locations throughout the U.S. Other Business Services Owned properties located within the U.S. include three facilities: one each in San Jose, California; Clinton, Iowa; and El Paso, Texas. Owned properties located outside the U.S. include five properties in Mexico and one facility each in Saint John, N.B., Canada and Corby, England. The operations of this segment are also conducted from forty-two leased offices located throughout the U.S. and thirty non-U.S. office locations. Resource Group and Corporate Owned properties within the U.S. include two buildings in Wilton, Connecticut. Operations are also conducted from eleven leased office locations throughout the U.S. ITEM 3. LEGAL PROCEEDINGS Reference is made to Note 13 of Notes to Consolidated Financial Statements on Page 33 of the 1994 Annual Report, which is incorporated herein by reference. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. -14- EXECUTIVE OFFICERS OF THE REGISTRANT* Officers are elected by the Board of Directors to hold office until their respective successors are chosen and qualified. Listed below are the executive officers of the registrant at March 1, 1995 and brief summaries of their business experience during the past five years. Name Title Age ---- ----- --- Charles W. Moritz Chairman** 58 Robert E. Weissman President and Chief Executive Officer** 54 Edwin A. Bescherer, Jr. Executive Vice President-Finance 61 and Chief Financial Officer William G. Jacobi Executive Vice President*** 51 Robert J Lievense Executive Vice President*** 49 Dennis G. Sisco Executive Vice President*** 48 Volney Taylor Executive Vice President** 55 Michael F. Brewer Senior Vice President-Communications & 51 Government Affairs Earl H. Doppelt Senior Vice President and General Counsel 41 David Fehr Senior Vice President 59 John J. Fitzpatrick Senior Vice President-Human Resources 55 Frank R. Noonan Senior Vice President*** 52 Thomas W. Young Senior Vice President and Controller 56 *Set forth as a separate item pursuant to Items 401(b) and (e) of Regulation S-K. **Member of the Board of Directors. ***Announcement on February 20, 1995 naming Messrs. Jacobi, Lievense, Sisco and Noonan to these offices with elections to take place on April 19, 1995. Mr. Moritz was elected Chairman of The Dun & Bradstreet Corporation (Dun & Bradstreet), effective January 1, 1985; he relinquished the title of Chief Executive Officer, effective January 1, 1994, to which office he had been elected, effective January 1, 1985. He will retire as Chairman and as a Director, effective March 31, 1995. Mr. Weissman was elected President and Chief Executive Officer of Dun & Bradstreet, effective January 1, 1994; he had been elected President and Chief Operating Officer, effective January 1, 1985. He has been elected to the additional office of Chairman, effective April 1, 1995. Mr. Bescherer was elected Executive Vice President-Finance of Dun & Bradstreet, effective June 17, 1987 and, in addition, Chief Financial Officer, effective April 18, 1984. Mr. Jacobi was named Executive Vice President of Dun & Bradstreet on February 20, 1995 with his election to take place on April 19, 1995. He also serves as Chairman of I.M.S. International, Inc., effective February 20, 1995. He had been elected Senior Vice President of Dun & Bradstreet, effective July 21, 1993. Prior thereto, he had served as President & Chief Operating Officer of Nielsen Media Research (January 1, 1991) and as Executive Vice President of Nielsen Media Research (March 1, 1989). Mr. Lievense was named Executive Vice President of Dun & Bradstreet on February 20, 1995 with his election to take place on April 19, 1995. He also serves as Chairman of A. C. Nielsen Company, effective February 20, 1995. He had been elected Senior Vice President of Dun & Bradstreet, effective July 21, 1993. He had served until February 20, 1995 as Chairman of The Reuben H. Donnelley Corporation, to which office he was elected, effective July 26, 1993. Previously he had served through July 20, 1993 as Chairman of Dataquest Incorporated (September 1, 1991) and as President of NCH Promotional Services, Inc. (July 27, 1990). He had also served through December 31, 1990 as President of Nielsen Clearing House Division of A. C. Nielsen Company (June 25, 1989). 15 Mr. Sisco was named Executive Vice President of Dun & Bradstreet on February 20, 1995 with his election to take place on April 19, 1995. He had been elected Senior Vice President of Dun & Bradstreet, effective July 21, 1993. He also serves as President of D&B Enterprises, Inc., to which office he was elected, effective December 18, 1988, as Chairman of Dataquest Incorporated, to which office he was elected, effective July 26, 1993, and as Chairman of Pilot Software, Inc., to which office he was elected October 27, 1994. Mr. Taylor was elected Executive Vice President of Dun & Bradstreet, effective February 1, 1982. He also serves as Chairman of Dun & Bradstreet Information Services, to which position he was appointed, effective January 1, 1991, and as President of Dun & Bradstreet, Inc. and President of Dun & Bradstreet International, Ltd., to which offices he was elected, effective January 1, 1991. He had also served through February 4, 1990 as President of The Reuben H. Donnelley Corporation, to which office he was elected, effective January 1, 1988. Mr. Brewer was elected Senior Vice President-Communications & Government Affairs of Dun & Bradstreet, effective March 15, 1993; he had been elected Vice President-Government Affairs, effective January 1, 1987. Mr. Doppelt was elected Senior Vice President and General Counsel of Dun & Bradstreet, effective May 18, 1994. Prior thereto, he had served with Viacom Inc. as Senior Vice President and Deputy General Counsel (March 1994) and with Paramount Communications Inc. as Senior Vice President and Deputy General Counsel (September 1992) and as Vice President and Deputy General Counsel (October 1986). Mr. Fehr was elected Senior Vice President of Dun & Bradstreet, effective January 1, 1985. Mr. Fitzpatrick was elected Senior Vice President-Human Resources of Dun & Bradstreet, effective July 21, 1993; he had been elected Senior Vice President-Human Resources Administration, effective September 1, 1987. Mr. Noonan was named Senior Vice President of Dun & Bradstreet on February 20, 1995 with his election to take place on April 19, 1995. He also serves as Chairman, President and Chief Executive Officer of The Reuben H. Donnelley Corporation, to which offices he was elected, effective August 7, 1991 (President), January 1, 1994 (Chief Executive Officer) and February 20, 1995 (Chairman). Previously he had served as Senior Vice President-Finance of the Business Information Group (January 1, 1991) and as Senior Vice President-Finance of the Financial Information Services Group (May 30, 1989). Mr. Young was elected Senior Vice President and Controller of Dun & Bradstreet, effective April 15, 1992; he had been elected Vice President and Controller, effective November 20, 1985. 16 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Information in response to this Item is set forth under Common Stock Information in the "Financial Review" on Page 20 of the 1994 Annual Report, which information is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA Selected financial data required by this Item is incorporated herein by reference to the information relating to the years 1990 through 1994 set forth in the "Ten-Year Selected Financial Data" on Pages 38 and 39 of the 1994 Annual Report. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information in response to this Item is set forth in the "Financial Review" on Pages 16 to 20 of the 1994 Annual Report, which information is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Index to Financial Statements and Schedules under Item 14 on Page 18. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information in response to this Item is incorporated herein by reference to the section entitled "Election of Directors" in the Company's proxy statement dated March 10, 1995 filed with the Securities and Exchange Commission, except that "Executive Officers of the Registrant" on Pages 15 to 16 of this report responds to Item 401 (b) and (e) of Regulation S-K. ITEM 11. EXECUTIVE COMPENSATION Information in response to this Item is incorporated herein by reference to the section entitled "Compensation of Executive Officers and Directors" in the Company's proxy statement dated March 10, 1995 filed with the Securities and Exchange Commission. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information in response to this Item is incorporated herein by reference to the section entitled "Security Ownership of Management and Others" in the Company's proxy statement dated March 10, 1995 filed with the Securities and Exchange Commission. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information in response to this Item is incorporated herein by reference to the section entitled "Security Ownership of Management and Others" in the Company's proxy statement dated March 10, 1995 filed with the Securities and Exchange Commission. -17- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)List of documents filed as part of this report. (1) Financial Statements. See Index to Financial Statements and Schedule on Page 20. (2) Financial Statement Schedule. See Index to Financial Statements and Schedule on Page 20. (3) Other Financial Information. Performance and Outlook, 1994. Ten Year Selected Financial Data. (4) Exhibits. See Index to Exhibits on Pages 24 to 26, which indicates which Exhibits are management contracts or compensatory plans required to be filed as Exhibits. Only responsive information appearing on Pages 7 to 39 to Exhibit D is incorporated herein by reference, and no other information appearing in Exhibit D is or shall be deemed to be filed as part of this Form 10-K. (b) Reports on Form 8-K. None. -18- SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE DUN & BRADSTREET CORPORATION (Registrant) By: CHARLES W. MORITZ ___________________________ (Charles W. Moritz, Chairman of the Board) By: ROBERT E. WEISSMAN ___________________________ (Robert E. Weissman, President and Chief Executive Officer) By: EDWIN A. BESCHERER, JR. ___________________________ (Edwin A. Bescherer,Jr., Executive Vice President-Finance and Chief Financial Officer) By: THOMAS W. YOUNG ___________________________ (Thomas W. Young, Senior Vice President and Controller) Date: March 27, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. HALL ADAMS, JR. JOHN R. MEYER ______________________________ ______________________________ (Hall Adams, Jr., Director) (John R. Meyer, Director) CLIFFORD L. ALEXANDER, JR. CHARLES W. MORITZ ______________________________ ______________________________ (Clifford L. Alexander, Jr., (Charles W. Moritz, Director) Director) MARY JOHNSTON EVANS JAMES R. PETERSON ______________________________ ______________________________ (Mary Johnston Evans, Director) (James R. Peterson, Director) ROBERT A. HANSON MICHAEL R. QUINLAN ______________________________ ______________________________ (Robert A. Hanson, Director) (Michael R. Quinlan, Director) ROBERT J. LANIGAN VOLNEY TAYLOR ______________________________ ______________________________ (Robert J. Lanigan, Director) (Volney Taylor, Director) VERNON R. LOUCKS, JR. ROBERT E.WEISSMAN ______________________________ ______________________________ (Vernon R. Loucks, Jr., Director) (Robert E. Weissman, Director) Date: March 27, 1995 -19- INDEX TO FINANCIAL STATEMENTS AND SCHEDULE FINANCIAL STATEMENTS: The Company's consolidated financial statements, the notes thereto and the related report thereon of Coopers & Lybrand L.L.P., independent public accountants, for the years ended December 31, 1994, 1993 and 1992, appearing on Pages 21 to 39 of the accompanying 1994 Annual Report, are incorporated by reference into this Annual Report on Form 10-K (see below). The additional financial data indicated below should be read in conjunction with such consolidated financial statements.
Page __________________________ 10-K 1994 Annual Report _____________ _____________ Report of Independent Public Accountants F-19 21 Statement of Management Responsibility for Financial F-20 21 Statements As of December 31, 1994 and 1993: Consolidated Statement of Financial Position F-22 23 For the years ended December 31, 1994, 1993 and 1992: Consolidated Statement of Income F-21 22 Consolidated Statement of Cash Flows F-23 24 Consolidated Statement of Shareowners' Equity F-24 25 Notes to Consolidated Financial Statements F-25 to F-43 26-37 Quarterly Financial Data (Unaudited) for the years ended December 31, 1994 and 1993 F-43 37 Management's Discussion and Analysis of Financial Condition and Results of Operations F-11 to F-18 16-20 Other financial information: Performance and Outlook, 1994 F-1 to F-10 8-15 Ten year selected financial data F-44 38-39 SCHEDULES: Report of Independent Public Accountants 22 21 The Dun & Bradstreet Corporation and Subsidiaries: II - Valuation and Qualifying Accounts for the years ended December 31, 1994, 1993 and 1992.................... 23 - Schedules other than the one listed above are omitted as not required or inapplicable or because the required information is provided in the consolidated financial statements, including the notes thereto. -20-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareowners and the Board of Directors of The Dun & Bradstreet Corporation: Our report on the consolidated financial statements of The Dun & Bradstreet Corporation as of December 31, 1994 and 1993, and for the years ended December 31, 1994, 1993 and 1992, has been incorporated by reference in this Form 10-K from page 21 of the 1994 Annual Report of The Dun & Bradstreet Corporation. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index on page 20 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Stamford, Connecticut January 25, 1995 -21- SCHEDULE II THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS for the years ended December 31, 1994, 1993, 1992 (In millions)
___________________________________________________________________________________________ COL. A COL. B COL.C COL. D COL. E ___________________________________________________________________________________________ Additions Balance Charged to Balance Beginning Costs and at End Description of Period Expenses Deductions(a) of Period ___________ _________ ___________ _____________ _________ ALLOWANCE FOR DOUBTFUL ACCOUNTS: For the Year Ended December 31, 1994... $ 79.2 $ 50.7 $ 53.1 $ 76.8 ======= ======= ======= ======= For the Year Ended December 31, 1993... $ 82.4 $ 42.2 $ 45.4 $ 79.2 ======= ======= ======= ======= For the Year Ended December 31, 1992... $ 69.8 $ 64.5 $ 51.9 $ 82.4 ======= ======= ======= ======= NOTE: (a) Represents primarily the charge-off of uncollectible accounts for which a reserve was provided. -22-
INDEX TO EXHIBITS
Regulation S-K Exhibit to Exhibit Number this Report ______________ ____________ (3) Articles of Incorporation and By-laws. (a) Restated Certificate of Incorporation of The Dun & Bradstreet Corporation dated June 15, 1988 (incorporated herein by reference to Exhibit 4(a) to Registrant's Registration No. 33-25774 on Form S-8 filed November 25, 1988). (b)By-laws of Registrant dated December 15, 1993.(incorporated herein by reference to Exhibit E to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993, file number 1-7155, filed March 25, 1994). (4) Instruments Defining the Rights of Security Holders, Including Indentures. Not Applicable. (9) Voting Trust Agreement. Not Applicable. (10) Material Contracts. (All of the following documents, except for items (u) and (v), are management contracts or compensatory plans or arrangements required to be filed pursuant to Item 14(c).) (a) Retirement Plan for Directors of Registrant, as amended December 21, 1994.............................................. Exhibit E** (b) Nonfunded Deferred Compensation Plan for Non-Employee Directors of Registrant, as amended April 21, 1993 (incorporated herein by reference to Exhibit F to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993, file number 1-7155, filed March 25, 1994) (c) Pension Benefit Equalization Plan, as ameded December 21, 1994. Exhibit F** (d) Profit Participation Benefit Equalization Plan adopted October 17, 1990 (incorporated herein by reference to Exhibit H to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990, file number 1-7155, filed March 27, 1991). (e) 1982 Key Employees Stock Option Plan for Registrant and Subsidiaries, as amended July 17, 1991 (incorporated herein by reference to Exhibit E to Registrant's Annual Report on Form 10-K for the year ended December 31, 1991, file number 1-7155, filed March 26, 1992) (f) 1991 Key Employees Stock Option Plan for Registrant and Subsidiaries, adopted April 16, 1991 (incorporated herein by reference to Exhibit 28(a) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (g) Ten-Year Incentive Stock Option Agreement (incorporated herein by reference to Exhibit 28(b) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (h) Ten-Year Non-Qualified Stock Option Agreement (incorporated herein by reference to Exhibit 28(c) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (i) Stock Appreciation Rights Agreement relating to Incentive Stock Options (incorporated herein by reference to Exhibit 28(d) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (j) Stock Appreciation Rights Agreement relating to Non-Qualified Stock Options (incorporated herein by reference to Exhibit 28(e) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (k) Limited Stock Appreciation Rights Agreement relating to Incentive Stock Options (incorporated herein by reference to Exhibit 28(f) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). -23-
Regulation S-K Exhibit to Exhibit Number this Report ______________ ____________ (l)Limited Stock Appreciation Rights Agreement relating to Non-Qualified Stock Options (incorporated herein by reference to Exhibit 28(g) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (m)1982 Key Employees Performance Unit Plan for Registrant and Subsidiaries, as amended December 18, 1991 (incorporated herein by reference to Exhibit F to Registrant's Annual Report on Form 10-K for the year ended December 31, 1991, file number 1-7155, filed March 26, 1992). (n)Corporate Management Incentive Plan, effective January 1, 1990 (incorporated herein by reference to Exhibit J to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, file number 1-7155, filed March 26, 1990). (o)1989 Key Employees Restricted Stock Plan for Registrant and Subsidiaries, as amended July 19, 1989 (incorporated herein by reference to Exhibit K to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, file number 1-7155, filed March 26, 1990). (p)Restricted Stock Agreement (incorporated herein by reference to Exhibit L to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, file number 1-7155, filed March 26, 1990). (q)Performance-Based Restricted Stock Agreement (incorporated herein by reference to Exhibit G to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993, file number 1-7155, filed March 25, 1994) (r)Form of Change-in-Control Severance Agreement, approved July 19, 1989 (incorporated herein by reference to Exhibit M to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, file number 1-7155, filed March 26, 1990) (s)Supplemental Executive Benefit Plan, as amended December 21, 1994 Exhibit G** (t)IMS International, Inc. Long-Term Incentive Compensation Plan, as amended April 19, 1991 (incorporated herein by reference to Exhibit F to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992, file number 1-7155, filed March 25, 1993). (u)Agreement of Limited Partnership of D&B Investors L.P., dated as of October 14, 1993. (incorporated herein by reference to Exhibit H to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993, file number 1-7155, filed March 25, 1994). (v)Purchase Agreement and Purchase Agreement Amendment dated October 14, 1993 among D&B Investors L.P.and other parties (incorporated herein by reference to Exhibit I to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993, file number 1-7155, filed March 25, 1994). (w)Consulting Agreement, dated March 6 1995, between Registrant and Charles W. Moritz.......................................... Exhibit H** (11) Statement Re Computation of Per Share Earnings. Computation of Earnings Per Share of Common Stock on a Fully Diluted Basis.................................................. Exhibit A** (12) Statement Re Computation of Ratios. Not applicable. (13) Annual Report to Security Holders. 1994 Annual Report............................................. Exhibit D** (18) Letter Re Change in Accounting Principles. Not applicable. (19) Previously Unfiled Documents. Not applicable (21) Subsidiaries of the Registrant. List of Active Subsidiaries as of January 31, 1995............. Exhibit B** 22) Published Report Regarding Matters Submitted to a Vote of Security Holders. Not applicable (23) Consents of Experts and Counsel. Consent of Independent Certified Public Accountants............ Exhibit C** -24-
Regulation S-K Exhibit to Exhibit Number this Report ______________ ____________ (24) Power of Attorney. Not applicable. (27) Financial Data Schedule. 1994 Financial Data Schedule................................... Exhibit I** (28) Information from Reports Furnished to State Insurance Regulatory Authorities. Not applicable. (99) Additional Exhibits. Not applicable. *Not included in this document **Filed electronically -25-
EX-11 2 EXHIBIT A THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK ON A FULLY DILUTED BASIS Dollar Amounts in Millions, Except Per Share Data 1994 1993 1992 __________________________________ (Average share data in thousands)
Weighted average number of shares 169,946 177,181 178,346 Dilutive effect of shares issuable as of year-end under stock option plans, stock appreciation rights and restricted stock plan 1,668 1,789 1,563 Adjustment of shares applicable to stock options and stock appreciation rights exercised during the year 50 88 50 _____________________________ Weighted average number of shares on a primary and fully diluted basis 171,664 179,058 179,959 ______________________________ Income Before Cumulative Effect of Changes in Accounting Principles $ 629.5 $ 428.7 $ 553.5 Cumulative Effect to January 1, 1993, of Changes in Accounting Principles: -SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions, " Net of Income Tax Benefits of $93.7 - (140.6) - -SFAS No. 112, "Employers' Accounting for Postemployment Benefits,Net of Income Tax Benefits of $150.0 - (250.0) - _____________________________ Net Income $ 629.5 $ 38.1 $ 553.5 _____________________________ Earnings per share of common stock on a fully diluted basis: Before Cumulative Effect of Changes in Accounting Principles $ 3.67 $ 2.39 $ 3.08 Cumulative Effect to January 1, 1993, of Changes in Accounting Principles: -SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" - (.78) - -SFAS No. 112, "Employers' Accounting for Postemployment Benefits" - (1.39) - _____________________________ Net Income $ 3.67(a) $ .22(a) $3.08(a) _____________________________ Note: (a) Also reflects Earnings Per Share on a primary basis.
