-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KwtxFpW0c2GYZ44/MxX5wx4LXcOk93EehwvqQ7SNn2j//5P54D78fM/FAbBS0W2n TB99g0NjIkGgBWHCDcyF8w== 0000030419-96-000012.txt : 19960328 0000030419-96-000012.hdr.sgml : 19960328 ACCESSION NUMBER: 0000030419-96-000012 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960327 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUN & BRADSTREET CORP CENTRAL INDEX KEY: 0000030419 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 132740040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07155 FILM NUMBER: 96538991 BUSINESS ADDRESS: STREET 1: 187 DANBURY ROAD CITY: WILTON STATE: CT ZIP: 06897 BUSINESS PHONE: 2032224200 MAIL ADDRESS: STREET 1: 187 DANBURY ROAD STREET 2: 34TH FLOOR CITY: WILTON STATE: CT ZIP: 06897 FORMER COMPANY: FORMER CONFORMED NAME: DUN & BRADSTREET COMPANIES INC DATE OF NAME CHANGE: 19790429 10-K 1 March 27, 1996 OFICS Filer Support Mail Stop 0-7 SEC Operations Center 6432 General Green Way Alexandria, VA 22312-2413 RE: File No. 1-7155 - Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 - ----------------------------------------------------------------------------- Gentlemen: Pursuant to the rules of the Securities Exchange Act of 1934 as amended, enclosed is one copy of The Dun & Bradstreet Corporation's Annual Report on Form 10-K for the year ended December 31, 1995. As an electronic filer, one paper copy is enclosed for backup. As required, adequate funds are available to cover the fee. In accordance with the SEC's previous request, three additional annual reports have been enclosed. Please acknowledge receipt of the report by stamping and returning the enclosed copy of this letter. Very truly yours, /s/ Stuart J. Goldshein Stuart J. Goldshein SGJ:sw Enclosures sec/ Receipt of the above described material is hereby acknowledged. Securities and Exchange Commission Date: By: ------------------------- ------------------------------------ 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 Required] For the fiscal year ended December 31, 1995 or Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee 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, 1996, 169,578,948 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 $11,023 million. (Continued) - ------------------------------------------------------------------------------ Documents Incorporated by Reference PART I ITEM -Business Dun & Bradstreet Business Segments, 1995, Pages 31 and 32, Note 16 Operations by Business Segments and page 32, Note 17 Operations by Geographic Area, of the 1995 Annual Report. PART II ITEM 5 -Market for the Registrant Page 14, Financial Review, Common Equity and Related of the 1995 Annual Report. Stockholder Matters ITEM 6 -Selected Financial Data Pages 34 and 35, Ten-Year Selected Financial Data, of the 1995 Annual Report. ITEM 7 -Management's Discussion Pages 9 to 14, Financial Review, and Analysis of Financial of the 1995 Annual Report. Condition and Results of Operations ITEM -Financial Statements and Pages 16 to 35 of the 1995 Annual Report. Supplementary Data PART III ITEM 10 -Directors and Executive Pages 2 to 4 of the Company's Proxy Officers of the Registrant Statement dated March 8, 1996. ITEM 11 -Executive Compensation Pages 8 to 18 of the Company's Proxy Statement dated March 8, 1996. ITEM 12 -Security Ownership of Pages 18 to 20 of the Company's Proxy Certain Beneficial Statement dated March 8, 1996. Owners and Management ITEM 13 -Certain Relationships Pages 18 to 20 of the Company's Proxy and Related Transactions Statement dated March 8, 1996. -------------------------------- The Index to Exhibits is located on Pages 22 to 24. 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. On January 9, 1996, the Company announced a plan to reorganize into three public independent companies by spinning off, through a tax-free distribution, two of its businesses to shareholders. The three companies will be: Cognizant Corporation, consisting of IMS International, Gartner Group, Nielsen Media Research, Pilot Software and Erisco; The Dun & Bradstreet Corporation, consisting of Dun & Bradstreet Information Services, Moody's Investors Service, and Reuben H. Donnelley; and A. C. Nielsen, the marketer of information, analysis and insight to the worldwide consumer-products and services industry. In connection with the reorganization, several other divisions, such as Dun & Bradstreet Software and American Credit Indemnity, will be divested. The distribution is subject to final approval by the Company's board of directors and obtaining a ruling from the Internal Revenue Service with respect to the tax-free treatment of the distribution. The Company expects to complete the reorganization by the end of 1996. (2) Not applicable. (b)(1) The response to this item is incorporated herein by reference to Note 16 Operations by Business Segments on Pages 31 to 32 of the 1995 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, 1996, 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, 1995 was approximately 49,500. (d) The response to this item is incorporated herein by reference to Note 17 Operations by Geographic Area on Page 32 of the 1995 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 and as part of electronic customer-site workstations. IMS provides information services covering over 70 countries and maintains offices in 57 countries on six continents, with 62% of total revenue generated outside the U.S. In 1995, IMS continued its expansion into developing markets in Eastern Europe and Asia, growing revenues by 30% in these areas. New product sales were also initiated in China and India. 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 25 countries and account for approximately 40% of IMS' worldwide revenues. 1 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. In 1995, Sales Technologies, Inc., a wholly owned subsidiary of Dun & Bradstreet, was refocused on the healthcare industry and became an operating unit of IMS. Sales Technologies is a leader in sales automation solutions and develops, installs, and supports networked systems that enable pharmaceutical, healthcare, and consumer packaged goods organizations to improve sales force effectiveness, productivity, communication and customer satisfaction. In the U.S., IMS launched Xplorer, a customized client/server decision support system that integrates customers' internal sales and marketing data with IMS and other external data. IMS also launched MediVal to assist in the management and resolution of Medicaid rebate disputes between states and pharmaceutical manufacturers. IMS acquired Decision Surveys International Ltd., a South African company involved in pharmaceutical market research. 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 associations 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 information service firms, as well as the in-house capabilities of its customers. Competition has generally 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 is able to deliver. A. C. Nielsen A. C. Nielsen (ACN) is the worldwide leader in the marketing research industry. Offering a full range of services to customers in 88 countries around the globe, ACN provides its customers with marketing information, applications and analysis for understanding and making critical decisions about their products and their markets. Given ACN's geographic reach and comprehensive scope of services, ACN is in a unique position within the industry to help its customers succeed within a global marketplace. Today, more than three quarters of ACN's revenues are generated outside the United States. ACN holds a global leadership position across a wide spectrum of research services. These services include: ACN's Retail Measurement Services, Worldwide Consumer Panel, Marketing and Sales Applications, Merchandising Services, Customized Research Services, Modeling and Analytic Services, Retailer Services and Information Delivery Services. Internationally, ACN also offers a range of Media Services to its clients. ACN's Retail Measurement Service, the cornerstone of the ACN portfolio of products, remains the industry standard in delivering quality data to customers on product movement and related causal information in six continents. Introduced in 1933, ACN's original Food and Drug Indices soon became the industry measurement tool for understanding the dynamics of product sales. Over the years, technology has dramatically improved ACN's ability to collect and analyze information from retailers and consumers. The availability of scanning technology in retail outlets around the world has broadened both the scope and capabilities of ACN's original retail indices. ACN Retail Measurement Services are available in over 65 countries. With its worldwide network of research services, ACN also assists retailers and manufacturers in better understanding, differences in consumer behavior on a market-by-market basis. ACN's Worldwide Consumer Panel is the largest in the world and is continuing to expand globally. In 1995, three new countries were added to the panel (Canada, South Africa and France), bringing the total number of countries in which there are ACN Consumer Panels to 15. 2 Through ACN's information delivery services, ACN customers can retrieve data and analyze information on their business. Available in major languages around the world, ACN's INF*ACT workstation is a Windows-based platform for data retrieval and analysis. Used by over 1,800 companies, with 20,000+ installations worldwide, ACN's workstations provide a foundation for a variety of advanced analytical applications. Spotlight is an expert system that enables users to access ACN's databases and find the most important facts related to volume and share changes for a brand. SPACEMAN offers a family of space management products that provide a hierarchy of integrated solutions for analyzing merchandising variables and producing automated "planograms". Now in over 20 countries, SPACEMAN is available in 10 languages and is used by over 10,000 manufacturers and retailers, representing 2,000 different companies. ACN also offers customized research services internationally across a wide range of industries, particularly in ACN's Asia/Pacific region. Strategic alliances with other research firms such as Millward Brown in Asia/Pacific have further increased the breadth of ACN's customized research capabilities. ACN's products and services are subject to direct and indirect competition from rival marketing research, information services and analytic consulting firms, as well as the in-house operations of a number of large manufacturers and publishers. There are five major competitors worldwide, but none has the global depth and breadth of coverage that ACN 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 1995, advertisers spent approximately $35.8 billion on television advertising, including $2.6 billion on cable television advertising, according to McCann-Erickson Worldwide, to bring a variety of programs and advertising messages to approximately 95.9 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 33 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. 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. (SRI), is developing a national television ratings laboratory. Installation of a test sample has begun in Philadelphia, PA for completion in 1996. This sample will be used to produce test data in 1996. Recently, the NBC Television Network asked SRI for a business plan for the creation of a national measurement system that could provide an alternative to the Nielsen service. This project could give rise to a national competitor in the next few years. On the local level, ADCOM, an emerging competitor, has announced plans to offer individual cable system measurement. A coalition of station owners may issue a "request for proposal" for a new local ratings service that would potentially compete with the Nielsen Station Index. 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 1995, Nielsen Media 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 transition the company from its present mainframe-based systems to a new flexible client/server architecture for data collection, processing and delivery. In addition, Nielsen Media is developing a new metering system to enable measurement of program viewing in the emerging digital television environment. The United States Patent and Trademark Office has awarded Nielsen Media a patent on this metering approach. This new system will use codes, which 3 are imperceptible to the viewer, inserted in the active audio and/or video portions of programs and commercials. These codes will be detected by metering equipment installed in the sample households. This system will allow Media to identify the program or commercial regardless of the delivery method to the home and simplify the process of installing meters in sample households. Nielsen Media's Monitor Plus Service provides commercial occurrence data and expenditure estimates. Customers use the data to determine competitive advertising trends within markets of interest. Monitor Plus currently provides service in 50 markets versus the 75 markets covered by its competitor and market leader, Competitive Media Reporting. Monitor Plus plans to expand its operations to cover 75 markets and to deploy a new digital data collection and processing technology. During 1995, Nielsen Media entered into a strategic relationship with Internet Profiles Corporation (I/PRO). D&B Enterprises and Nielsen Media have together taken a substantial minority position in the company. Under the terms of the agreement, Nielsen Media and I/PRO will jointly market and brand two I/PRO products: I/COUNT (monitors Web site usage) and I/AUDIT (audits and verifies audience usage and characteristics). Also under the agreement, additional products may be jointly developed and marketed. Nielsen and IMS 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 37 countries and a worldwide database covering more than 40 million businesses. DBIS also provides receivables management services worldwide and credit insurance in the U.S. and Canada. DBIS is organized into three regions: United States, Europe/Middle East/Africa 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 Credit and Marketing Information Services, Receivable Management Services and American Credit Indemnity Company which are described below: Credit Information Credit Information provides its customers with access to a database on more than 10 million U.S. businesses. Its core products 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. Credit Information licenses its data to customers. It also distributes its information via a number of other firms, including leading vendors of on-line services. Customers of Credit Information (approximately 64,000 subscription customers and over 175,000 non-subscription 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's 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. 4 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 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 current PAYDEX score, the 90-day PAYDEX score, historical trends and industry comparisons. Predictive 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-subscription customers who have an occasional need for business information with data on a specific company. Credit Information also markets other specialized reports and business information. Credit Information is the leading commercial credit reporting agency in the United States. However, it faces competition both from in-house operations of the businesses it seeks as customers and from other general and specialized credit reporting and other information 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 subscription 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. In 1995, RMS began offering sales franchises in twenty-six states. These franchises are located in states with less concentrated markets and will focus on selling, while RMS continues to be responsible for all product fulfillment. RMS is considered to be the leader in the commercial collection industry in the United States. 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 now faces competition from the expansion of large consumer agencies into the commercial marketplace. Marketing Information Services Marketing Information Services provides marketing information for business-to-business and educational marketers. The Marketing Information Services provides 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 40 million businesses in over 200 countries. Information is delivered in print, on diskette, magnetic tape, CD-ROM and on-line formats. Additionally, Marketing Information Services offers a line of Database Marketing products providing solutions for marketing professionals by organizing various databases into an "information warehouse." The development of such a "warehouse" leads to useful market penetration, market segmentation, territory alignment, and demand estimation analyses as well as the identification of the best prospective customers. Database Marketing products are available in both a PC desktop version and on a larger computing platform. Market Data Retrieval offers services that help businesses sell to the education 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. Marketing Information Services, while a market leader in its industry, faces competition from other data providers in competitive distribution channels, delivery formats and data quality enhancements. 5 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 offered through its own dedicated agency force with offices throughout the U.S. and Canada. The Company has announced that it plans to divest ACI during 1996. 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, from companies choosing to self-insure their credit risks 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. 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 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 37 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 the customer make better 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 1995, DBIS Europe continued to invest in data systems. New products were introduced in France, Italy and Belgium during the year. Also, in late 1995 a new range of cross-border products was rolled-out to the European market. DBIS Europe also continued investing heavily in a new technology platform, which will result in enhanced product/service flexibility as well as opportunities to streamline operations. In 1995, Dun & Bradstreet Japan (D&B Japan) and Japan's second largest credit information provider, Tokyo Shoko Research, Ltd. (TSR), formed a marketing, technology and database alliance. The alliance results 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 that require manufacturing facilities or the use of natural resources. DBIS Europe and DBIS Asia-Pacific, Canada, Latin America face competition from banks, consumer information companies, application software developers, on-line content providers and in-house operations of businesses as well as direct competition from businesses providing similar services. DBIS Europe is believed to be 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. 6 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 1995, Moody's had outstanding ratings on approximately 55,500 corporate and 54,000 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. In addition to revenues derived from ratings, Moody's provides comprehensive historical and current business, financial, investment and marketing information on over 38,000 major U.S. and non-U.S. entities and on over 24,000 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 ten 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 world, 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 understood and utilized abroad. However, Moody's believes that its long-standing reputation for integrity and high-quality analysis 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 its well-established reputation in the financial information market through enhancements of its databases and by further expansion into the electronic market for financial information. Moody's is registered as an investment adviser under the Investment Advisers Act of 1940 and the laws of a number of states. 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 packaged application software for financial, human resource, and manufacturing and distribution business functions, as well as advanced decision support software. The Company has announced that it plans to divest D&B Software during 1996. D&B Software products are installed throughout the world on a wide range of computer hardware platforms, including Data General, Digital Equipment Corporation, Compaq, 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, 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 57% and 19% of D&B Software's revenues, respectively. Approximately 30% of total revenue is generated from operations outside of the U.S. 7 D&B Software continued to broaden and enhance its client/server product line during 1995. Revenues related to client/server applications now exceed $100 million. SmartStream for the Distributed Enterprise (SmartStream DE), the first client/server business application suite built on a fully distributed architecture, was released in November. The SmartStream DE release includes numerous enhancements to existing products such as SmartStream Builder, SmartStream Manufacturing/Distribution, SmartStream Financials, SmartStream Human Resources and SmartStream Decision Support. SmartStream DE distributes data, workflow and business processes throughout the enterprise, allowing companies to blend centralized control with local autonomy, dynamically change business processes, and broaden decision-making authority. SmartStream is now available in eight languages, and multiple platforms and operating systems. D&B Software has strategic alliances with Powersoft, Sybase, Microsoft and Cognos and incorporates software developed by partners in the SmartStream product suite. D&B Software also has alliances with hardware vendors such as Hewlett Packard, IBM, Sun, Digital Equipment Corporation, Compaq and Data General. 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 client/server solutions, D&B Software faces continuing risks including the ability to build new client/server products, migrate customers to new applications and manage changes in capabilities required to install and support new products. 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 continue to change, 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. Pilot Software, Inc. Pilot Software, Inc. (Pilot) is a leading global provider of client/server decision support solutions for medium and large-scale enterprises. Its products include powerful visualization and modeling tools that can be used by analysts, managers and executives to easily access internal and external data and provide the business insights needed to create sustainable competitive advantage. The company's flagship product, LightShip, is a scaleable on-line analytical processing (OLAP) environment. It is a comprehensive environment that includes visual desktop analysis tools, pre-built analysis libraries, scaleable multidimensional servers and design tools. LightShip's library of pre-built visual analysis tools allow users to quickly implement solutions that can be easily customized and extended. Its multidimensional server provides unique time-based business analysis capabilities. LightShip's open architecture allows it to seamlessly interface with other components of a corporate information technology (IT) environment including desktop productivity tools, query and reporting tools and client/server development tools. 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 allow organizations to quickly identify key trends, problems and opportunities so they can take effective action. These advantages enable executives, managers and analysts to effectively access and understand the vast amount of information trapped in their operational systems. Pilot has a strong international presence, with offices throughout North and South America, Europe and the Pacific Rim. Pilot has a multi-channel distribution strategy including software developers, value-added resellers and consulting organizations. Pilot is working closely with several other Dun & Bradstreet companies including DBIS, IMS and Nielsen to deliver additional data access and analysis tools that compliment their existing products. Pilot and its partners offer a full range of technical support, training and consulting services around the world. 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. More than 50% of total revenue is generated from operations outside of the U.S. 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 and the support of managed care services. Its primary markets include managed care organizations, insurance carriers, third-party administrators and self-administered corporations. Erisco has successfully completed the 8 development of the core applications for its newest product, Facets, which is a managed care information system built using client/server technology. The target market for Facets is managed care companies such as Health Maintenance or Preferred Provider Organizations. 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 the traditional indemnity, as well as the new managed care markets. The continued trend of expanding growth in managed care membership and the acceptance of enterprise-wide client/server system architecture positions Facets well in the marketplace. 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 17 telephone company clients throughout the U.S. RHD provides these services for more than 400 directories in 19 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, bilingual directories and street address directories. RHD Yellow Pages product and marketing enhancements include English and Spanish Talking Yellow Pages, Yellow Pages Television, Touch Four, AutoIntelligence, 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. RHD also has an agreement with Centennial Media Corporation to publish directories in Denver and Boulder, Colorado. 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 Directory Services Agreement with Sprint Publishing and Advertising 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. 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 research and analysis of the computer hardware, software, communications and related technology industries (collectively, the information technology or IT industry). Gartner Group's core business is researching and analyzing significant IT industry developments, packaging such analyses into annually 9 renewable subscription-based products and distributing such products through print and electronic media. Gartner Group's product offerings collectively provide comprehensive coverage of the information technology industry. Gartner Group's principal products are called continuous services which, on an ongoing basis, highlight industry developments, review new products and technologies and analyze industry trends within a particular technology or market sector. Gartner Group currently offers 50 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's staff researches and prepares the published analyses, responds to telephone inquiries from client companies, and holds conferences and executive briefings. Late in 1995, Gartner Group acquired Dataquest, formerly a unit of The Dun & Bradstreet Corporation. Dataquest is a leading provider of information technology, market research and consulting for the IT vendor, manufacturer and financial communities which complements the Gartner Group end-user focus. Gartner Group has made a substantial investment in recent years in the expansion of its distribution network and increased its direct sales force in the United States from a total of 26 sales people at the start of fiscal year 1990 to 205 sales people as of September 30, 1995. In the Europe/Middle East/Africa region, Gartner Group has 20 sales offices, including 9 independent distributors. In the Asia/Pacific Rim, Gartner Group has 12 sales offices, including 8 distributors. In the Americas region, in addition to the United States sales offices, Gartner Group has sales relationships with 6 independent distributors. Gartner Group experiences competition in the market for information products and services from other independent providers of similar services as well as the internal marketing and planning organizations of their clients. Gartner Group also competes indirectly against other information providers, including electronic and print media companies and consulting firms. Gartner Group's indirect competitors, many of whom have substantially greater financial, information gathering and marketing resources than Gartner Group, could choose to compete directly against Gartner Group in the future. In addition, although Gartner Group believes that it has established a significant market presence, there are few barriers to entry into their market, and new competitors could readily seek to compete against them in one or more market segments addressed by Gartner Group's continuous service products. Increased competition, direct and indirect, could adversely affect Gartner Group's operating results through pricing pressure and loss of market share. As of September 30, 1995, there were approximately 5,500 client organizations which subscribe to Gartner Group's continuous services products. In addition, Gartner Group had approximately 19,200 client interfaces, defined as an individual IT professional at a company who receives directly from Gartner Group all printed and electronic materials relating to a particular continuous service. No single client organization accounted for over two percent of continuous service revenues as of September 30, 1995. NCH Promotional Services NCH Promotional Services (NCH) is a worldwide supplier of coupon processing and promotion 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 coupon-and-cash-refund programs. NCH derives approximately 60% of its revenues from U.S. operations. Coupons are distributed throughout the U.S. in various forms of print media, in and on packages, in stores and through direct mail. Using laser scanning technology, NCH's SmartScan service processes coupons for retailers. Retailers consolidate and ship all of their coupons, regardless of type or issuing manufacturer, to NCH where their coupons will be scanned, counted, valued, sorted and billed to the appropriate manufacturers. Various coupon activity reports are also supplied. Retailers then receive reimbursement from NCH in a single check. This service provides retailers and manufacturers with a convenient, economical means of handling coupon redemption. NCH provides services for manufacturers in three key areas: coupon processing, financial management and reporting and promotion analysis. Process 2000 is NCH's coupon processing system which validates coupon claims, performs misredemption analysis and provides timely payment to retailers. A wide range of customized marketing reports are available in various data formats including hardcopy, on-line access via the LauNCH product, EDI transmissions and diskette. 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 10 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. Competition includes numerous rival coupon clearing houses, billing services, manufacturer redemption agents and manufacturers who handle their own redemption services. NCH's competition in the retailer service business focus primarily on price. The manufacturer service business competes on a combination of price and value-added services such as advanced redemption analysis, consistent and timely payments to retailers and misredemption control. NCH is a recognized leader in the coupon industry. 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., (to be known in the future as Cognizant Enterprises) invests in emerging and established businesses in the information industry. It invests as a limited partner in Information Partners Capital Fund and Information Associates, venture capital limited partnerships, as well as through direct investments. RESOURCE GROUP Shared Transaction Services Shared Transaction Services (STS) began operations in 1994 as an internal-services business that leads the ongoing "reengineering" of business processes across internal divisions in the functions of accounting, purchasing, payroll, employee benefits and related areas, and operates shared-services centers to process transactions for many of these functions. These STS Centers provide centralized services formerly supplied within each Dun & Bradstreet division but at lower cost with higher levels of service. STS now operates in North America and Europe with operational STS Centers established in the United States, Canada, France, Germany, Italy and the U.K. These Centers process internal transactions according to standard and/or reengineered processes, both manual and electronic. In several 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 that provides information processing services for the majority of the Company's North American and European business units. The primary service provided is mainframe processing. Data Services also performs selective distributed processing, telecommunications, printing and PC/LAN support. The objectives of Data Services are to reduce expenses and improve operations through the integration of individual data centers into regional data centers and to leverage economies of scale in purchasing the collective capacity requirements of all divisions. During 1995, Data Services successfully integrated individual data centers into five data centers; three in the United States and two in Europe. The names of the Company's products are trademarks or registered trademarks of The Dun & Bradstreet Corporation or one of its subsidiaries. 11 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 fifty-seven leased offices located throughout the U.S. and 142 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, Brazil; Santiago, Chile; Mexico City, Mexico; Caracas, Venezuela; High Wycombe, England; Lyons, France; Ebeltoft, Denmark; and seven properties within Italy. The operations of this segment are also conducted from ninety-three leased offices located throughout the U.S. and 105 non-U.S. office locations. Software Services Operations are conducted from forty-seven leased offices located throughout the U.S. and twenty-six 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-five leased office locations throughout the U.S. Other Business Services Owned property located within the U.S. consists of an office building in Clinton, Iowa. 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 thirty-four leased offices located throughout the U.S. and twenty-five 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 six leased office locations throughout the U.S. 12 ITEM 3. LEGAL PROCEEDINGS The Company and its subsidiaries are involved in legal proceedings and litigation arising in the ordinary course of business. 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. Additionally, reference is made to the settlement of the Shareowners Class Action described in Note 6, Litigation, in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 ("Third Quarter 10-Q"). On January 12, 1996, the United States District Court for the Southern District of New York (the "Court") ordered payment of the settlement amount to class plaintiffs whose claims were allowed in the settlement. Reference is also made to the settlement of the Towers Class Action involving the Company's 95%-owned subsidiary American Credit Indemnity Company ("ACI") described in Note 6, Litigation, in the Company's Third Quarter 10-Q. On December 18, 1995, the Court granted its final approval to the settlement, dismissed all claims against ACI, and directed the parties to implement the settlement, which included payment of the settlement amount to class plaintiffs whose claims were allowed in the settlement. In each of the foregoing settlements, the amount of the settlement did not materially affect the Company's 1995 earnings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 13 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, 1996 and brief summaries of their business experience during the past five years.