A-1 EX-21 3 EXHIBIT B THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ A. C. NIELSEN COMPANY Delaware Addex, Inc. Delaware Nieuw Willemstad Holdings, Inc. Delaware Nielsen Holding Ges.mbH Austria Dun & Bradstreet Information Services Gesellschaft mbH Austria CMIS Coordinierte Management Informations Austria Systeme, Ges.mbh A. C. Nielsen Company (Belgium) S.A. Belgium The Dun & Bradstreet Corporation & Co. SNC Belgium Palmetto Assurance Ltd. Bermuda A. C. Nielsen Chile Limitada Chile A. C. Nielsen Chile S.A. Chile 51.0 A. C. Nielsen de Colombia S.A. Colombia 87.2 Nielsen del Ecuador S.A. Ecuador A. C. Nielsen (Argentina) S.A. Delaware IPSA, S.A. Argentina 80.2 Teollisuuden Tielopalvelu Industrial Intelligence Ltd. Oy Finland A.C. Nielsen Finland Oy Finland Finnpanel Oy Finland 50.0 Dun & Bradstreet Canada Holding, Ltd. Ontario, Canada The D&B Companies of Canada Ltd. Ontario, Canada Dun & Bradstreet Finance Inc. Ontario, Canada Dun & Bradstreet Software Services Canada L.P. Delaware Nielsen Korea Limited Korea Interactive Data Canada Inc. Ontario, Canada NCH Promotional Services, Inc. Delaware Nielsen Holdings, Inc. Delaware Nielsen Leasing Corporation Delaware A. C. Nielsen S.A. France Dun & Bradstreet-France S.A France S&W S.N.R.C.-Wys Muller France S&W Formation S.A.R.L. France S&W S.A. Belgium Dun & Bradstreet Software Services (France) S.A. France Moody's France S.A. France Nielsen A.E.M. Snc France Panel de Gestion S.A.R.L. France 61.0 A. C. Nielsen Hellas Ltd. Greece A. C. Nielsen of Ireland Limited Ireland D & B Group Limited Ireland D&B Marketing Information Services S.p.A Italy C.R.A. S.r.l. Italy 60.0 SITA, Societa per gli Indici Tessile e Abbigliamento-S.r.l. Italy 60.0 Ciser S.r.l. Italy Management Tools S.r.l. Italy 60.0 Dun & Bradstreet Holding (Belgium) S.A. Belgium
B-1 THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ A. C. NIELSEN COMPANY (Continued) Nielsen Japan K.K. Japan A. C. Nielsen Company de Mexico, S.A. de C.V. Mexico Inmobiliaria Zeta, S.A. de C.V. Mexico A. C. Nielsen (N.Z.) Limited New Zealand AGB McNair Holdings Limited New Zealand AGB Research NZ Ltd. New Zealand OTR Research Limited New Zealand Media Research Services Ltd. New Zealand 75.0 Nielsen Norge A/S Norway 65.0 A/S Norsk Reklame-Statistikk Norway 83.1 Dun & Bradstreet Holdings Spain B.V The Netherlands Dun & Bradstreet S.A Spain A. C. Nielsen Company S.A. Spain INFOADEX S.A. Spain 50.0 Nedro-Nielsen/ESEO-Estudios de Mercado Lda. Portugal A. C. Nielsen P.R. Inc. Puerto Rico A. C. Nielsen Singapore Pte. Ltd. Singapore A. C. Nielsen Management Services S.A. Switzerland A. C. Nielsen S.A. Switzerland Nielsen Medya Arastirma Hizmetleri Limited Sirketi Turkey Dataquest Incorporated California Dataquest Europe S.A. France DATAQUEST Japan Limited Japan Dataquest Hong Kong Limited Hong Kong Research Asia Pte. Limited Singapore Research Asia Siam Limited Thailand Research Asia (Taiwan) Limited Taiwan AMERICAN CREDIT INDEMNITY COMPANY New York 95.0 CORINTHIAN HOLDINGS, INC. Delaware D&B CORPORATION JAPAN K.K. Japan D&B ENTERPRISES, INC. Delaware D&B (R.I.C.) LTD. Delaware Dun & Bradstreet East-Vent Ltd. Delaware 80.0 Dun & Bradstreet C.I.S. Russia Dun & Bradstreet India Private Limited India Dun & Bradstreet-Satyam Software Private Limited India 76.0 D&B TRANSPORTATION SERVICES COMPANY, INC. Delaware DBHC, INC Delaware Lexecon Health Service Inc. Illinois DUN & BRADSTREET COMPUTER LEASING, INC. Delaware Fillupar Leasing Partnership Delaware 98.0
B-2 THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ DUN & BRADSTREET DIVESTITURE, INC Delaware DUN & BRADSTREET HOLDINGS, INC. Delaware Dun & Bradstreet Pension Services, Inc. Delaware NA Insurance Services, Inc. California Erisco, Inc. New York DUN & BRADSTREET, INC. Delaware Dun & Bradstreet Life Insurance Company Arizona Duns Holding, Inc. Delaware D&B Acquisition Corp. Delaware Duns Licensing Associates, L.P. Delaware 82.5 Corinthian Leasing Corporation Delaware Mergex, Inc. Delaware DUN & BRADSTREET INTERNATIONAL, LTD. Delaware Dun & Bradstreet (Australia) Holdings Pty. Australia Dun & Bradstreet (Australia) Group Pty. Ltd. Australia Arrebnac Pty. Ltd. Australia A. C. Nielsen (Holdings) Pty. Limited Australia A. C. Nielsen (Trading) Pty. Limited Australia A. C. Nielsen (Operations) Pty. Limited Australia A. C. Nielsen Australia Pty. Limited Australia AGB McNair Holdings Pty. Limited Australia AGB Research Holdings Pty. Limited Australia Tart Research Pty. Limited Australia AGB McNair Pty. Limited Australia McNair Anderson Associates Australia Pty. Limited College Mercantile Pty. Ltd. Australia Dun & Bradstreet (Australia) Pty. Limited Australia Dun & Bradstreet (Nominees) Pty. Ltd. Australia Dun & Bradstreet Unit Trust Australia Dun & Bradstreet Software Services Australia Australia Pty. Limited IMS Australia Pty. Ltd. N.S.W., Australia Amfac Pty. Limited N.S.W., Australia Chemdata Pty. Limited N.S.W., Australia Data Design Hisoft Pty. Limited N.S.W., Australia Medrecord Australia Pty. Limited N.S.W., Australia Permail Pty. Limited N.S.W., Australia Moody's Investors Service Pty. Limited Australia Nandette Pty. Limited Australia Australian Independent Media Data Pty. Ltd. Australia 50.0 Dun & Bradstreet S.A. Argentina N.V. Dun & Bradstreet-Eurinform S.A. Belgium Dun & Bradstreet do Brasil Ltda Brazil Companhia Brasileira de Pesquisa e Analise Brazil Dun & Bradstreet Ltda. Chile Dun & Bradstreet International Consultant (Shanghai) Co. Ltd. China
B-3 THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ DUN & BRADSTREET INTERNATIONAL, LTD. (Continued) Dun & Bradstreet Holdings-France, Inc. Delaware Kosmos Business Information Limited England D & B Group, Ltd. Delaware A. C. Nielsen (Holdings) Limited England A. C. Nielsen Company Limited England Dun & Bradstreet Software Services Limited England Dun & Bradstreet Software Services Medium Systems Limited England Advance-Peterholm Group Ltd. England D & B Telephone Company Ltd. England D&B Europe Limited England Dun & Bradstreet Limited England Dataquest Europe Limited England Dun & Bradstreet Finance Ltd. England Dun & Bradstreet Limited Ireland Dun & Bradstreet Pension Trustees Limited England Dun & Bradstreet (U.K.) Ltd. England DunsGate Limited England Interactive Data Ltd. England IMS Holdings (U.K.) Limited England Intercontinental Medical Statistics Ltd. England Imsworld Publications Ltd. England PMS International Limited England The Medical Direct Mail Organisation Ltd. England Pharma Strategy Group Limited England Moody's Investors Service Limited England ST Europe plc England S.T. S.A.R.L. France Dun & Bradstreet Credit Control, Ltd. Delaware Dun & Bradstreet (HK) Limited Hong Kong Dun & Bradstreet (Israel) Ltd. Israel Dunbrad, Inc. Delaware Dun & Bradstreet Credit Reporting (Israel) Israel Wiri Beleggingen B.V. The Netherlands Dun & Bradstreet Kosmos S.p.A. Italy Argus Situazioni Aziendali S.r.l. Italy Orefro L'Informazione S.p.A. Italy Consorzio Manifatturieri S.r.l. Italy L'Informazione S.r.l. Italy Orefro Data S.r.l. Italy Orefro Media & Marketing S.r.l. Italy Dun & Bradstreet Business Information Services (Japan) K.K. Japan D&B Information Services (M) Sdn. Bhd. Malaysia Dun & Bradstreet S.A. de C.V. Mexico
B-4 THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ DUN & BRADSTREET INTERNATIONAL, LTD. (Continued) Dun & Bradstreet Nederland Holding B.V. The Netherlands A. C. Nielsen (Nederland) B.V. The Netherlands ANR AMER Nielsen Research Limited Cyprus 51.0 AMER Marketing Co. Ltd. Bulgaria AMER EESTI AS Estonia AMER Baltic Ltd. Lithuania AMER Ltd. Latvia AMER Research Ltd. s.r.l. Romania AMER Marketing Co. Ltd. Russia AMER Marketing Plus Ltd. Russia AMER D.O.O. Slovenia AMER Marketingoru Spolecnost s.r.o. Slovak Republic Nielsen Marketing Research spol, s.r.o. Czech Republic Nielsen Marketing Research Ktf. Hungary Nielsen Marketing Research Sp. z.o.o. Poland Nederlands Centrum voor Marketing Analyses B.V. The Netherlands 70.0 Dun & Bradstreet Danmark Holding A/S Denmark AIM Nielsen A/S Denmark AIM Farmstat ApS Denmark 66.67 D & B International A/S Denmark A/S H. Hyldahl Denmark Dahl Jensen Kuvertering ApS Denmark Dun & Bradstreet (C & EE) Holding B.V. The Netherlands 70.0 Dun & Bradstreet spol s r.o. Czech Republic Dun & Bradstreet Hungaria Informacio Szolgaltato Korlatolt Hungary 88.73 Felelosegu Tarsasag [d/b/a Dun & Bradstreet Hungaria Kft.] Dun & Bradstreet Poland sp. z o.o. Poland Dun & Bradstreet Software Services (Nederland) B.V. The Netherlands Dun & Bradstreet B.V. The Netherlands IMS Services Nederland B.V. The Netherlands Soliditet Norden AB Sweden Soliditet AB Sweden Soliditet OY Finland A.C. Nielsen Company A.B. Sweden Dun & Bradstreet Holding (Norway) AS Norway Soliditet AS Norway Dun & Bradstreet (New Zealand) Limited New Zealand Dun & Bradstreet S.A. Peru Dun & Bradstreet Portugal, Lda. Portugal Dun & Bradstreet (Singapore) Pte. Ltd. Singapore Dun & Bradstreet A.G. Switzerland Bichet Auskunfte A.G. Switzerland Ifico-Burgel A.G. Switzerland Novinform AG Switzerland Renseignements Fell SA Switzerland 70.0 Dun & Bradstreet C.A. Venezuela Dun & Bradstreet Zimbabwe (Private) Limited Zimbabwe DUN & BRADSTREET INVESTMENTS CANADA INC. Ontario, Canada
B-5 THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ DUN & BRADSTREET LEASING INC. Ontario,Canada DUN & BRADSTREET SOFTWARE HOLDINGS, INC. Delaware DBC Holding Corp. Delaware Dun & Bradstreet Software Services, Inc. Georgia DBS-Dun & Bradstreet Software Services do Brasil Ltda. Brazil D&BS Services (M) Sdn. Bhd. Malaysia Dun & Bradstreet Software Services Hong Kong Limited Hong Kong Dun & Bradstreet Software Services New Zealand Limited New Zealand Dun & Bradstreet Software Services (S) PTE Ltd. Singapore Dun & Bradstreet Software Services International, Inc. Georgia Dun & Bradstreet Software Services (Canada) No. 2 Limited Ontario,Canada Dun & Bradstreet Software Services Holdings S.A. France Dun & Bradstreet Software Services Australia Holdings Pty. Ltd. Australia D&B Technology Asia K.K. Japan DUN-DONNELLEY PUBLISHING CORPORATION Delaware DUNS INVESTING CORPORATION Delaware 550 COCHITUATE ROAD INVESTMENT CORPORATION Delaware GARTNER GROUP, INC. Delaware 50.6 Gartner Group Asia, Inc. Delaware Gartner Group Europe, Inc. Delaware Gartner Group Sales, Inc. Delaware GG Hong Kong, Inc. Delaware New Science Associates Inc. Delaware New Science Associates, Ltd. England Real Decisions, Inc. Connecticut Gartner Group FSC, Inc. Virgin Islands Gartner Group Scandinavia, A/S Denmark Gartner Group UK Ltd. England Gartner Group France S.A.R.L. France Gartner Group, GMBH Germany Gartner Group Italia S.R.L. Italy Gartner Group Nederland BV The Netherlands Gartner Group Norge, A/S Norway Gartner Group Sverige, AB Sweden
B-6 THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ I.M.S. INTERNATIONAL, INC. Delaware I.M.S. Financial, Inc. Delaware IMS Pharminform Holding AG Switzerland Informations Medicales Et Statistiques S.A. Belgium Informations Medicales & Statistiques S.A.R.L. Morocco Institute for Medical Statistics Norge A/S Norway IMS AG Switzerland IMS Medinform A.S. Czech Republic IMS Information Medical Statistics AG Switzerland IMS Poland Limited Poland IMS Medinform Hungaria Market Research Services Ltd. Hungary IMSMARQ AG Switzerland IMS Servicos Ltda. Brazil IMS Tunisia Tunisia Interdata S.A. de C.V. Mexico RCI Research Consultants AG Switzerland Marketing Y Datos Limitada [k/a Markdata Ltda.] Chile Interstatistik AG Switzerland I M S Ges.m.b.H. Austria Datec Industria e Comercio, Distribuidora Grafica e Mala Direta Ltda. Brazil Interdata Dominicana, S.A. Dominican Republic Intercomunicaciones Y Servicio de Datos S.A. Colombia [k/a Interdata S.A.] Pharma Data Paraguaya S.R.L. Paraguay Pharma Data Uruguaya S.A. Uruguay Data Coordination AG Switzerland PMA Sociedad Anonima Argentina Datandina S.A. (Peru) Peru Institute for Medical Statistics Oy Finland I.M.S. (Nederland) B.V. The Netherlands I.M.S. Nederland Finance B.V. io The Netherlands Datandina Ecuador S.A. Ecuador Asserta Centroamerica Medicion de Mercados, S.A. Guatemala PMV De Venezuela, C.A. Venezuela Pharmadat Marktforschungs- Gesellschaft m.b.H. Austria Pharmacall Statistik Ges. m.b.H. Austria Medidat Marktforschungs- Gesellschaft m.b.H. Austria 50.0 Intercontinental Marketing Services Iberica, S.A. Spain Pharmatest Medical Market Studies, S.A. Spain Mercados Y Analisis, S.A. [k/a M.A.S.A.] Spain IMS Turkiye Ltd. Turkey
B-7 THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ I.M.S. INTERNATIONAL, INC. (Continued) I.M.S. Financial, Inc. (Continued) IMS Pharminform Holding AG (Continued) SRG Holdings Limited Hong Kong SRG Management Services Limited Hong Kong Survey Research Hongkong Ltd.Hong Kong SRG China Ltd. Hong Kong Shanghai SRG Ltd. China 80.0 SRG Research Services (HK) Ltd. Hong Kong Survey Research Asia Pacific Ltd. Hong Kong Survey Research Taiwan Ltd. Taiwan Research Consulting Services Ltd. Hong Kong Survey Research Group Ltd. Hong Kong SRG Guangzhou Ltd. China 64.0 Survey Research Group Pte. Ltd. Singapore ASI Market Research Inc. Japan Deemar Company Ltd. Thailand Survey Research Singapore Pte. Ltd. Singapore Consumer Pulse Inc. Philippines Dealer Pulse Inc. Philippines Media Pulse Inc. Philippines SRG International Ltd. New York Marketing Insights Pty. Ltd. Australia Market Research (NZ) Ltd. New Zealand Research Philippines Unisearch Inc. Philippines SRG Research Canada Ltd. Canada D.J. Calhoun Marketing & Development Ltd. Canada 86.0 Recherches en Marketing (Quebec) Inc. Canada 86.0 IMS Software Services, Ltd. Delaware Dun & Bradstreet Germany Holding, Ltd. Delaware ACN Marketing Research Holding GmbH Germany A. C. Nielsen GmbH Germany A. C. Nielsen Werbeforschung S&P GmbH Germany Dataquest GmbH Germany P&S Handelsberatung GmbH Germany D & B Schimmelpfeng GmbH Germany D&B Unterstutzungskasse GmbH Germany IMS Holding Deutschland GmbH Germany IFNS Marktforschung GmbH Germany Institut fur Medizinische Statistik GmbH Germany I.M.S. Hellas Ltd. Greece IMS Data GmbH Germany Midoc Medizinische Informations -und Dokumentations- Germany Gesellschaft m.b.H. IMS Japan Ltd. (KK) Japan Pharmamedia AG Switzerland 51.0 I.M.S. Portugal-Consultores Internacionais de Marketung Farmaceutico, Lda. Portugal
B-8 THE DUN & BRADSTREET CORPORATION EXHIBIT B LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1995
State or Other % Ownership Name Jurisdiction of 100% except Incorporation as noted _____________________________________________________________________________ I.M.S. INTERNATIONAL, INC. (Continued) IMS (NZ) Limited New Zealand IMS Investments (NZ) Limited New Zealand Riddell Information Services Pty. Ltd. New Zealand IMS Pacific Limited Hong Kong IMS HK Investments Ltd. Hong Kong IMS of Canada, Ltd. Canada Informations Medicales Et Statistiques S.A.R.L. France Intercontinental Medical Statistics International, Ltd. New York Market Research International, Ltd. Delaware Nippon Computer Services, Inc. Japan IMS Asia (1989) Pte. Ltd. Singapore Data Coordination (Israel) Ltd. Israel Clark-O'Neill, Inc. New Jersey IMS America, Ltd. New Jersey Coordinated Management Systems, Inc. Delaware Emron, Inc. New Jersey INTERACTIVE DATA CORPORATION Delaware MOODY'S INVESTORS SERVICE, INC. Delaware Moody's Canada Inc. Canada Moody's Deutschland GmbH Germany Moody's Asia Pacific Limited Hong Kong Moody's Japan Kabushiki Kaisha Japan Moody's Investors Service Espana, S.A. Spain OAK INVESTMENTS LTD. Bermuda PILOT SOFTWARE, INC. Delaware PES (Amsterdam) Holding en Finance B.V. The Netherlands Pilot Software Pty. Ltd. Australia Pilot Software S.A.R.L. France Pilot Software GmbH Germany Pilot Software B.V. The Netherlands Pilot Software S.R.L. Italy Pilot Software Pte. Ltd. Singapore Pilot Software AB Sweden Pilot Software Ltd. England Thorn EMI Computer Software Ltd. England SALES TECHNOLOGIES, INC. Georgia THE REUBEN H. DONNELLEY CORPORATION Delaware D&B Investors L.P. Delaware 99.0 Am-Don Partnership [d/b/a DonTech] Illinois 50.0 C-Don Partnership Pennsylvania 50.0 CenDon Partnership Illinois 50.0 Uni-Don Partnership Florida 50.0 January 31, 1995
B-9 EX-23 4 EXHIBIT C CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the registration statements of The Dun & Bradstreet Corporation on Forms S-8 (File Nos. 2-53006, 33-21719, 33-25774, 33-27144, 33-44551, 33-49060, 33-51005 and 33-56289) of our reports dated January 25, 1995, on our audits of the consolidated financial statements and financial statement schedules of The Dun & Bradstreet Corporation as of December 31, 1994 and 1993 and for the years ended December 31, 1994, 1993 and 1992, which reports are incorporated by reference or included in this Form 10-K. COOPERS & LYBRAND L.L.P. Stamford, Connecticut March 27, 1995 C-1 EX-13 5 [DESCRIPTION] EXHIBIT-D Performance & Outlook The Dun & Bradstreet Corporation delivers information, software and services that help customers make better, faster, more profitable decisions. ______________________________________________________________________ Revenue by Segment millions of dollars Marketing Information Services $2,043 Risk Management & Business Marketing Information Services $1,606 Software Services $406 Directory Information Services $440 Other Business Services $401 ______________________________________________________________________ Revenue by Geographic Area 1994 vs. 1985 percent 1994 United States 59% Europe 28% Other Non-U.S. 13% _______________________________________________________ 1985 United States 79% Europe 14% Other Non-U.S. 7% Performance & Outlook Marketing Information Services
Dollar amounts in millions 1994 1993 % Change 1992 1991 1990 __________________________________________________________________________________ Operating Revenue $2042.9 $1,868.3 +9.3 $1,894 $1,832 $1,938 Operating Income Before Restructuring Income/Expense - Net $ 277.1 $296.5 -6.5 $303 $286 $332 Operating Margin % Before Restructuring Income and Expense - Net +13.6 +15.9 -14.5 ___________________________________________________________________________________ Adjusted for acquisitions and divestitures and timing factors, revenue growth was about 6% and operating income was down 18%.
*In 1994, the effect of foreign-currency translation on revenue and operating income performance of D&B units was insignificant. **Operating-income comments throughout the Performance & Outlook section are before restructuring income/expense net. Nielsen Nielsen is the world's leading provider of retail, promotion, media, household and consumer information services; modeling, analytical and logistics software; and decision-support tools. Consumer packaged goods manufacturers and retailers use these services for tactical, operational and strategic decision making. 1994 Performance Nielsen's revenue was $1.102 billion, up 4.8 percent on a reported basis and up about 3 percent adjusted for acquisitions and divestitures.* Operating income** declined, reflecting increased investment spending as well as past competitive losses and higher costs in the U.S. 1995 Outlook Nielsen anticipates moderate growth in underlying worldwide revenue, with stabilization of its U.S. business as a result of the impact of competitive successes in 1994. Some margin improvement is anticipated primarily as a result of productivity actions. Operating Highlights and Growth Initiatives Client Wins Twenty-six clients in North America reestablished or consolidated their accounts with Nielsen, which also won more than 40 renewals compared with five losses. Key victories included Johnson & Johnson, Bristol-Myers Squibb, General Mills, Tambrands and Dole Foods. F-1 Nielsen won European agreements with customers, including Reckitt & Colman, Benckiser and, early in 1995, Unilever Foods and Kraft Jacobs Suchard. New Products and Technology Nielsen loaded its massive database covering U.S. consumer products in the revolutionary Nielsen Solution System and began using it to generate ad hoc reports and special analyses for clients. Nielsen Solution System changes how information is stored, processed and delivered, and will give customers new opportunities to make rapid strategic and operational decisions. Nielsen and efficient market services, inc., established agreements with major retailers to develop Efficient Consumer Response (ECR) and category management information services. Daily information gathered in all the stores in a retail chain represents a critical foundation for capturing the full benefits of ECR, which calls for a dramatic reengineering of promotion and distribution practices by manufacturers and retailers. Nielsen's Solutions Partners program and its consumer information services address all key elements of the distribution chain. Nielsen Workstation, the Promotion Simulator and Opportunity Explorer modeling and analytic products and the Spaceman family of logistical software products generated strong double-digit revenue growth in the U.S. Nielsen rolled out scanning-based core retail tracking services in nine European countries. Nielsen adopted Pilot Software's LightShip Server online analytic processing software in Europe and began using it for customer application development. Pilot was acquired by D&B in late 1994. Geographic Expansion Nielsen acquired Survey Research Group (SRG), the market leader in Asia; established a joint venture with AMER World Research that covers Eastern Europe, North Africa and the Middle East; reentered South Africa through a joint venture with IBIS; and acquired media and consumer research businesses in Australia and New Zealand. Nielsen dramatically expanded its media research business in Latin America, acquiring IPSA S.A. of Argentina and announcing it will introduce television audience measurement services in Brazil, Colombia and Ecuador. IMS International IMS International is the world's leading provider of marketing, sales- management and medical information and decision-support services for the pharmaceutical and health-care industries. 1994 Performance Revenue was $691 million, up about 13 percent on a reported basis and up about 8 percent, adjusted for the acquisition of Amfac Chemdata and timing factors. Operating income declined, reflecting increased investment spending. 1995 Outlook IMS expects double-digit underlying growth in revenue and operating income. F-2 Operating Highlights and Growth Initiatives Client Wins Xponent, IMS America's revolutionary prescriber database service, and Plan Trak, its managed-care database, contributed to strong competitive gains. IMS America added new clients, including Merck & Co. and Sandoz. New Products Xplorer, launched at mid-year, quickly became the market leader in decision-support software for the pharmaceutical industry. IMS began developing pharmacy database services in Italy and France in 1994 and will add the U.K., Belgium and the Netherlands in 1995. The Japan Sales Territory Report, a local version of IMS' proven sales management services, was introduced; the first studies from the people's Republic of China were published; and growth accelerated in Eastern Europe. IMS expanded IDRAC, the CD-ROM service that customers use to manage the drug registration process in Europe. IMS introduced MediVal, which helps manufacturers and retailers in the U.S. manage Medicaid-related prescription reimbursements. Acquisitions The acquisition of Amfac Chemdata in Australia, a leading developer of pharmacy management software, supports both pharmacy database services and enhanced over-the-counter information services. IMS acquired Emron, which provides managed-care information, software and marketing services to pharmaceutical manufacturers. Nielsen Media Research Nielsen Media Research is the leading U.S. provider of national and local television information services for networks and affiliates, independent stations, syndicators, cable networks and systems, advertisers and their agencies. Nielsen Media reported excellent growth in revenue from both national and local services in 1994, as well as excellent growth in operating income. Annual revenue exceeded $250 million for the first time. The division expects solid underlying growth in revenue and operating income in 1995. Nielsen Media expanded its local metered services to 32 cities and will add Pittsburgh in 1995. Nielsen's competitor in syndicated local television audience measurement, Arbitron, withdrew from the marketplace in 1994. Expanded programming by the FOX Network and an increase in the cable network customer base to 35 generated growth in national measurement services. Nielsen began increasing its nationwide People Meter sample from 4,000 households to 5,000. Nielsen Media is implementing client/server technology that supports a more flexible, integrated reporting system for clients and will enable Nielsen to introduce new products and services. Nielsen Media generated growth from its national and local Hispanic services in the U.S., including local measurement in 10 new markets. F-3 Nielsen relaunched its Monitor-Plus competitive media-reporting service; expanded its sports marketing services; and began testing a totally passive People Meter technology capable of delivering more precise levels of viewing data. Risk Management & Business Marketing Information Services
Dollar amounts in millions 1994 1993 % Change 1992 1991 1990 _________________________________________________________________________________ Operating Revenue $1,605.7 $1,564.2 + 2.7 $1,521 $1,397 $1,351 Operating Income Before Restructuring Income/Expense - Net $ 445.2 $ 404.6 +10.0 $380 $285 $253 Operating Margin % Before Restructuring Income and Expense - Net +27.7 +25.9 + 6.9 ___________________________________________________________________________________ Adjusted for acquisitions, revenue was essentially unchanged and operating income was up 9%.
Dun & Bradstreet Information Services Dun & Bradstreet Information Services (DBIS) is the leading supplier of business-to-business credit, marketing and receivables-management information and decision-support services worldwide, and credit insurance in the U.S. and Canada. 1994 Performance Revenue was $1.256 billion, up 3 percent on a reported basis and up about 1 percent adjusted for acquisitions. Operating-income growth was substantial due primarily to productivity improvements. DBIS North America's revenue was essentially unchanged, held down by slightly lower U.S. credit services sales as customers continued to move to lower- priced, less comprehensive products. Adjusted for acquisitions, DBIS Europe posted a revenue increase of about 1 percent 1995 Outlook DBIS expects moderate underlying growth in revenue and operating income Operating Highlights and Growth Initiatives Increased Geographic/Market Penetration DBIS acquired S&W in France, Novinform A.G. in Switzerland and Orefro L'Informazione in Italy, and formed an alliance with Tokyo Shoko Research in Japan. Soliditet, the leading supplier of business information in Scandinavia acquired in 1993, generated double-digit growth rates, exceeding expectations. American Credit Indemnity, which markets credit insurance in the U.S. and Canada, implemented a new underwriting strategy, expanded its marketing to new industry groups and generated strong growth in revenue. F-4 DBIS' Asia-Pacific and Latin American operations generated strong growth in Mexico, Brazil, Hong Kong and Singapore. New Products and Technology DBIS enhanced and expanded its Portfolio Analysis and Database Marketing services in the U.S. and Canada and its Opportunity & Risk Analysis service in Europe and Australia. These products, which integrate customer data with D&B data and software for marketing, credit and purchasing applications, generated promising new revenue streams in their first full year. A powerful desktop version of Database Marketing, Market Spectrum, was launched in early 1995. Credit-scoring information services continued to grow in North America. Customized credit-scoring was introduced for the trucking industry. New products were launched in the U.S. and the U.K. that enable companies to program their own standards in DBIS' systems and produce reports that deliver specific credit decisions. A total revision of the U.K.'s business information product lines to offer more options and flexible pricing generated increased inquiries and market share gains in the second half of the year. Entering 1995, DBIS launched similar new product ranges in Belgium and Italy. The business-to-business marketing database was enhanced and enlarged in the U.S. and contributed to improved performance in the marketing segment. DBIS will launch a series of CD-ROM products for the marketing segment in 1995. DBIS generated new revenue in the U.S. through a suite of environmental information products that customers in banking, real estate and other industries use to measure the risk associated with a company's proximity to hazardous environmental sites. DBIS offered new electronic commerce services using electronic data- interchange technology and third-party networks. The U.S. federal government adopted DBIS' D-U-N-S Number as the standard business identifier for electronic commerce. DBIS launched WorldBase, which consolidates business-identification and marketing information on more than 38 million businesses worldwide. WorldBase will serve as a platform for a wide variety of customer applications, such as building global customer and vendor databases, establishing corporate family linkages and conducting cross-border marketing and sales campaigns. Moody's Investors Service Moody's Investors Service, a global provider of financial analysis, opinion, research and information, rates debt securities issued by corporate and government entities, and publishes financial information in print and electronic formats. 1994 Performance After three consecutive years of strong growth, revenue and operating income declined as expected in 1994 due to dramatic reductions in corporate bond volumes and public-debt refundings. 1995 Outlook Moody's anticipates moderate growth in revenue for the full year, primarily from its expansion into international markets and from new products, but little change in operating income due to investment spending. However, continuing uncertainty remains in the bond market, particularly in public finance. F-5 Operating Highlights and Growth Initiatives Geographic Expansion Moody's opened offices in Hong Kong and Toronto during 1994, and in Singapore in early 1995. The company now maintains offices in eight countries outside the U.S. Its Tokyo office has doubled in size over the past two years. Moody's opened an office in Dallas, and now serves public-finance investors and issuers through three offices in key cities across the U.S. New Products Moody's expanded its coverage of new debt instruments, such as derivatives and structured notes. Moody's Company Data with EDGAR was released. This product adds U.S. Securities and Exchange Commission electronic filings to Moody's highly successful CD-ROM service covering more than 10,000 public companies. Moody's created and tested a new product that offers equity information and analysis on companies in emerging markets including Asia-Pacific, Latin America, Eastern Europe, the Middle East and Africa. Moody's expects this service, developed with D&B Information Services and the International Finance Corporation, to provide equity investors with better information on companies and markets in newly attractive investment areas. Interactive Data Interactive Data delivers securities-related information and software to the investment community in North America, Europe and the Asia-Pacific region. The division reported increased revenue and a strong increase in operating income. Software Services
Dollar amounts in millions 1994 1993 % Change 1992 1991 1990 _________________________________________________________________________________ Operating Revenue $ 405.9 $ 475.6 -14.7 $534 $557 $558 Operating Income Before Restructuring Income/Expense - Net $ -.8 $ 43.7 -101.9 $ 19 $ 43 $ 57 Operating Margin % Before Restructuring Income and Expense - Net -.2 +9.2 -102.2 ___________________________________________________________________________________ Software Services posted a slight loss due to a third-quarter charge for revaluation of computer software. Excluding the charge, the segment had a profit in 1994.
Dun & Bradstreet Software Dun & Bradstreet Software delivers integrated client/server software for financial, personnel management, manufacturing and decision-support applications; and mainframe applications software, maintenance and support services. F-6 1994 Performance Revenue declined significantly due to lower mainframe-related sales. Operating income declined as a result of revenue performance and development spending. 1995 Outlook D&B Software expects stabilization in its revenue and operating-income results, with increased client/server software revenue essentially offsetting mainframe software declines. Operating Highlights and Growth Initiatives New Products D&B Software launched SmartStream 3.0, the integrated SmartStream Suite of client/server software. New elements of the SmartStream Suite in 1994 included manufacturing and distribution components that were released in the fourth quarter, personnel management, and major upgrades of the financial and decision- support components. Additional SmartStream products introduced were SmartPath, a tool for converting from mainframe to client/server computing; SmartStream Budget, an enterprise budgeting and analysis tool; and Stream Builder, an application-development tool. Client/Server Growth Client/server revenue rose 60 percent in 1994. Mainframe Enhancements DBS formed a separate unit to enhance its mainframe software and services. New pricing options were introduced for consulting, maintenance and support services designed to give customers greater flexibility and an easier transition to client/server computing. Sales Technologies Sales Technologies (ST) develops and markets mobile sales force automation software and services, principally for the business-to- business, pharmaceutical and consumer packaged goods markets. The division reported a decline in revenue due to the exit of unprofitable product lines, the close-down of its European operations and lower sales of legacy products. ST improved its operating-income performance, posting a significant reduction in losses due to cost savings and improved productivity. ST introduced three new Windows-based client/server products: SNAP/Virtual Office for the business-to-business market, SNAP/Pharma for the pharmaceutical industry, and SNAP/CPG for the consumer packaged goods industry. These products share core sales automation technology, while adding industry-specific components and features. They also integrate data from DBIS, IMS and Nielsen to deliver comprehensive information to mobile sales representatives. Pilot Software Pilot Software, acquired in late 1994, markets the LightShip family of business-intelligence, client/server software products. Its LightShip Server online analytic processing (OLAP) software delivers new capabilities to customers to analyze large volumes of business intelligence data quickly and effectively. Pilot gives Dun & Bradstreet a strong competitor in the fast-growing business-intelligence and OLAP software markets. It also provides new technology and capabilities that will contribute to product development and the introduction of new value to customers at other D&B units, particularly IMS International and Nielsen. In December, Nielsen adopted LightShip Server for customer application development in Europe. The two units are now working together to load Nielsen's information on LightShip and integrate it with existing Nielsen decision-support and analytical software. The first elements of the combined service are expected to be operational early in the second quarter of 1995. F-7 Erisco Erisco provides software and services for managed health-care administration. Revenue declined during 1994 due to discontinued services for defined-contribution administration, but operating income improved. Directory Information Services
Dollar amounts in millions 1994 1993 % Change 1992 1991 1990 _________________________________________________________________________________ Operating Revenue $ 440.1 $ 450.7 - 2.4 $419 $463 $450 Operating Income Before Restructuring Income/Expense - Net $ 214.2 $ 185.2 +15.6 $161 $209 $184 Operating Margin % Before Restructuring Income and Expense - Net +48.7 +41.1 +18.5 ___________________________________________________________________________________ Excluding the impact of timing factors and the divestiture of Thomson Directories, revenue growth was about 6% and operating income was up 32%.