Name Title Age Robert E. Weissman Chairman and Chief Executive Officer** 55 William G. Jacobi Executive Vice President 52 Robert J Lievense Executive Vice President 50 Dennis G. Sisco Executive Vice President 49 Volney Taylor Executive Vice President** 56 Nicholas L. Trivisonno Executive Vice President-Finance 48 and Chief Financial Officer Michael F. Brewer Senior Vice President-Communications & Government Affairs 52 Michael P. Connors Senior Vice President and Chief Human Resources Officer 40 Earl H. Doppelt Senior Vice President and General Counsel 42 Victoria R. Fash Senior Vice President-Business Strategy 44 Frank R. Noonan Senior Vice President 53 Thomas W. Young Senior Vice President and Controller 57 *Set forth as a separate item pursuant to Items 401(b) and (e) of Regulation S-K. **Member of the Board of Directors. Mr. Weissman was elected Chairman and Chief Executive Officer of Dun & Bradstreet, effective April 1, 1995; he had been elected President and Chief Executive Officer of Dun & Bradstreet, effective January 1, 1994, and President and Chief Operating Officer, effective January 1, 1985. Mr. Jacobi was elected Executive Vice President of Dun & Bradstreet, effective February 20, 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 elected Executive Vice President of Dun & Bradstreet, effective February 20, 1995. He had been elected Senior Vice President of Dun & Bradstreet, effective July 21, 1993. He also serves as President and Chief Operating Officer of A. C. Nielsen Company, effective January 10, 1996. Previously he had served as Chairman and Chief Executive Officer of A. C. Nielsen Company (February 20, 1995), Chairman of The Reuben H. Donnelley Corporation (July 26, 1993), Chairman of Dataquest Incorporated (September 1, 1991), President of NCH Promotional Services, Inc. (July 27, 1990) and President of the Nielsen Clearing House Division of A. C. Nielsen Company (June 25, 1989). Mr. Sisco was elected Executive Vice President of Dun & Bradstreet, effective February 20, 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, and as Chairman of Pilot Software, Inc., to which office he was elected October 27, 1994. He had also served through November 20, 1995 as Chairman of Dataquest Incorporated, to which office he was elected, effective July 26, 1993. 14 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. Trivisonno was elected Executive Vice President-Finance and Chief Financial Officer of Dun & Bradstreet, effective September 20, 1995. He also serves as Chairman and Chief Executive Officer of A. C. Nielsen Company, effective January 10, 1996. Prior thereto, he had served with GTE Corporation through July 1995 as Executive Vice President-Strategic Planning and Group President (October 1993), as Senior Vice President-Finance (January 1989) and as Corporate Vice President and Controller (November 1988). He also served as a director of GTE Corporation and as a member of the Office of the Chairman from October 1993 through July 1995. 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. Connors was elected Senior Vice President and Chief Human Resources Officer of Dun & Bradstreet, effective March 27, 1995. Prior thereto, he had served as Senior Vice President of American Express Travel Related Services from September 1989. 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). Ms. Fash was elected Senior Vice President-Business Strategy of Dun & Bradstreet, effective April 19, 1995; she had been elected Vice President-Business Operations Planning, effective May 18, 1994. Prior thereto, she had served as Assistant to the President of Dun & Bradstreet (September 1991) and as Assistant to the President of Dun & Bradstreet Software Services (formerly Management Science America, Inc.) (January 1991). Mr. Noonan was elected Senior Vice President of Dun & Bradstreet, effective February 20, 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. 15
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 Dividends and Common Stock Information in the "Financial Review" on Page 14 of the 1995 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 1991 through 1995 set forth in the "Ten-Year Selected Financial Data" on Pages 34 and 35 of the 1995 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 9 to 14 of the 1995 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 19. 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 8, 1996 filed with the Securities and Exchange Commission, except that "Executive Officers of the Registrant" on Pages 14 to 15 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 8, 1996 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 8, 1996 filed with the Securities and Exchange Commission. 16 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 8, 1996 filed with the Securities and Exchange Commission. 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 19. (2) Financial Statement Schedule. See Index to Financial Statements and Schedule on Page 19. (3) Other Financial Information. Business Segments, 1995. Ten Year Selected Financial Data. (4) Exhibits. See Index to Exhibits on Pages 22 to 24, which indicates which Exhibits are management contracts or compensatory plans required to be filed as Exhibits. Only responsive information appearing on Pages 4 to 35 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. 17 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: ROBERT E. WEISSMAN - ------------------------------------------ (Robert E. Weissman, Chairman and Chief Executive Officer) By: NICHOLAS L. TRIVISONNO - ------------------------------------------ (Nicholas L. Trivisonno, Executive Vice President - Finance and Chief Financial Officer) By: THOMAS W. YOUNG - ------------------------------------------ (Thomas W. Young, Senior Vice President and Controller) Date: March 27, 1996 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. JAMES R. PETERSON - ---------------------------------------- --------------------------------------- (Hall Adams, Jr., Director) (James R. Peterson, Director) CLIFFORD L. ALEXANDER, JR. M. BERNARD PUCKETT - ---------------------------------------- --------------------------------------- (Clifford L. Alexander, Jr., Director) (M. Bernard Puckett, Director) MARY JOHNSTON EVANS MICHAEL R. QUINLAN - ---------------------------------------- --------------------------------------- (Mary Johnston Evans, 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) JOHN R. MEYER - ---------------------------------------- (John R. Meyer, Director) Date: March 27, 1996 18 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, 1995, 1994 and 1993, appearing on Pages 15 to 35 of the accompanying 1995 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 1995 Annual Report ----------------- ---------------- ----------------- ---------------- Report of Independent Public F-27 15 Accountants Statement of Management Responsibility for Financial F-28 15 Statements As of December 31, 1995 and 1994: Consolidated Statement of Financial F-30 17 Position For the years ended December 31, 1995, 1994 and 1993: Consolidated Statement of F-29 16 Income Consolidated Statement of Cash F-31 18 Flows Consolidated Statement of Shareholders' F-32 19 Equity Notes to Consolidated Financial F-33 to F-56 20 to 33 Statements Quarterly Financial Data (Unaudited) for the years ended December 31, 1995 and F-55 33 1994 Management's Discussion and Analysis of Financial Condition and Results of Operations F-6 to F-26 9 to 14 Other financial information: Business Segments, F-1 to F-5 4 to 8 1995 Ten-year selected financial F-57 34 to 35 data SCHEDULE: Report of Independent Public 20 15 Accountants The Dun & Bradstreet Corporation and Subsidiaries: II-Valuation and Qualifying Accounts for the years ended December 31, 1995, 1994 and 1993 21 - 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. 19 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders 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, 1995 and 1994, and for the years ended December 31, 1995, 1994 and 1993, has been incorporated by reference in this Form 10-K from page 15 of the 1995 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 19 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 23, 1996 20 SCHEDULE II THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS for the years ended December 31, 1995, 1994, 1993 (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, 1995 $ 76.8 $ 43.5 $ 45.9 $ 74.4 ====== ======= ======= ====== ====== ======= ======= ====== 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 ====== ======= ======= ====== ====== ======= ======= ====== NOTE: (a) Represents primarily the charge-off of uncollectible accounts for which a reserve was provided.
21
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 (v) and (w), 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 (incorporated herein by reference to Exhibit E to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994, file number 1-7155, filed March 27, 1995). (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 amended December 21, 1994 (incorporated herein by reference to Exhibit F to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994, file number 1-7155, filed March 27, 1995). (d) Profit Participation Benefit Equalization Plan, as amended and restated effective January 1, 1995 Exhibit E^ (e) 1982 Key Employees Stock Option Plan for Registrant and Subsidiaries, as amended April 18, 1995 Exhibit F^ (f) 1991 Key Employees Stock Option Plan for Registrant and Subsidiaries, as amended April 18, 1995 (incorporated herein by reference to Exhibit C to Registrant's Proxy Statement dated March 10, 1995, file number 1-7155). (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). 22
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) Key Employees Performance Unit Plan for Registrant and Subsidiaries, as amended April 18, 1995 (incorporated by reference to Exhibit B to Registrant's Proxy Statement dated March 10, 1995, file number 1-7155). (o) Corporate Management Incentive Plan, as amended April 18, 1995 (incorporated herein by reference to Exhibit A to Registrant's Proxy Statement dated March 10, 1995, file number 1-7155). (p) 1989 Key Employees Restricted Stock Plan for Registrant and Subsidiaries, as amended April 18, 1995 (incorporated herein by reference to Exhibit D to Registrant's Proxy Statement dated March 10, 1995, file number 1-7155). (q) 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). (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 (incorporated herein by reference to Exhibit G to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994, file number 1-7155, filed March 27, 1995). (t) Restricted Stock Plan for Non-Employee Directors, adopted July 20, 1994 (incorporated by reference to Exhibit E to Registrant's Proxy Statement dated March 10, 1995, file number 1-7155). (u) Executive Transition Plan, adopted May 17,1995 Exhibit G^ (v) 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). (w) 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). (x) Consulting Agreement, dated March 6, 1995, between Registrant and Charles W. Moritz (incorporated herein by reference to Exhibit H to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994, file number 1-7155, filed March 27, 1995). (y) Memorandum of Agreement, dated April 13, 1995, between Registrant and Serge Okun (incorporated by reference to Exhibit 10 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, file number 1-7155, filed August 10, 1995). (z) Agreement and Release, dated July 20, 1995, between Registrant and Edwin A. Bescherer, Jr. (incorporated by reference to Exhibit 10 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, file number 1-7155, filed November 10, 1995).
23
Regulation S-K Exhibit to Exhibit Number this Report (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. 1995 Annual Report Exhibit D^ (18) Letter Re Change in Accounting Principles. Not applicable. (19) Report Furnished to Security Holders. Not applicable (21) Subsidiaries of the Registrant. List of Active Subsidiaries as of January 31, 1996 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 Public Accountants Exhibit C^ (24) Power of Attorney. Not applicable. (27) Financial Data Schedules Exhibit H^ (28) Information from Reports Furnished to State Insurance Regulatory Authorities. Not applicable. (99) Additional Exhibits. Not applicable. ^Filed electronically.
24 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 1995 1994 1993 (Average share data in thousands)
Weighted average number of shares 169,522 169,946 177,181 Dilutive effect of shares issuable as of year-end under stock option plans, stock appreciation rights and restricted stock plan 2,061 1,668 1,789 Adjustment of shares applicable to stock options and stock appreciation rights exercised during the year 25 50 88 ------------------------------------------------- Weighted average number of shares on a fully diluted basis 171,608 171,664 179,058 ------------------------------------------------- Income Before Cumulative Effect of Changes in Accounting Principles. . . . $320.8 $629.5 $ 428.7 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 $320.8 $629.5 $ 38.1 ------------------------------------------------ Earnings per share of common stock on a fully diluted basis: Before Cumulative Effect of Changes in Accounting Principles $1.87 $3.67 $ 2.39 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 $1.87(a) $3.67 (a) $ .22 (a) ========= ====== =========== ===== ============= Note: (a) Also reflects Earnings Per Share on a primary basis. A-1
EX-21 3 EXHIBIT B THE DUN & BRADSTREET CORPORATION LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1996