Reuben H. Donnelley Reuben H. Donnelley provides yellow pages advertising directory marketing, sales and publishing. Donnelley serves as sales and marketing representative for directories published by NYNEX, and publishes and sells directories on behalf of Cincinnati Bell and Sprint. Donnelley also is a proprietary publisher in the mid-Atlantic region and southern California. DonTech, a partnership with Ameritech advertising services, serves Chicago and other markets in Illinois and northwestern Indiana. 1994 Performance Directory Information Services' reported revenue decreased 2.4 percent to $440.1 million. Excluding the impact of timing factors and the divestiture of Thomson Directories, revenue growth for 1994 was about 6 percent. Underlying sales were up slightly. Operating income increased 15.6 percent to $214.2 million. Excluding timing factors and the divestiture, operating income rose 32 percent, reflecting significant productivity gains. 1995 Outlook While Directory Information Services expects to maintain its strong cash flow performance, reported revenue and operating income are expected to decline moderately due to contractual changes. Underlying sales are expected to continue to grow, with gains in Directory's key markets at rates above industry averages. Operating Highlights and Growth Initiatives Yellow Pages Gains Good sales and revenue gains were generated in key regions in the Northeast and Midwest, driven by reengineered account-planning, market- segmentation and territory-management practices, as well as improving economic conditions. Donnelley extended through 2004 its agreement with Sprint to provide advertising sales, composition, compilation and customer service in central Florida. F-8 New Technologies and Media Donnelley announced it will build a new publishing center in North Carolina that will employ advanced business systems and reengineered processes, and will support the division's entry into new media, including interactive and electronic services. Donnelley continued to reduce the time required to publish its directories, which expands sales cycles and increases customer satisfaction. Donnelley successfully began selling ads for the new NYNEX Interactive Yellow Pages on the Prodigy online network. Prodigy subscribers will have access to over 2 million Yellow Pages listings in the Northeast. Donnelley tested a new advertising program in its proprietary operations in California called Yellow Pages Television (YPTV). This initiative offers directory advertisers the opportunity to adapt their print advertising for use on cable television stations. By year-end, YPTV was available in five southern California markets, with 26,000 commercial TV spots scheduled to run. Other Business Services
Dollar amounts in millions 1994 1993 % Change 1992 1991 1990 _________________________________________________________________________________ Operating Revenue $ 401.1 $ 351.6 + 14.1 $383 $402 $540 Operating Income Before Restructuring Income/Expense - Net $ 88.3 $ 28.0 +215.4 $ 50 $ 37 $ 63 Operating Margin % Before Restructuring Income and Expense - Net +22.0 + 8.0 +175.0 ___________________________________________________________________________________ Adjusted for divestitures, revenue increased about 17% and operating income increased more than 400%. Operating income includes a gain on the sale of the assets of DunsNet
Gartner Group Gartner Group is a leading provider of research, analysis and advisory services to users and suppliers of information technology, with offices or representatives in more than 30 countries worldwide. D&B holds more than 50 percent of Gartner stock, which is traded over-the-counter on the NASDAQ national market system. Gartner produced exceptional growth in revenue and operating income, and expects continuing strong growth in 1995. Key growth drivers at Gartner include: The introduction of new subscription products. Wider distribution of its research and advisory services in customers' organizations. Electronic delivery using CD-ROM and Lotus Notes technology has expanded Gartner's base of direct users to more than 50,000 individuals, compared with 23,000 two years ago. Wider marketing of Gartner's services to a larger customer base, including more mid-sized companies. F-9 Dataquest Dataquest provides global market research, analysis and consulting services for information technology, hardware, software, communications and services companies. Its machinery information division was divested in 1994. Dataquest posted double-digit growth in revenue, adjusted for the divestiture, and a substantial improvement in operating income performance. After several years of operating losses, the unit returned to profitability and posted results well ahead of expectations. Dataquest introduced electronic product delivery vehicles; improved its consulting services and performance; increased sales coverage in North America and Asia; and developed new products and revised product lines more closely aligned with customer needs. In the fourth quarter, Dataquest acquired ResearchAsia, a technology market-tracking firm covering Hong Kong, Thailand, South Korea, Singapore, Taiwan and other countries. NCH Promotional Services NCH Promotional Services provides cents-off coupon redemption, processing and financial management services to retailers, and promotion analysis and information management to manufacturers. NCH reported lower revenue, reflecting a decline in worldwide coupon redemptions and competitive pricing in the industry. The division reported excellent growth in operating income as a result of production efficiencies and process reengineering. NCH introduced LAUNCH, a Windows-based promotion management system, and Payment Choice, a flexible management and reporting system for retailers. F-10 FINANCIAL REVIEW The Company reported record earnings per share in 1994 of $3.70, up 10.1% from $3.36 a year ago, excluding the adoption of Financial Accounting Standards Board (FASB) Statements of Financial Accounting Standards (SFAS) No. 112 and No. 106 and a net restructuring charge of $166.7 million after-tax, in 1993. (See Notes 3 and 6 to the Consolidated Financial Statements.) Including these factors, the Company reported 1993 earnings per share of $.23. Net income in 1994 increased by 5.7% to $629.5 million from $595.4 million in 1993, excluding the factors cited above. Including these factors, The Dun & Bradstreet Corporation (D&B) reported 1993 net income of $38.1 million. Reported operating income in 1994 increased by 11.5% to $925.5 million from $830.0 million, before restructuring expense-net in 1993. Operating-income growth outpaced revenue growth primarily because of improved productivity from workforce reductions, prior restructuring actions and other company-wide productivity initiatives. Excluding the effects of acquisitions, divestitures, timing factors and restructuring expense-net, D&B's 1994 operating income grew by about 10%. For the Company's current portfolio of businesses, operating expenses excluding restructuring expense-net and the effect of the dollar increased .4% in 1994 compared with 1993, reflecting productivity improvements. D&B reported an 18.9 % operating margin for 1994--up from 16.0% three years ago. Productivity actions ranged from a workforce reduction of about 5,000 since late 1993, to company-wide consolidation of data- processing centers, real estate, and back-office accounting. Reported 1994 revenue increased by 3.9% to $4,895.7 million, from $4,710.4 million in 1993. Excluding the effects of acquisitions and divestitures and timing factors, 1994 revenue rose by about 2%. For the full year, the impact of the dollar was not significant. Good underlying revenue performance at IMS International (IMS), Nielsen Media and Gartner Group, Inc. (Gartner Group) was largely offset by a decline at Moody's Investors Service resulting from the change in bond-market conditions, a decrease in mainframe-related revenue at D&B Software (DBS), and by past competitive losses at Nielsen in the U.S. (Excluding these three business, D&B's full-year underlying revenue was up about 5%, and fourth-quarter underlying revenue was up about 7%.) Revenue growth remains D&B's number-one objective. The Company's positive year-end finish was encouraging, with enhanced performances by IMS, Nielsen International, Nielsen Media and Gartner Group. D&B continued to compete aggressively in 1994. Nielsen U.S. seized the competitive momentum by winning a solid majority of contracts awarded in 1994, while IMS substantially strengthened its leadership position in the U.S. marketplace. During the second quarter of 1994, D&B took further steps to improve productivity. The Company divested two non-strategic businesses--Thomson Directories (TDL) and the Machinery Information Division of Dataquest--and initiated other actions to restructure certain operations and businesses, and to reduce costs and increase operating efficiencies. These restructuring measures included office consolidations, the closedown of Sales Technologies' European operations, the discontinuance of certain production and data- collection systems and products, as well as additional steps to complete certain actions initiated in the fourth quarter of 1993. The pre-tax costs associated with these restructuring actions essentially offset a pre-tax gain of $54.7 million on the two divestitures. (See Note 3 to the Consolidated Financial Statements.) In the third quarter of 1994, several non-recurring gains and significant changes in costs were included in the Company's operating results. 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, Dun & Bradstreet Information Services (DBIS) and Nielsen. In addition, a change in eligibility F-11 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. In the fourth quarter, as part of the Company's global initiative to improve productivity and increase synergies, the Company realized a $12.6 million benefit-plan curtailment gain due to workforce reductions and divestitures and a $10.2 million gain from the sale of Nielsen's headquarters in Northbrook, Illinois. The Company also realized a $9.8 million benefit, included in other expense-net, from tax sharing agreements with an Alaska Native Corporation. These gains partially offset the high level of spending on new growth initiatives in the quarter. The Company reported 1994 non-operating expense-net of $46.3 million, compared with non-operating income-net of $35.5 million in 1993. Non-operating income-net in 1993 included the $21.0 million gain on the initial public offering of Gartner Group. Non-operating expense-net in 1994 was due in part to a lower cash position as a result of cash payments for acquisitions, restructuring and severance, lower interest rates earned on international cash investments and higher interest rates paid on increased U.S. short-term borrowings, and higher minority interest expense related to two previously disclosed limited partnerships and to Gartner Group. These expenses were partially offset by benefits from tax sharing agreements with an Alaska Native Corporation. The cost of funds raised by one partnership, which provided funding for the Company's 1993 share repurchases, was more than offset by the favorable impact on earnings per share of lower average shares outstanding. The Company's effective tax rates were 28.4%, 29.5% and 30.4% in 1994, 1993 and 1992, respectively, excluding the effect of the restructuring charge in 1993. The declines in the effective rates in 1993 and 1994 were a result of the continuing favorable effects of global tax-planning actions, partially offset in 1993 by an increase in the U.S. corporate income tax rate. Return on average shareowners' equity was 55.6%, 34.6% and 26.1% in 1994, 1993 and 1992, respectively, excluding in 1993 restructuring expense-net of $277.5 million, a $21.0 million gain from Gartner Group's sale of stock and the cumulative effect of accounting changes. Focusing on 1995, D&B's revenue-growth outlook for 1995 is substantially improved. The Company believes mid-single-digit revenue growth is achievable, driven by investments in 1994, high- growth acquisitions, increased competitive momentum and a stable revenue outlook at Nielsen U.S. and D&B Software. Based on the Company's decision to accelerate its long-term commitment to revenue growth, it was decided to substantially increase investment in D&B in 1995 over 1994. Accelerated investment will fuel topline growth and build customer value through new products and services, competitive pricing and strategic acquisitions. Based on these aggressive investment plans, 1995 underlying revenue growth is expected to be in the mid-single digits, with growth in earnings per share at or nearly at the Company's topline performance. While the Company expects good 1995 business performance from its divisions, several other factors will affect 1995 earnings growth. In 1994, spending on new revenue initiatives, including dilution from acquisitions, was funded primarily by an unusually high level of productivity improvements from restructuring actions and workforce reductions, as well as by employee benefit plan changes and some one -time gains. In 1995, the incremental contribution from productivity gains, while continuing to be strong, is not likely to be sufficient to drive earnings growth beyond revenue growth, given the accelerated levels of investment. Moreover, in 1995, the Company anticipates less of a contribution from one-time savings and gains, which helped to fund investment spending in 1994. The first quarter of 1995 may not be representative of anticipated full-year performance, in part because of a significant decline at Moody's, compared with its good performance in the first quarter of 1994, resulting from the change in bond-market conditions. Some of 1995's revenue growth will come from new products and services, which typically show lower initial margins. The Company also anticipates a reduction in contribution from the Directory business due to contractual changes. F-12 Further, the Company expects a substantial increase in interest expense as a result of 1994 expenditures on acquisitions, restructuring and severance, as well as interest-rate increases on short-term financing. Despite aggressive plans to increase spending, the Company is financially strong and able to fund the current dividend. At a minimum, the Company plans to maintain the current dividend. Any recommendation to the board to increase the dividend will depend on how much earnings grow. Given D&B's current performance and confidence in its strategy to deliver results, D&B's long-term expectations remain high-single- digit revenue growth, and low-double-digit growth in earnings per share. Marketing Information Services reported a 9.3% increase in 1994 revenue to $2,042.9 million from $1,868.3 million in 1993. Adjusted for the acquisitions of SRG, AGB Australia and Amfac Chemdata, the divestiture of Donnelley Marketing Information Services (DMIS), and timing factors, 1994 revenue growth for the segment was up about 6%. IMS reported 1994 revenue of $691 million, up about 13% on a reported basis and up about 8%, adjusted for the acquisition of Amfac Chemdata and timing factors. Nielsen reported 1994 revenue of $1,102.0 million, up 4.8% on a reported basis and up about 3%, adjusted for acquisitions and the divestiture of DMIS. Nielsen Media reported excellent revenue growth in 1994. Reported operating income for the segment before restructuring expense-net decreased 6.5% to $277.1 million from $296.5 million a year ago. Adjusted for acquisitions, the divestiture of DMIS and timing factors, operating income before restructuring expense-net was down 18%. Operating income before restructuring expense-net in 1994 reflected increased investment spending in the segment, as well as past competitive losses and higher costs in Nielsen's U.S. business. Risk Management and Business Marketing Information Services reported 1994 revenue growth of 2.7% to $1,605.7 million from $1,564.2 million in 1993. Adjusted for the acquisitions of Novinform AG, S&W and Orefro, segment revenue was essentially unchanged, held down by a decline at Moody's Investors Service. Moody's reported lower 1994 revenue, principally due to the dramatic decline in corporate-bond volumes and public-debt refundings. DBIS reported 1994 revenue of $1,256.3 million, up 3.0% from 1993. Adjusted for acquisitions, DBIS' revenue was up about 1%. DBIS North America's 1994 revenue was essentially unchanged, held down by slightly lower U.S. credit services revenue resulting from customers' increased use of lower priced, less comprehensive U.S. credit services products. Adjusted for acquisitions, DBIS Europe's 1994 revenue increased by about 1%. Reported operating income for the segment before restructuring expense-net increased 10.0% to $445.2 million from $404.6 million a year ago. Adjusted for acquisitions, operating income before restructuring expense-net was up 9%, despite a decline at Moody's, due primarily to productivity gains at DBIS. Software Services reported a 14.7% decrease in 1994 revenue to $405.9 million from $475.6 million a year ago. DBS' 1994 revenue, adjusted for the dollar, was down in line with the segment, due to lower mainframe-related revenue. The Software Services segment posted a slight loss in 1994 before restructuring expense-net, due to a third-quarter charge for the revaluation of computer software. Excluding the charge, the segment had a modest profit, compared with operating income before restructuring expense-net of $43.7 million a year ago. Directory Information Services reported a 2.4% decrease in 1994 revenue to $440.1 million from $450.7 million a year ago, largely as a result of timing factors. Excluding the impact of timing factors and the divestiture of TDL, revenue growth for 1994 was about 6%. Underlying sales of Directory Information Services yellow pages directories were up slightly. Reported operating income for the segment before restructuring expense-net increased 15.6% to $214.2 million from $185.2 million a year ago. Excluding the impact of timing factors and the divestiture, segment operating income before restructuring expense-net was up 32%, reflecting significant productivity gains. Other Business Services reported 1994 revenue of $401.1 million, up 14.1% from $351.6 million in 1993. Adjusted for Dataquest's divestiture of its Machinery Information Division and the divestiture of Plan Services, segment revenue increased about 17%. Gartner Group F-13 reported excellent revenue growth in 1994. NCH Promotional Services reported a decrease in 1994 revenue, reflecting a decline in worldwide coupon redemptions and competitive pricing in the industry, as well as the impact of actions taken to improve cash flow and profitability. Reported operating income for the segment before restructuring expense-net increased by 215.4% to $88.3 million from $28.0 million a year ago, due primarily to the third-quarter gain on the sale of the assets of DunsNet. Adjusted for Dataquest's divestiture of its Machinery Information Division and the divestiture of Plan Services, segment operating income before restructuring expense-net was up significantly, due to the DunsNet gain and the excellent performance at Gartner Group. In 1993, the Company reported earnings per share of $3.36, up 8.4% from $3.10 in 1992, excluding, in 1993, the cumulative effect of accounting changes and the net restructuring charge. Nineteen ninety-three earnings per share were reduced by $.05 per share as a result of an increase in the U.S. corporate income tax rate. Including the effect of these factors, the Company reported 1993 earnings per share of $.23 and net income of $38.1 million. Operating revenue in 1993 was down .8% to $4,710.4 million from $4,750.7 million in 1992. Excluding the effects of divestitures and acquisitions, the adverse impact of the stronger dollar and certain timing factors, 1993 revenue was up about 3.5%. Operating income before restructuring expense-net in 1993 increased 5.6% to $830.0 million from $785.9 million in 1992. Excluding the effects of divestitures and acquisitions, the stronger dollar, certain timing factors and restructuring expense- net, 1993 operating income was up about 13%. Operating income after restructuring expense-net decreased to $552.5 million. Operating expenses, excluding the effect of acquisitions and divestitures, restructuring expense-net and the effect of the stronger dollar, increased 1.7% in 1993 compared with 1992, reflecting productivity improvements. In 1993, the Company adopted the provisions of SFAS No. 112, "Employers' Accounting for Postemployment Benefits" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." The adoption of SFAS No. 112 and SFAS No. 106 resulted in one-time, non-cash, after-tax charges of $250 million and $140 million, respectively, in the first quarter of 1993. (See Note 6 to the Consolidated Financial Statements.) The Company reported 1993 non-operating income-net of $35.5 million, compared with non-operating income-net of $9.3 million in 1992. Non-operating income-net in 1993 included a $21.0 million gain from the initial public offering of Gartner Group. Other expense-net of $12.4 million in 1993 compared with other expense-net of $2.0 million in 1992 reflected the minority interest's share of income/loss of majority-owned subsidiaries and two previously disclosed limited partnerships. Non-operating expense-net in 1993 also reflected lower interest expense due in part to a lower level of short-term borrowings, a larger portfolio of marketable securities and interest income on notes related to the sale of Datastream. In effect, a portion of the increase in interest income-net represented an offset to the absence of operating income from divested businesses. In 1992, the Company reported earnings per share of $3.10, up 9.2% from $2.84 per share in 1991. Net income for 1992 increased 9.3% to $553.5 million from $506.5 million in 1991. Operating revenue in 1992 increased $99.7 million, or 2.1% to $4,750.7 million from $4,651.0 million in 1991. Revenue growth in 1992 was held down by the effects of four divestitures--Donnelley Marketing in February 1991, the communications unit of IMS International in July 1991, Information Associates in June 1992 and Datastream International in September 1992--as well as by the impact of changes in contractual arrangements at Reuben H. Donnelley in 1991. Excluding these factors, and the impact of a slightly weaker dollar, revenue growth was about 5%, which was held down by the negative impact of economic and industry conditions on Directory Information Services and DBS. Operating income in 1992 increased by 5.6% to $785.9 million from $744.3 million in 1991. Excluding the effects of divestitures, the 1991 changes in Donnelley contracts, 1991 restructuring expense and the impact of a slightly weaker dollar, operating income increased by about 9%. F-14 Operating expenses excluding the effect of acquisitions and divestitures, restructuring expense-net and the impact of a weaker dollar, increased 4% in 1992 compared with 1991. Non-operating income-net of $9.3 million in 1992, compared with non-operating expense-net of $7.0 million in 1991, reflecting a larger portfolio of marketable securities and a lower level of short-term borrowings, due to a significant increase in cash flow from operations and proceeds from the sales of Datastream International and Information Associates. In effect, a portion of the increase in interest income-net represented an offset to the absence of operating income from divested businesses. Non- operating income-net in 1992 also included a $3.4 million gain on foreign-currency put options, compared with an $11.2 million gain in 1991. In line with the Company's often stated strategy of sharpening its focus on key markets for information services, during 1992, the Information Associates unit of DBS and Datastream International were sold during the second and third quarters, respectively. Restructuring actions initiated in 1992 included the reorganization of European operations at Nielsen, and workforce reductions and actions to consolidate operations at DBS and Reuben H. Donnelley. The pre-tax costs of these actions essentially offset a pre-tax gain of $107 million on the sales of Datastream International and Information Associates. In 1993 the Company sold DMIS, redeemed preferred shares and notes related to the sales of Donnelley Marketing and Datastream International and resolved certain contingencies related to other divestitures. As a result of the above transactions, a $40.0 million restructuring gain was recognized. In 1993, the Company also recognized a $21.0 million non-operating gain related to the initial public offering of Gartner Group in which the Company holds a majority interest. In connection with the above operating and non-operating gains, the Company recorded $61.0 million of restructuring expense related to workforce reductions (non-severance costs) and restructuring of certain operations and businesses. Additional restructuring actions initiated in 1993 totaling $256.5 million represented an acceleration of ongoing efforts to achieve long-term productivity improvements and to leverage the Company's global synergies. A significant portion of the charge was for downsizing the number of data-processing centers, reducing worldwide real estate costs, and reengineering back-office accounting functions. The ongoing pre-tax savings from these synergy actions are expected to grow in the next few years to approximately $100 million annually. In 1994, 1993 and 1992, certain restructuring actions initiated in 1993, 1992 and 1991 were completed at a lower cost than originally estimated and other actions required more costs to implement than originally expected. In addition, costs to complete certain actions being implemented changed based on revised estimates and experience to date. In a number of instances, new restructuring actions were initiated to complement or enhance original actions and certain actions were expanded, contracted or discontinued based on changed circumstances. While the total costs of all restructuring actions remained unchanged, the changes in estimates and other changes did impact operating income by business segment. (See Notes 3 and 15 to the Consolidated Financial Statements.) Restructuring actions significantly affect year-to-year comparisons of operating income by segment. Accordingly, Marketing Information Services reported operating income of $285.3 million in 1994, compared with operating income of $243.5 million and $257.2 million in 1993 and 1992, respectively. Risk Management and Business Marketing Information Services reported operating income in 1994 of $447.0 million, compared with operating income of $307.6 million and $371.0 million in 1993 and 1992, respectively. Software Services' operating loss for 1994 totaled $3.6 million, compared with operating losses of $24.6 million and $19.2 million in 1993 and 1992, respectively. Directory Information Services' operating income in 1994 totaled $248.0 million, compared with $170.3 million and $154.0 million in 1993 and 1992, respectively. Other Business Services' operating income in 1994 totaled $110.0 million, compared with $24.8 million and $149.8 million in 1993 and 1992, respectively. F-15 Non-U.S.Operations and Monetary Assets - The Company has operations in more than 70 countries. Approximately 41% of the Company's revenues in 1994 were from non-U.S. operations, including approximately 28% from European operations. The percentage of the Company's revenue from non-U.S. (particularly non-European) operations increased in 1994 compared with 1993 because of the effect of acquisitions in 1994. Non-U.S. operations accounted for approximately 28% of the Company's operating income in 1994, including European operations, which accounted for approximately 20%. Changes in the value of non- U.S. currencies relative to the U.S. dollar cause fluctuations in U.S. dollar operating results. In 1994, the effect of foreign currency translation on revenue and operating income growth was insignificant. In 1993, foreign currency translation decreased U.S. dollar revenue and operating income growth by approximately 4%. From 1989 through 1993, the Company had used various financial instruments, which have provided partial protection against foreign currency exposures versus annual plan; however, this practice did not avoid year-to-year fluctuations in U.S. dollar operating results resulting from foreign currency translation. In 1994, the Company discontinued this practice; however, the cost/benefit of this practice will be re-evaluated periodically and might be used in the future. Non-U.S. monetary assets are maintained in European currencies, principally in Germany, Switzerland, Spain, Italy, and the Netherlands. Changes in the value of these currencies relative to the U.S. dollar are charged or credited to shareowners' equity. The effect of exchange rate changes during 1994 increased the U.S. dollar amount of cash and cash equivalents by approximately $15.4 million. Liquidity and Financial Position - At December 31, 1994, cash, cash equivalents and current and non-current marketable securities totaled $495 million, (including $130 million of American Credit Indemnity's marketable securities, a portion of which is subject to insurance regulation), a decline of $279 million from December 31, 1993 and short-term debt totaled $501 million, an increase of $243 million from December 31, 1993. This combined usage ($522 million) of cash during 1994 included a number of significant outlays, including expected payments for postemployment benefits and restructuring of $174.5 million and $142.8 million, respectively, and net outlays of approximately $126 million for the acquisition of businesses and equity investments (net of proceeds from the sale of businesses of $143.7 million). Excluding the aforementioned significant outlays, the Company used approximately $80 million of cash during 1994. This usage included increased spending for property, plant and equipment and software development, reflecting spending for growth, and an increase in accounts receivable, which management believes was largely attributable to a number of timing factors. In 1995, the Company expects outlays in the range of $145 million for completion of restructuring actions principally initiated in late 1993. In addition, annual outlays for postemployment benefits (principally severance) in the range of $100 million are anticipated in 1995 and 1996 to complete workforce reductions originally planned through 1997. The Company expects improvement in cash flow from operations in 1995 and therefore, including the aforementioned 1995 expenditures expects to be a moderate user of cash. Net cash provided by operating activities was $562.0 million, $917.0 million, and $986.9 million in 1994, 1993 and 1992, respectively. The decrease of $355.0 million in net cash provided by operating activities in 1994, compared with 1993, primarily reflected higher restructuring payments ($47.7 million), higher postemployment benefit payments ($130.2 million), increased investment in accounts receivable ($125.1 million) and a higher increase in other working capital items ($73.7 million). Cash used in investing activities totaled $639.1 million for 1994, compared with $367.0 million and $283.5 million in 1993 and 1992, respectively. Cash used in investing activities in 1994 reflected payments for acquisition of businesses and equity investments (included in Other Investments and Notes Receivable) of approximately $270 million. The increase in cash usage, compared with 1993 also reflected higher payments for the purchase of marketable securities-net ($84.4 million), higher capital F-16 expenditures ($36.8 million) related to the purchase and refurbishment of several buildings, increased additions to computer software and other intangibles ($27.3 million), offset, in part, by higher proceeds from sale of businesses ($36.2 million). Capital expenditures were $272.5 million, $235.7 million, and $196.9 million in 1994, 1993 and 1992, respectively. Cash received ($143.7 million) during 1994 from the sale of TDL, the Machinery Information Division of Dataquest and DunsNet's assets was added to the general funds of the Company. Net cash used in financing activities totaled $253.8 million in 1994, compared with $353.8 million in 1993, and $481.3 million in 1992. The decrease in cash usage in 1994 reflected an increase in U.S. short-term borrowings ($395.7 million), part of which was used to repay Alaska Native Corporation obligations ($166.2 million). In addition, 1993 included payments for purchase of the Company's common stock ($612.2 million) funded, in part, by third-parties' investments in partnerships ($625.0 million). In late 1996, third-parties special investors interests ($500 million) in the investment partnership (see Note 10 to the Consolidated Financial Statements) will be exchanged for cash, Company stock, a debt instrument issued by the Company, or a combination thereof at the Company's discretion. Additionally, the limited partners in the database licensing partnership described in Note 10 will have the right to have their limited partnership interests ($125 million) liquidated after 1996. The Company has entered into interest rate swap agreements, which effectively fixed interest rates on $300 million of variable rate debt, at a weighted average fixed rate payable of 6.84%. (See Note 5 to the Consolidated Financial Statements.) The Company continues to be financially strong. Management believes that short- and medium-term financing alternatives available to the Company, in addition to the Company's portfolio of cash, cash equivalents and marketable securities, as well as cash generated from operations, will be more than sufficient to meet the Company's cash requirements including operating requirements, dividends, severance payments, restructuring expenses, payments for acquisitions and those that might result from liquidation of partnerships minority interests. Dividends - The regular quarterly dividend was increased to $.65 from $.61 per share on April 20, 1994. The increase brought dividends per share in 1994 to $2.56, an increase of 6.7% over the $2.40 paid in 1993. On an annualized basis, the dividend rate of $2.60 was up 6.6% from the previous rate. Common Stock Information - The Company's common stock (symbol DNB) is listed on the New York, London, Tokyo, Zurich, Geneva and Basel stock exchanges. During 1994 and 1993, 63.3 million shares and 69.4 million shares, respectively, were traded, representing 37.2% and 39.2% of the average number of shares outstanding in the respective years. The number of shareowners of record declined to 14,646 at January 31, 1995 from 15,458 at January 31, 1994. The following summarizes price and dividend-per-share information for Dun & Bradstreet common stock as reported in the periods shown: F-17 Price Per Share ($) Dividends Paid ------------------------------ -------------- 1994 1993 Per Share ($) ------------ ------------ ------------- High Low High Low 1994 1993 ______________________________________________________________________ First Quarter 64 57 7/8 61 3/4 55 3/4 .61 .57 Second Quarter 59 3/4 55 1/4 60 3/4 57 3/8 .65 .61 Third Quarter 59 1/4 55 1/2 64 7/8 57 1/2 .65 .61 Fourth Quarter 60 3/4 51 7/8 68 1/2 60 5/8 .65 .61 ______________________________________________________________________ Year 64 51 7/8 68 1/2 55 3/4 2.56 2.40 ______________________________________________________________________ F-18 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareowners and the Board of Directors of The Dun & Bradstreet Corporation: We have audited the accompanying consolidated statement of financial position of The Dun & Bradstreet Corporation and Subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, shareowners' equity and cash flows for the years ended December 31, 1994, 1993 and 1992. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Dun & Bradstreet Corporation and Subsidiaries as of December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for the years ended December 31, 1994, 1993 and 1992, in conformity with generally accepted accounting principles. As discussed in Note 6 to the consolidated financial statements, in 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits". COOPERS & LYBRAND L.L.P. Stamford, Connecticut January 25, 1995 F-19 Statement of Management Responsibility for Financial Statements To the Shareowners of The Dun & Bradstreet Corporation: Management has prepared and is responsible for the consolidated financial statements and related information that appear on pages 16 to 39. The consolidated financial statements, which include amounts based on judgments of management, have been prepared in conformity with generally accepted accounting principles. Other financial information in the annual report is consistent with that in the consolidated financial statements. Management believes that the Company's internal control systems provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing financial statements and maintaining accountability for assets. These systems are augmented by written policies, an organizational structure providing division of responsibilities, careful selection and training of qualified financial people and a program of internal audits. The independent accountants are engaged to conduct an audit of and render an opinion on the financial statements in accordance with generally accepted auditing standards. These standards include an assessment of the systems of internal controls and tests of transactions to the extent considered necessary by them to support their opinion. The Board of Directors, through its Audit Committee consisting solely of outside directors of the Company, is responsible for reviewing and monitoring the Company's financial reporting and accounting practices. Coopers & Lybrand L.L.P. and the internal auditors each have full and free access to the Audit Committee and meet with it regularly, with and without management. Robert E. Weissman /s/ Robert E. Weissman ________________________ Robert E. Weissman President and Chief Executive Officer Edwin A. Bescherer, Jr. /s/ Edwin A. Bescherer, Jr. __________________________________ Edwin A. Bescherer, Jr. Executive Vice President - Finance and Chief Financial Officer F-20 The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statement of Income Years Ended December 31,
Dollar amounts in millions, except per share data 1994 1993 1992 ___________ ___________ __________ Operating Revenue $4,895.7 $4,710.4 $4,750.7 Operating Costs, Selling and Administrative Expenses 3,549.1 3,506.7 3,585.9 Depreciation and Amortization 421.1 373.7 378.9 Restructuring Expense - Net 0 277.5 0 ___________ ___________ __________ Operating Income 925.5 552.5 785.9 ___________ ___________ __________ Interest Income 31.2 51.6 44.1 Interest Expense (39.0) (24.7) (32.8) Gain on Sale of Gartner Group Stock 0 21.0 0 Other Expense - Net (38.5) (12.4) (2.0) ___________ ___________ __________ Non-Operating (Expense)Income - Net (46.3) 35.5 9.3 ___________ ___________ __________ Income Before Provision for Income Taxes and Cumulative Effect of Changes in Accounting Principles 879.2 588.0 795.2 Provision for Income Taxes 249.7 159.3 241.7 ___________ ___________ __________ Income Before Cumulative Effect of Changes in Accounting Principles 629.5 428.7 553.5 Cumulative Effect to January 1, 1993, of Changes in Accounting Principles: -SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," Net of Income Tax Benefits of $93.7 - (140.6) - -SFAS No. 112, "Employers' Accounting for Postemployment Benefits," Net of Income Tax Benefits of $150.0 - (250.0) - ___________ ___________ __________ Net Income $ 629.5 $ 38.1 $ 553.5 _______________________________________________________________ ___________ __________ Earnings Per Share of Common Stock: Before Cumulative Effect of Changes in Accounting Principles $ 3.70 $ 2.42 $ 3.10 Cumulative Effect to January 1, 1993, of Changes in Accounting Principles: -SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," - (.79) - -SFAS No. 112, "Employers' Accounting for Postemployment Benefits" - (1.40) - _______________________________________________________________ ___________ __________ Net Earnings Per Share of Common Stock $ 3.70 $ .23 $ 3.10 ___________ ___________ ___________ Average Number of Shares Outstanding 169,946,000 177,181,000 178,346,000 _______________________________________________________________ ___________ ___________ The accompanying notes are an integral part of the consolidated financial statements F-21
The Dun & Bradstreet Corporation Consolidated Statement of Financial Position December 31,
Dollar amounts in millions, except per share data 1994 1993 ___________________________________________________________________________ ASSETS Current Assets Cash and Cash Equivalents $ 335.4 $ 650.9 Marketable Securities 26.9 17.7 Accounts Receivable - Net 1,256.5 1,078.9 Other Current Assets 362.2 374.9 --------- --------- Total Current Assets 1,981.0 2,122.4 ___________________________________________________________________________ Investments Marketable Securities 133.1 106.2 Other Investments and Notes Receivable 366.4 310.6 --------- --------- Total Investments 499.5 416.8 ___________________________________________________________________________ Property, Plant and Equipment - Net 918.5 861.1 ___________________________________________________________________________ Other Assets-Net Deferred Charges $ 363.1 $ 318.5 Computer Software 335.9 294.5 Other Intangibles 216.0 214.7 Goodwill 1,149.9 942.4 --------- --------- Total Other Assets-Net 2,064.9 1,770.1 ___________________________________________________________________________ TOTAL ASSETS $5,463.9 $5,170.4 ___________________________________________________________________________ Liabilities and Shareowners' Equity Current Liabilities Accounts and Notes Payable $ 790.8 $ 371.8 Accrued and Other Current Liabilities 1,300.4 1,561.5 Accrued Income Taxes 95.4 110.8 --------- --------- Total Current Liabilities 2,186.6 2,044.1 ___________________________________________________________________________ Unearned Subscription Income 290.3 263.7 Postretirement and Postemployment Benefits 484.9 545.7 Deferred Income Taxes 209.3 176.8 Other Liabilities and Minority Interests 974.2 1,028.8 ___________________________________________________________________________ TOTAL LIABILITIES $4,145.3 $4,059.1 ___________________________________________________________________________ Shareowners' Equity Preferred Stock, par value $1 per share, authorized - 10,000,000 shares; outstanding - none Common Stock, par value $1 per share, authorized - 400,000,000 shares; issued-188,411,297 and 188,406,813 shares for 1994 and 1993, respectively $ 188.4 $ 188.4 Capital in Excess of Par Value 67.2 64.2 Retained Earnings 2,330.0 2,135.7 Treasury Stock, at cost, 18,650,410 and 18,124,514 shares for 1994 and 1993, respectively (1,077.2) (1,036.5) Cumulative Translation Adjustment (183.5) (240.5) Unrealized Losses on Investments (6.3) 0 ______________________________________________________________ __________ Total Shareowners' Equity $1,318.6 $1,111.3 ______________________________________________________________ __________ Total Liabilities and Shareowners' Equity $5,463.9 $5,170.4 ______________________________________________________________ __________ The accompanying notes are an integral part of the consolidated financial statements. F-22
The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statement of Cash Flows Years Ended December 31,
Dollar amounts in millions 1994 1993 1992 ___________ ___________ __________ Cash Flows from Operating Activities: Net Income $ 629.5 $ 38.1 $ 553.5 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Cumulative Effect of Changes in Accounting Principles: Postretirement Benefits Other Than Pensions 0 140.6 0 Postemployment Benefits 0 250.0 0 Depreciation and Amortization 421.1 373.7 378.9 Gain from Sale of DunsNet Assets (36.0) 0 0 Gains from Sale of Businesses and Gartner Group Stock (56.3) (61.0) (106.9) Restructuring Provisions 56.3 317.5 106.9 Restructuring Payments (142.8) (95.1) (93.6) Postemployment Benefit Payments (174.5) (44.3) 0 Net (Inrease) Decrease in Accounts Receivable (88.3) 36.8 12.0 Deferred Income Taxes 67.9 2.9 (40.0) Postemployment Benefits - Curtailment Gains (46.0) (2 1) 0 Net (Increase) Decrease in Other Working Capital Items (89.4) (15.7) 154.9 Other 20.5 (24.4) 21.2 _______________________________________________________________ ___________ ___________ Net Cash Provided by Operating Activities 562.0 917.0 986.9 _______________________________________________________________ ___________ ___________ Cash Flows from Investing Activities: (Payments for) Proceeds from Marketable Securities - Net (.5) 83.9 (89.0) Proceeds from Sale of Businesses 143.7 107.5 174.5 Payments for Acquisition of Businesses (excluding cash and cash equivalents acquired of $1.9 million and and $12.8 million in 1994 and 1993, respectively) (234.0) (120.1) (1.8) Capital Expenditures (272.5) (235.7) (196.9) Additions to Computer Software and Other Intangibles (230.2) (202.9) (160.6) (Increase)Decrease in Other Investments and Notes Receivable (67.6) (29.8) .8 Other 22.0 30.1 (10.5) _______________________________________________________________ ___________ ___________ Net Cash Used in Investing Activities (639.1) (367.0) (283.5) _______________________________________________________________ ___________ ___________ Cash Flows from Financing Activities: Payment of Dividends (435.2) (423.0) (401.3) Payments for Purchase of Treasury Shares (70.0) (612.2) (48.3) Net Proceeds from Exercise of Stock Options 23.4 43.1 23.6 Increase Decrease in U.S. Short-term Borrowings 360.8 (34.9) (54.5) Third-Parties' Investments in Partnerships 0 625.0 0 Payment of Alaska Native Corp. Obligations (166.2) 0 0 Other 33.4 48.2 (.8) _______________________________________________________________ ___________ ___________ Net Cash Used in Financing Activities (253.8) (353.8) (481.3) _______________________________________________________________ ___________ ___________ Effect of Exchange Rate Changes on Cash and Cash Equivalents 15.4 (39.8) (12.7) _______________________________________________________________ ___________ ___________ Increase(Decrease) in Cash and Cash Equivalents (315.5) 156.4 209.4 Cash and Cash Equivalents, Beginning of Year 650.9 494.5 285.1 _______________________________________________________________ ___________ ___________ Cash and Cash Equivalents, End of Year $ 335.4 $ 650.9 $ 494.5 _______________________________________________________________ ___________ ___________ The accompanying notes are an integral part of the consolidated financial statements F-23
The Dun & Bradstreet Corporation and Subsidiaries CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY
Dollar amounts in millions, except per share data __________________________________________________________________________________________________________________ Common Capital in Cumulative Unrealized Three Years Ended Stock Excess of Retained Treasury Translation Losses on December 31, 1994 ($1 Par Value) Par Value Earnings Stock Adjustment Investments Total __________________________________________ _________ _________ _________ ___________ ___________ _________ Balance, Jan. 1, 1992 $188.4 $56.5 $2,368.4 $(450.5) $(39.7) $ 0 $ 2,123.1 Net Income 553.5 553.5 Cash Dividends ($2.25 per share) (401.3) (401.3) Treasury shares reissued under stock options and deferred compensation plans (577,296) 2.9 23.6 26.5 Treasury shares reissued under restricted stock plan (71,884) 4.0 4.0 Less unearned portion (4.0) 4.0) Plus earned portion of grants 3.2 3.2 Treasury shares acquired (864,108) (48.3) (48.3) Change in cumulative translation adjustment (100.7) (100.7) _________________________________________ ________ ___________ ________ ___________ __________ __________ Balance, December 31, 1992 188.4 59.4 2,520.6 (472.0) (140.4) 0 2,156.0 Net Income 38.1 38.1 Cash Dividends ($2.40 per share) (423.0) (423.0) Treasury shares reissued under stock options and deferred compensation plans (958,011) 4.8 43.1 47.9 Treasury shares reissued under restricted stock plan (93,888) 5.4 5.4 Less unearned portion (5.4) (5.4) Plus earned portion of grants 4.6 4.6 Treasury shares acquired (9,010,227) (612.2) (612.2) Change in cumulative translation adjustment (100.1) (100.1) _________________________________________ ________ ___________ ________ ___________ __________ __________ Balance, December 31, 1993 188.4 64.2 2,135.7 (1,036.5) (240.5) 0 1,111.3 Net Income 629.5 629.5 Cash Dividends ($2.56 Per share) (435.2) (435.2) Treasury shares reissued under stock options and deferred compensation plans (552,805) 3.0 23.4 26.4 Treasury shares reissued under restricted stock plan (114,930) 7.1 7.1 Less unearned portion (7.1) (7.1) Plus earned portion of grants 5.9 5.9 Treasury shares acquired (1,193,631) (70.0) (70.0) Change in cumulative translation adjustment 57.0 57.0 Unrealized losses on investments (6.3) (6.3) _________________________________________ ________ ___________ ___________ _________ __________ __________ Balance, December 31, 1994 $188.4 $67.2 $2,330.0 $(1,077.2) $(183.5) $(6.3) $1,318.6 _________________________________________ ________ ___________ ___________ _________ __________ __________ The accompanying notes are an integral part of the consolidated financial statements F-24
The Dun & Bradstreet Corporation Notes to Consolidated Financial Statements Note 1. Summary of Significant Accounting Policies Principles of Consolidation. The consolidated financial statements include those of the Company, its subsidiaries and partnerships in which the Company has a controlling interest. Investments in companies over which the Company has influence but not a controlling interest are carried at equity. The effects of all significant intercompany transactions have been eliminated. The financial statements of IMS International, Inc. (IMS), Dun & Bradstreet Software, Gartner Group, Inc. (Gartner Group) and subsidiaries outside the United States and Canada reflect a fiscal year ending November 30 to facilitate timely reporting of the Company's consolidated financial results. Cash Equivalents. Marketable securities that mature within 90 days of purchase date are considered cash equivalents. Marketable Securities. The Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities" in 1994. At December 31, 1994, all marketable securities were classified as "available for sale" and , therefore, are reported at fair value, with net unrealized gains and losses reported in shareowners' equity. Prior to 1994, marketable securities, consisting principally of fixed income securities, were carried at amortized cost. The fair value of current and non-current marketable securities (and interest rate swap agreements and foreign exchange forward contracts discussed in Note 5 below) were estimated based on quoted market prices whenever available. When quoted market prices were not available, the Company used standard pricing models for various types of financial instruments which take into account the present value of estimated future cash flows. Realized gains and losses on marketable securities are determined on the specific identification method. Unbilled Expenditures. These expenditures, which are included in other current assets, represent costs to be expensed upon contract completion and the cost of coupons purchased in connection with clearing house activities, which are rebilled to customers. Property, Plant and Equipment. Buildings and machinery and equipment are depreciated over their estimated useful lives using principally the straight-line method. Leasehold improvements are amortized on a straight-line basis over the shorter of the term of the lease or the estimated useful life of the improvement. Other Assets. Deferred charges include prepaid pension costs and assets of grantor trusts established to pay benefits for U.S. supplemental pension plans. Certain computer software costs are capitalized in accordance with Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed," and are reported at the lower of unamortized cost or net realizable value. Other intangibles result from acquisitions and database development. Computer software and other intangibles are being amortized, using principally the straight-line method, over three to five years and five to 15 years, respectively. Goodwill represents the excess purchase price over the fair value of identifiable net assets of businesses acquired and is amortized on a straight-line basis over seven to 40 years. At each balance sheet date, the Company reviews the recoverability of goodwill based on estimated undiscounted future cash flows from operating activities compared with the carrying value of goodwill. Unearned Subscription Income. Amounts billed for service and subscriptions are credited to unearned subscription income and reflected in operating revenue over the subscription term, which is generally one year. Earnings Per Share of Common Stock. Earnings per share are based on the weighted average number of shares of common stock outstanding during the year. The inclusion of shares issuable under stock options in the calculation of earnings per share would not result in material dilution. Financial Instruments. 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. The counterparties to these instruments are major international financial institutions. See Note 5 to the Consolidated Financial Statements. Reclassifications. Certain prior-year amounts have been reclassified to conform with the 1994 presentation. F-25 Note 2. Acquisitions In 1994 and 1993, the Company acquired various companies in separate transactions that were accounted for as purchases. The aggregate purchase price of such acquisitions totaled approximately $234 million in 1994 (approximately $300 million including acquisition costs, contingent payments and minority interests in several companies). The largest acquisitions were: Survey Research Group, a premier market research firm in Southeast Asia; S&W S.N.R.C. - Wys Muller S.A., a French credit information company; and Pilot Software, a leading provider of on-line analytic processing software solutions that support business decision making needs across many industries. In 1993, the Company acquired Soliditet, a provider of commercial- credit information in Scandinavia, and Gartner Group, a provider of research, analysis and advisory services to users and suppliers of information technology systems and software. The aggregate purchase price for acquisitions totaled approximately $120 million in 1993. The results of operations of all purchases are included in the Consolidated Statement of Income from dates of acquisition. Had the acquisitions made in 1993 and 1994 been consummated on January 1 of the year preceding the year of acquisition, the results of these acquired operations would not have had a significant impact on the Company's consolidated results of operations for any of the years presented. F-26 Note 3. Restructuring In the second quarter of 1994, the Company divested two non-strategic businesses - Thomson Directories and the Machinery Information Division of Dataquest, and initiated other actions to restructure certain operations and businesses, and to reduce costs and increase operating efficiencies. These restructuring actions included office consolidations, the closedown of Sales Technologies' European operations, the discontinuance of certain production and data- collection systems and products, as well as additional steps to complete certain actions initiated in the fourth quarter of 1993. The pre-tax costs associated with these restructuring actions essentially offset a pre-tax gain of $54.7 million on the two divestitures. During 1993, the Company recorded a $317.5 million restructuring charge that was partially offset by one-time operating gains of $40.0 million related to the divestiture of Donnelley Marketing Information Services, the redemption of notes related to the 1991 sale of Donnelley Marketing, the redemption of notes related to the 1992 sale of Datastream and the resolution of contingencies related to other divestitures, thereby resulting in a $277.5 million net restructuring expense. Nineteen ninety-three results also included a $21.0 million non-operating gain related to the initial public offering of Gartner Group, which reduced the impact of the restructuring charges to $256.5 million before-tax ($166.7 million after-tax). This charge represented an acceleration of the Company's ongoing efforts to achieve long-term productivity improvements. Restructuring expense ($317.5 million) consisted of the costs to consolidate the Company's data centers ($54.0 million), reduce worldwide real estate costs ($117.2 million), consolidate back-office accounting functions ($19.1 million), discontinue certain production and data-collection systems and products ($66.2 million) and initiate workforce reductions (non-severance costs) and other actions ($61.0 million). During 1992, the Company sold Datastream International and Information Associates, a unit of Dun & Bradstreet Software, and initiated other actions to restructure certain operations and businesses and to reduce costs and increase operating efficiencies. The pre-tax costs associated with these actions essentially offset a pre-tax gain of $106.9 million on the sales. In 1994, 1993 and 1992, certain restructuring actions initiated in 1993, 1992 and 1991 were completed at a lower cost than originally estimated, and other actions required more costs to implement than originally expected. In addition, costs to complete certain actions being implemented changed based on revised estimates and experience to date. In a number of instances, new restructuring actions were initiated to complement or enhance original actions and certain actions were expanded, contracted or discontinued based on changed circumstances. While the total cost of all restructuring actions remained unchanged, the changes in estimates and other changes did impact operating income by business segment. (See Note 15 to the Consolidated Financial Statements.) F-27 Note 4. Change in Accounting for Marketable Securities Effective January 1, 1994, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Adoption of SFAS No. 115 did not have a material effect on the Company's consolidated financial statements. Disclosures below include amounts classified in the consolidated statement of financial position as marketable securities, as well as assets of grantor trusts established to pay benefits for U.S. supplemental pension plans and certain marketable securities included in other investments and notes receivable. Cash equivalents of $46.4 million and $149.2 million at December 31, 1994 and 1993, respectively, represent marketable securities purchased within 90 days of maturity date, for which book value, including accrued interest, approximates fair value. Cash equivalents have been excluded from these disclosures. A summary of cost (amortized cost of debt instruments) and fair values follows: December 31, 1994 December 31, 1993 _________________ __________________ Fair Fair Cost Value Cost Value ________________________________ _______ _______ _______ Equity securities $ 35.3 $ 31.6 $ 11.6 $ 11.7 Debt securities of U.S. Government and its agencies 82.2 79.5 63.2 67.4 Debt securities of states and other subdivisions of the U.S. Government 99.7 97.7 85.8 89.6 Debt securities of non-U.S. Governments 13.9 13.6 9.9 10.3 Corporate debt securities 11.7 11.5 19.6 19.7 Other .1 .1 .2 .2 ________________________________ _______ _______ _______ $242.9 $234.0 $190.3 $198.9 ________________________________ _______ _______ _______ At December 31, 1994, gross unrealized gains and losses were $2.6 million and $11.5 million, respectively. At December 31, 1993, gross unrealized gains and losses were $9.1 million and $.5 million, respectively. At December 31, 1994, cost and fair values of debt securities by contractual maturity were as follows: Cost Fair Value ________________________________________ _______ __________ Due in one year or less $ 15.4 $ 15.3 Due after one year through five years 81.6 80.4 Due after five years through ten years 103.2 99.5 Mortgage-backed securities 7.4 7.2 ________________________________________ _______ __________ $207.6 $202.4 ________________________________________ _______ __________ For the years ended December 31, 1994 and 1993, proceeds from the sales and maturities of marketable securities were $145.1 million and $146.8 million, respectively, and gross realized gains and losses were not material. F-28 Note 5 - Financial Instruments with Off-Balance-Sheet Risk and Fair Value of Financial Instruments 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. The counterparties to these instruments are major international financial institutions. The Company is exposed to interest and exchange rate risk in the event of nonperformance by the counterparties to the financial instruments; however, the Company does not anticipate such nonperformance. The amount of such exposure is generally the unrealized gains in such contracts. Interest rate swap agreements are entered into as hedges against variable interest rate exposures. During the first quarter of 1994, the Company entered into swap agreements which effectively fixed interest rates on $300 million of variable rate debt, from 1994 through fiscal 2005. The weighted averaged fixed rate payable under these agreements is 6.84%. The differential interest to be paid or received under these agreements is included in interest expense over the life of the debt. Foreign exchange forward contracts are entered into to hedge the effects of exchange rate changes on certain of the Company's non-U.S. net investments. At December 31, 1994, the Company had approximately $102 million in foreign exchange forward contracts outstanding with various expiration dates through January, 1995. Unrealized losses on these contracts totaled $1 million at December 31,1994. Such contracts have been designated as hedges of non-U.S. net investments, and gains and losses on these contracts are included in the cumulative translation adjustment component of shareowners' equity. At December 31, 1994, the unrealized fair value of the interest rate swaps was $22.0 million. F-29 The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements continued Dollar amounts in millions Note 6. Postretirement and Postemployment Benefits The Company has defined benefit pension plans covering substantially all associates in the United States. The benefits to be paid to associates under these plans are based on years of credited service and average final compensation. Pension costs are determined actuarially and funded to the extent allowable under the Internal Revenue Code. Supplemental plans in the United States are maintained to provide retirement benefits in excess of levels allowed by ERISA. The Company's non-U.S. subsidiaries provide retirement benefits for associates consistent with local practices, primarily using defined benefit or termination indemnity plans. The components of net periodic pension cost are summarized as follows: 1994 1993 1992 ___________________________________________________ Service Cost $50.3 $42.2 $42.7 Interest Cost 93.8 88.8 85.8 Actual Return on Plan Assets (7.2) (126.3) (80.1) Net Amortization and Deferral (111.1) 14.2 (30.5) ___________________________________________________ Net Periodic Pension Cost $25.8 $18.9 $17.9 ___________________________________________________ The status of defined benefit pension plans at December 31, 1994 and 1993, is as follows: Funded Unfunded _______________ __________________________ U.S.(1) Non-U.S. _____________________________ 1994 1993 1994 1993 1994 1993
_______________________________________________________________________________________ Fair Value of Plan Assets $1,178.7 $1,223.3 _______________________________________________________________________________________ Actuarial Present Value of Benefit Obligations: Vested Benefits $896.6 $858.0 $90.8 $71.0 $65.1 $68.1 Non-Vested Benefits 37.1 33.0 4.4 7.3 .1 .6 ______________________________________________________________________________________ Accumulated Benefit Obligations 933.7 891.0 95.2 78.3 65.2 68.7 Effect of Projected Future Salary Increases 114.1 153.7 56.0 37.4 .1 .2 _______________________________________________________________________________________ Projected Benefit Obligations 1,047.8 1,044.7 151.2 115.7 65.3 68.9 ______________________________________________________________________________________ Plan Assets in Excess of (Less than) Projected Benefit Obligations 130.9 178.6 (151.2) (115.7) (65.3) (68.9) Unrecognized Net (Gain) Loss 144.6 49.2 30.4 38.7 (.5) (.4) Unrecognized Prior Service Cost 13.2 26.7 33.5 19.0 1.0 .8 Unrecognized Net Transition (Asset) Obligation (94.6) (108.2) 2.5 2.9 -- -- Adjustment to Recognize Minimum Liability -- -- (15.1) (23.2) (.4) (.2) ______________________________________________________________________________________ Prepaid (Accrued) Pension Cost $194.1 $146.3 $(99.9) $(78.3) $(65.2) (68.7) 1)Represents supplemental plans for which grantor trusts (with assets of $69 and $60 million at December 31, 1994 and 1993, respectively) have been established to pay plan benefits.