State or Other % Ownership Name Jurisdiction of 100% Except Incorporation as Noted - ----------------------------------------------------------------------------------------------------------------------------------- A. C. NIELSEN COMPANY Delaware A. C. Nielsen (Argentina) S.A. Delaware Control Publicitario S.A. Argentina IPSA S.A. Argentina 80.25 IPSA Nielsen Argentina S.A. Argentina Dun & Bradstreet Information Services Ges.mbH Austria CMIS Coordinierte Management Informations Systeme Ges.mbH Austria ANR Piackutato Kft. Hungary A. C. Nielsen Company (Belgium) S.A. Belgium The Dun & Bradstreet Corporation & Co. SNC Belgium Palmetto Assurance Ltd. Bermuda Dun & Bradstreet Canada Holding, Ltd. Canada The D&B Companies of Canada Ltd. Canada Dun & Bradstreet Finance Inc. Canada Nielsen Korea Limited Korea Dun & Bradstreet Software Services Canada L.P. Delaware A. C. Nielsen Chile Limitada Chile A. C. Nielsen Chile S.A. Chile 51.0 A. C. Nielsen de Colombia S.A. Colombia 94.0 Nielsen del Ecuador S.A. Ecuador ANR Amer Nielsen Research Limited Cyprus 51.0 Teollisuuden Tielopalvelu Industrial Intelligence Ltd. Oy Finland A. C. Nielsen Finland Oy Finland Finnpanel Oy Finland 50.0 A. C. Nielsen S.A. France D&B Finance France France Dun & Bradstreet-France, S.A. France S&W S.A. France S&W S.A. Belgium Dun & Bradstreet Shared Services SARL France Dun & Bradstreet Software Services (France) S.A. France ERIM S.A. France Moody's France S.A. France Panel de Gestion S.A.R.L. France Amer-Nielsen Research Hellas S.A. Greece 80.0 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 Telepanel S.A. Italy 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 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 Hunter AGB Ltd. New Zealand Media Research Services Ltd. New Zealand 75.0 OTR Research Limited New Zealand Spectrum Research Ltd. New Zealand Market Research (NZ) Ltd. New Zealand Nielsen Norge as Norway 98.9 A/S Norsk Reklame-Statistikk Norway 83.7 A. C. Nielsen de Panama S.A. Panama A. C. Nielsen Peru S.A. Peru Nedro-Nielsen Estudios de Mercado, Lda. Portugal A. C. Nielsen P.R. Inc. Puerto Rico Dun & Bradstreet Norden AB Sweden A. C. Nielsen Company A.B. Sweden Dun & Bradstreet Soliditet AB Sweden Dun & Bradstreet Finland OY Finland A. C. Nielsen Singapore Pte. Ltd. Singapore 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 Panel Internacional S.A. Spain A. C. Nielsen Management Services S.A. Switzerland A. C. Nielsen S.A. Switzerland IHA Institut for Marktanalysen Switzerland 50.0 ACN/PIB Partners Connecticut 50.01 Addex, Inc. Delaware Nieuw Willemstad Holdings, Inc. Delaware NCH Promotional Services, Inc. Delaware Nielsen Holdings, Inc. Delaware Nielsen Leasing Corporation Delaware Panel Internationel S.A. Delaware AMERICAN CREDIT INDEMNITY COMPANY New York 95.0 D&B CORPORATION JAPAN K.K. Japan D&B ENTERPRISES, INC. Delaware Information Associates, L.P. Delaware 50.0 B-2 D&B (R.I.C.) LTD. Delaware Dun & Bradstreet India Private Limited India Dun & Bradstreet Marketing Research Private Limited India 70.0 Dun & Bradstreet-Satyam Software Private Limited India 76.0 Dun & Bradstreet East-Vent Ltd. Delaware 80.0 Dun & Bradstreet C.I.S. Russia D&B TRANSPORTATION SERVICES COMPANY, INC. Delaware DBHC, INC. Delaware Dun & Bradstreet HealthCare Information Inc. Illinois DUN & BRADSTREET COMPUTER LEASING, INC. Delaware Fillupar Leasing Partnership Delaware 98.0 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 D&B Investors L.P. Delaware 99.0 Dun & Bradstreet Life Insurance Company Arizona Dun & Bradstreet Program Management Services, Inc. Delaware Dun & Bradstreet RMS Franchise Corporation Delaware 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 S.A. Argentina Arrebnac Pty. Ltd. Australia Dun & Bradstreet Pension Plan Pty. Ltd. Australia A. C. Nielsen (Holdings) 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 Australia Associates Pty. Limited Marketing Insights Pty. Ltd. Australia B-3 DUN & BRADSTREET INTERNATIONAL, LTD. (Continued) Arrebnac Pty. Ltd. (Continued) Dun & Bradstreet Pension Plan Pty. Ltd. (Continued) 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 Pty Limited Australia Moody's Investors Service Pty. Limited Australia Nandette Pty. Limited Australia Australian Independent Media Data Pty. Limited Australia 50.0 IMS Australia Pty. Ltd. Australia Amfac Pty. Limited Australia Chemdata Pty. Limited Australia Data Design Hisoft Pty. Limited Australia Medrecord Australia Pty. Limited Australia Permail Pty. Limited Australia N.V. Dun & Bradstreet-Eurinform S.A. Belgium Dun & Bradstreet do Brasil Ltda. Brazil Companhia Brasileira de Pesquisa e Analise Brazil 50.0 Dun & Bradstreet Ltda. Chile Dun & Bradstreet International Consultant (Shanghai) Co. Ltd. China 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 Dataquest Europe Limited England Dun & Bradstreet Finance Ltd. England Dun & Bradstreet Software Services Limited England Dun & Bradstreet Software Services (England ) Ltd England Dun & Bradstreet Software Services Medium Systems Limited England Advance-Peterholm Group Ltd. England D & B Telephone Company Ltd. England D&B PCNet Ltd. England D&B Europe Limited England Dun & Bradstreet Limited England Dun & Bradstreet Limited Ireland Dun & Bradstreet (U.K.) Ltd. England Dun & Bradstreet (U.K.) Pension Plan Trustee Company Ltd. England DunsGate Limited England IMS Holdings (U.K.) Limited England Intercontinental Medical Statistics Ltd. England Imsworld Publications Ltd. England IMS Nominees Limited England IMS Sold Out Limited England Medical Direct Mail Organisation Ltd. England PMS International Limited England B-4 DUN & BRADSTREET INTERNATIONAL, LTD. (Continued) D & B Group, Ltd (Continued) IMS Holdings (U.K.) Limited (Continued) Pharma Strategy Group Limited England Moody's Investors Service Limited England ST Europe Ltd. England Dun & Bradstreet Credit Control, Ltd. Delaware Dun & Bradstreet (HK) Limited Hong Kong Dun & Bradstreet Portfolios-Holland, Inc. Delaware Dun & Bradstreet Finance B.V. The Netherlands 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 Consorzio Manifatturieri S.r.l. Italy Orefro Data S.r.l. Italy Orefro L'Informazione S.p.A. Italy Ore. Tel S.r.l. Italy D&B Information Services Japan K.K. Japan D&B Information Services (M) Sdn. Bhd. Malaysia Dun & Bradstreet S.A. de C.V. Mexico Dun & Bradstreet Nederland Holding B.V. The Netherlands South African L.P. (No official name) South Africa 50.0 Nielsen Marketing Research spol, s.r.o. Czech Republic Dun & Bradstreet Danmark Holding A/S Denmark AIM Nielsen A/S Denmark AIM Farmstat ApS Denmark 66.67 D & B International A/S Denmark Informations Medicales Et Statistiques SA France Perfect Data International N.V. The Netherlands Antilles Perfect Data Services Nederland B.V. The Netherlands A. C. Nielsen (Nederland) B.V. The Netherlands Centrum voor Marketing Analyses B.V. The Netherlands 70.0 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 Dun & Bradstreet Holding Norway AS Norway Dun & Bradstreet Norge AS Norway ANR Amer Nielsen Research Sp. z.o.o. Poland B-5 DUN & BRADSTREET INTERNATIONAL, LTD. (Continued) Dun & Bradstreet (New Zealand) Limited New Zealand Dun & Bradstreet S.A. Peru Dun & Bradstreet Portugal, Lda. Portugal Dun & Bradstreet (Singapore) Pte. Ltd. Singapore Ifico-Buergel A.G. Switzerland Dun & Bradstreet S.A. Uruguay Dun & Bradstreet C.A. Venezuela Dun & Bradstreet Zimbabwe (Private) Limited Zimbabwe DUN & BRADSTREET INVESTMENTS CANADA INC. Canada DUN & BRADSTREET LEASING INC. Canada DUN & BRADSTREET SOFTWARE HOLDINGS, INC. Delaware DBC Holding Corp. Delaware Dun & Bradstreet Software Services, Inc. Georgia Dun & Bradstreet Software Services Australia Holdings Pty. Ltd. Australia DBS-Dun & Bradstreet Software Services do Brasil Ltda. Brazil Dun & Bradstreet Software Services (Canada) No. 2 Limited Canada Dun & Bradstreet Software Services Hong Kong Limited Hong Kong D&B Technology Asia K.K. Japan D&BS Services (M) Sdn. Bhd. Malaysia 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-DONNELLEY PUBLISHING CORPORATION Delaware DUNS INVESTING CORPORATION Delaware GARTNER GROUP, INC. Delaware 52.3 Gartner Group Pacific Pty Limited Australia 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 Nomos Ricerca S.r.l. Italy Nomos Ricerca Services Italy Nomos Ricerca Telecomunicazioni Italy Gartner Group Japan KK Japan Gartner Group Nederland BV The Netherlands Gartner Group Norge, A/S Norway Gartner Group Sverige, AB Sweden B-6 GARTNER GROUP, INC. (Continued) Decision Drivers, Inc. Delaware 85.0 Gartner Group Asia, Inc. Delaware Gartner Group Credit Corporation Delaware Gartner Group Europe, Inc. Delaware Gartner Group Investment Corporation Delaware RCI, LP Massachusetts 58.0 Gartner Group Sales, Inc. Delaware GG Hong Kong, Inc. Delaware GG Investment Management, Inc. Delaware Gartner Enterprises, Ltd. Delaware G.G. West Corporation Delaware New Science Associates Inc. Delaware New Science Associates, Ltd. England RCI Management Corporation Delaware Real Decisions, Inc. Connecticut Dataquest Incorporated California Dataquest Europe S.A. France DATAQUEST Japan Limited Japan Dataquest Asia Pacific Limited Hong Kong DQ Research Pte. Ltd Singapore Dataquest Taiwan Limited Taiwan Dataquest Research (Thailand) Limited Thailand Gartner Group FSC, Inc. Virgin Islands I.M.S. INTERNATIONAL, INC. Delaware Dun & Bradstreet Marketing Pty. Ltd. Australia Dun & Bradstreet (Australia) Holdings Pty. Australia Dun & Bradstreet (Australia) Group Pty. Ltd. Australia IMS of Canada, Ltd. Canada IMS Pacific Limited Hong Kong IMS HK Investments Ltd. Hong Kong IMS (NZ) Limited New Zealand IMS Investments (NZ) Limited New Zealand I.M.S. Portugal-Consultores Internacionais de Marketung Farmaceutico, Lda. Portugal IMS International (South Africa) (Pty.) Ltd. South Africa IMS Pharminform Holding AG Switzerland Pharmadat Marktforschungs-Gesellschaft m.b.H. Austria Pharmacall Statistik Ges. m.b.H. Austria Informations Medicales Et Statistiques S.A. Belgium IMS Servicos Ltda. Brazil Intercomunicaciones Y Servicio de Datos S.A. [k/a Interdata S.A.] Colombia IMS Medinform A.S. Czech Republic Interdata Dominicana, S.A. Dominican Republic Datandina Ecuador S.A. Ecuador B-7 I.M.S. INTERNATIONAL, INC. (Continued) IMS Pharminform Holding AG (Continued) IMS Egypt Limited Egypt Institute for Medical Statistics Oy Finland Asserta Centroamerica Medicion de Mercados, S.A. Guatemala SRG Holdings Limited Hong Kong SRG Management Services Limited Hong Kong Research Consulting Services Ltd. Hong Kong SRG China Ltd. Hong Kong Shanghai SRG Ltd. China 80.0 SRG International (HK) Ltd. Hong Kong SRG Research Services (HK) Ltd. Hong Kong Survey Research HongKong Ltd. Hong Kong Survey Research Asia Pacific Ltd. Hong Kong Survey Research Taiwan Ltd. Taiwan Survey Research Group Ltd. Hong Kong SRG Guangzhou Ltd. China 92.0 Survey Research Group Pte. Ltd. Singapore SRG Research Canada Ltd. Canada D.J. Calhoun Marketing & Canada 86.0 Development Ltd. Recherches en Marketing (Quebec) Inc. Canada ASI Market Research Inc. Japan Hankook Research Company Korea 50.0 Survey Research Malaysia Sdn Bhd Malaysia Target Marketing Promotions Sdn Bhd Malaysia Consumer Pulse Inc. Philippines Dealer Pulse Inc. Philippines Media Pulse Inc. Philippines Philippine Monitoring Services Inc. Philippines Research Philippines Unisearch Inc. Philippines Survey Research Singapore Pte. Ltd. Singapore Deemar Company Ltd. Thailand SRG International Ltd. New York IMS Medinform Hungaria Market Research Services Ltd. Hungary Interdata S.A. de C.V. Mexico Informations Medicales & Statistiques S.A.R.L. Morocco I.M.S. (Nederland) B.V. The Netherlands IMS Denmark ApS Denmark I.M.S. Finance Nederland B.V. The Netherlands Institute for Medical Statistics Norge A/S Norway Pharma Data Paraguaya S.R.L. Paraguay Datandina S.A. Peru IMS Philippines, Inc. Philippines Intercontinental Marketing Services Iberica, S.A. Spain Mercados Y Analisis, S.A. [k/a M.A.S.A.] Spain IMS Sweden AB Sweden B-8 I.M.S. INTERNATIONAL, INC. (Continued) IMS Pharminform Holding AG (Continued) D&B Novinform AG Switzerland ICM Institut fur Credit Management AG Switzerland Data Coordination AG Switzerland PMA Sociedad Anonima Argentina IMS AG Switzerland IMS Information Medical Statistics AG Switzerland IMS Poland Limited Sp. z.o.o. Poland 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 Brazil e Mala Direta Ltda. IMS Tunisia Tunisia IMS Tibbi Istatistik Ticaret ve Musavirlik Ltd Sirketi Turkey Pharma Data Uruguaya S.A. Uruguay PMV De Venezuela, C.A. Venezuela I.M.S. Financial, Inc. Delaware Dun & Bradstreet Germany Holding GmbH Germany ACN Marketing Research Holding GmbH Germany A. C. Nielsen GmbH Germany A. C. Nielsen Werbeforschung S&P GmbH Germany "P&S" Handelsberatung GmbH Germany Dun & Bradstreet Schimmelpfeng GmbH Germany D&B Unterstutzungskasse GmbH Germany Dun & Bradsteet Information Solutions GmbH Germany IMS Holding Deutschland GmbH Germany IFNS Marktforschung GmbH Germany IMS GmbH Institut fur Medizinische Statistik Germany IMS Data GmbH Germany I.M.S. Hellas Ltd. Greece GPI Krankenhausforschung Gesellschaft Germany 60.0 Fur Pharminformations Systems mbH MedVantage GmbH Integriertes Germany 60.0 Datenmanagement im Health Care-Markt Midoc Medizinische Informations-und Dokumentations- Germany Gesellschaft m.b.H. Data Coordination (Israel) Ltd. Israel IMS Japan Ltd. KK Japan Japan T.K. Japan Nippon Computer Services, Inc. Japan IMS Asia (1989) Pte. Ltd. Singapore Clark-O'Neill, Inc. New Jersey IMS America, Ltd. New Jersey Coordinated Management Systems, Inc. Delaware Emron, Inc. New Jersey B-9 I.M.S. INTERNATIONAL, LTD. (Continued) IMS Software Services, Ltd. Delaware Intercontinental Medical Statistics International, Ltd. Delaware Intercontinental Medical Statistics International, Ltd. New York PJH Technology Solutions, Ltd. Delaware Decision Surveys International (Pty.) Ltd. South Africa IMSA (Pty.) Ltd. South Africa IPRA (Pty.) Ltd. South Africa PMSA (Pty.) Ltd. South Africa 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 Singapore Pte Ltd. Singapore Moody's Investors Service Espana, S.A. Spain Financial Proformas, Inc. Delaware Moody's Emerging Markets Service, Inc. Delaware Moody's Overseas Holdings, Inc. Delaware Moody's Interbank Credit Service Limited Cyprus OAK INVESTMENTS LTD. Bermuda PILOT SOFTWARE, INC. Delaware PES (Amsterdam) Holding en Finance B.V. The Netherlands Pilot Software Pty. Ltd. Australia Pilot Software Ltd. England Thorn EMI Computer Software Ltd. England Pilot Software S.A.R.L. France Pilot Software GmbH Germany Pilot Software S.R.L. Italy Pilot Software B.V. The Netherlands Pilot Software Pte. Ltd. Singapore Pilot Software AB Sweden SALES TECHNOLOGIES, INC. Georgia THE REUBEN H. DONNELLEY CORPORATION Delaware RHD Systems, Inc. Delaware Am-Don Partnership [d/b/a DonTech] Illinois 50.0 The CenDon Partnership Illinois 50.0 C-Don Partnership Pennsylvania 50.0 Uni-Don Partnership Florida