The weighted average expected long-term rate of return on pension plan assets was 9.75% for 1994, 1993 and 1992. At December 31, 1994 and 1993, the projected benefit obligations were determined using weighted average discount rates of 8.51% and 7.37%, respectively, and weighted average rates of increase in future compensation levels of 5.78% and 5.72%, respectively. Plan assets are invested in diversified portfolios that consist primarily of equity and debt securities. During 1994, the Company recognized pension curtailment gains of approximately $15 million, resulting from a previously announced workforce reduction, and $3 million resulting from divestitures. In addition to providing pension benefits, the Company provides various health-care and life-insurance benefits for retired associates. Substantially all of the Company's associates in the United States become eligible for these benefits if they reach normal retirement age while working for the Company. Certain of the Company's subsidiaries outside the United States have postretirement benefit plans, although most participants are covered by government-sponsored or -administered programs. The cost of company-sponsored postretirement benefit plans outside the U.S. is not significant. F-30 During 1993, the Company adopted the provisions of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." The Statement requires the accrual of the projected future cost of providing postretirement benefits during the period that associates render the services necessary to be eligible for such benefits. In prior years, this expense was recognized as claims were paid and was not material to the Company's results of operations. The Company elected to immediately recognize the accumulated postretirement benefit obligation. Measured as of January 1, 1993, the effect of adopting SFAS No. 106 was a one-time, non-cash, after-tax charge of $140.6 million ($.79 per share). The components of net periodic postretirement benefit cost other than pensions are summarized as follows: 1994 1993 ______________________________________________ Service Cost $ 4.5 $ 6.0 Interest Cost 15.8 18.3 Net Amortization and Deferral (4.3) (1.0) _____ ______ Net Periodic Postretirement Benefit Cost $16.0 $23.3 _____ ______ The status of postretirement benefit plans other than pensions at December 31, 1994 is as follows: 1994 1993 ______________________________________________________ ______ Actuarial Present Value of Benefit Obligation: Retirees and Dependents $(134.7) $(150.8) Active Associates - Eligible (28.4) (31.8) Active Associates - Not Yet Eligible (33.0) (45.5) ______________________________________________________________________ Accumulated Postretirement Benefit Obligation (196.1) (228.1) Unrecognized Net (Gain) Loss (1.0) 30.0 Unrecognized Prior Service Cost (Credit) (23.1) (45.0) ______________________________________________________________________ Accrued Postretirement Benefit Obligation $(220.2) $(243.1) ______________________________________________________________________ Benefits are paid as incurred from general corporate assets. The accumulated postretirement benefit obligation at December 31, 1994 and 1993 was determined using discount rates of 8.50% and 7.25%, respectively. The assumed rate of future increases in per capita cost of covered health-care benefits is 9.6% in 1995, decreasing gradually to 5.0% for the year 2021 and remaining constant thereafter. Increasing the assumed health-care cost trend rate by one percentage point in each year would increase the accumulated postretirement benefit obligation by $19 million and would increase annual aggregate service and interest costs by $1.9 million. During 1994, the Company recognized a curtailment gain of approximately $25.7 million resulting from a change in eligibility requirements for the postretirement medical plan. In addition, the Company recognized curtailment and settlement gains of approximately $2 million resulting from divestitures. During 1993, the Company adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits". SFAS No. 112 requires that employers expense the costs of postemployment benefits paid before retirement, principally severance benefits, over the service lives of employees if certain conditions are met. Under the Company's previous accounting policy, the total cost of such benefits was expensed when the event occurred. The initial effect of adopting SFAS No. 112 in 1993 was a one-time, after-tax charge of $250 million ($1.40 per share). Ongoing operating expenses increased marginally as a result of adopting SFAS No. 112. F-31 The Dun & Bradstreet Corporation and Subsidiaries Notes continued Dollar amounts in millions, except per share data Note 7. Employee Stock Plans The Company has granted options to certain associates, under its Key Employees Stock Option Plans, to purchase shares of its common stock at the market price on the date of the grant. Options outstanding at December 31, 1994 were granted during the years 1985 through 1994 and are exercisable over periods ending not later than 2004. At December 31, 1994, 1993 and 1992, options for 4,306,119, 3,556,944, and 3,285,149 shares of common stock were exercisable and 1,567,393, 3,467,164 and 5,097,281 shares were available for future grants under the plans. Changes in stock options for the three years ended December 31, 1994 are summarized as follows:
Shares Option Price Total Per Share ($) Options outstanding, January 1, 1992 5,950,366 11.16 to 67.00 $274.4 Granted 1,646,652 51.88 to 57.75 95.1 Exercised (575,960) 11.16 to 55.38 (23.5) Surrendered or Expired (172,859) 41.50 to 67.00 (8.6) _________________________________________________________________________________ Options outstanding, December 31, 1992 6,848,199 11.16 to 62.50 337.4 Granted 1,757,578 56.75 to 62.25 109.0 Exercised (951,936) 11.16 to 57.75 (42.7) Surrendered or Expired (209,675) 41.50 to 62.50 (11.2) _________________________________________________________________________________ Options outstanding, December 31, 1993 7,444,166 11.16 to 62.50 392.5 Granted 2,158,258 54.00 to 62.50 116.8 Exercised (547,668) 11.16 to 57.75 (23.1) Surrendered or Expired (321,584) 11.16 to 62.50 (18.3) _________________________________________________________________________________ Options outstanding, December 31, 1994 8,733,172 20.52 to 62.50 $467.9 _________________________________________________________________________________ Options which became exercisable during: 1992 1,047,869 41.50 to 58.38 $ 49.2 1993 1,231,406 41.50 to 58.38 $ 61.0 1994 1,344,876 41.50 to 62.25 $ 73.0 _________________________________________________________________________________
All proceeds from options exercised are credited to treasury stock. Any tax benefit to the Company resulting from the exercise of options is credited to capital in excess of par value. There have been no charges to income with respect to any stock options. The plans also provide for the granting of stock appreciation rights and limited stock appreciation rights in tandem with stock options, to certain key associates. At December 31, 1994, there were no stock appreciation rights attached to stock options; however, 1,345,588 limited stock appreciation rights were outstanding, which are exercisable only if, and to the extent that, the related option is exercisable and only upon the occurrence of specified contingent events. Under the 1989 Key Employees Restricted Stock Plan, key associates may be granted restricted shares of the Company's stock. The plan provides for the granting of up to 1,800,000 shares of the Company's common stock prior to December 31, 1998. During 1994, 1993 and 1992, 117,262, 102,540 and 72,713 restricted shares, respectively, were awarded under the plan. Forfeitures in 1994, 1993 and 1992 totaled 2,332, 8,652 and 829, respectively. The restrictions on the majority of such shares lapse over a period of three years from the date of the grant and compensation expense is charged to operations over a service period of six years. F-32 Dollar amounts in millions Note 8. Income Taxes Income before provision for income taxes consisted of: 1994 1993 1992 ________________________________________ U.S. $560.0 $367.6 $548.1 Non-U.S. 319.2 220.4 247.1 ________________________________________ $879.2 $588.0 $795.2 ________________________________________ The provision (benefit) for income taxes consisted of: 1994 1993 1992 ______________________________________________________________ Current tax provision: U.S. Federal $104.1 $224.2 $153.7 State and Local 54.3 73.8 50.2 Non-U.S. 34.6 101.0 78.2 ______________________________________________________________ 193.0 399.0 282.1 ______________________________________________________________ Deferred tax provision (benefit): U.S. Federal 11.6 (194.7) 2.9 State and Local (17.9) (16.5) 4.8 Non-U.S. 63.0 (28.5) (48.1) _______________________________________________________________ 56.7 (239.7) (40.4) _______________________________________________________________ $249.7 $159.3 $241.7 _______________________________________________________________ The following table summarizes the significant differences between the U.S. Federal statutory tax rate and the Company's effective tax rate for financial statement purposes. 1994 1993 1992 ______________________________________________________________________ Statutory tax rate 35.0% 35.0% 34.0% State and Local income taxes, net of U.S. Federal tax benefit 2.7 6.4 4.6 Non-U.S. taxes (1.2) (.9) (6.8) Recognition of capital losses (8.7) (15.2) (1.8) Other .6 1.8 .4 _______________________________________________________________________ Effective tax rate 28.4% 27.1% 30.4% _______________________________________________________________________ Income taxes paid were approximately $191.4 million, $236.3 million and $222.9 million in 1994, 1993 and 1992, respectively. Income taxes refunded were approximately $10.8 million, $9.5 million and $15.7 million in 1994, 1993 and 1992, respectively. Deferred tax assets (liabilities) are comprised of the following at December 31: 1994 1993 ____________________________________________________________________ Deferred Tax Assets: Operating and Capital Losses $137.8 $ 75 6 Restructuring Costs 93.6 126.9 Postretirement Benefits 90.2 99.9 Postemployment Benefits 86.4 133.9 Bad Debts 26.3 31.2 Intangibles 15.0 24.7 Other 6.8 11.7 ____________________________________________________________________ 456.1 503.9 Valuation Allowance (78.0) (73.1) ____________________________________________________________________ 378.1 430.8 ____________________________________________________________________ Deferred Tax Liabilities: Intangibles (195.3) (182.9) Revenue Recognition (89.0) (62.9) Tax Leasing Transactions (80.3) (90.9) Depreciation (41.5) (72.8) Other (7.5) (1.7) _____________________________________________________________________ (413.6) (411.2) _____________________________________________________________________ Net Deferred Tax (Liability) Asset $(35.5) $ 19.6 _____________________________________________________________________ Undistributed earnings of non-U.S. subsidiaries aggregated approximately $761.4 million at December 31, 1994. Deferred tax liabilities have not been recognized for these undistributed earnings because it is management's intention to reinvest such undistributed earnings outside the U.S. If all undistributed earnings were remitted to the U.S., the amount of U.S. Federal income taxes payable would not be material; however, withholding taxes, imposed by certain non-U.S. countries, would total approximately $45.3 million. During 1987 and 1988, the Company entered into tax-sharing agreements with an Alaska Native Corporation (ANC), under which the Company acquired income tax benefits related to certain net operating losses (NOLs) of the ANC. In 1994, the Company recognized benefits of $9.8 million in Other Expense-Net related to these transactions, and paid $166.2 million to settle all liabilities related to the ANC agreements. During the three-year period ended December 31, 1983, the Company invested $304.4 million in tax-leasing transactions, varying in length from 4.5 to 25 years. These leases provided the Company with significant benefits from tax deductions in excess of taxable income for Federal income tax purposes. These amounts are included in deferred income taxes. F-33 The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements continued Dollar amounts in millions, except per share data Note 9. Notes Payable Notes payable consisted of the following at December 31: 1994 1993 ______________________________________________ Commercial Paper $443.7 $82.9 Bank Notes 45.2 6.2 Other 11.7 2.9 ______________________________________________ $500.6 $92.0 ______________________________________________ The Company has short-term borrowing agreements with several banks to provide up to $500 million of borrowings, all of which support a commercial paper program. The Company also had other unused lines of credit of $114 million at December 31, 1994, all of which were in the form of non-U.S. credit facilities. None of these arrangements had material commitment fees or compensating balance requirements. The weighted average interest rates on notes payable, including borrowings in hyperinflationary countries, at December 31, 1994 and 1993, respectively were 7.53% and 4.02%. F-34 The Dun & Bradstreet Corporation and Subsidiaries Notes continued Note 10. 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 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 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 December 31, 1994 and 1993 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. F-35 The Dun & Bradstreet Corporation and Subsidiaries Notes continued Note 11. Capital Stock In October 1993, the Board of Directors authorized the Company to purchase up to 10 million shares of its common stock. Shares repurchased under this program totaled 8.3 million in 1993. There were no shares repurchased under this program in 1994. In October 1988, the Company adopted a Shareowners' Rights Plan. The plan is intended to protect the shareowners' interests in the event of an unsolicited attempt to acquire the Company. The plan is not intended to prevent a takeover of the Company on terms that are favorable and fair to all shareowners and will not interfere with a merger approved by the Board of Directors. Under the plan, each share of the Company's common stock has a right which trades with the stock until the right becomes exercisable. Each right entitles the shareowners to buy 1/100 of a share of Series A participating preferred stock at a purchase price of $230, subject to adjustment. The rights will not be exercisable until a person or group (Acquiring Person) acquires beneficial ownership of, or commences a tender offer for, 20% or more of the Company's outstanding common stock. In the event the Company is acquired in a merger or other business combination, or subject to other transactions, as described in the Shareowners' Rights Plan, each right will entitle its holder (other than the Acquiring Person) to receive upon exercise, stock with a value of two times the exercise price in the form of the Company's common stock or where appropriate, the Acquiring Person's common stock. The Company may redeem the rights, which expire in October 1998, for $.01 per right, under certain circumstances. The shareowners have authorized the issuance of 10 million shares of $1 par value preferred stock. The preferred stock can be issued with varying terms, as determined by the Board of Directors. Under certain circumstances, the Company may not issue voting stock or securities convertible into voting stock of the Company without shareowner approval. F-36 The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements continued Note 12. Lease Commitments Certain of the Company's operations are conducted from leased facilities, which are under operating leases that expire over the next 10 years. Rental expense under real estate operating leases for the years 1994, 1993 and 1992 was $156.3 million, $168.9 million, and $176.6 million, respectively. The approximate minimum annual rental expense for real estate operating leases that have remaining noncancelable lease terms in excess of one year, net of sublease rentals, at December 31, 1994, was (in millions): 1995 - $140.0; 1996 - $109.8; 1997 - $85.5; 1998 - $74.9; 1999 - $61.7; and an aggregate of $119.3 million thereafter. The Company also leases certain computer and other equipment under operating leases that expire over the next five years. These leases are frequently renegotiated or otherwise changed as advancements in computer technology produce opportunities to lower costs and improve performance. Rental expense under computer and other equipment leases was $71.6 million, $96.8 million and $91.1 million for 1994, 1993 and 1992, respectively. At December 31, 1994, the approximate minimum annual rental expense for computer and other equipment under operating leases that have remaining noncancelable lease terms in excess of one year was (in millions): 1995 - $35.4; 1996 - $19.7; 1997 - $11.1; 1998 - $3.5; 1999- $1.0. In connection with the Company's acceleration of its ongoing efforts to achieve long-term productivity improvements, the Company terminated a significant number of computer and real estate leases in 1994 and intends to terminate a significant number of additional real estate leases in 1995 (see Note 3 to the Consolidated Financial Statements). The estimated costs to terminate such leases have been included in accrued restructuring costs. The Company has agreements with various third parties to purchase certain data processing and telecommunication services, extending beyond one year. At December 31, 1994, the purchases covered by these agreements aggregate approximately (in millions): 1995 - $50.2; 1996 - $48.7; 1997 - $46.5; 1998 - $43.6; 1999 - $27.5; and an aggregate thereafter of $2.9. F-37 Note 13.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 names 17 defendants, including Towers Financial Corporation ("Towers") and various subsidiaries and controlling persons of Towers, as well as ACI, in addition to a "Broker-Dealer Defendant Class," alleged to consist of more than 75 members. The Amended Complaint is brought by an alleged class of persons who bought promissory notes issued by Towers between February 15, 1989 and February 9, 1993. It alleges 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 seeks damages from all the defendants in at least that amount, as well as punitive damages. The claims against ACI assert negligent misrepresentation, negligence and fraud under common law and violations of Section 10(b) (and Rule 10b-5 thereunder) of the Securities Exchange Act of 1934. The Amended Complaint alleges 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 alleges 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, in which they seek to assert a primary liability claim against ACI and others under the Exchange Act, and certain common law claims. On September 2, 1994, 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 proposed settlement is subject to United States District Court approval. 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. F-38 The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements continued Dollar amounts in millions, except per share data Note 14. Supplemental Financial Data Accounts Receivable - Net: 1994 1993 ________________________________________________ Trade $1,254.4 $1,090.4 Less: allowance for doubtful accounts (76.8) (79.2) ________________________________________________ 1,177.6 1,011.2 Other 78.9 67.7 ________________________________________________ $1,256.5 $1,078.9 ________________________________________________ Other Current Assets: 1994 1993 _____________________________________________ Unbilled expenditures $51.1 $ 61.9 Deferred taxes 173.8 196.4 Prepaid expenses 113.6 97.7 Inventories 23.7 18.9 _____________________________________________ $362.2 $374.9 _____________________________________________ Property, Plant and Equipment - Net, carried at cost,less accumulated depreciation and amortization: 1994 1993 _____________________________________________ Buildings $ 439.3 $ 409.4 Machinery and Equipment 1,296.1 1,266.7 _____________________________________________ 1,735.4 1,676.1 Less: accumulated depreciation 935.3 923.8 _____________________________________________ 800.1 752.3 Leasehold improvements, less: accumulated amortization of $107.7 and $100.9 67.4 60.1 Land 51.0 48.7 _____________________________________________ $ 918.5 $ 861.1 _____________________________________________ Computer Software, Other Intangibles and Goodwill: Computer Other Goodwill Software Intangibles _______________________________________________________ January 1,1993 $246.8 $228.1 $ 833.4 Additions at cost 149.4 53.5 198.4 Amortization (92.2) (25.5) (38.8) Other deductions and reclassifications (9.5) (41.4) (50.6) _____________________________________________________ December 31,1993 $294.5 $214.7 $ 942.4 Additions at cost 182.9 47.3 250.4 Amortization (97.5) (44.6) (48.2) Other deductions and reclassifications (44.0) (1.4) 5.3 ______________________________________________________ December 31,1994 $335.9 $216.0 $1,149.9 ______________________________________________________ Accounts and Notes Payable: 1994 1993 ____________________________________________ Trade $ 86.4 $ 77.1 Customer advances 125.9 138.1 Taxes other than income taxes 54.6 34.9 Notes 500.6 92.0 Other 23.3 29.7 ____________________________________________ $790.8 $371.8 ____________________________________________ Accrued and Other Current Liabilities: 1993 1992 ____________________________________________ Salaries, wages, bonuses and other compensation $ 255.1 $ 237.2 Profit-sharing 34.7 31.4 Deferred revenues on uncompleted contracts 270.8 252.2 Restructuring costs 145.0 187.1 Postemployment benefits 100.0 200.0 Alaska Native Corp. obligations 0 166.2 Other 494.8 487.4 _____________________________________________ $1,300.4 $1,561.5 _____________________________________________ F-39 Dollar amounts in millions Note 15. Operations by Business Segments Financial information for each of the Company's five segments is set forth below:
Risk Management(2) and Business Marketing(1) Marketing Directory Other Information Information Software Information Business Services Services Services Services Services Total __________________________________________________________________________________________________________ Year Ended December 31, 1994 Operating Revenue $2,042.9 $1,605.7 $ 405.9 $ 440.1 $ 401.1 $4,895.7 Restructuring Income (Expense) - Net(3) $ 8.2 $ 1.8 $ (2.8) $ 33.8 $ 21.7 $ 62.7(4) Segment Operating Income (Loss) $ 285.3 $ 447.0 $ (3.6) $ 248.0 $ 110.0 $1,086.7 General Corporate Expenses (161.2)(4) Non-Operating Expense - Net (46.3) __________________________________________________________________________________________________________________ Income Before Provision for Income Taxes and Accounting Changes $ 879.2 Segment Depreciation and Amortization(5) $ 190.3 $ 102.6 $ 70.9 $ 15.6 $ 27.4 $ 406.8 Segment Capital Expenditures $ 124.1 $ 71.9 $ 20.2 $ 8.2 $ 12.4 $ 236.8 Identifiable Assets at December 31, 1994 $1,817.9 $1,574.0 $ 602.2 $ 514.9 $ 419.2 $4,928.2 __________________________________________________________________________________________________________________ Year Ended December 31, 1993 Operating Revenue $1,868.3 $1,564.2 $ 475.6 $ 450.7 $ 351.6 $4,710.4 Restructuring (Expense) Income - Net(3) $ (53.0) $ (97.0) $ (68.3) $ (14.9) $ (3.2) $ (236.4)(4) Segment Operating Income (Loss) $ 243.5 $ 307.6 $ (24.6) $ 170.3 $ 24.8 $ 721.6 General Corporate Expenses (169.1)(4) Non-Operating Income - Net 35.5 __________________________________________________________________________________________________________________ Income Before Provision for Income Taxes and Accounting Changes $ 588.0 Segment Depreciation and Amortization(5) $ 153.3 $ 87.6 $ 76.7 $ 15.8 $ 29.2 $ 362.6 Segment Capital Expenditures $ 109.6 $ 60.3 $ 33.5 $ 9.6 $ 13.1 $ 226.1 Identifiable Assets at December 31, 1993 $1,641.1 $1,393.5 $ 629.9 $ 500.6 $ 426.9 $4,592.0 __________________________________________________________________________________________________________________ Year Ended December 31, 1992 Operating Revenue $1,893.9 $1,520.6 $ 533.5 $ 419.4 $ 383.3 $4,750.7 Restructuring (Expense) Income - Net(3) $ (45.5) $ (8.6) $ (37.9) $ (7.3) $ 99.4 $ .1(4) Segment Operating Income (Loss) $ 257.2 $ 371.0 $ (19.2) $ 154.0 $ 149.8 $ 912.8 General Corporate Expenses (126.9)(4) Non-Operating Income - Net 9.3 __________________________________________________________________________________________________________________ Income Before Provision for Income Taxes $ 795.2 Segment Depreciation and Amortization(5) $ 150.6 $ 87.0 $ 81.2 $ 15.0 $ 33.3 $ 367.1 Segment Capital Expenditures $ 96.1 $ 49.4 $ 21.2 $ 6.4 $ 19.6 $ 192.7 Identifiable Assets at December 31, 1992 $1,580.1 $1,159.2 $ 702.0 $ 473.6 $ 415.5 $4,330.4 __________________________________________________________________________________________________________________ (1) Nielsen's operating revenue was $1,102.0 in 1994, $1,051.8 in 1993 and $1,123.8 in 1992. IMS' operating revenue was $691.1 in 1994, $613.9 in 1993 and $586.1 in 1992. (2) Operating revenue from worldwide credit services was $917.0 in 1994, $892.7 in 1993 and $853.9 in 1992. (3) See Note 3 to the Consolidated Financial Statements. (4) General Corporate Expenses include $62.7, $41.1 and $.1 of restructuring expense in 1994, 1993 and 1992, respectively. (5) Includes depreciation and amortization of Property, Plant and Equipment, Computer Software, Other Intangibles and Goodwill. F-40
The Dun & Bradstreet Corporation and Subsidiaries Note 15 continued Note 15. Operations by Business Segments (continued) Directory Information Services' operating revenue includes $134.0 million, $110.2 million and $119.3 million in 1994, 1993 and 1992, respectively, relating to the Company's share of earnings of DonTech, a partnership with Ameritech advertising services. As of December 31, 1994 DonTech assets and liabilities were as follows: current assets, $198.5 million; other assets, $48.0 million; current liabilities, $18.7 million. DonTech's December 31, 1993 assets and liabilities were as follows: current assets, $174.9 million; other assets, $32.8 million; current liabilities, $13.7 million. In 1994, DonTech's revenues totaled $411.7 million compared to $382.8 million and $387.9 million in 1993 and 1992, respectively. Pre-tax income was $216.4 million, $175.0 million and $192.3 million in 1994, 1993 and 1992, respectively. At December 31, 1994 and 1993, the Company's investment in DonTech was $227.8 million and $194.0 million, respectively. Non-operating assets of $535.7 million, $578.4 million and $584.5 million at December 31, 1994, 1993 and 1992, respectively, included primarily deferred pension costs, cash and cash equivalents, marketable securities, other investments and deferred income taxes. These assets are not identified with business segments and represent the reconciling item between the identifiable assets shown and the Company's total assets. F-41 Note 16. Operations by Geographic Area Financial information by geographic area is summarized as follows. Inter-area sales were not significant.
Other United States Europe Non-U.S. Total 1994 Operating Revenue $2,889.2 $1,354.2 $652.3 $4,895.7 Restructuring (Expense) Income - Net(1) $ (12.5) $ 26.1 $(13.6) $ 0 Operating Income $ 667.1 $ 185.7 $ 72.7 $ 925.5 Identifiable Assets $2,843.7 $1,512.8 $571.7 $4,928.2 _______________________________________________________________________________ 1993 Operating Revenue $2,938.9 $1,267.7 $503.8 $4,710.4 Restructuring Expense - Net(1) $ (215.8) $ (45.7) $(16.0) $ (277.5) Operating Income $ 368.0 $ 120.0 $ 64.5 $ 552.5 Identifiable Assets $2,754.9 $1,448.6 $388.5 $4,592.0 _________________________________________________________________________________ 1992 Operating Revenue $2,845.8 $1,418.6 $486.3 $4,750.7 Restructuring Income (Expense) - Net(1) $ 31.7 $ (29.2) $ (2.5) $ 0 Operating Income $ 560.4 $ 159.5 $ 66.0 $ 785.9 Identifiable Assets $2,691.8 $1,291.1 $347.5 $4,330.4 _________________________________________________________________________________ (1) See Note 3 to the Consolidated Financial Statements.
F-42 Dollar amounts in millions, except per share data Note 17. Quarterly Financial Data (Unaudited)
Three Months Ended ___________________________________________________ March 31 June 30 September 30 December 31 Year _____________________________________________________________________________________________ 1994 Operating Revenue $1,099.2 $1,184.7 $1,203.4 $1,408.4 $4,895.7 Operating Income $ 159.8 $ 214.1 $ 250.4 $ 301.2 $ 925.5 Net Income $ 108.7 $ 144.6 $ 166.7 $ 209.5 $ 629.5 Earnings Per Share $.64 $.85 $.98 $1.23 $3.70 ______________________________________________________________________________________________ 1993 Operating Revenue $1,071.4 $1,161.6 $1,158.0 $1,319.4 $4,710.4 Restructuring Expense - Net $ - $ - $ - $(277.5) $ (277.5) Operating Income (Loss) $ 140.5 $ 191.6 $ 228.7 $ (8.3) $ 552.5 Income Before Cumulative Effect of Accounting Changes, Net of Income Taxes $ 105.2 $ 138.8 $ 158.5 $ 26.2 $ 428.7 Net (Loss) Income $ (285.4) $ 138.8 $ 158.5 $ 26.2 $ 38.1 Earnings Per Share Before Cumulative Effect of Accounting Changes (1) $.59 $.78 $.89 $.15 $2.42(2) ______________________________________________________________________________________________ (1)The sum of the quarterly earnings per share amounts in 1993 is not equal to the full year because the computations of the weighted average number of shares outstanding for each quarter and for the full year are made independently. (2)Includes $277.5 million restructuring expense and $21.0 million gain from Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7 million after-tax) which reduced earnings per share by $.94. F-43
The Dun & Bradstreet Corporation and Subsidiaries Ten-Year Selected Financial Data
All amounts except per share data, average number of shares outstanding and percentages are shown in millions of dollars 1994 1993 1992 1991 1990 ______________________________________________________ ________ _______ _______ _______ Continuing Operations: Operating Revenue 4,895.7 4,710.4 4,750.7 4,651.0 4,837.3 Costs and Expenses(1) 3,970.2 4,157.9 3,964.8 3,906.7 4,050.4 _____________________________________________ ________ _______ _______ _______ _______ Operating Income (1) 925.5 552.5 785.9 744.3 786.9 Non-Operating (Expense)Income - Net (46.3) 35.5 9.3 (7.0) (19.1) _____________________________________________ ________________ _______ _______ _______ Income from Continuing Operations Before Provision for Income Taxes 879.2 588.0 795.2 737.3 767.8 Provision for Income Taxes 249.7 159.3 241.7 230.8 261.1 _____________________________________________ ________ _______ _______ _______ _______ Income from Continuing Operations 629.5 428.7 553.5 506.5 506.7 Income from Discontinued Operations, Net of Income Taxes 0 0 0 0 0 _____________________________________________ _________________ _______ _______ _______ Income from Operations, Net of Income Taxes(2) 629.5 428.7 553.5 506.5 506.7 ______________________________________________________________ _______ _______ _______ Cumulative Effect of Accounting Changes(3) 0 (390.6) 0 0 0 _____________________________________________ ________________ _______ _______ _______ Net Income 629.5 38.1 553.5 506.5 506.7 ______________________________________________________________ _______ _______ _______ Dividends 435.2 423.0 401.3 383.9 379.1 ______________________________________________ _________ ________ _______ _______ _ Earnings Per Share of Common Stock: Continuing Operations 3.70 2.42(4) 3.10 2.84 2.79 Discontinued Operations .00 .00 .00 .00 .00 ______________________________________________ _________________ _______ _______ ______ Income from Operations(2) 3.70 2.42(4) 3.10 2.84 2.79 ______________________________________________ _________________ _______ _______ ______ Cumulative Effect of Accounting Changes(3) .00 (2.19) .00 .00 .00 _______________________________________________________________ _______ _______ _______ Total 3.70 .23 3.10 2.84 2.79 _______________________________________________________________ _______ _______ _______ Dividends Per Share 2.56 2.40 2.25 2.15 2.09 _____________________________________________ _________________ _______ _______ _______ Average Number of Shares Outstanding(in millions)169.9 177.2 178.3 178.6 181.6 _____________________________________________ _______________ _______ _______ _______ As a Percentage of Operating Revenue: Operating Income 18.9 17.6(5) 16.5 16.0(1) 16.3 Income from Operations, Net of Income Taxes 12.9 12.6(6) 11.7 10.9 10.5 ____________________________________________ _________________ _______ _______ _______ Return on Average Shareowners' Equity % 55.6 34.6(6) 26.1 25.2(1) 24.7 _____________________________________________ _________________ _______ _______ _______ Shareowners' Equity 1,318.6 1,111.3 2,156.0 2,123.1 2,044.1 _____________________________________________ __________ _______ _______ _______ _______ Total Assets 5,463.9 5,170.4 4,914.9 4,828.7 4,810.3 _____________________________________________ _________ ________ _______ _______ _______ (1)Includes impact of $277.5, $15.0, $32.1, $35.3 and $50.7 million of restructuring expense - net in 1993, 1991, 1988, 1987 and 1986 respectively. (2)Excludes net gains (losses) from disposals of discontinued operations of $12.5 and ($.6), or $.07 and $.00 per share, in 1987 and 1986, respectively. (3)Includes impact of $250.0 million or $1.40 per share for the adoption of SFAS No. 112 and $140.6 million or $.79 per share for the adoption of SFAS No. 106 in 1993. (See Note 6 to the Consolidated Financial Statements.) (4)$3.36 excluding $277.5 million restructuring expense and $21.0 million gain from Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7 million after-tax). (5)Excludes net restructuring expense of $277.5 million described in Note 3. (6)Excludes $277.5 million restructuring expense and $21.0 million gain from Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7 million after-tax) described in Note 3 and the impact of the cumulative effect of the accounting changes described in Note 6. Including net restructuring expense of $166.7 million after-tax, Return on Average Shareowner's Equity is 24.9%.
All amounts except per share data, average number of shares outstanding and percentages are shown in millions of dollars 1989 1988 1987 1986 1985 ______________________________________________ _______ _______ _______ _______ ______ Continuing Operations: Operating Revenue 4,318.9 4,267.4 3,788.5 3,463.2 3,022.0 Costs and Expenses(1) 3,455.8 3,497.7 3,098.6 2,859.8 2,483.7 ______________________________________________ _______ _______ _______ _______ _______ Operating Income (1) 863.1 769.7 689.9 603.4 538.3 Non-Operating (Expense)Income - Net 49.0 21.0 43.9 43.5 42.3 ______________________________________________ _______ _______ _______ _______ _______ Income from Continuing Operations Before Provision for Income Taxes 912.1 790.7 733.8 646.9 580.6 Provision for Income Taxes 327.9 291.7 295.4 270.0 257.3 ______________________________________________ _______ _______ _______ _______ _______ Income from Continuing Operations 584.2 499.0 438.4 376.9 323.3 Income from Discontinued Operations, Net of Income Taxes 0 0 .6 2.3 1.5 ______________________________________________ _______ _______ _______ _______ _______ Income from Operations, Net of Income Taxes(2) 584.2 499.0 439.0 379.2 324.8 ______________________________________________ _______ _______ _______ _______ _______ Cumulative Effect of Accounting Changes(3) (31.9) 0 0 0 0 ______________________________________________ _______ _______ _______ ______ _______ Net Income 552.3 499.0 439.0 379.2 324.8 ______________________________________________ _______ _______ _______ _______ _______ Dividends 361.9 288.1 226.8 193.2 164.5 ______________________________________________ _______ _______ _______ _______ _______ Earnings Per Share of Common Stock: Continuing Operations 3.13 2.67 2.36 2.03 1.74 Discontinued Operations .00 .00 .00 .01 .01 ______________________________________________ _______ _______ _______ _______ _______ Income from Operations(2) 3.13 2.67 2.36 2.04 1.75 ______________________________________________ _______ _______ _______ _______ _______ Cumulative Effect of Accounting Changes(3) (.17) .00 .00 .00 .00 ______________________________________________ _______ _______ _______ _______ _______ Total 2.96 2.67 2.36 2.04 1.75 ______________________________________________ _______ ______ _______ _______ _______ Dividends Per Share 1.935 1.68 1.445 1.235 1.06 _______________________________________________ _______ _____ _______ _______ _______ Average Number of Shares Outstanding(in millions 186.9 187.1 186.1 185.9 185.7 _______________________________________________ _______ _______ _______ _______ _______ As a Percentage of Operating Revenue: Operating Income 20.0 18.0(1) 18.2(1) 17.4(1) 17.8 Income from Operations, Net of Income Taxes 13.5 11.7 11.6 10.9 10.7 ______________________________________________ _______ _______ _______ _______ _______ Return on Average Shareowners' Equity % 28.1 25.2(1) 25.0 24.4(1) 23.6 ______________________________________________ _______ _______ _______ _______ _______ Shareowners' Equity 2,150.6 2,093.2 1,899.3 1,650.9 1,474.0 ______________________________________________ _______ _______ _______ _______ _______ Total Assets 5,264.5 5,023.8 3,753.7 3,484.0 2,949.5 ______________________________________________ _______ _______ _______ _______ _______ (1)Includes impact of $277.5, $15.0, $32.1, $35.3 and $50.7 million of restructuring expense - net in 1993, 1991, 1988, 1987 and 1986 respectively. (2)Excludes net gains (losses) from disposals of discontinued operations of $12.5 and ($.6), or $.07 and $.00 per share, in 1987 and 1986, respectively. (3)Includes impact of $250.0 million or $1.40 per share for the adoption of SFAS No. 112 and $140.6 million or $.79 per share for the adoption of SFAS No. 106 in 1993. (See Note 6 to the Consolidated Financial Statements.) (4)$3.36 excluding $277.5 million restructuring expense and $21.0 million gain from Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7 million after-tax). (5)Excludes net restructuring expense of $277.5 million described in Note 3. (6)Excludes $277.5 million restructuring expense and $21.0 million gain from Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7 million after-tax) described in Note 3 and the impact of the cumulative effect of the accounting changes described in Note 6. Including net restructuring expense of $166.7 million after-tax, Return on Average Shareowner's Equity is 24.9%. F-44
EX-10 6 EX-10A EXHIBIT E _________ PLAN FOR COMPENSATING RETIRED DIRECTORS FOR POST RETIREMENT AVAILABILITY AND SERVICE (As amended effective as of December 21, 1994) The objective of the Plan for Compensating Retired Directors for Post Retirement Availability and Service (the "Plan") is to recognize the value of a Director's past service to The Dun & Bradstreet Corporation (the "Corporation"), to compensate for the availability of the Director's knowledge and experience as a resource to the Corporation after the Director's retirement, and to facilitate the recruitment of new Directors. 1. Each Director of the Corporation who has served as such for at least five years, including two years during which the Director was not also an employee of the Corporation or its subsidiaries, shall be entitled Each Director of the Corporation who has served as such for at least upon reaching age 70 to receive an amount (the "Plan Benefit") under the Plan each year thereafter until such Director's death. For purposes of the Plan, more than six months of service during a 12-month period after a Director's first election to the Board of Directors of the Corporation (the "Board") will be considered as a full year's service. The annual Plan Benefit will be an amount equal to the annual retainer being paid for service on the Board at the time the Director retires, which amount shall be paid in advance quarterly or, at the Director's election in accordance with Paragraph 3 or 6 below, in a lump sum distribution of the actuarial present value of such annual benefits or in a combination of a lump sum distribution and advance quarterly payments. The relevant annual retainer shall not include retainers, if any, paid to Board members for service as chairmen of committees of the Board, nor shall it include meeting fees. 2. An eligible Director who retires from the Board at or after age 70 will start to receive any portion of the Plan Benefits which is payable quarterly in the first calendar quarter after retirement. An eligible Director who retires from the Board prior to age 70 for any reason, other than disability that terminates the Director's active business or professional career, will start to receive any portion of the Plan Benefits which is payable quarterly in the first calendar quarter subsequent to the Director's reaching age 70. An eligible Director who retires from the Board prior to age 70 due to such disability will start to receive any portion of the Plan Benefits which is payable quarterly in the first calendar quarter after such retirement or after reaching age 65, whichever occurs later. 3. A Director who is eligible for benefits under this Plan may make an election while serving as a Director of the Corporation, on a form supplied by the Executive Compensation and Stock Option Committee of the Board (the "Committee"), to receive all, none, or a specified portion of his aggregate Plan Benefits under this Plan in a lump sum distribution and to receive any balance of such Plan Benefits in the form of advance quarterly payments made in the manner and at such time as described in Paragraphs 1 and 2 of this Plan (an "Election"); provided that any such Election shall be effective for purposes of this Plan only if (i) such Director remains in the service of the Corporation as a Director for the full twelve calendar months immediately following the Election Date of such Election, except in the case of such Director's "total disability" as provided below and (ii) such Director complies with the administrative procedures set forth by the Committee with respect to the making of the Election. A Director making such an Election may specify the portion of his aggregate Plan Benefits under this Plan to be received in a lump sum as follows: 0 percent, 25 percent, 50 percent, 75 percent or 100 percent. 4. An eligible Director may make an Election while serving as a Director of the Corporation for a payment form different than the payment form previously elected in a prior Election by filing a revised election form; provided that any such new Election shall be effective only if the conditions in clauses (i) and (ii) of the Paragraph 3 are satisfied with respect to such new Election. Any prior Election made by an eligible Director that has satisfied such conditions remains effective for purposes of this Plan until such Director has made a new Election that satisfies such conditions. 5. In the event an eligible Director who has made an Election dies or becomes "totally disabled" as defined in The Dun & Bradstreet Corporation Long Term Disability Plan (the "Disability Plan") while serving the Corporation as a Director and such "total disability" occurs during the twelve-calendar-month period immediately following the Election Date of such Election, the condition that such Director remain serving as a Director of the Corporation for such twelve-month-period shall be deemed to be satisfied and such Election shall be effective with respect to Plan Benefits payable to such Director under this Plan. 6. Any Director who is eligible for benefits under this Plan and who as of December 31, 1994 (i) is age 69 or older and (ii) has served at least 4 years as a Director of the Corporation, including at least one year during which the Director was not also an employee of the Corporation or its subsidiaries, may make an election, on a form supplied by the Committee, to receive all, none, or a specified portion, in the same percentages as described in Paragraph 3 of this Plan, of his aggregate Plan Benefits under the Plan in a lump sum and to receive any balance of such benefits in the form of advance quarterly payments made in the manner and at such time as described in Paragraphs 1 and 2 of this Plan (a "Special Election"); provided that any such Special Election shall be effective for purposes of this Plan only if such Director remains in the service of the Corporation as a Director for the one calendar month immediately following the Election Date, except in the case of "total disability" as provided in the immediately following paragraph and complies with the administrative procedures set forth by the Committee with respect to the making of the Special Election; and provided further that the Election Date with respect to any such Special Election is not later than January 31, 1995. 7. In the event an eligible Director who has made a Special Election becomes "totally disabled" as defined in the Disability Plan while serving the Corporation as a Director and such "total disability" occurs during the one-calendar-month-period immediately following the Election Date of such Special Election, the Director shall for purposes of this Plan be deemed to have served the Corporation as a Director for such one- calendar-month period, and such Special Election shall be effective with respect to Plan Benefits payable to such Director under this Plan. 8. If a Director who is eligible for Plan Benefits has made an Election or Special Election to receive any portion of such Plan Benefits in a lump sum distribution and such Election or Special Election is effective on the date Plan Benefits would otherwise commence under Paragraphs 1 and 2 of this Plan, such Plan Benefits shall be payable in the form so elected pursuant to such Election or Special Election. Any portion of a Director's Plan Benefits payable in a lump sum shall be paid on the date that is 60 days after the date when Plan Benefits under this Plan which are payable in quarterly payments commence, or would commence if any such Plan Benefits were payable in quarterly payments, or as soon as practicable thereafter, provided the Committee has approved such payment. A lump sum distribution of a Director's Plan Benefits made pursuant to an Election or Special Election under this Plan shall fully satisfy all present and future Plan liability with respect to such Director for such portion or all of such Plan Benefits so distributed. 9. The amount of any portion of a Director's Plan Benefits payable as a lump sum under this Plan shall equal the present value of such portion of such Director's Plan Benefits, and such present value shall be determined (i) based on a discount rate equal to the average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the close of business on the last business day of each of the three months immediately preceding the date when quarterly payments with respect to such Plan Benefits otherwise would commence if no Election or Special Election under the Plan had been made and (ii) using the 1983 Group Annuity Mortality Table. 10. "Election Date" for purposes of this Plan means the date that a properly completed election form with respect to an Election or a Special Election is received by the Treasurer of the Corporation. 11. As a condition to the right to receive any Plan Benefits, each eligible Director must agree to be available after retirement to consult with the Corporation and to render it such advice as the Corporation shall, from time to time, reasonably request. No Director shall be eligible for Plan Benefits (or continuation thereof) if, at any time subsequent to election as a Director of the Corporation, the Director engages in any business or activity which is competitive with or detrimental to the Corporation. Notwithstanding any other provision of this Plan to the contrary, a Director who receives any portion of his Plan Benefits in a lump sum distribution pursuant to an Election or Special Election shall receive such lump sum portion of his Plan Benefits subject to the condition that if the Director engages in any business or activity which is competitive with or detrimental to the Corporation, such Director shall within 60 days after written notice by the Corporation repay to the Corporation the amount described in the immediately following sentence. The amount to be repaid shall equal the amount, as determined by the Committee, of the Director's lump sum benefit paid under this Plan to which such Director would not have been entitled, if such lump sum benefit had instead been payable in the form of advance quarterly payments under this Plan and such payments were subject to the provisions of this Paragraph 11. 12. Plan Benefits will cease to be paid upon a Director's death, and may not be assigned or alienated by a Director. 13. Subject to certain conditions as provided below, the Corporation shall indemnify each Director who receives any benefits under this Plan in the form of installments as described in Paragraphs 1 and 2 of this Plan for any interest and penalties that may be assessed by the U.S. Internal Revenue Service (the "Service") with respect to U.S. Federal income tax on any such benefits (payable under the Plan in installments) upon final settlement or judgment with respect to any such assessment in favor of the Service, provided the basis for the assessment is that the amendment of this Plan to provide for the Election or the Special Election causes the Director to be treated as being in constructive receipt of such benefits prior to the time when such benefits are actually payable under the Plan. 14. In case any such assessment shall be made against a Director, such Director (the "indemnified party"), shall promptly notify the Corporation's Treasurer in writing and the Corporation, upon request of such indemnified party, shall select and retain an accountant or legal counsel reasonably satisfactory to the indemnified party to represent the indemnified party in connection with such assessment and shall pay the fees and expenses of such accountant or legal counsel related to such representation, and the Corporation shall have the right to determine how and when such assessment by the Service should be settled, litigated or appealed. In connection with any such assessment, any indemnified party shall have the right to retain his own accountant or legal counsel, but the fees and expenses of such accountant or legal counsel shall be at the expense of such indemnified party unless the Corporation and the indemnified party shall have mutually agreed to the retention of such accountant or legal counsel. 15. The Corporation shall not be liable to a Director for any indemnity payments under this Plan with respect to any assessment described in Paragraph 13 of this Plan if such Director against whom such assessment is made has not notified or allowed the Corporation to participate with respect to such assessment in the manner described above or, following demand by the Corporation, has not made the deposit with the Service to avoid any additional interest or penalties as described in Paragraph 16 or has agreed to, or otherwise settled with the Service with respect to, such assessment without the Corporation's prior written consent, provided, however, (i) if such assessment is settled with such consent or if there is a final judgment for the Service, (ii) the Corporation has been notified and allowed to participate in the manner as provided above and (iii) the Director has made any required deposit to avoid additional interest or penalties as described in Paragraph 16 of this Plan, the Corporation agrees to indemnify the indemnified party to the extent set forth in Paragraphs 13 and 14 of this Plan. 16. In the event a final settlement or judgment with respect to an assessment as described under Paragraph 13 of this Plan has been made against a Director, such Director may receive a portion or all of his Plan Benefits that is otherwise payable as an annuity under this Plan in the form of a lump sum in accordance with procedures as the Committee may set forth, and such lump sum distribution will be made as soon as practicable after any such election. At the time such assessment is made against such Director (the "assessed party") and prior to any final settlement or judgement with respect to such assessment, if so directed by the Corporation, such assessed party shall, as a condition to receiving any indemnity under Paragraphs 13 and 14 of this Plan, as soon as practicable after notification of such assessment make a deposit with the Service to avoid any additional interest or penalties with respect to such assessment and, upon the request of such assessed party, the Corporation shall lend, or arrange for the lending to, such assessed party a portion of his remaining benefit under this Plan, not to exceed the lump sum value of such benefit under this Plan, determined using the actuarial assumptions set forth in Paragraph 9 of this Plan, solely for purposes of providing the assessed party with funds to make a deposit with the Service to avoid any additional interest or penalties with respect to such assessment. 17. Upon the occurrence of a "Change in Control" of the Corporation, as such term is defined in Paragraph 18 of this Plan, (i) each former Director shall receive a lump sum distribution of such Director's unpaid Plan Benefits under the Plan in an amount equal to the present value of such benefits, within 30 days of the date of such Change in Control, in full satisfaction of all present and future Plan liability with respect to such former Director and (ii) each fully vested Director who is not already receiving benefits under the Plan shall receive (A) a lump sum distribution of the present value of such Director's Plan Benefits, determined as if the Director had retired as of the date of such Change in Control, within 30 days of the date of such Change in Control, and (B) a lump sum distribution of the present value of such Director's additional Plan Benefits, if any, accrued under the Plan from the date of the Change in Control until the date such Director ceases to be an active Director, within 30 days from the date the Director ceases to be an active Director; provided, however, in the event an active Director has less than five years of service but at least two full years of service as a Director at the time a Change in Control of the Corporation occurs, including at least two years during which the Director was not also an employee of the Corporation or its subsidiaries, such Director shall receive (i) 40% of the present value of the Plan Benefit, determined as if the Director had retired as of the date of such Change in Control with five years of such service, plus an additional 20% of such Plan Benefit for each year (or portion thereof) of such service in excess of two years and such benefit shall be paid to the Director in a lump sum within 30 days of the date of such Change in Control and (ii) within 30 days after the Director ceases to be an active Director, a lump sum distribution of the present value of the Director's additional Plan Benefit, if any, accrued under the Plan from the date of the Change in Control until the date the Director ceases to be an active Director; provided further, that in the event an active Director has less than two full years of service as a Director at the time a Change in Control of the Corporation occurs, the Director shall receive (i) within 30 days of the date the Director completes two years of service, during which the Director was not also an employee of the Corporation or its subsidiaries, a lump sum distribution equal to 40% of the present value of the Plan Benefit, determined as if the Director had retired as of the date of such Change in Control with five years of such service, and (ii) within 30 days after the Director ceases to be an active Director, a lump sum distribution of the present value of the Director's additional Plan Benefit, if any, accrued under the Plan from the date the Director completed such two years of service until the date the Director ceases to be an active Director. Lump sum amounts payable hereunder shall be equal to the value on the lump sum payment date of the installment benefit payable to the Director as follows: (a) For a former Director who is currently receiving Plan Benefits, the lump sum amount shall equal the present value of future installment payments as of the date the lump sum payment is made. (b) For a former Director (other than a disabled Director) whose Plan Benefits have not yet commenced, the lump sum amount shall equal the value of the installment benefit payable commencing as of the first day of the calendar quarter immediately following the Director's 70th birthday. (c) For a former Director who retired due to disability and whose benefits have not yet commenced, the lump sum amount shall equal the value of the installment benefit payable commencing as of the first day of the calendar quarter immediately following the Director's 65th birthday. (d) For a Director who is active at the time of a Change in Control, the lump sum amount payable prior to the Director's retirement shall equal the value of the installment benefit payable commencing as of the first day of the calendar quarter immediately following the Director's 70th birthday, assuming that the Director retires (i) on the date of the occurrence of the Change in Control, if the Director has at least two years of service on such date or (ii) on the date the Director completes two years of service, if the Director has not completed at least two years of service on the date of the occurrence of the Change in Control. (e) For a Director who is active at the time of a Change in Control, the lump sum amount payable after such Director ceases to be a Director shall equal the value of the installment benefit payable as of the date such Director ceases to be an active Director, commencing as of the first day of the calendar quarter immediately following the Director's 70th birthday, minus the amount, if any, received under (d) above. The determination of present value shall be based on the 1983 Group Annuity Mortality Table and the interest rate or rates established by the Pension Benefit Guaranty Corporation as of January 1st of the applicable year, for purposes of determining the present value of immediate annuities. If any lump sum payment is not made within the applicable 30-day time period described above, interest shall be credited to the amount of such payment at an annual rate equal to the yield on 90-day U.S. Treasury Bills plus one percentage point. For this purpose the yield on U.S. Treasury Bills shall be the rate published in The Wall Street Journal on the first business day of the calendar month in which the first day of such 30-day period falls. 18. A "Change in Control" of the Corporation shall mean the occurrence of any of the following events: (a) any "person," as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Corporation, any trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, or any corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 30% or more of the combined voting power of the Corporation's then outstanding securities; (b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new Director (other than a Director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clause (a), (c) or (d) of this Paragraph) whose election by the Board or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute at least a majority thereof; (c) the stockholders of the Corporation approve a merger or consolidation of the Corporation with any other company, other than (1) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 50% of the combined voting power of the Corporation's then outstanding securities; or (d) the stockholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation's assets. 19. Plan Benefits payable under this Plan shall not be funded and shall be made out of the general funds of the Corporation; provided, however, that the Corporation reserves the right to establish one or more trusts to provide alternate sources of benefit payments under this Plan, provided, further, however, that upon the occurrence of a "Potential Change in Control" of the Corporation, as defined below, the appropriate officers of the Corporation are authorized to make contributions to such a trust fund, established as an alternate source of benefits payable under the Plan, as are necessary to fund the lump sum payments to Directors required pursuant to Paragraph 17 of this Plan in the event of a Change in Control of the Corporation; provided, further, however, that if payments are made from such trust fund, such payments will satisfy the Corporation's obligations under this Plan to the extent made from such trust fund. In determining the amount of the necessary contribution to the trust fund in the event of a Potential Change in Control, the following actuarial assumptions shall be used: (i) the interest rate used shall be the interest rate used by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities as of January 1st of the year of the occurrence of the Potential Change in Control, (ii) the 1983 Group Annuity Mortality Table shall be used, and (iii) it shall be assumed that all active Directors will retire as soon as practicable after the occurrence of the Potential Change in Control. For the purposes of this Plan, "Potential Change in Control" means: (a) the Corporation enters into an agreement, the consummation of which would result in the occurrence of a Change in Control of the Corporation; (b) any person (including the Corporation) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control of the Corporation; (c) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation (or a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), who is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 9.5% or more of the combined voting power of the Corporation's then outstanding securities, increases such person's beneficial ownership of such securities by 5% or more over the percentage so owned by such person; or (d) the Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control of the Corporation has occurred 20. The Committee shall be responsible for the administration of the Plan and may delegate to any management committee, employee, Director or agent its responsibility to perform any act hereunder, including, without limitation, those matters involving the exercise of discretion; provided that such delegation shall be subject to revocation at any time at its discretion. The Committee shall have full authority to interpret the provisions of the Plan and construe all of its terms, to adopt, amend, and rescind rules and regulations for the administration of the Plan, and generally to conduct and administer the Plan and to make all determinations in connection with the Plan as may be necessary or advisable, other than those determinations delegated to management employees or independent third parties by the Board. All of its rules, interpretations and decisions shall be applied in a uniform manner to all Directors similarly situated and decisions of the Committee shall be conclusive and binding on all persons. 21. The Plan will be effective with respect to Directors retiring from the Board after January 1, 1980; provided, however, that no Director shall be eligible to receive Plan Benefits for the period prior to August 1, 1981. Service on the Board prior to January 1, 1980 shall count for the purpose of determining eligibility for benefits under the Plan. 22. The Plan may be modified, amended or revoked at any time by the Board of Directors of the Corporation. Adopted by Board of Directors: July 15, 1981 Amended by Board of Directors, effective: September 20, 1989 December 19, 1990 July 1, 1994 December 21, 1994 E-1 ?? EX-10 7 EX-10C EXHIBIT F _________ PENSION BENEFIT EQUALIZATION PLAN OF THE DUN & BRADSTREET CORPORATION (As Amended Effective December 21, 1994) ________________________________________ I.Purpose of the Plan The purpose of the Pension Benefit Equalization Plan of The Dun & Bradstreet Corporation (the "Plan") is to provide a means of equalizing the benefits of those employees participating in the Master Retirement Plan of The Dun & Bradstreet Corporation (the "Retirement Plan") whose funded benefits under the Retirement Plan are or will be limited by the application of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code of 1986, as amended (the "Code") or any applicable law or regulation. The Plan is intended to be an "excess benefit plan" as that term is defined in Section 3(36) of ERISA with respect to those participants whose benefits under the Retirement Plan have been limited by Section 415 of the Code, and a "top hat" plan meeting the requirements of Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA with respect to those participants whose benefits under the Retirement Plan have been limited by Section 401(a)(17) of the Code. II.Administration of the Plan The Executive Compensation and Stock Option Committee of the Board of Directors (the "Committee") of The Dun & Bradstreet Corporation (the "Corporation") shall administer the Plan and may delegate to any management committee, employee, director or agent its responsibility to perform any act hereunder, including without limitation those matters involving the exercise of discretion, provided that such delegation shall be subject to revocation at any time at its discretion. The Committee shall have full authority to determine all questions arising in connection with the Plan, other than those determinations delegated to management employees or independent third parties by the Board of Directors, including interpreting its provisions and construing all of its terms; may adopt procedural rules; and may employ and rely on such legal counsel, such actuaries, such accountants and such agents as it may deem advisable to assist in the administration of the Plan. All of its rules, interpretations and decisions shall be applied in a uniform manner to all participants similarly situated and decisions of the Committee shall be conclusive and binding on all persons. III.Participation in the Plan All members of the Retirement Plan shall be eligible to participate in this Plan whenever their benefits under the Retirement Plan as from time to time in effect would exceed the limitations on benefits and contributions imposed by Sections 401, 415 or any other applicable Section of the Code, calculated from and after September 2, 1974. For purposes of this Plan, benefits of a participant in this Plan shall be determined as though no provision were contained in the Retirement Plan incorporating limitations imposed by Sections 401, 415 or any other Section of the Code. IV.Benefit Limitations For purposes of this Plan and the Retirement Plan, the limitations imposed by Section 415 of the Code shall be deemed to be met when the sum of the participant's defined benefit plan fraction and his defined contribution plan fraction equals 1.0, as such fractions are computed for purposes of Section 415 of the Code and Section 19.4 of the Retirement Plan. V.Equalized Benefits The Corporation shall pay to each eligible member of the Retirement Plan and his beneficiaries a supplemental pension benefit equal to the benefit which would have been payable to them under the Retirement Plan, as if no provision were set forth therein incorporating limitations imposed by Sections 401, 415 or any other applicable Section of the Code, to the extent that such benefit otherwise payable under the Retirement Plan exceeds the benefit limitations related to the Retirement Plan as described in Section III of this Plan. Subject to Section XII of this Plan, such supplemental pension benefits shall be payable in accordance with all of the terms and conditions applicable to the participant's benefits under the Retirement Plan including whatever optional benefits he may have elected; provided, however, if an Election (as defined in Section IX of this Plan) or a Special Election (as defined in Section X of this Plan) has been made and becomes effective prior to the date when benefits under this Plan would otherwise be payable, the form of payment of benefits under this Plan shall be in the form so elected pursuant to such Election or Special Election; provided further that notwithstanding any Election or Special Election, if the lump sum value, determined in the same manner as provided under Section IX below, of the benefits payable under this Plan is $10,000 or less at the time such benefits are payable under this Plan, such benefits shall be payable as a lump sum. Any portion of the benefits payable under this Plan as a lump sum, including any amounts payable as a lump sum under Section VI, shall be paid 60 days after the date when payments of the same benefits under this Plan, if payable in the form of an annuity, would otherwise commence, or as soon as practicable thereafter, provided the Committee has approved such payment. Any such lump sum distribution of a participant's or beneficiary's benefits under this Plan shall fully satisfy all present and future Plan liability with respect to such participant or beneficiary for such portion or all of such benefits so distributed. Any portion of the benefits payable under this Plan as an annuity shall commence on the date when annuity benefits under this Plan would otherwise commence, without regard to any Election or Special Election. VI.Payments of Benefits in the Event of Death In case of the death of the participant, the amount in his account shall, where applicable and subject to Section XII of this Plan, be distributed to the surviving beneficiary who has been designated to receive benefits under the Retirement Plan and in the manner which has been elected under the Retirement Plan; provided, however, if an Election (as defined in Section IX of this Plan) or a Special Election (as defined in Section X of this Plan) has been made and becomes effective prior to the date when benefits under this Plan would otherwise be payable, the form of payment of benefits payable to such surviving beneficiary under this Plan shall be in the form so elected pursuant to such Election or Special Election; provided further that notwithstanding any Election or Special Election, if the lump sum value, determined in the same manner as provided under Section IX below, of the benefits payable under this Plan is $10,000 or less at the time such benefits are payable to such surviving beneficiary under this Plan, such benefits shall be payable as a lump sum. If the participant has not designated a beneficiary under the Retirement Plan, or if no such beneficiary is living at the time of the participant's death, the amount, if any, in the participant's account that is distributable upon his death shall be distributed to the person or persons who would otherwise be entitled to receive a distribution of the participant's Retirement Plan benefits. Payment to such person or persons shall completely discharge the Plan with respect to the amount so paid. VII.Change in Control Upon the occurrence of a "Change in Control" of the Corporation, as such term is defined in the Retirement Plan, (i) each participant and beneficiary already receiving benefits and/or survivor's benefits under the Plan shall receive a lump sum distribution of their unpaid benefits and/or survivor's benefits under the Plan in an amount equal to the present value of such benefits and/or survivor's benefits in full satisfaction of all present and future Plan liability with respect to such participant or beneficiary, and (ii) each vested participant who is not already receiving benefits under the Plan shall receive (A) a lump sum distribution of the present value of his accrued benefit under the Plan as of the date of such Change in Control, within 30 days of the date of such Change in Control and (B) a lump sum distribution of the present value of his additional benefit, if any, accrued under the Plan from the date of the Change in Control until the date he retires or terminates