B-10 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, 33-56289 and 33-64317) of our reports dated January 23, 1996, on our audits of the consolidated financial statements and financial statement schedule of The Dun & Bradstreet Corporation as of December 31, 1995 and 1994 and for the years ended December 31, 1995, 1994 and 1993, which reports are incorporated by reference or included in this Form 10-K. COOPERS & LYBRAND L.L.P. Stamford, Connecticut March 27, 1996 C-1 EX-13 5 Dun & Bradstreet Business Segments Marketing Information Services Dollar amounts in millions 1995 1994 % change Operating Revenue $ 2,388.1 $ 2,042.9 +16.9 Operating Income Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* $ 337.2 $ 277.1 +21.7 Operating Income $ 125.6 $ 285.3 -56.0 Operating Margin % Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* +14.1 +13.6 +3.7 Operating Margin % +5.3 +14.0 -62.1 * Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions. Segment Performance Reported revenue for the segment rose 16.9 percent to $2.39 billion from $2.04 billion in 1994. Excluding the impact of a weaker U.S. dollar, acquisitions and timing factors, revenue growth for the segment was 9 percent. Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions, operating income increased by 21.7 percent to $337.2 million from $277.1 million in 1994, primarily reflecting strong performance at IMS. Reported operating income declined 56.0 percent to $125.6 million from $285.3 million, reflecting the impact of gains and charges. Business Descriptions A.C. Nielsen markets retail measurement services; modeling and analytical services; consumer panel services; marketing and sales application software; information delivery services; merchandising services; customized research; and retailer services. With operations in 88 countries, A.C. Nielsen is by far the leading global provider of business information, analysis and insights to the worldwide consumer products and services industry. A.C. Nielsen's revenue was $1.29 billion, up 17 percent on a reported basis and up 6 percent on an underlying basis. IMS International is the world's leading provider of marketing, sales-management and medical information and decision-support services for the pharmaceutical and healthcare industries. IMS's revenue was $819 million, up 18 percent on a reported basis and 11 percent on an underlying basis. F-1 Nielsen Media Research is the leading U.S. provider of audience measurement services for broadcast and cable television and online electronic media. Its national and local television information services are used by networks and affiliates, independent stations, syndicators, cable networks and systems, advertisers and advertising agencies. Nielsen Media achieved strong underlying revenue growth. Risk-Management and Business Marketing Information Services Dollar amounts in millions 1995 1994 % change Operating Revenue $ 1,734.1 $ 1,605.7 +8.0 Operating Income Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* $ 405.1 $ 445.2 -9.0 Operating Income $ 449.5 $ 447.0 +.6 Operating Margin % Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* +23.4 +27.7 -15.5 Operating Margin % +25.9 +27.8 -6.8 * Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions. Segment Performance Reported revenue for the segment rose 8.0 percent to $1.73 billion from $1.61 billion in 1994. Excluding the impact of the weaker dollar, acquisitions and divestitures, segment revenue increased by 6 percent. Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions, operating income decreased by 9.0 percent to $405.1 million from $445.2 million a year ago, due in part to major insolvencies that resulted in increased incurred losses of about $28 million at American Credit Indemnity, the credit insurance business slated for divestiture in 1996. Profits also were dampened by weakness in DBIS's international operations, including the impact of integrating certain acquisitions and the effects of economic conditions in Latin America. Reported operating income increased 0.6 percent to $449.5 million from $447.0 million, reflecting in part the gain on the sale of Interactive Data Corporation. Business Descriptions Dun & Bradstreet Information Services (DBIS) is the world's leading provider of business information and decision- support services that help customers in marketing, commercial credit and collections reduce risk, improve cash flow, increase sales and revenues and speed payments. DBIS gathers and manages information on more than 40 million businesses worldwide and markets its products in more than 120 countries. Revenue was $1.39 billion, up 11 percent on a reported basis and 6 percent on an underlying basis. Revenue at DBIS-U.S. increased 6 percent to $766 million. DBIS-Europe reported 20 percent growth in revenue for the year, with underlying revenue up modestly due to weakness in several countries. Moody's Investors Service is a leading global provider of financial analysis, opinion, research and information. Moody's rates debt securities issued by corporate and government entities, and publishes financial information in print and electronic formats. Moody's reported a moderate increase in 1995 revenue. While the first half of the year reflected weakness in corporate-bond volumes and public-debt refundings, Moody's performance improved sharply in the second half due to increased volume in the corporate bond market. F-2 Software Services Dollar amounts in millions 1995 1994 % change Operating Revenue $ 457.4 $ 405.9 +12.7 Operating Income Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* $ 30.3 $ -0.8 - Operating Loss $ -10.3 $ -3.6 -186.1 Operating Margin % Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* +6.6 -.2 - Operating Margin % -2.3 -.9 -155.6 * Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions. Segment Performance Reported revenue rose 12.7 percent to $457.4 million from $405.9 million in 1994. Excluding the impact of the dollar and the acquisition of Pilot Software, underlying revenue growth was 5 percent. Excluding the impact of charges related to restructuring and other non-recurring actions, operating income was $30.3 million, compared with a slight loss in 1994. The reported operating loss increased to $10.3 million from $3.6 million in 1994 reflecting restructuring actions and the impact of the non-recurring charge. Business Descriptions Dun & Bradstreet Software is a leading enterprise software provider. It markets integrated financial, human resources, procurement, manufacturing, distribution and decision-support application suites, as well as maintenance and support services for client/server and mainframe customers. Its SmartStream for the Distributed Enterprise (DE) is the first suite of integrated client/server software to distribute information, workflow and business processes across an enterprise. The company has almost 4,000 customers in 50 countries. D&B Software posted gains in revenues and customer retention, reflecting strong sales of client/server software. Client/server revenue increased by 150 percent, exceeding $100 million for the year. Erisco provides software and services for managed healthcare administration. Revenue was up in 1995. Pilot Software markets open, online analytical processing (OLAP) software, including visual desktop analysis tools, scalable multi-dimensional servers, data-mining servers and related products. Pilot's underlying revenue rose solidly in 1995, led by 46 percent growth in its client/server product line. F-3 Directory Information Services Dollar amounts in millions 1995 1994 % change Operating Revenue $ 423.7 $ 440.1 -3.7 Operating Income Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* $ 204.0 $ 214.2 -4.7 Operating Income $ 186.3 $ 248.0 -24.8 Operating Margin % Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* +48.1 +48.7 -1.2 Operating Margin % +44.0 +56.4 -22.0 * Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions. Segment Performance Reported revenue decreased 3.7 percent to $423.7 million from $440.1 million in 1994 as a result of previously disclosed contractual changes. Underlying sales grew 3.5 percent, with Donnelley's telephone company operations delivering the strongest gains. Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions, operating income decreased 4.7 percent to $204.0 million. Reported oper-ating income declined 24.9 percent to $186.3 million from $248.0 million, reflecting the impact of the non-recurring charge. Business Description Reuben H. Donnelley is a leading provider of marketing, sales and publishing services for yellow pages advertising directories. Donnelley serves as sales and marketing representative for directories published by NYNEX, and publishes and sells directory advertising 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, serves Chicago and other markets in Illinois and northwestern Indiana. F-4 Other Business Services Dollar amounts in millions 1995 1994 % change Operating Revenue $ 411.8 $ 401.1 +2.7 Operating Income Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* $ 63.8 $ 52.3 +22.0 Operating Income $ 61.2 $ 110.0 -44.4 Operating Margin % Before Restructuring Income/Expense - Net And Other Non-Recurring Charges* +15.5 +13.0 +19.2 Operating Margin % +14.9 +27.4 -45.6 * Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions. Segment Performance Reported revenue rose 2.7 percent to $411.8 million from $401.1 million in 1994. Underlying segment revenue increased by 25 percent. Excluding the impact of gains related to divestitures and charges related to restructuring and other non-recurring actions, operating income increased by 22.0 percent to $63.8 million. Reported operating income declined 44.4 percent to $61.2 million from $110.0 million in 1994, reflecting primarily the impact of the 1994 gain on the sale of the assets of DunsNet. Business Descriptions Gartner Group is a leading provider of research, analysis and advisory services for information technology users, vendors and suppliers, 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 (GART). Late in 1995, Gartner acquired Dataquest, formerly a unit of The Dun & Bradstreet Corporation. Gartner Group reported excellent growth in revenue. NCH Promotional Services provides cents-off coupon redemption, processing and financial management services to retailers, and promotion analysis and information management services to manufacturers. NCH reported a slight decrease in revenue reflecting a decline in worldwide coupon redemptions and competitive pricing in the industry. F-5 FINANCIAL REVIEW On January 9, 1996, the Company announced a plan to reorganize into three public independent companies by spinning off two of its businesses to shareholders. The three companies will be: Cognizant Corporation, consisting of IMS International, Gartner Group, Nielsen Media Research, Pilot Software and ERISCO; The Dun and Bradstreet Corporation, consisting of Dun & Bradstreet Information Services, Moody's Investors Service and Reuben H. Donnelley; and A.C. Nielsen. The companies will be focused on high-growth information markets; financial-information services; and marketing information to the worldwide consumer-products and services industry. In connection with the new strategy, Dun & Bradstreet Software and American Credit Indemnity (ACI) were slated for divestiture. (See Notes 2 and 19 to the Consolidated Financial Statements.) The Company's earnings per share in 1995 was $3.80, up 2.7% from $3.70 a year ago, excluding a non-recurring after-tax charge of $324.2 million (or $1.91 per share) in the fourth quarter of 1995 for costs principally associated with the Company's plan to reorganize. Including the non-recurring pre-tax charge of $448.4 million, the Company's 1995 earnings per share was $1.89. Net income in 1995 increased by 2.5% to $645.0 million from $629.5 million in 1994, excluding the charge cited above. Including the charge, the Company reported 1995 net income of $320.8 million. Revenue increased 10.6% in 1995 to $5,415.1 million from $4,895.7 million in 1994, driven by strong revenue performances at IMS International (IMS), Nielsen Media Research (Nielsen Media), Gartner Group Inc. (Gartner Group), A.C. Nielsen and Dun & Bradstreet Information Services (DBIS). Excluding the effects F-6 of acquisitions and divestitures, timing factors affecting the Marketing Information Services segment described below, and a weaker U.S. dollar, revenue grew 7.5%. Operating income in 1995 increased by 4.8% to $970.2 million from $925.5 million in 1994, excluding the non-recurring charge of $448.4 million. Included in operating income in 1995 was a $28 million gain related to the sale of warrants received in connection with the divestiture of Donnelley Marketing and gains totaling $105.1 million relating to the sale of Interactive Data and other divestitures. The Company also recorded a $12.8 million restructuring provision primarily to write off software for product lines that were discontinued at Sales Technologies, and a provision of $77.2 million for postemployment benefits expense. In the fourth quarter, the Company also recognized a $24 million one-time decline in employee medical costs. Operating costs and selling and administrative expenses, excluding the effect of acquisitions and divestitures, the non-recurring charge, restructuring expense-net and the effect of the weaker dollar increased 7.4% in 1995 compared with 1994, reflecting the Company's aggressive investments in new revenue growth initiatives, the costs of integrating certain acquisitions made in 1994, the impact of inflation in Latin America and an increase in incurred losses at American Credit Indemnity (ACI) due to several major insolvencies. Excluding the fourth quarter 1995 charge related principally to the reorganization, operating margin was 17.9% for 1995 compared with 18.9% for 1994. The Company reported 1995 non-operating expense-net of $78.1 million compared with non-operating expense-net of $46.3 million in 1994. The increase in non-operating expense-net in 1995 was due, in part, to higher U.S. interest expense from higher average borrowings and higher rates and higher minority F-7 interest expense related to Gartner Group and a limited partnership (see Note 11 to the Consolidated Financial Statements). Other expense-net included benefits from tax sharing agreements with an Alaska Native Corporation of $6.0 million and $9.8 million in 1995 and 1994, respectively. The Company's effective tax rates were 27.7%, 28.4% and 29.5% in 1995, 1994 and 1993, respectively, excluding the effect of a net restructuring charge in 1993. The declines in the effective rates in 1994 and 1995 were a result of the continuing favorable effects of global tax-planning actions. Return on average shareholders' equity was 48.6%, 55.6% and 34.6% in 1995, 1994 and 1993, respectively, excluding in 1995 the non-recurring fourth quarter charge and 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. Marketing Information Services reported a 16.9% increase in 1995 revenue to $2,388.1 million from $2,042.9 million in 1994. Excluding the impact of a weaker U.S. dollar, acquisitions and the positive effect on 1994's revenues of contract changes with pharmaceutical customers by IMS, and new contracts for secondary market coverage by Nielsen Media due to Arbitron's decision to exit the television audience measurement business, revenue growth for the segment was 9%. IMS reported 1995 revenue of $819 million, up 18% on a reported basis, and 11% excluding the impact of a weaker U.S. dollar, acquisitions and contract changes discussed above. A.C. Nielsen reported 1995 revenue of $1,286 million, up 17% on a reported basis, and up 6% excluding the impact of a weaker U.S. dollar and acquisitions. Nielsen Media posted strong revenue growth for the year, excluding the impact of timing factors described above. Operating income for the segment F-8 decreased by 56% to $125.6 million from $285.3 million in 1994. Excluding the impact of restructuring income in 1995 and 1994, the postemployment benefit provision in the third quarter and the non-recurring charge in the fourth quarter of 1995, segment operating income increased 22%. Risk Management and Business Marketing Information Services reported 1995 revenue growth of 8.0% to $1,734.1 million from $1,605.7 million in 1994. Excluding the impact of the weaker U.S. dollar, acquisitions and divestitures, segment revenue increased by 6%. Moody's reported a moderate increase in 1995 revenue, principally due to weakness in corporate-bond volumes and public-debt refundings in the first half of the year. DBIS' 1995 revenue was up 10.7% to $1,390 million on a reported basis, and rose 6% excluding the impact of a weaker U.S. dollar and acquisitions. Revenue at DBIS U.S. increased 6% to $766 million. While DBIS Europe reported 20% growth in revenue for the year, excluding the impact of a weaker U.S. dollar and acquisitions, revenue was up modestly due to weakness in several countries. Operating income for the segment was essentially unchanged at $449.5 million, compared with $447.0 million in 1994. Excluding the impact of the gain from the sale of Interactive Data, restructuring income in 1994, the postemployment benefit provision in the third quarter and the non-recurring charge in the fourth quarter, segment operating income decreased by 9%, due, in part, to major insolvencies