employment with the Corporation, within 30 days from the date of the participant's retirement or termination of employment with the Corporation. In determining the amount of the lump sum distributions to be paid under this Section VII, the following actuarial assumptions shall be used: (i) the interest rate used shall be the interest rate used by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities as of January lst of either the year of the occurrence of the Change in Control or the participant's retirement or termination of employment, whichever is applicable, (ii) the 1983 Group Annuity Mortality Table shall be used; and (iii) it shall be assumed that all participants retired or terminated employment with the Corporation on the date of the occurrence of the Change in Control for purposes of determining the amount of the lump sum distribution to be paid upon the occurrence of the Change in Control. VIII.Funding Benefits payable under this Plan shall not be funded and shall be made out of the general funds of the Corporation; provided, however, that the Corporation reserves the right to establish one or more trusts to provide alternate sources of benefit payments under this Plan, provided, further, however, that upon the occurrence of a "Potential Change in Control" of the Corporation, as defined below, the appropriate officers of the Corporation are authorized to make contributions to such a trust fund, established as an alternate source of benefits payable under the Plan, as are necessary to fund the lump sum payments to Plan participants required pursuant to Section VII of this Plan in the event of a Change in Control of the Corporation; provided, further, however, that if payments are made from such trust fund, such payments will satisfy the Corporation's obligations under this Plan to the extent made from such trust fund. In determining the amount of the necessary contribution to the trust fund in the event of a Potential Change in Control, the following actuarial assumptions shall be used: (i) the interest rate used shall be the interest rate used by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities as of January 1st of the year of the occurrence of the Potential Change in Control, (ii) the 1983 Group Annuity Mortality Table shall be used; and (iii) it shall be assumed that all participants will retire or terminate employment with the Corporation as soon as practicable after the occurrence of the Potential Change in Control. For the purposes of this Plan, "Potential Change in Control" means: (a) the Corporation enters into an agreement, the consummation of which would result in the occurrence of a Change in Control of the Corporation; (b) any person (including the Corporation) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control of the Corporation; (c) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation (or a Corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), who is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 9.5% or more of the combined voting power of the Corporation's then outstanding securities, increases his beneficial ownership of such securities by 5% or more over the percentage so owned by such person; or (d) The Board of Directors of the Corporation adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control of the Corporation has occurred. IX.Election of Form of Payment A participant under this Plan may make an election, on a form supplied by the Committee, to receive all, none, or a specified portion of his benefits under this Plan in a lump sum and to receive any balance of such benefits in the form of an annuity (an "Election"); provided that any such Election shall be effective for purposes of this Plan only if (i) such participant remains in the employment of the Corporation or an Affiliate (as defined under Section XII below), as the case may be, for the full twelve calendar months immediately following the Election Date of such Election, except in the case of such participant's death or disability as provided below and (ii) such participant complies with the administrative procedures set forth by the Committee with respect to the making of the Election. A participant making such Election shall be subject to the provisions of Section XII of this Plan. A participant may elect a payment form different than the payment form previously elected by him under this Section IX by filing a revised election form; provided that any such new Election shall be effective only if the conditions in clauses (i) and (ii) of the immediately preceding paragraph are satisfied with respect to such new Election. Any prior Election made by a participant that has satisfied such conditions remains effective for purposes of this Plan until such participant has made a new Election that satisfies such conditions. A participant making an election under this Section IX may specify the portion of his benefits under this Plan to be received in a lump sum as follows: 0 percent, 25 percent, 50 percent, 75 percent or 100 percent. In the event a participant who has made an Election dies or becomes "totally disabled" as defined in The Dun & Bradstreet Corporation Long Term Disability Plan while employed by the Corporation or an Affiliate and such death or total disability occurs during the twelve-calendar- month period immediately following the Election Date of such Election, the condition that such participant remain employed with the Corporation or an Affiliate (as defined in Section XII) for such twelve-month-period shall be deemed to be satisfied and such Election shall be effective with respect to benefits payable to such participant or participant's beneficiaries under this Plan. The amount of any portion of the benefits payable as a lump sum under this Section IX will equal the present value of such portion of such benefits, and the present value shall be determined (i) based on a discount rate equal to the average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the close of business on the last business day of each of the three months immediately preceding the date the annuity value is determined and (ii) using the 1983 Group Annuity Mortality Table. "Election Date" for purposes of this Plan means the date that a properly completed election form with respect to an Election or Special Election (as defined in Section X below) is received by the Corporate Assistant Treasurer of the Corporation. X.Special Election of Form of Payment Any participant under this Plan (except for the Chairman of the Board of Directors of the Corporation on December 21, 1994) who as of December 31, 1994 (i) is age 54 or older and (ii) has at least 4 years of Credited Service (as defined in the Corporation's Supplemental Executive Benefit Plan) may make an election, on a form supplied by the Committee, to receive all, none, or a specified portion, in the same percentages as described in Section IX above, of his benefits under this Plan in a lump sum and to receive any balance of such benefits in the form of an annuity (a "Special Election"); provided that any such Special Election shall be effective for purposes of this Plan only if such participant remains in employment with the Corporation or an Affiliate (as defined in Section XII below), as the case may be, for the one calendar month immediately following the Election Date, except in the case of death or disability as provided below and complies with the administrative procedures set forth by the Committee with respect to the making of the Special Election; and provided further that the Election Date with respect to any such Special Election may not be later than January 31, 1995. A participant making such Special Election shall be subject to the provisions of Section XII of this Plan. In the event a participant who has made a Special Election dies or becomes "totally disabled" as defined in The Dun & Bradstreet Corporation Long Term Disability Plan while employed by the Corporation or an Affiliate (as defined in Section XII below) and such death or total disability occurs during the one-calendar-month-period immediately following the Election Date of such Special Election, the participant shall for purposes of this Section X be deemed to have been employed with the Corporation or an Affiliate (as defined in Section XII below), as the case may be, for such one-calendar-month period, and such Special Election shall be effective with respect to benefits payable to such participant or participant's beneficiaries under this Plan. The amount of any portion of the benefits payable as a lump sum under this Section X will equal the present value of such portion of such benefits, and the present value shall be determined (i) based on a discount rate equal to the average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the close of business on the last business day of each of the three months immediately preceding the date the annuity value is determined and (ii) using the 1983 Group Annuity Mortality Table. XI.Indemnification Subject to certain conditions as provided below, the Corporation shall indemnify each participant or beneficiary who receives any benefits under this Plan in the form of an annuity for any interest and penalties that may be assessed by the U.S. Internal Revenue Service (the "Service") with respect to U.S. Federal income tax on such benefits (payable under the Plan in the form of an annuity) upon final settlement or judgment with respect to any such assessment in favor of the Service, provided the basis for the assessment is that the amendment of this Plan to provide for the Election or the Special Election causes the participant or the beneficiary, as the case may be, to be treated as being in constructive receipt of such benefits prior to the time when such benefits are actually payable under the Plan. In case any such assessment shall be made against a participant or beneficiary, such participant or beneficiary, as the case may be (the "indemnified party"), shall promptly notify the Corporation's Treasurer in writing and the Corporation, upon request of such indemnified party, shall select and retain an accountant or legal counsel reasonably satisfactory to the indemnified party to represent the indemnified party in connection with such assessment and shall pay the fees and expenses of such accountant or legal counsel related to such representation, and the Corporation shall have the right to determine how and when such assessment by the Service should be settled, litigated or appealed. In connection with any such assessment, any indemnified party shall have the right to retain his own accountant or legal counsel, but the fees and expenses of such accountant or legal counsel shall be at the expense of such indemnified party unless the Corporation and the indemnified party shall have mutually agreed to the retention of such accountant or legal counsel. The Corporation shall not be liable to a participant or beneficiary for any payments under this Section XI with respect to any assessment described in the second preceding paragraph if such participant or beneficiary against whom such assessment is made has not notified or allowed the Corporation to participate with respect to such assessment in the manner described above or, following demand by the Corporation, has not made the deposit to avoid additional interest or penalties as described below, or has agreed to, or otherwise settled with the Service with respect to, such assessment without the Corporation's written consent, provided, however, (i) if such assessment is settled with such consent or if there is a final judgment for the Service, (ii) the Corporation has been notified and allowed to participate in the manner as provided above and (iii) such participant or beneficiary has made any required deposit to avoid additional interest or penalties as described below, the Corporation agrees to indemnify the indemnified party to the extent set forth in this Section XI. In the event a final settlement or judgment with respect to an assessment as described under this Section XI has been made against a participant or beneficiary, such participant or beneficiary may elect to receive a portion or all of his benefits that is otherwise payable as an annuity under the Plan in the form of a lump sum in accordance with procedures as the Committee may set forth, and such lump sum distribution will be made as soon as practicable after any such election. At the time such assessment is made against such participant or beneficiary (the "assessed party") and prior to any final settlement or judgement with respect to such assessment, if so directed by the Corporation, such assessed party shall, as a condition to receiving an indemnity under this Section XI, as soon as practicable after notification of such assessment make a deposit with the Service to avoid any additional interest or penalties with respect to such assessment and, upon the request of such assessed party, the Corporation shall lend, or arrange for the lending to, such assessed party a portion of his remaining benefit under the Plan, not to exceed the lump sum value of such benefit under the Plan, determined using the actuarial assumptions set forth in Section IX, solely for purposes of providing the assessed party with funds to make a deposit with the Service to avoid any additional interest or penalties with respect to such assessment. XII.Limitations on Payment of Benefits If a participant under this Plan has at any time made an Election or a Special Election to have all or a portion of the benefits under this Plan distributed in a lump sum, such participant shall be subject to this Section XII. Notwithstanding any other provision of this Plan to the contrary, no benefits or no further benefits, as the case may be, shall be paid to a participant who is subject to this Section XII if the Committee reasonably determines that such participant has: (i)To the detriment of the Corporation or any Affiliate, directly or indirectly acquired, without the prior written consent of the Committee,an interest in any other company, firm, association, or organization (other than an investment interest of less than 1% in a publicly-owned company or organization), the business of which is in direct competition with the business (present or future) of the Corporation or any of its Affiliates; (ii) To the detriment of the Corporation or any Affiliate, directly or indirectly competed with the Corporation or any Affiliate as an owner, employee, partner, director or contractor of a business, in a field of business activity in which the participant has been primarily engaged on behalf of the Corporation or any Affiliate or in which he has considerable knowledge as a result of his employment by the Corporation or any Affiliate, either for his own benefit or with any person other than the Corporation or any Affiliate, without the prior written consent of the Committee; or (iii) Been discharged from employment with the Corporation or any Affiliate for "Cause." An "Affiliate" for purposes of this Plan means any corporation, partnership, division or other organization controlling, controlled by or under common control with the Corporation or any joint venture entered into by the Corporation. "Cause" for purposes of this Section XII shall include the occurrence of any of the following events or such other dishonest or disloyal act or omission as the Committee determines to be "cause": (a) The participant has misappropriated any funds or property of the Corporation or any Affiliate; (b) The participant has, without the prior knowledge or written consent of the Committee, obtained personal profit as a result of any transaction by a third party with the Corporation or any Affiliate; or (c) The participant has sold or otherwise imparted to any person, firm, or corporation the names of the customers of the Corporation or any Affiliate or any confidential records, data, formulae, specifications and other trade secrets or other information of value to the Corporation or any Affiliate derived by his or her association with the Corporation or any Affiliate. In any case described in this Section XII, the participant shall be given prior written notice that no benefits or no further benefits, as the case may be, will be paid to such participant. Such written notice shall specify the particular act(s), or failures to act, on the basis of which the decision to terminate his benefits has been made. Notwithstanding any other provision of this Plan to the contrary, a participant who receives in a lump sum any portion of his benefits under this Plan pursuant to an Election or Special Election shall receive such lump sum portion of his benefits subject to the condition that if such participant engages in any of the acts described in clause (i) or (ii) of this Section XII, then such participant shall within 60 days after written notice by the Corporation repay to the Corporation the amount described in the immediately following sentence. The amount to be repaid shall equal the amount, as determined by the Committee, of the participant's lump sum benefit paid under this Plan to which such participant would not have been entitled, if such lump sum benefit had instead been payable in the form of an annuity under this Plan and such annuity payments were subject to the provisions of this Section XII. XIII.Miscellaneous This Plan may be terminated at any time by the Board of Directors of the Corporation, in which event the rights of participants to their accrued benefits shall become nonforfeitable. This Plan may also be amended at any time by the Board of Directors of the Corporation, except that no such amendment shall deprive any participant of his benefits accrued at the time of such amendment. No right to payment or any other interest under this Plan may be alienated, sold, transferred, pledged, assigned, or made subject to attachment, execution, or levy of any kind. Nothing in this Plan shall be construed as giving any employee the right to be retained in the employ of the Corporation. The Corporation expressly reserves the right to dismiss any employee at any time without regard to the effect which such dismissal might have upon him under the Plan. This Plan shall be construed, administered and enforced according to the laws of the State of New York. XIV.Effective Date This Plan shall be effective as of October 17, 1990, upon its adoption by the Board of Directors of The Dun & Bradstreet Corporation. F-1 ??(..continued) EX-10 8 EX-10S EXHIBIT G _________ SUPPLEMENTAL EXECUTIVE BENEFIT PLAN OF THE DUN & BRADSTREET CORPORATION (as amended effective December 21, 1994) ________________________________________ PREAMBLE The principal purpose of this Supplemental Executive Benefit Plan is to ensure the payment of a competitive level of retirement income and disability benefits in order to attract, retain and motivate selected executives of the Corporation and its affiliated companies. SECTION 1 Definitions 1.1 "Affiliate" means any corporation, partnership, division or other organization controlling, controlled by or under common control with the Corporation or any joint venture entered into by the Corporation. 1.2 "Average Final Compensation" means the greater of (i) a Participant's or Vested Former Participant's average final compensation as defined in the Master Retirement Plan of The Dun & Bradstreet Corporation as if no provision were set forth therein incorporating limitations imposed by Sections 401, 415 or any other applicable Section of the Internal Revenue Code, or, (ii) if the Participant is disabled at the time of his Retirement, the Participant's Basic Earnings. For purposes of (i), Average Final Compensation will not include an employee's compensation while the employee is a Vested Former Participant or a Former Participant and will include compensation from the date of the Participant's employment with the Corporation or an Affiliate. 1.3 "Basic Disability Plan" means as to any Participant either (i) the long-term disability plan of the Corporation or an Affiliate pursuant to which long-term disability benefits are payable to such Participant or, (ii) if the Affiliate which employs such Participant has not adopted a long-term disability plan, the long-term disability plan of the Corporation. 1.4 "Basic Disability Plan Benefit" means the amount of benefits actually payable to a Participant from the Basic Disability Plan. For purposes of determining a Participant's Basic Disability Plan Benefit a disability benefit shall not be treated as actually payable to a Participant unless the Participant is actually covered by a long- term disability plan of the Corporation or an Affiliate. 1.5 "Basic Earnings" means a Participant's total earnings received as an employee as salary or wages in the twelve months immediately preceding the onset of the Participant's disability, including any amounts deferred under a plan qualified under Section 401(k) of the Internal Revenue Code, amounts contributed on a Participant's behalf on a salary reduction basis to a cafeteria plan described in Section 125 of the Internal Revenue Code, cash bonuses and commissions, but excluding any pension, retainers, severance pay, income derived from stock options, stock appreciation rights and restricted stock awards and dispositions of stock acquired thereunder, payments dependent upon any contingency after the period of Credited Service and other special remuneration (including performance units). 1.6 "Basic Plan" means as to any Participant or Vested Former Participant the qualified retirement or pension plan of the Corporation or an Affiliate pursuant to which retirement benefits are payable to such Participant or Vested Former Participant or to the Surviving Spouse or designated beneficiary of a deceased Participant or Vested Former Participant. 1.7 "Basic Plan Benefit" means the amount of benefits payable from the Basic Plan to a Participant or Vested Former Participant. 1.8 "Board" means the Board of Directors of The Dun & Bradstreet Corporation. 1.9 "Change in Control" means: (a) Any "person," as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Corporation, any trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, or any Corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 30% or more of the combined voting power of the Corporation's then outstanding securities; (b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clause (a), (c) or (d) of this Section) whose election by the Board or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute at least a majority thereof; (c) the stockholders of the Corporation approve a merger or consolidation of the Corporation with any other company, other than (1) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 50% of the combined voting power of the Corporation's then outstanding securities; or (d) the stockholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation's assets. 1.10 "Committee" means the Executive Compensation and Stock Option Committee of the Board. 1.11 "Corporation" means The Dun & Bradstreet Corporation, a Delaware corporation, and any successor or assigns thereto. 1.12 "Credited Service" means a Participant's, Former Participant's or Vested Former Participant's credited service as defined in the Master Retirement Plan of The Dun & Bradstreet Corporation, except that Credited Service will include service while the Participant is receiving Disability Benefits and service from the date the Participant, Former Participant or Vested Former Participant was employed by the Corporation or an Affiliate, but will not include service while an employee is a Former Participant or Vested Former Participant. However, in the case of an acquired company, the Participant's, Former Participant's or Vested Former Participant's service with that company prior to the date of acquisition will not be counted unless such service is recognized for benefit accrual purposes under the relevant Basic Plan. 1.13 "Disability Benefits" mean the benefits provided to Participants and Vested Former Participants pursuant to Section 5 of the Plan. 1.14 "Effective Date" means July 1, 1989. 1.15 "Election" means an election as to the form of benefit payment made pursuant to Section 4.5 of the Plan. 1.16 "Election Date" means the date that a properly completed election form with respect to an Election or a Special Election is received by the Corporation's Treasurer. 1.17 "Former Participant" means an employee who has not completed five or more years of Credited Service at the time his employment with the Corporation or an Affiliate terminates or at the time he was removed, upon written notice by the Chief Executive Officer of the Corporation and with the approval of the Committee, from further participation in the Plan. 1.18 "Other Disability Income" means (A) the disability insurance benefit that the Participant is entitled to receive under the Federal Social Security Act while he is receiving the Basic Disability Plan Benefit and (B) the disability income payable to a Participant from the following sources: (a)any supplemental executive disability plan of any Affiliate; and (b)any other contract, agreement or other arrangement with the Corporation or an Affiliate (excluding any Basic Disability Plan) to the extent it provides disability benefits. 1.19 "Other Retirement Income" means (A)(i) the Social Security retirement benefit that the Participant or Vested Former Participant is entitled to receive under the Federal Social Security Act as of the date of his Retirement or, (ii) if the Participant or Vested Former Participant is not eligible to receive a Social Security retirement benefit commencing on such date, the Social Security retirement benefit he is entitled to receive at the earliest age he is eligible to receive such a benefit, discounted to the date his Benefit under the Plan actually commences, using the actuarial assumptions then in use under the relevant Basic Plan, assuming for purposes of (i) and (ii) above that for years prior to the Participant's employment with the Corporation and for years following the Participant's termination of employment with the Corporation up until the Participant attains age 62, the Participant earned compensation so as to accrue the maximum Social Security benefits, and (B) the retirement income payable to a Participant or Vested Former Participant from the following sources: (a)any retirement benefits equalization plan of the Corporation or an Affiliate the purpose of which is to provide the Participant or Vested Former Participant with the benefits he is precluded from receiving under any relevant Basic Plan as a result of limitations under the Internal Revenue Code; and (b)any supplemental executive retirement plan of any Affiliate; and (c)any other contract, agreement or other arrangement with the Corporation or an Affiliate (excluding any Basic Plan) to the extent it provides retirement or pension benefits. 1.20 "Participant" means an employee of the Corporation or an Affiliate who becomes a participant in the Plan pursuant to Section 2. 1.21 "Plan" means this Supplemental Executive Benefit Plan of The Dun & Bradstreet Corporation, as amended from time to time. 1.22 "Potential Change in Control" means: (a) the Corporation enters into an agreement, the consummation of which would result in the occurrence of a Change in Control of the Corporation; (b) any person (including the Corporation) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control of the Corporation; (c) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation (or a Corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), who is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 9.5% or more of the combined voting power of the Corporation's then outstanding securities, increases his beneficial ownership of such securities by 5% or more over the percentage so owned by such person; or (d) the Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control of the Corporation has occurred. 1.23 "Retirement" means the termination, other than at death, of a Participant's or Vested Former Participant's employment with the Corporation or an Affiliate (i) after reaching age 55 and completing ten years of Credited Service, or (ii) immediately following the cessation of the payment of Disability Benefits under the Plan to such Participant or Vested Former Participant while he is still disabled, as such term is defined under the Basic Disability Plan. 1.24 "Retirement Benefits" mean the benefits provided to Participants and Vested Former Participants pursuant to Section 4 of the Plan. 1.25 "Special Election" means an election as to the form of benefit payment made pursuant to Section 4.6 of the Plan. 1.26 "Surviving Spouse" means the spouse of a deceased Participant or Vested Former Participant to whom such Participant or Vested Former Participant is legally married immediately preceding such Participant or Vested Former Participant's death. 1.27 "Surviving Spouse's Benefits" mean the benefits provided to a Participant's or Vested Former Participant's Surviving Spouse pursuant to Section 6 of the Plan. 1.28 "Vested Former Participant" means an employee who completed five or more years of Credited Service at the time his employment with the Corporation or an Affiliate terminated or at the time he was removed, upon written notice by the Chief Executive Officer of the Corporation and with the approval of the Committee, from further participation in the Plan. 1.29 The masculine gender, where appearing in the Plan, will be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. SECTION 2 Eligibility and Participation 2.1 All key management and other employees of the Corporation and its Affiliates who are responsible for the management, growth or protection of the business of the Corporation and its Affiliates, who are designated by the Chief Executive Officer of the Corporation as such, are eligible, upon approval by the Committee, for participation in the Plan as of the effective date of such designation. 2.2 A Participant may be removed, upon written notice by the Chief Executive Officer of the Corporation and with the approval of the Committee, from further participation in the Plan, and as of such date shall accrue no further benefits under the Plan. SECTION 3 Eligibility For Benefits 3.1 Each Participant or Vested Former Participant is eligible for an annual Retirement Benefit under this Plan upon Retirement, or upon termination of employment with the Corporation before Retirement after completing five or more years of Credited Service. 3.2 Each Participant is eligible to commence receiving a Disability Benefit under this Plan upon the actual or deemed commencement of benefits under the relevant Basic Disability Plan. Notwithstanding the above, no Participant may receive any Disability Benefit if he has not previously enrolled for the maximum disability insurance coverage available under the relevant Basic Disability Plan. 3.3 Notwithstanding any other provision of the Plan to the contrary, no benefits or no further benefits, as the case may be, shall be paid to a Participant, Vested Former Participant or Surviving Spouse if the Committee reasonably determines that such Participant or Vested Former Participant has: (I)To the detriment of the Corporation or any Affiliate, directly or indirectly acquired, without the prior written consent of the Committee, an interest in any other company, firm, association, or organization (other than an investment interest of less than 1% in a publicly-owned company or organization), the business of which is in direct competition with the business (present or future) of the Corporation or any of its Affiliates; (ii) To the detriment of the Corporation or any Affiliate, directly or indirectly competed with the Corporation or any Affiliate as an owner, employee, partner, director or contractor of a business, in a field of business activity in which the Participant or Vested Former Participant has been primarily engaged on behalf of the Corporation or any Affiliate or in which he has considerable knowledge as a result of his employment by the Corporation or any Affiliate, either for his own benefit or with any person other than the Corporation or any Affiliate, without the prior written consent of the Committee; or (iii) Been discharged from employment with the Corporation or any Affiliate for "Cause." "Cause" shall include the occurrence of any of the following events or such other dishonest or disloyal act or omission as the Committee reasonably determines to be "cause": (a) The Participant or Vested Former Participant has misappropriated any funds or property of the Corporation or any Affiliate; (b) The Participant or Vested Former Participant has, without the prior knowledge or written consent of the Committee, obtained personal profit as a result of any transaction by a third party with the Corporation or any Affiliate; or (c) The Participant or Vested Former Participant has sold or otherwise imparted to any person, firm, or corporation the names of the customers of the Corporation or any Affiliate or any confidential records, data, formulae, specifications and other trade secrets or other information of value to the Corporation or any Affiliate derived by his or her association with the Corporation or any Affiliate. In any case described in this Section 3.3, the Participant, Vested Former Participant or Surviving Spouse shall be given prior written notice that no benefits or no further benefits, as the case may be, will be paid to such Participant, Vested Former Participant or Surviving Spouse. Such written notice shall specify the particular act(s), or failures to act, on the basis of which the decision to terminate his benefits has been made. 3.4 (a) Notwithstanding any other provision of the Plan to the contrary, a Participant or Vested Former Participant who receives in a lump sum any portion of his Retirement Benefit pursuant to an Election or Special Election shall receive such lump sum portion of his Retirement Benefit subject to the condition that if such Participant or Vested Former Participant engages in any of the acts described in clause (i) or (ii) of Section 3.3, then such Participant or Vested Former Participant shall within 60 days after written notice by the Corporation repay to the Corporation the amount described in Section 3.4(b). (b) The amount described under this Section 3.4(b) shall equal the amount, as determined by the Committee, of the Participant's or Vested Former Participant's lump sum benefit paid under this Plan to which such Participant or Vested Former Participant would not have been entitled, if such lump sum benefit had instead been payable in the form of an annuity under this Plan and such annuity payments were subject to the provisions of Section 3.3. SECTION 4 Amount and Form of Retirement Benefits 4.1 The Retirement Benefit provided by the Plan is designed to provide each Participant and Vested Former Participant with an annual pension from the Plan and certain other sources equal to his Retirement Benefit as herein after specified. Thus, the Retirement Benefits described here under as payable to Participants and Vested Former Participants will be offset by retirement benefits payable from sources outside the Plan as specified herein. 4.2 (a) The Retirement Benefit of a Participant or Vested Former Participant shall be an annual benefit equal to 50% of his Average Final Compensation with respect to his first ten years of Credited Service, plus 2% of such earnings for each of his next five years of Credited Service, inclusive of his Other Retirement Income and his Basic Plan Benefit. If such a Participant or Vested Former Participant retires before age 60 without the Corporation's consent, his Retirement Benefit shall be reduced by 3% for each year or fraction thereof his Retirement commenced prior to his reaching age 60. (b) Any portion of the Retirement Benefit provided under this Section 4.2 payable in the form of an annuity pursuant to Section 4.4 shall be payable in monthly installments and will commence on the first day of the calendar month coinciding with or next following the day the Participant or Vested Former Participant retires, and any portion of such Retirement Benefit payable in a lump sum pursuant to Section 4.4 shall be paid on the date that is sixty days after the date when annuity payments under this Section 4.2 commence, or would commence if any portion of the Retirement Benefit were payable in the form of an annuity, or as soon as practicable thereafter, provided the Committee has approved any such payments. 4.3 (a) Subject to Section 4.3(c), the Retirement Benefit of a Participant or Vested Former Participant who terminates employment with the Corporation with five or more years of Credited Service before he is eligible to retire under the relevant Basic Plan shall be an annual benefit equal to 25% of his Average Final Compensation for his first five years of Credited Service, plus 5% of such earnings for each additional year of Credited Service between six and ten years of Credited Service and 2% for each additional year of Credited Service from 11 to 15 years, inclusive of his Other Retirement Income and his Basic Plan Benefit. (b)Any portion of the Retirement Benefit provided under this Section 4.3 payable in the form of an annuity pursuant to Section 4.4 shall be payable in monthly installments and will commence on the first day of the calendar month coinciding with or next following the day the Participant or Vested Former Participant reaches age 55 or the date of his termination, if later, and any portion of such Retirement Benefit payable in a lump sum pursuant to Section 4.4 shall be paid on the date that is 60 days after the date when annuity payments under this Section 4.3 commence, or would commence if any portion of the Retirement Benefit were payable in the form of an annuity, or as soon as practicable thereafter, provided the Committee has approved any such payments. (c) If a Participant or Vested Former Participant terminates employment with the Corporation without the Corporation's consent, and the payment of his Retirement Benefit commences, or would commence if it were payable in the form of an annuity, before he reaches age 60, his Retirement Benefit shall be reduced by 10% for each year or fraction thereof that the payment of his Retirement Benefit commences, or would commence if it were payable in the form of an annuity, prior to his reaching age 60. 