that resulted in increased incurred losses of about $28 million at ACI, planned for divestiture in 1996. Segment profits in 1995 also were dampened by weakness in DBIS' international operations, including the impact of integrating certain acquisitions and the effects of weak economic conditions in Latin America. F-9 Software Services reported a 12.7% increase in 1995 revenue to $457.4 million from $405.9 million a year ago. Excluding the impact of the weaker U.S. dollar and the acquisition of Pilot Software, underlying revenue growth was 5%. D&B Software posted a gain in revenue for the year, reflecting strong sales of client/server software. Client/server revenue increased by 150% in 1995, exceeding $100 million for the year. The segment's operating loss increased to $10.3 million from a loss of $3.6 million in 1994. Excluding charges related to restructuring in 1995 and 1994, postemployment benefit charges and the fourth quarter non-recurring charge, segment operating income was $30.3 million, compared with a slight loss in 1994. Directory Information Services reported a 3.7% decrease in 1995 revenue to $423.7 million from $440.1 million a year ago, as a result of changes in contractual arrangements with telephone companies. Underlying 1995 sales of Directory Information Services were up modestly. Operating income for the segment decreased by 25% to $186.3 million from $248.0 million. Excluding the impact of gains related to divestitures, charges related to restructuring in 1994 and the non-recurring charge in the fourth quarter, segment operating income decreased by 5%. Other Business Services reported 1995 revenue of $411.8 million, up 2.7% from $401.1 million in 1994. Excluding the divestiture of D&B Plan Services and the weaker U.S. dollar, segment revenue increased by 25%. Gartner Group reported excellent revenue growth in 1995. NCH Promotional Services reported a slight decrease in 1995 revenue. Operating income for the segment decreased 44.4% to $61.2 million. Excluding the impact of the divestiture of D&B Plan Services, the third-quarter 1994 gain on the sale of the assets of DunsNet, charges related to F-10 restructuring in 1994, and the non-recurring charge, segment operating income increased 22%. In 1994, the Company reported earnings per share of $3.70, up 10.1% from $3.36 in 1993, 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 7 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 Company reported 1993 net income of $38.1 million. 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 affecting the Marketing Information Services and Directory Information Services segments, discussed below, 1994 revenue rose by about 2%. For the full year, the impact of the dollar was not significant. Good revenue performance at IMS, Nielsen Media and 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 and by past competitive losses at A.C. Nielsen in the U.S. (Excluding these three businesses, D&B's full-year underlying revenue was up about 5%, and fourth-quarter underlying revenue was up about 7%.) During the second quarter of 1994, the Company took further steps to improve productivity. The Company divested two non-strategic businesses - Thomson Directories Ltd. (TDL) and the Machinery Information Division of Dataquest (MID) - and initiated other actions to restructure certain operations F-11 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 $56.3 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, which resulted in a charge of $38.8 million. The charge principally reflected the revaluation of certain computer software and other intangible assets that will be replaced or no longer be used at DBS, IMS, DBIS and A.C. Nielsen. In addition, a change in eligibility requirements for the Company's postretirement medical plan resulted in a curtailment gain of approximately $25.7 million, which was largely offset by a substantial increase in spending for new-product development. In the fourth quarter of 1994, 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 A.C. Nielsen's F-12 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. 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 affecting the Marketing Information Services and Directory Information Services segments, discussed below, and restructuring expense-net, D&B's 1994 operating income grew by about 10%. Operating costs and selling and administrative expenses, excluding the effect of acquisitions and divestitures, restructuring expense-net and the effect of the weaker 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% in 1991. 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. 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 a $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 F-13 higher interest rates paid on increased U.S. short-term borrowings, and higher minority interest expense related to two limited partnerships (see Note 11 to the Consolidated Financial Statements) 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. 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 the positive effect on 1994's revenues of contract changes with pharmaceutical customers by IMS, and new contracts for secondary market coverage by Nielsen Media due to Arbitron's decision to exit the television audience measurement business, 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 the timing factors previously described. A.C. 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 discussed above, operating income before restructuring expense-net was down 18%. Operating income before restructuring expense-net in F-14 1994 reflected increased investment spending in the segment, as well as past competitive losses and higher costs in A.C. 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 impact of 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 the impact of 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 the impact of 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 in 1993. Adjusted for the impact of 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 in 1993. DBS' 1994 revenue, adjusted for the U.S. 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, F-15 compared with operating income before restructuring expense-net of $43.7 million in 1993. Directory Information Services reported a 2.4% decrease in 1994 revenue to $440.1 million from $450.7 million in 1993, largely as a result of the effects of changes in publication dates for certain yellow pages directories. Excluding the impact of changes in publication dates 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 in 1993. Excluding the impact of changes in publication dates 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 MID and the divestiture of D&B Plan Services, segment revenue increased about 17%. Gartner Group 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 in 1993, due primarily to the third-quarter gain on the sale of the assets of DunsNet. Adjusted for Dataquest's divestiture of MID and the divestiture of D&B Plan Services, segment operating income before restructuring expense-net was up significantly, due to the DunsNet gain and the excellent performance at Gartner Group. F-16 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 and the Adverse impact of the stronger dollar, 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 U.S. dollar, and restructuring expense-net, 1993 operating income was up about 13%. Operating income decreased to $552.5 million. Operating costs and selling and administrative 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. 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 limited partnerships F-17 (see Note 11 to the Consolidated Financial Statements). 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 International. In effect, a portion of the increase in interest income-net represented an offset to the absence of operating income from divested businesses. Adoption of Statements of Financial Accounting Standards - 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 7 to the Consolidated Financial Statements.) In the fourth quarter of 1995, the Company recorded a charge of $448.4 million. This charge included an impairment loss of $218 million in connection with the adoption of the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 121 requires that long-lived assets and certain intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of an asset may not be recoverable. In general, this statement requires recognition of an impairment loss when the sum of undiscounted expected future cash flows is less than the carrying amount of such assets. The measurement for such impairment loss is then based on the fair value of the asset. The charge principally reflected the revaluation of certain fixed F-18 assets, administrative and production systems and other intangibles that will be replaced or will no longer be used at A.C. Nielsen, IMS, DBIS and Dun & Bradstreet Corporate headquarters due, principally, to the new business strategies that will result from the announced plans to spin-off certain businesses. (See Notes 2 and 19 to the Consolidated Financial Statements.) In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation," which requires that companies with stock-based compensation plans either recognize compensation expense based on new fair value accounting methods or disclose pro forma net income and earnings per share assuming the fair value method had been applied. The Company is evaluating the new statement and has not determined whether it will adopt the recognition or disclosure alternative of the statement. Therefore, the impact of adoption on the Company's financial statements has not been determined. Restructuring - In line with the Company's strategy of sharpening its focus on key markets for information services, during 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. F-19 Additional restructuring actions were initiated in the fourth quarter of 1993 totaling $256.5 million. (See Note 3 to the Consolidated Financial Statements.) These actions were designed to achieve long-term productivity improvement, reduce costs and leverage the Company's global synergies. The costs associated with this plan, and all other restructuring actions, included only specific, direct and incremental costs that could be estimated with reasonable accuracy and were clearly identifiable with the related plans. Costs included in the fourth quarter restructuring charge included $54.0 million for the consolidation of fourteen major data centers in North America and Europe into two data centers in the U.S. and two centers located in Europe, resulting principally in lease termination costs, asset writeoffs and other costs incident to the consolidation of such data centers. The Company also provided $117.2 million to initiate approximately seventy separate actions to reduce real estate costs by consolidating office facilities in each of fifteen major geographic regions in the U.S. and nine geographic regions in Europe. Costs incurred included lease termination costs and asset writeoffs. A provision of $19.1 million was taken to consolidate and reengineer the Company's back office accounting functions by consolidating thirty-five reporting entities into one accounting center for the U.S. and Canada, and twenty-five reporting entities into four primary centers in Europe, and to reengineer all accounting processes and functions. Costs incurred included project implementation costs, outside consulting costs and asset writeoffs. The restructuring charge also included $66.2 million to discontinue certain production systems at A.C. Nielsen U.S. and DBIS U.S., due to accelerating the introduction of new technologies; to F-20 discontinue certain data collection systems of A.C. Nielsen U.S.; and to discontinue products at A.C. Nielsen U.S., Sales Technologies and Erisco. Costs principally related to writeoffs of computer software and other intangible assets. At December 31, 1994 and 1995, restructuring accruals for the 1993 synergy actions totaled $134.8 million and $42.2 million, respectively. Other restructuring accruals for workforce reductions (non-severance costs) and other actions from prior years totaled $44.4 million and $30.5 million at December 31, 1994 and 1995, respectively. (See Note 3 to the Consolidated Financial Statements.) The remaining balances of the restructuring accruals of $72.7 million will be expended, primarily in cash, in 1996. The pre-tax savings from the 1993 synergy actions totaled approximately $145 million through December 31, 1995, and were expected to grow to approximately $100 million annually. The pre-tax savings from the restructuring actions taken in 1994 totaled $21 million through December 31, 1995. The impact of the planned reorganization of D&B into three independent companies on these synergy projects is being evaluated. In 1994 and 1993, 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 13 and 16 to the Consolidated Financial Statements.) F-21 Non-U.S. Operating and Monetary Assets - The Company has operations in more than 70 countries. Approximately 44% of the Company's revenues in 1995 were from non-U.S. operations, including approximately 29% from European operations. Non-U.S. operations accounted for approximately 31% of the Company's operating income in 1995, including European operations, which accounted for approximately 17%. Changes in the value of non-U.S. currencies relative to the U.S. dollar cause fluctuations in U.S. dollar operating results. In 1995, foreign currency translation increased U.S. dollar revenue and operating income growth by approximately 3%. The effect of foreign currency translation on revenue and operating income growth in 1994 was insignificant. 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 fluctuation 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 is periodically reviewed and might be used in the future. The Company does enter into foreign exchange forward contracts to hedge the effects of exchange rates on certain of the Company's non-U.S. net investments. (See Note 6 to the Consolidated Financial Statements.) Non-U.S. monetary assets are maintained in currencies other than the U.S. dollar, principally in Germany, Spain, Italy and Japan. Changes in the value of these currencies relative to the U.S. dollar are charged or credited to shareholders' equity. The effect of exchange rate changes during 1995 increased the U.S. dollar amount of cash and cash equivalents by approximately $13.1 million. F-22 Liquidity and Financial Position - At December 31, 1995, cash, cash equivalents and current and non-current marketable securities totaled $578 million (including $128 million of American Credit Indemnity's marketable securities, a portion of which is subject to insurance regulation restriction), an increase of $83 million from December 31, 1994, and short-term debt totaled $445 million, a decrease of $56 million from December 31, 1994. The combined increase in cash and decrease in short-term debt of $139 million included proceeds from the sale of businesses of $216 million (net of payments for acquisitions of $25 million) which were more than offset by expected payments for postemployment benefits and restructuring of $131 million and $101 million, respectively. Excluding the aforementioned items, the Company generated $155 million of cash, which was partially the result of lower income tax payments net of refunds ($79 million lower than in 1994). Net cash provided by operating activities was $895.2 million, $606.0 million and $959.9 million in 1995, 1994 and 1993, respectively. The increase of $289.2 million in net cash provided by operating activities in 1995, compared with 1994, primarily reflected lower restructuring payments ($41.6 million), lower postemployment benefit payments ($44.0 million) and a decrease in other working capital items ($208.8 million) reflecting lower income tax payments net of refunds ($78.6 million) and higher deferred revenue ($50.4 million), offset in part by increased investment in accounts receivable ($99.7 million), reflecting in part, increased revenues. Net cash used in investing activities totaled $311.8 million for 1995, compared with $683.1 million and $409.9 million in 1994 and 1993, respectively. The decrease in cash usage in 1995 of $371.3 million primarily reflected lower payments for acquisitions and equity investments (included in Other Investments F-23 and Notes Receivable) of $232.2 million and higher proceeds from sale of businesses ($97.6 million). Capital expenditures were $286.2 million, $272.5 million, and $235.7 million in 1995, 1994 and 1993, respectively. Cash received ($241.3 million) during 1995, principally from the sale of Donnelley Marketing warrants and Interactive Data, was added to the general funds of the Company. Net cash used in financing activities totaled $546.4 million in 1995, compared with $253.8 million in 1994 and $353.8 million in 1993. The increase in cash usage in 1995 reflected a decrease in U.S. short-term borrowings ($38.7 million) in 1995 compared with an increase in 1994 of $194.6 million (net of payments for Alaska Native Corp. obligations of $166.2 million). The Company has entered into interest rate swap agreements, which effectively fixed interest rates on $400 million of variable rate debt, at a weighted average fixed rate payable of 7.07%. (See Note 6 to the Consolidated Financial Statements.) In late 1996, third parties special investors interests ($500 million) in an investment partnership (see Note 11 to the Consolidated Financial Statements) will be redeemed 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 11 will have the right to have their limited partnership interests ($125 million) liquidated in late 1996. The Company has announced that in late 1996 it will be reorganized into three independent companies by spinning off two of its businesses to shareholders and divesting D&B Software and ACI. (See Note 19 to the Consolidated Financial Statements.) Management estimates that one-time cash F-24 outlays of $75 million will be required to complete the reorganization of the Company and additional payments approximating $70 million and $40 million will be accelerated into 1996 from 1997 and 1998, respectively. These costs will be recorded as incurred. In addition, outlays approximating $70 million for completion of previously planned restructuring actions and $100 million for postemployment benefits are expected in 1996. While the capital structures of the three independent companies have not been concluded, it is expected that financing alternatives, proceeds from planned divestitures, existing portfolio of cash, cash equivalents and marketable securities and cash generated from operations will be more than sufficient to meet the needs of the three Companies. Dividends - The regular quarterly dividend was increased to $.66 from $.65 per share on April 19, 1995. The increase brought dividends per share in 1995 to $2.63, an increase of 2.7% over the $2.56 paid in 1994. On an annualized basis, the dividend rate of $2.64 was up 1.5% from the previous rate. On January 9, 1996 the board of directors approved a first-quarter 1996 quarterly dividend of $.66 per share, payable March 8, 1996 to shareholders of record at the close of business February 20, 1996. The Company anticipates that its current dividend policy will be maintained through at least the first half of 1996. It is expected that dividend policies for all three independent public companies will be formulated consistent with comparable businesses. The dividend payout range being evaluated for the new Dun & Bradstreet is 55-to-60 percent, and a dividend payout in the range of 20 percent is under consideration for Cognizant Corporation. A.C. Nielsen does not anticipate paying a dividend. F-25 Common Stock Information - The Company's common stock (symbol DNB) is listed on the New York, London, Tokyo, Zurich, Geneva and Basel stock exchanges. During 1995 and 1994, 85.5 million shares and 63.3 million shares, respectively, were traded, representing 50.4% and 37.2% of the average number of shares outstanding in the respective years. The number of shareholders of record declined to 14,390 at January 31, 1996 from 14,646 at January 31, 1995. The following summarizes price and dividend-per-share information for Dun & Bradstreet common stock as reported in the periods shown:
Price Per Share ($)Dividends Paid 1995 1994 Per Share ($) High Low High Low 1995 1994 -------------------- ----------------- ----------------- First Quarter 55 1/4 48 1/2 64 57 7/8 .65 .61 Second Quarter 55 1/2 50 1/2 59 3/4 55 1/4 .66 .65 Third Quarter 59 1/8 51 59 1/4 55 1/2 .66 .65 Fourth Quarter 65 1/2 57 60 3/4 51 7/8 .66 .65 -------------------- ----------------- ----------------- Year 65 1/2 48 1/2 64 51 7/8 2.63 2.56
F-26 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders 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, 1995 and 1994, and the related consolidated statements of income, shareholders' equity and cash flows for the years ended December 31, 1995, 1994 and 1993. 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, 1995 and 1994, and the consolidated results of their operations and their cash flows for the years ended December 31, 1995, 1994 and 1993, in conformity with generally accepted accounting principles. As discussed in Note 2 to the consolidated financial statements, in 1995, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." In addition, as discussed in Note 7 to the consolidated financial statements, in 1993, the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and SFAS No. 112, "Employers' Accounting for Postemployment Benefits." Stamford, Connecticut January 23, 1996 F-27 STATEMENT OF MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS To the Shareholders of The Dun & Bradstreet Corporation: Management has prepared and is responsible for the consolidated financial statements and related information that appear on pages 9 to 35. The consolidated financial statements, which include amounts based on estimates 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 - ------------------------ Robert E. Weissman Chairman and Chief Executive Officer Nicholas L. Trivisonno - ---------------------------------- Nicholas L. Trivisonno Executive Vice President - Finance and Chief Financial Officer F-28 The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statement of Income Years Ended December 31, Dollar amounts in millions, except per share data
1995 1994 1993 --------------------------------- Operating Revenue ........................................ $5,415.1 $4,895.7 $4,710.4 Operating Costs .......................................... 2,499.2 1,732.6 1,634.4 Selling and Administrative Expenses ...................... 2,039.9 1,816.5 1,872.3 Depreciation & Amortization .............................. 474.5 421.1 373.7 Restructuring (Income)/Expense - Net ..................... (120.3) 0 277.5 ---------------------------------- Operating Income ......................................... 521.8 925.5 552.5 ---------------------------------- Interest Income .......................................... 31.7 31.2 51.6 Interest Expense ......................................... (52.6) (39.0) (24.7) Gain on Sale of Gartner Group Stock ...................... 0 0 21.0 Other Expense - Net ...................................... (57.2) (38.5) (12.4) ---------------------------------- Non-Operating (Expense) Income - Net ..................... (78.1) (46.3) 35.5 Income Before Provision for Income Taxes and Cumulative Effect of Changes in Accounting Principles .. 443.7 879.2 588.0 Provision for Income Taxes ............................... 122.9 249.7 159.3 ----------------------------------- Income Before Cumulative Effect of Changes in Accounting Principles .................................. 320.8 629.5 428.7 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 ............................................... $320.8 $629.5 $38.1 ------------------------------------ Earnings Per Share of Common Stock: Before Cumulative Effect of Changes in Accounting Principles .................................. $ 1.89 $3.70 $2.42 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 ................... $ 1.89 $3.70 $.23 ------------------------------------- Average Number of Shares Outstanding ..................... 169,522,000 169,946,000 177,181,000 ------------------------------------- The accompanying notes are an integral part of the consolidated financial statements.
F-29 The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statement of Financial Position December 31,
Dollar amounts in millions, except per share data Assets 1995 1994 Current Assets Cash and Cash Equivalents $ 385.5 $ 335.4 Marketable Securities 52.8 26.9 Accounts Receivable - Net 1,451.7 1,256.5 Other Current Assets 408.5 362.2 --------------------------- Total Current Assets 2,298.5 1,981.0 Investments Marketable Securities 139.5 133.1 Other Investments and Notes Receivable 336.9 366.4 --------------------------- Total Investments 476.4 499.5 Property, Plant and Equipment-Net 874.4 918.5 Other Assets-Net Deferred Charges 366.3 363.1 Computer Software 312.3 335.9 Other Intangibles 178.5 216.0 Goodwill 1,009.4 1,149.9 --------------------------- Total Other Assets-Net 1,866.5 2,064.9 --------------------------- Total Assets $5,515.8 $5,463.9 --------------------------- Liabilities and Shareholders' Equity Current Liabilities Accounts and Notes Payable $802.1 $790.8 Accrued and Other Current Liabilities 1,364.3 1,300.4 Accrued Income Taxes 42.1 95.4 Redeemable Partnership Interests 625.0 0.0 --------------------------- Total Current Liabilities 2,833.5 2,186.6 Unearned Subscription Income 319.6 290.3 Postretirement and Postemployment Benefits 553.3 484.9 Deferred Income Taxes 167.7 209.3 Other Liabilities and Minority Interests 459.2 974.2 --------------------------- Total Liabilities $4,333.3 $4,145.3 --------------------------- Shareholders' 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---188,420,996 and 188,411,297 shares for 1995 and 1994, respectively $188.4 $188.4 Capital in Excess of Par Value 70.0 67.2 Retained Earnings 2,204.7 2,330.0 Treasury Stock, at cost,19,031,922 and 18,650,410 shares for 1995 and 1994, respectively (1,107.3) (1,077.2) Cumulative Translation Adjustment (177.3) (183.5) Unrealized Gains (Losses) on Investments 4.0 (6.3) --------------------------- Total Shareholders' Equity $1,182.5 $1,318.6 --------------------------- Total Liabilities and Shareholders' Equity $5,515.8 $5,463.9 --------------------------- The accompanying notes are an integral part of the consolidated financial statements.
F-30 The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statement of Cash Flows Years Ended December 31,
Dollar amounts in millions 1995 1994 1993 ------------------------------------ Cash Flows from Operating Activities: Net Income $320.8 $629.5 $38.1 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Cumulative Effect of Changes in Accounting Principles: Postretirement Benefits Other Than Pensions 0 0 140.6 Postemployment Benefits 0 0 250.0 Depreciation and Amortization 474.5 421.1 373.7 Gain from Sale of DunsNet Assets 0 (36.0) 0 Gains from Sale of Businesses and Gartner Group Stock (133.1) (56.3) (61.0) Restructuring Provisions 12.8 56.3 317.5 Provisions Related to Reorganization 448.4 0 0 Restructuring Payments (101.2) (142.8) (95.1) Postemployment Benefit Expense 90.7 8.6 10.0 Postemployment Benefit Curtailment Loss/(Gain) 4.5 (46.0) (2.1) Postemployment Benefit Payments (130.5) (174.5) (44.3) Net (Increase) Decrease in Accounts Receivable (188.0) (88.3) 36.8 Deferred Income Taxes (72.0) 67.9 2.9 Net Decrease (Increase) in Other Working Capital Items 119.4 (89.4) (15.7) Other 48.9 55.9 8.5 --------------------------------------- Net Cash Provided by Operating Activities 895.2 606.0 959.9 Cash Flows from Investing Activities: Proceeds from Marketable Securities 74.6 145.1 146.8 Payments for Marketable Securities (96.3) (181.0) (95.9) Proceeds from Sale of Businesses 241.3 143.7 107.5 Payments for Acquisition of Businesses (excluding cash and cash equivalents acquired of $.5 million, $1.9 million and $12.8 million in 1995, 1994 and 1993 respectively) (25.3) (234.0) (120.1) Capital Expenditures (286.2) (272.5) (235.7) Additions to Computer Software and Other Intangibles (231.9) (230.2) (202.9) Increase in Other Investments and Notes Receivable (17.6) (73.9) (46.7) Other 29.6 19.7 37.1 --------------------------------------- Net Cash Used in Investing Activities (311.8) (683.1) (409.9) Cash Flows from Financing Activities: Payment of Dividends (446.1) (435.2) (423.0) Payments for Purchase of Treasury Shares (72.3) (70.0) (612.2) Net Proceeds from Exercise of Stock Options 34.2 23.4 43.1 (Decrease) Increase in U.S. Short-term Borrowings (38.7) 360.8 (34.9) Third-Parties Investments in Partnerships 0 0 625.0 Payment of Alaska Native Corp. Obligations 0 (166.2) 0 Other (23.5) 33.4 48.2 ---------------------------------------- Net Cash Used in Financing Activities (546.4) (253.8) (353.8) ---------------------------------------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 13.1 15.4 (39.8) Increase (Decrease) in Cash and Cash Equivalents 50.1 (315.5) 156.4 Cash and Cash Equivalents , Beginning of Year 335.4 650.9 494.5 Cash and Cash Equivalents, End of Year $385.5 $335.4 $650.9 The accompanying notes are an integral part of the consolidated financial statements.
F-31 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Dollar amounts in millions, except per share data Common Capital in Cumulative Unrealized Three Years Ended Stock Excess of Retained Treasury Translation Gains (Losses) December 31, 1995 ($1 Par Value) Par Value Earnings Stock Adjustment on Investments Total Balance, January 1, 1993 $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 Net Income 320.8 320.8 Cash Dividends ($2.63 per share) (446.1) (446.1) Treasury shares reissued under stock options and deferred compensation plans (741,526) 2.8 34.2 37.0 Treasury shares reissued under restricted stock plan (174,100) 8.8 8.8 Less unearned portion (8.8) (8.8) Plus earned portion of grants 8.0 8.0 Treasury shares acquired (1,297,138) (72.3) (72.3) Change in cumulative translation adjustment 6.2 6.2 Unrealized gains on investments 10.3 10.3 - ------------------------------------------------------------------------------------------------------------------------------------ Balance, December 31, 1995 $188.4 $70.0 $2,204.7 $(1,107.3) $(177.3) $4.0 $1,182.5 The accompanying notes are an integral part of the consolidated financial statements.