4.4 (a) Except as provided under Section 4.4(b) or Section 4.4(c), a Retirement Benefit under this Plan shall be payable to a Participant or Vested Former Participant in the form of a straight life annuity and without regard to any optional form of benefits elected under the Basic Plan. (b) If a Participant or a Vested Former Participant has made an Election while he was a Participant pursuant to Section 4.5 or a Special Election pursuant to Section 4.6 and such Election or Special Election becomes effective (i) prior to the date such Participant or such Vested Former Participant retires or terminates employment with the Corporation or an Affiliate and (ii) while he was still a Participant, a Retirement Benefit under this Plan shall be payable to such Participant or such Vested Former Participant in the form or combination of forms of payment elected pursuant to such Election or Special Election under Section 4.5 or Section 4.6, as the case may be, and without regard to any optional form of benefits elected under the Basic Plan. Any lump sum distribution of a Participant's or Vested Former Participant's Retirement Benefit under the Plan shall fully satisfy all present and future Plan liability with respect to such Participant or Vested Former Participant for such portion or all of such Retirement Benefit so distributed. (c) Notwithstanding any Election or Special Election made under Section 4.5 or 4.6, if the lump sum value, determined in the same manner as provided under Section 4.5(a), of a Participant's or Vested Former Participant's Retirement Benefit is $10,000 or less at the time such Retirement Benefit is payable under this Plan, such benefit shall be payable as a lump sum. (d) If the Retirement Benefit under this Plan is payable to a Participant or Vested Former Participant in a different form and/or at a different time than his Other Retirement Income or his Basic Plan Benefits, the offset provided in this Plan for such Participant's or Vested Former Participant's Other Retirement Income and Basic Plan Benefit shall be converted, using actuarial assumptions that are reasonable and appropriate and in accordance with applicable law at the time the annuity under this Plan is determined, to the extent required as follows, but solely for purposes of calculating the amount of such offset: (i) a percentage of the benefits to be offset equal to the percentage of such Participant's or Vested Former Participant's benefits payable in the form of an annuity under this Plan shall be actuarially converted to the extent required into the form of a straight life annuity, commencing at the time such benefits payable under this Plan commence or on the date such Participant or Vested Former Participant would first become eligible for the payment of such benefits under this Plan, if earlier; and (ii) the balance, if any, of the benefits to be offset shall be actuarially converted to a lump sum payment payable on the date which is 60 days after the date described in Section 4.4(d)(i). 4.5 (a) A Participant may elect, on a form supplied by the Committee, to receive all, none, or a specified portion, as provided in Section 4.5(c), of his Retirement Benefit under the Plan in a lump sum and to receive any balance of such Retirement Benefit in the form of an annuity; provided that any such Election shall be effective for purposes of this Plan only if the conditions of Section 4.5(b) are satisfied. A Participant may elect a payment form different than the payment form previously elected by him under this Section 4.5(a) by filing a revised election form; provided that any such new Election shall be effective only if the conditions of Section 4.5(b) are satisfied with respect to such new Election. Any prior Election made by a Participant that has satisfied the conditions of Section 4.5(b) remains effective for purposes of the Plan until such Participant has made a new Election satisfying the conditions of Section 4.5(b). The amount of any portion of a Participant's or a Vested Former Participant's Retirement Benefit payable as a lump sum under this Section 4.5 will equal the present value of such portion of the Retirement Benefit, and such present value shall be determined (i) based on a discount rate equal to the average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the close of business on the last business day of each of the three months immediately preceding the date the annuity value is determined and (ii) using the 1983 Group Annuity Mortality Table. (b) A Participant's Election under Section 4.5(a) becomes effective only if the following conditions are satisfied: (i) such Participant remains in the employment of the Corporation or an Affiliate, as the case may be, for the full twelve calendar months immediately following the Election Date of such Election, except in case of death or disability of such Participant as provided in Section 4.5(d) and (ii) such Participant complies with the administrative procedures set forth by the Committee with respect to the making of the Election. (c) A Participant making an election under Section 4.5(a) may specify the portion of his Retirement Benefit under the Plan to be received in a lump sum as follows: 0 percent, 25 percent, 50 percent, 75 percent or 100 percent. (d) In the event a Participant who has made an Election pursuant to Section 4.5(a) dies or becomes totally and permanently disabled for purposes of the relevant Basic Disability Plan while employed by the Corporation or an Affiliate and such death or total and permanent disability occurs during the twelve-calendar-month period, as described under Section 4.5(b)(i), immediately following the Election Date of such Election, the condition under Section 4.5(b)(i) shall be deemed satisfied with respect to such Participant. 4.6 (a) Any Participant (except the Chairman of the Board of Directors of the Corporation on December 21, 1994) who as of December 31, 1994 (i) is age 54 or older and (ii) has at least 4 years of Credited Service may elect, on a form supplied by the Committee, to receive all, none, or a specified portion, in the same percentages as described in Section 4.5(c), of his Retirement Benefit under the Plan in a lump sum and to receive any balance of such Retirement Benefit in the form of an annuity; provided that any such Special Election shall be effective for purposes of this Plan only if such Participant remains in employment with the Corporation or an Affiliate, as the case may be, for the one calendar month immediately following the Election Date, except in the case of death or total and permanent disability as provided in Section 4.6(b), and complies with the administrative procedures set forth by the Committee for making such Special Election; and provided further that the Election Date with respect to any such Special Election is not later than January 31, 1995. The amount of any portion of a Participant's or a Vested Former Participant's Retirement Benefit payable as a lump sum under this Section 4.6 will equal the present value of such portion of the Retirement Benefit, and such present value shall be determined (i) based on a discount rate equal to the average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the close of business on the last business day of each of the three months immediately preceding the date the annuity value is determined and (ii) using the 1993 Group Annuity Mortality Table. (b) In the event a Participant who has made a Special Election pursuant to Section 4.6(a) dies or becomes totally and permanently disabled for purposes of the relevant Basic Disability Plan while employed by the Corporation or an Affiliate and such death or total and permanent disability occurs during the one-calendar-month-period, as described under Section 4.6(a), immediately following the Election Date of such Special Election, the condition under Section 4.6(a) requiring that such Participant remain employed with the Corporation or an Affiliate, as the case may be, for the one-calendar-month period immediately following the Election Date of such Election shall be deemed satisfied. 4.7 Subject to Section 3.3, Section 3.4 and the foregoing limitations of this Section 4, the Retirement Benefit of each Participant and Vested Former Participant under the Plan shall at all times be 100% vested and nonforfeitable. 4.8 (a) Subject to Section 4.8(c), the Corporation shall indemnify each Participant, Vested Former Participant and Surviving Spouse who receives any portion of a Retirement Benefit or Surviving Spouse's Benefit under this Plan in the form of an annuity for any interest and penalties that may be assessed by the U.S. Internal Revenue Service (the "Service") with respect to U.S. Federal income tax on such benefits (payable under the Plan in the form of an annuity) upon final settlement or judgment with respect to any such assessment in favor of the Service, provided the basis for the assessment is that the amendment of the Plan to provide for the Election or the Special Election causes the Participant, Vested Former Participant or Surviving Spouse, as the case may be, to be treated as being in constructive receipt of such benefits prior to the time when such benefits are actually payable under the Plan. (b) In case any assessment shall be made against a Participant, Vested Former Participant or Surviving Spouse as described in Section 4.8(a), such Participant, Vested Former Participant or Surviving Spouse, as the case may be (the "indemnified party"), shall promptly notify the Corporation's Treasurer in writing and the Corporation, upon request of such indemnified party, shall select and retain an accountant or legal counsel reasonably satisfactory to the indemnified party to represent the indemnified party in connection with such assessment and shall pay the fees and expenses of such an accountant or legal counsel related to such representation, and the Corporation shall have the right to determine how and when such assessment by the Service should be settled, litigated or appealed. In connection with any such assessment, any indemnified party shall have the right to retain his own accountant or legal counsel, but the fees and expenses of such accountant or legal counsel shall be at the expense of such indemnified party unless the Corporation and the indemnified party shall have mutually agreed to the retention of such accountant or legal counsel. (c) The Corporation shall not be liable for any payments under this Section 4.8 with respect to any assessment described in Section 4.8(a) if a Participant, Vested Former Participant or Surviving Spouse against whom such assessment is made has not notified or allowed the Corporation to participate with respect to such assessment in the manner described in Section 4.8(b) or, following demand by the Corporation, has not made the deposit to avoid additional interest or penalties as described in Section 4.8(d) or has agreed to, or otherwise settled with the Service with respect to, such assessment without the Corporation's written consent, provided, however, (i) if such assessment is settled with such consent or if there is a final judgment for the Service, (ii) the Corporation has been notified and allowed to participate in the manner as provided in Section 4.8(b) and (iii) such Participant, Vested Former Participant or Surviving Spouse has made any required deposit to avoid additional interest or penalty as described in Section 4.8(d), the Corporation agrees to indemnify the indemnified party to the extent set forth in this Section 4.8. (d) In the event a final settlement or judgment with respect to an assessment as described under Section 4.8 has been made against a Participant, Vested Former Participant or Surviving Spouse, such Participant, Vested Former Participant or Surviving Spouse may elect to receive a portion or all of his Retirement Benefit or Surviving Spouse's Benefit that is otherwise payable as an annuity under the Plan in the form of a lump sum in accordance with procedures as the Committee may set forth, and such lump sum distribution will be made as soon as practicable after any such election. At the time such assessment is made against such Participant, Vested Former Participant or Surviving Spouse (the "assessed party") and prior to any final settlement or judgement with respect to such assessment, if so directed by the Corporation, such assessed party shall, as a condition to receiving any indemnity under this Section 4.8, as soon as practicable after notification of such assessment make a deposit with the Service to avoid any additional interest or penalties with respect to such assessment and, upon the request of such assessed party, the Corporation shall lend, or arrange for the lending to, such assessed party a portion of his remaining Retirement Benefit or Surviving Spouse's Benefit under the Plan, not to exceed the lump sum value of such benefit under the Plan, determined using the actuarial assumptions set forth in Section 4.5(a), solely for purposes of providing the assessed party with funds to make a deposit with the Service to avoid any additional interest or penalties with respect to such assessment. SECTION 5 Disability Benefits 5.1The Disability Benefit provided by the Plan is designed to provide each Participant with a disability benefit from the Plan and certain other sources equal to his Disability Benefit as hereinafter specified. Thus, Disability Benefits described hereunder as payable to Participants will be offset by disability benefits payable from sources outside the Plan (other than benefits payable under the relevant Basic Disability Plan) as specified herein. 5.2In the event that a Participant has become totally and permanently disabled for the purposes of the relevant Basic Disability Plan, an annual Disability Benefit shall be payable in monthly installments under this Plan during the same period as disability benefits are actually or deemed paid by the relevant Basic Disability Plan, in an amount equal to 60% of the Participant's Basic Earnings. Such Disability Benefit shall be offset by the Participant's Other Disability Income, if any. A Participant's Disability Benefits shall also be offset by the Participant's Basic Plan Benefit, if the Participant's Basic Disability Plan Benefit does not already include such an offset. SECTION 6 Surviving Spouse's Benefits 6.1 Upon the death of a Participant or Vested Former Participant, while employed by the Corporation or an Affiliate, who has completed at least ten years of Credited Service with the Corporation or an Affiliate and has attained age 55, his Surviving Spouse will be entitled to a Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement Benefit that would have been provided from the Plan had the Participant or Vested Former Participant retired from the Corporation or an Affiliate with the Corporation's consent, on the date of his death. 6.2 Upon the death of a Participant or Vested Former Participant, while employed by the Corporation or an Affiliate, who has completed at least five years of Credited Service with the Corporation or an Affiliate and has not attained age 55, his Surviving Spouse will be entitled to a Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement Benefit that would have been provided from the Plan had the Participant or Vested Former Participant terminated employment with the Corporation or an Affiliate on the date of his death with the Corporation's consent, and elected to have the payment of his Basic Plan Benefit commence at age 55 in the form of a straight life annuity. 6.3 Upon the death of a Vested Former Participant while no longer employed by the Corporation or an Affiliate, who has not attained age 55, his Surviving Spouse will be entitled to a Surviving Spouses's Benefit under this Plan equal to 50% of the Retirement Benefit that would have been provided from the Plan to the Vested Former Participant at age 55, taking into account whether the Corporation consented to the termination. 6.4 Upon the death of a Participant or Vested Former Participant, while employed by the Corporation or an Affiliate, who has completed at least five, but less than ten, years of Credited Service with the Corporation or an Affiliate and has attained age 55, his Surviving Spouse will be entitled to a Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement Benefit that would have been provided from the Plan had the Participant or Vested Former Participant terminated employment with the Corporation or an Affiliate on the date of his death with the Corporation's consent and his Basic Plan Benefit commenced immediately in the form of a straight life annuity. 6.5 Upon the death of a Vested Former Participant while he is receiving Retirement Benefits, his Surviving Spouse shall receive a Surviving Spouse's Benefit equal to 50% of the Retirement Benefit he was receiving at the time of his death. 6.6 Except as provided in Section 6.8, the Surviving Spouse's Benefit provided under Sections 6.1, 6.4 and 6.5 will be payable monthly, will commence on the first day of the month coincident with or next following the month in which the Participant or Vested Former Participant dies, and will continue until the first day of the month in which the Surviving Spouse dies. 6.7 Except as provided in Section 6.8, the Surviving Spouse's Benefit provided under Sections 6.2 and 6.3 will be payable monthly, will commence on the first day of the month coincident with or next following the month in which the Participant or Vested Former Participant would have attained age 55 and will continue until the first day of the month in which the Surviving Spouse dies. 6.8 (a) If a Participant or a Vested Former Participant while he was a Participant has made an Election under Section 4.5 or a Special Election under Section 4.6 and such Election or Special Election is effective on the date of such Participant's or Vested Former Participant's death, the Surviving Spouse's Benefit payable to a Surviving Spouse of such Participant or Vested Former Participant will be payable in the form or combination of forms of payment so elected by such Participant or Vested Former Participant pursuant to such Election or Special Election. The amount of any lump sum payment under this Section 6.8 shall be the present value of the applicable portion of the Surviving Spouse's Benefit payable under the Plan, and such present value shall be determined using the actuarial assumptions set forth in Section 4.5(a). Any lump sum distribution of a Surviving Spouse's Surviving Spouse's Benefit under the Plan shall fully satisfy all present and future Plan liability with respect to such Surviving Spouse for such portion or all of such Surviving Spouse's Benefit so distributed. (b) Notwithstanding any Election or Special Election made under Section 4.5 or 4.6, if the lump sum value, determined in the same manner as provided under Section 4.5(a), of a Surviving Spouse's Benefit is $10,000 or less at the time such Surviving Spouse's Benefit is payable under this Plan, such benefit shall be payable as a lump sum. (c) Any portion of a Surviving Spouse's Benefit provided under Section 6.1, 6.4 and 6.5 which is payable as an annuity shall be paid in the manner and at such time as set forth in Section 6.6, and any such benefit which is payable as a lump sum shall be paid 60 days after the date when annuity payments commence, or would commence if any portion of such Surviving Spouse's Benefit were payable as an annuity as set forth in Section 6.6. (d) Any portion of a Surviving Spouse's Benefit provided under Section 6.2 and 6.3 which is payable as an annuity shall be paid in the manner and at such time as set forth in Section 6.7, and any such benefit which is payable as a lump sum shall be paid 60 days after the date when annuity payments commence, or would commence if any portion of such Surviving Spouse's Benefit were payable as an annuity, as set forth in Section 6.7. 6.9 Notwithstanding the foregoing provisions of Section 6, the amount of a Surviving Spouse's Benefit shall be reduced by one percentage point for each year (including a half year or more as a full year) in excess of ten that the age of the Participant or Vested Former Participant exceeds the age of the Surviving Spouse. SECTION 7 Committee 7.1 The Committee shall be responsible for the administration of the Plan and may delegate to any management committee, employee, director or agent its responsibility to perform any act hereunder, including without limitation those matters involving the exercise of discretion, provided that such delegation shall be subject to revocation at any time at its discretion. The Committee shall have the authority to interpret the provisions of the Plan and construe all of its terms, to adopt, amend, and rescind rules and regulations for the administration of the Plan, and generally to conduct and administer the Plan and to make all determinations in connection with the Plan as may be necessary or advisable, other than those determinations delegated to management employees or independent third parties by the Board. All such actions of the Committee shall be conclusive and binding upon all Participants, Former Participants, Vested Former Participants and Surviving Spouses. SECTION 8 Miscellaneous 8.1 The Board may, in its sole discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in part. However, no termination, suspension or amendment of the Plan may adversely affect a Participant's or Vested Former Participant's vested benefit under the Plan, or a retired Participant's or Vested Former Participant's right or the right of a Surviving Spouse to receive or to continue to receive a benefit in accordance with the Plan as in effect on the date immediately preceding the date of such termination, suspension or amendment. 8.2 Nothing contained herein will confer upon any Participant, Former Participant or Vested Former Participant the right to be retained in the service of the Corporation or any Affiliate, nor will it interfere with the right of the Corporation or any Affiliate to discharge or otherwise deal with Participants, Former Participants or Vested Former Participants with respect to matters of employment without regard to the existence of the Plan. 8.3 Notwithstanding anything herein to the contrary, at any time following the termination of service of a Participant or Vested Former Participant, the Committee may authorize, under uniform rules applicable to all Participants, Vested Former Participants and Surviving Spouses under the Plan, a lump sum distribution of a Participant's, Vested Former Participant's and/or Surviving Spouse's Retirement Benefit or Surviving Spouse's Benefit under the Plan in an amount equal to the present value of such Retirement Benefit or Surviving Spouse's Benefit, using the actuarial assumptions then in use for funding purposes under the Master Retirement Plan of The Dun & Bradstreet Corporation, in full satisfaction of all present and future Plan liability with respect to such Participant, Vested Former Participant and/or Surviving Spouse, if the amount of such present value is less than $250,000. Such lump sum distribution may be made without the consent of the Participant, Vested Former Participant or Surviving Spouse. 8.4 (a) Notwithstanding anything in this Plan to the contrary, if a Participant has less than five years of Credited Service at the time of a Change in Control, and as a result of the Change in Control, and before he completes five years of Credited Service, (i) the Plan is terminated, (ii) the Participant is removed from further participation in the Plan, or (iii) the Participant is terminated as a result of action initiated directly or indirectly by the Corporation or any Affiliate, such Participant shall be entitled to a Benefit of 25% of his Average Final Compensation and the Corporation will remain obligated to pay all benefits under the Plan. (b)Notwithstanding anything in this Plan to the contrary, upon the occurrence of a Change in Control, (i) no reduction shall be made in a Participant's or Vested Former Participant's Retirement Benefit, notwithstanding his termination of employment or Retirement prior to age 60 without the Corporation's consent, (ii) the provisions of Section 3.3(i) and (ii) shall not apply to any Participant, Vested Former Participant or Surviving Spouse, (iii) each Participant and Vested Former Participant already receiving a Retirement Benefit under the Plan shall receive a lump sum distribution of his unpaid Retirement Benefit and, if he is married, his Surviving Spouse's Benefit under the Plan within 30 days of the Change in Control in an amount equal to the present value of such Retirement Benefit and Surviving Spouse's Benefit in full satisfaction of all present and future Plan liability with respect to such Participant, Vested Former Participant and Surviving Spouse, if any, and each Surviving Spouse already receiving a Surviving Spouse's Benefit under the Plan shall receive a lump sum distribution of his unpaid Surviving Spouse's Benefit at the same time in an amount equal to the present value of such Surviving Spouse's Benefit in full satisfaction of Plan liability to such Surviving Spouse, (iv) each Vested Former Participant who is not already receiving a Retirement Benefit under the Plan shall receive a lump sum distribution of his unpaid Retirement Benefit and, if he is married, his Surviving Spouse's Benefit within 30 days of the Change in Control in an amount equal to the present value of such Retirement Benefit and Surviving Spouse's Benefit, and each Surviving Spouse of either a Vested Former Participant or a Participant with five or more years of Credited Service who is not already receiving a Surviving Spouse's Benefit under the Plan shall receive a lump sum distribution of his unpaid Surviving Spouse's Benefit at the same time in an amount equal to the present value of such Surviving Spouse's Benefit, (v) each Participant with less than five years of Credited Service who is entitled to a benefit under Section 8.4(a) shall receive a lump sum distribution of the present value of such Retirement Benefit within 30 days from the earlier of the date the Plan is terminated, the date he is removed from further participation in the Plan, or the date his employment with the Corporation is terminated, and of his Surviving Spouse's Benefit based upon the amount of such Retirement Benefit if he is married on the applicable date, and (vi) each Participant who is not included in (v) above and who is not already receiving a Retirement Benefit under the Plan shall receive (a) within 30 days of the later to occur of the date of such Change in Control or the date he completes five years of Credited Service a lump sum distribution of the present value of his accrued Retirement Benefit under the Plan as of the applicable date and, if he is married on such date, the present value of his Surviving Spouse's Benefit, and (b) within 30 days from the earliest of the date of his Retirement or termination of employment with the Corporation, the date the Plan is terminated or the date he is removed from further participation in the Plan, a lump sum distribution of the present value of his additional Retirement Benefit accrued after the applicable event in (a) computed as of the applicable date herein set forth in (b) and, if he is married on such applicable date, the present value of his surviving Spouse's Benefit. In determining the amount of the lump sum distributions to be paid under this Section 8.4, the following actuarial assumptions shall be used: (i) the interest rate used shall be the interest rate used by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities as of January lst of either the year of the occurrence of the Change in Control or the participant's retirement or termination of employment, whichever is applicable, (ii) the 1983 Group Annuity Mortality Table shall be used; and (iii) it shall be assumed that all participants retired or terminated employment with the Corporation on the date of the occurrence of the Change in Control and with the Corporation's consent for purposes of determining the amount of the lump sum distribution to be paid upon the occurrence of the Change in Control. 8.5 The Plan is unfunded, and the Corporation will make Plan benefit payments solely on a current disbursement basis, provided, however, that the Corporation reserves the right to purchase insurance contracts, which may or may not be in the name of a Participant or Vested Former Participant, or establish one or more trusts to provide alternative sources of benefit payments under this Plan, provided, further, however, that upon the occurrence of a "Potential Change in Control" the appropriate officers of the Corporation are authorized to make such contributions to such trust or trusts as are necessary to fund the lump sum distributions to Plan participants required pursuant to Section 8.4 of this Plan in the event of a Change in Control. In determining the amount of the necessary contribution to the trust or trusts in the event of a Potential Change in Control, the following actuarial assumptions shall be used: (i) the interest rate used shall be the interest rate used by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities as of January 1st of the year of the occurrence of the Potential Change in Control, (ii) the 1983 Group Annuity Mortality Table shall be used; and (iii) it shall be assumed that all participants will retire or terminate employment with the Corporation as soon as practicable after the occurrence of the Potential Change in Control and with the Corporation's consent. The existence of any such insurance contracts, trust or trusts shall not relieve the Corporation of any liability to make benefit payments under this Plan, but to the extent any benefit payments are made from any such insurance contract in the name of the Corporation or any Affiliate or from any such trust, such payment shall be in satisfaction of and shall reduce the Corporation's liabilities under this Plan. Further, in the event of the Corporation's bankruptcy or insolvency, all benefits accrued under this Plan shall immediately become due and payable in a lump sum and all Participants, Vested Former Participants and Surviving Spouses shall be entitled to share in the Corporation's assets in the same manner and to the same extent as general unsecured creditors of the Corporation. 8.6 If any dispute arises under the Plan between the Corporation and a Participant, Former Participant, Vested Former Participant or Surviving Spouse (collectively or individually referred to as "Participant" in this Section 8.6) as to the amount or timing of any benefit payable under the Plan or as to the persons entitled thereto, such dispute shall be resolved by binding arbitration proceedings initiated by either party to the dispute in accordance with the rules of the American Arbitration Association and the results of such proceedings shall be conclusive on both parties and shall not be subject to judicial review. If the disputed benefits involve the benefits of a Participant who is no longer employed by the Corporation or any Affiliate, the Corporation shall pay or continue to pay the benefits claimed by the Participant until the results of the arbitration proceedings are determined unless such claim is patently without merit; provided, however, that if the results of the arbitration proceedings are adverse to the Participant, then in such event the recipient of the benefits shall be obligated to repay the excess benefits to the Corporation. The Corporation expressly acknowledges that the amounts payable under the Plan are necessary to the livelihood of Participants and their family members and that any refusal or neglect to pay benefits under the preceding sentence prior to the resolution of any dispute shall be prima facie evidence of bad faith on its part and will be conclusive grounds for an arbitration award resulting in an immediate lump sum payment to the Participant, of the Participant's benefits under the Plan then due and payable to him, unless the arbitrator determines that the claim for the disputed benefits was without merit. The amount of such lump sum payment shall be equal to the then actuarial value of such benefits calculated by utilizing the actuarial assumptions then in use for funding purposes under the Master Retirement Plan of the Dun & Bradstreet Corporation. In addition, in the event of any dispute covered by this Section 8.6 the Corporation agrees to pay the entire costs of any arbitration proceeding or legal proceeding brought hereunder, including the fees and expenses of counsel and pension experts engaged by a Participant and that such expenses shall be reimbursed promptly upon evidence that such expenses have been incurred without awaiting the outcome of the arbitration proceedings; provided, however, that such costs and expenses shall be repaid to the Corporation by the recipient of same if it is finally determined by the arbitrators that the position taken by such person was without merit. 8.7 To the maximum extent permitted by law, no benefit under the Plan shall be assignable or subject in any manner to alienation, sale, transfer, claims of creditors, pledge, attachment or encumbrances of any kind. 8.8 The Corporation may withhold from any benefit under the Plan an amount sufficient to satisfy its tax withholding obligations. 8.9 The Plan is established under and will be construed according to the laws of the State of New York. G-1 ??(..continued) EX-10 9 EX-10W EXHIBIT-H March 6, 1995 Mr. Charles W. Moritz Chairman The Dun & Bradstreet Corporation 187 Danbury Road Wilton, CT 06897 Dear Charlie: The purpose of this letter agreement is to confirm the following terms and conditions of your post-retirement consulting agreement with The Dun & Bradstreet Corporation (the "Company") and to document certain other mutual understandings: (1) Effective March 31, 1995 you will resign as Chairman and as a member of the Company's Board of Directors. On that date your Change-in-Control Severance agreement with the Company shall also terminate. Effective April 1, 1995 you 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, you will be deemed to have terminated your employment with the consent of the Company. From April 1, 1995 forward, you and your spouse will receive all post-retirement benefits normally provided to retired employees under the provisions of the Company's group medical, dental and life insurance plans. (2) Prior to March 31, 1995, you will receive a pro-rata 1995 bonus award in the amount of $180,000. Subsequent to March 31, 1995, you will not be eligible for any additional bonus awards or any stock option, performance unit or restricted stock grants. Stock option, performance unit and restricted stock grants issued to you prior to March 31, 1995 shall vest, become exercisable or become payable in accordance with the provisions of the respective Stock Option, Performance Unit and Restricted Stock plans, except that the performance unit award which you will receive in February 1996 for the 1993 - 1995 performance cycle shall include a 50% cash award in lieu of a 50% matching restricted stock grant. (3) In return for your agreement to be reasonably available during the period April 1,1995 through March 31,1997 to consult with the Board of Directors and the Chief Executive Officer of the Company, and to perform such mutually agreed to services for and on behalf of the Company as shall be requested of you from time to time, you shall receive an annual retainer of 250,000. Retainer payments shall be made in eight equal quarterly installments. The Company will also reimburse you for reasonable travel, entertainment and out-of-pocket expenses in connection with requested consulting activities on behalf of the Company, as well as provide appropriate secretarial and administrative support services necessary for you to carry out your duties. (4) Prior to April 1, 1998 you will not become a stockholder (unless such stock is listed on a national securities exchange or traded daily in the over-the-counter market), employee, officer, director or consultant of or to a corporation, partnership or other business or firm which competes directly or indirectly with any of the businesses owned or operated by the Company. These restrictions shall apply whether or not you accept any form of compensation from a competing entity. (5) In the event of your death prior to the payment of all monies specified in paragraphs (2) and (3) of this agreement, the Company will make, or cause to be made, all remaining payments to your surviving spouse or to your estate in the event that your spouse pre-deceases you. * * * This agreement has been reviewed and approved by Jim Peterson, Chairman of the Executive Compensation and Stock Option Committee, on behalf of the Board of Directors. To indicate your understanding and acceptance of the terms and conditions contained herein, please sign, date and return two originals to Earl H. Doppelt, Senior Vice President and General Counsel. Sincerely, /s/ Robert E. Weissman REW:dgh cc: James R. Peterson Earl H. Doppelt /s/ C.W. Moritz 3/6/95 _________________ _________ Charles W. Moritz Date H-1 EX-27 10
5 1,000 1.0 12-MOS DEC-31-1994 JAN-01-1994 DEC-31-1994 1.0 335,426 26,862 1,256,495 0 0 1,980,982 1,961,496 1,042,984 5,463,866 2,121,942 0 188,411 0 0 1,130,205 5,463,866 0 4,895,705 0 3,970,229 38,460 0 7,826 879,190 249,690 629,500 0 0 0 629,500 3.70 3.70