F-32 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 significant 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 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, were reported at fair value, with net unrealized gains and losses reported in shareowners' equity. At December 31, 1995, marketable securities are either classified as "available for sale" or "held to maturity". The marketable securities classified as "held to maturity" are valued at amortized cost, which approximates market value. The fair value of current and non-current marketable securities (and interest rate swap agreements and foreign exchange forward contracts discussed in Note 6 to the Consolidated Financial Statements) 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 SFAS 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. The Company adopted the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" in 1995. This statement requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In general, this statement requires recognition of an impairment loss when the sum of undiscounted expected future cash flows is less than the carrying amount of such assets. The measurement for such impairment loss is then based on the fair value of the asset. See Note 2 to the Consolidated Financial Statements. At each balance sheet date, the Company reviews the recoverability of goodwill, not identified with long-lived assets, based on estimated undiscounted future cash flows from operating activities compared with the carrying value of goodwill and recognizes any impairment on the basis of such comparison. The recognition and measurement of goodwill impairment is assessed at the business unit level. Revenue Recognition. The Company recognizes revenue as earned, which is generally over the contract period or as the information is delivered or related services are performed. 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. Software license revenue is recognized upon delivery of the software and documentation when there are no significant remaining related obligations. Revenue from post-contract customer support (maintenance) is recognized on a straight-line basis over the term of the contract. F-33 Note 1. (Cont'd.) Foreign Currency Translation. For all operations outside the United States where the Company has designated the local currency as the functional currency, assets and liabilities are translated using average monthly rates of exchange. For these countries, currency translation adjustments are accumulated in a separate component of shareowners' equity, whereas realized transaction gains and losses are recognized in other expense-net. For operations in countries that are considered to be highly inflationary, where the U.S. dollar is designated as the functional currency, monetary assets and liabilities are translated using end-of-year exchange rates, nonmonetary accounts are translated using historical exchange rates, and all translation and transaction adjustments are recognized in other expense-net. 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 6 to the Consolidated Financial Statements. Estimates. The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Reclassifications. Certain prior-year amounts have been reclassified to conform with the 1995 presentation. F-34 Note 2. Non-Recurring Charges In the fourth quarter of 1995, the Company recorded within operating costs a charge of $448.4 million. This charge primarily reflected an impairment loss in connection with the adoption of the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ($218.1 million), a provision for postemployment benefits ($79.8 million) under the Company's severance plan, an accrual for contractual obligations that have no future economic benefits and penalties to cancel certain contracts ($100.7 million) and other asset revaluations ($49.8 million). SFAS No. 121 requires that long-lived assets and certain intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In connection with this review, the Company recorded an impairment loss of $218.1 million reflecting the revaluation of certain fixed assets, administrative and production systems and other intangibles that will be replaced or will no longer be used at A.C. Nielsen, IMS, Dun & Bradstreet Information Services (DBIS) and Dun & Bradstreet Corporate headquarters due, principally, to the new business strategies that will result from the plans to spin-off certain businesses. (See Note 19 to the Consolidated Financial Statements.) The provision for postemployment benefits of $79.8 million, represents the cost of workforce productivity improvements anticipated from the planned spin-offs. The accrual for contractual obligations that have no future economic benefits and penalties to cancel certain contracts of $100.7 million and the other asset revaluations of $49.8 million (primarily computer software) are necessitated based on an evaluation of the new business initiatives. 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 D&B Software, IMS, DBIS and A.C. Nielsen. In addition, a change in eligibility requirements for the Company's postretirement medical plan resulted in a curtailment gain of approximately $25.7 million , which was largely offset by a substantial increase in spending for new-product development. F-35 Note 3. Restructuring In 1995, the Company reported a $28 million restructuring gain related to the sale of warrants received in connection with the divestiture of Donnelley Marketing and restructuring gains totaling $105.1 million relating to the sale of Interactive Data and other divestitures. The Company also recorded a $12.8 million restructuring provision primarily to write off software for product lines that were discontinued at Sales Technologies. In the second quarter of 1994, the Company divested two non-strategic businesses - Thomson Directories Ltd. (TDL) and the Machinery Information Division of Dataquest (MID) - 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 $56.3 million on the two divestitures. During 1993, the Company sold Donnelley Marketing Information Services, 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 were initiated in the fourth quarter of 1993 totaling $256.5 million. These actions were designed to achieve long-term productivity improvement, reduce costs and leverage the Company's global synergies. The costs associated with this plan, and all other restructuring actions, included only specific, direct and incremental costs that could be estimated with reasonable accuracy and were clearly identifiable with the related plans. Costs included in the restructuring charge included $54.0 million for the consolidation of fourteen major data centers in North America and Europe into two data centers in the U.S. and two centers located in Europe, resulting principally in lease termination costs, asset writeoffs and other costs incident to the consolidation of such data centers. The Company also provided $117.2 million to initiate approximately seventy separate actions to reduce real estate costs by consolidating office facilities in each of fifteen major geographic regions in the U.S. and nine geographic regions in Europe. Costs incurred include lease termination costs and asset writeoffs. A provision of $19.1 million was taken to consolidate and reengineer the Company's back office accounting functions by consolidating thirty-five reporting entities into one accounting center for the U.S. and Canada, and twenty-five reporting entities into four primary centers in Europe, and to reengineer all accounting processes and functions. Costs incurred include project implementation costs, outside consulting costs and asset writeoffs. The restructuring charge also included $66.2 million to discontinue certain production systems at A.C. Nielsen U.S. and DBIS U.S., due to accelerating the introduction of new technologies; to discontinue certain data collection systems of A.C. Nielsen U.S.; and to discontinue products at A.C. Nielsen U.S., Sales Technologies and Erisco. Costs principally related to writeoffs of computer software and other intangible assets. The table below sets forth the details of all restructuring accrual activity by major category for the years ended December 31, 1994 and 1995. F-36
1994 Activity 1995 Activity ---------------------------------- ----------------------------------- January 1, Cash & December 31, Cash & December 31, Category 1994 Expense Noncash Items 1994 Expense Noncash Items 1995 -------------------------------------------------------------------------------------- Data center consolidations $54.0 - ($28.7) $25.3 - (13.2) 12.1 Real estate cost reductions 117.2 - (21.7) 95.5 - (68.7) 26.8 Accounting function consolidations 19.1 - (11.6) 7.5 - (4.2) 3.3 Discontinue production and data collection systems and products 14.8 - (8.3) 6.5 12.8 (14.9) 4.4 Other 80.9 $56.3 (92.8) 44.4 - (18.3) 26.1 - ------------------------------------------------------------------------------------------------------------------------------------ Total $286.0 $56.3 ($163.1) $179.2 12.8 (119.3) 72.7 - ------------------------------------------------------------------------------------------------------------------------------------ Current restructuring liability $187.1 $145.0 $72.7 Non Current restructuring liability 98.9 34.2 0 - ------------------------------------------------------------------------------------------------------------------------------------ Total restructuring liability $286.0 $179.2 $72.7 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
In 1994 and 1993, 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 Note 16 to the Consolidated Financial Statements.) F-37 Note 4. Acquisitions In1995, 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 $25 million in 1995. The aggregate purchase price for 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, 1994 and 1995 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-38 Note 5. Marketable Securities Amounts included below are 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 $54.1 million and $46.4 million at December 31, 1995 and 1994, 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, 1995 December 31, 1994 Cost Fair Cost Fair Value Value Equity securities ...................... $ 25.6 $ 23.7 $ 35.3 $ 31.6 Debt securities of the U.S. ............ Government and its agencies ...... 71.8 75.2 82.2 79.5 Debt securities of states and other sub- divisions of the U.S. Government . 129.2 131.8 99.7 97.7 Debt securities of non-U.S. governments 13.7 14.2 13.9 13.6 Corporate debt securities .............. 12.3 12.3 11.7 11.5 Other .................................. .1 .1 .1 .1 - -------------------------------------------------------------------------------- $ 252.7 $ 257.3 $ 242.9 $ 234.0 At December 31, 1995, gross unrealized gains and losses were $9.2 million and $4.6 million, respectively. At December 31, 1994, gross unrealized gains and losses were $2.6 million and $11.5 million, respectively. Debt securities of states and other subdivisions of the U.S. Government totaling $30.1 million have been classified as "held to maturity" at December 31, 1995, and mature in one year or less. All other securities are classified as "available for sale." At December 31, 1995, cost and fair values of debt securities by contractual maturity were as follows: Cost Fair Value Due in one year or less ............................... $ 53.5 $ 53.5 Due after one year through five years ................. 97.3 101.9 Due after five years through ten years ................ 71.4 73.1 More than ten years ................................... 1.5 1.7 Mortgage-backed securities ............................ 3.4 3.4 $ 227.1 $ 233.6 For the years ended December 31, 1995 and 1994, proceeds from the sales and maturities of marketable securities were $74.6 million and $145.1 million, respectively, and gross realized F-39 Note 6 - 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 1995, the Company entered into swap agreements that effectively fixed interest rates on $100 million of variable rate debt, from 1995 through February 2001. In 1994, the Company entered into swap agreements that effectively fixed interest rates on $300 million of variable rate debt, from 1994 through January 2005. The weighted average fixed rate payable under these agreements is 7.07%. The differential interest to be paid or received annually under these agreements is included in interest expense. At December 31, 1995, the unrealized fair value of the interest rate swaps was a loss of $26 million. 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 and to hedge against foreign exchange movements between the dates that foreign currency transactions are recorded and the dates they are settled. At December 31, 1995, the Company had approximately $148 million in foreign exchange forward contracts outstanding with various expiration dates through January 1996. Unrealized losses on these contracts were insignificant. Gains and losses on the contracts designated as hedges of non-U.S. net investments are included in the cumulative translation adjustment component of shareholders' equity, and the remaining gains and losses on foreign exchange forward contracts are recorded in other expense - net. F-40 Note 7. 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: 1995 1994 1993 Service Cost $43.1 $50.3 $42.2 Interest Cost 108.5 93.8 88.8 Actual Return on Plan Assets (248.1) (7.2) (126.3) Net Amortization and Deferral 126.8 (111.1) 14.2 - ---------------------------------------------------- Net Periodic Pension Cost $30.3 $25.8 $18.9 - ----------------------------------------------------- The status of defined benefit pension plans at December 31, 1995 and 1994, is as follows:
Funded Unfunded U.S.(1) Non-U.S. 1995 1994 1995 1994 1995 1994 Fair Value of Plan Assets $1,366.3 $1,178.7 Actuarial Present Value of Benefit Obligations: Vested Benefits 1,065.6 896.6 $140.3 $90.8 $68.6 $65.1 Non-Vested Benefits 42.1 37.1 3.7 4.4 0 .1 - ------------------------------------------------------------------------------------------------------------------------------------ Accumulated Benefit Obligations 1,107.7 933.7 144.0 95.2 68.6 65.2 Effect of Projected Future Salary Increases 133.9 114.1 59.4 56.0 .1 .1 - ------------------------------------------------------------------------------------------------------------------------------------ Projected Benefit Obligations 1,241.6 1,047.8 203.4 151.2 68.7 65.3 - ------------------------------------------------------------------------------------------------------------------------------------ Plan Assets in Excess of (Less than) Projected Benefit Obligations 124.7 130.9 (203.4) (151.2) (68.7) (65.3) Unrecognized Net Loss (Gain) 154.1 144.6 55.4 30.4 --- (.5) Unrecognized Prior Service Cost 13.3 13.2 30.3 33.5 .6 1.0 Unrecognized Net Transition(Asset)Obligation (79.5) (94.6) 2.0 2.5 --- --- Adjustment to Recognize Minimum Liability --- --- (28.3) (15.1) (.5) (.4) - -------------------------------------------------------------------------------------------------------------------------------- Prepaid (Accrued) Pension Cost $212.6 $194.1 $(144.0) $(99.9) $(68.6) $(65.2) (1)Represents supplemental plans for which grantor trusts (with assets of $71 and $69 million at December 31, 1995 and 1994, 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 1995, 1994 and 1993. At December 31, 1995 and 1994, the projected benefit obligations were determined using weighted average discount rates of 7.16% and 8.51%, respectively, and weighted average rates of increase in future compensation levels of 4.70% and 5.78%, 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 work-force 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-41 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: 1995 1994 1993 - --------------------------------------------------- Service Cost $5.1 $ 4.5 $ 6.0 Interest Cost 16.0 15.8 18.3 Net Amortization and Deferral (5.0) (4.3) (1.0) - --------------------------------------------------- Net Periodic Postretirement Benefit Cost $16.1 $16.0 $23.3 - --------------------------------------------------- The status of postretirement benefit plans other than pensions at December 31, 1995 and 1994, is as follows: 1995 1994 Actuarial Present Value of Benefit Obligation: Retirees and Dependents $(170.0) $(134.7) Active Associates - Eligible (25.7) (28.4) Active Associates - Not Yet Eligible (35.6) (33.0) - ------------------------------------------------------------------------- Accumulated Postretirement Benefit Obligation (231.3) (196.1) Unrecognized Net Loss (Gain) 26.2 (1.0) Unrecognized Prior Service Cost (Credit) (18.1) (23.1) - ------------------------------------------------------------------------- Accrued Postretirement Benefit Obligation $(223.2) $(220.2) - ------------------------------------------------------------------------- The accumulated postretirement benefit obligation at December 31, 1995 and 1994 was determined using discount rates of 7.0% and 8.5%, respectively. The assumed rate of future increases in per capita cost of covered health-care benefits is 8.9% in 1996, 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 $27 million and would increase annual aggregate service and interest costs by $2.3 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 ($1.40 per share). F-42 Note 8. Employee Stock Plans The Company has granted options to certain associates, under its Key Employees Stock Option Plans, to purchase shares of its common stock at the market price on the date of the grant. Options outstanding at December 31, 1995 were granted during the years 1986 through 1995 and are exercisable over periods ending not later than 2005. At December 31, 1995, 1994 and 1993, options for 4,859,596, 4,306,119 and 3,556,944 shares of common stock were exercisable and 10,306,592, 1,567,393 and 3,467,164 shares were available for future grants under the plans. Changes in stock options for the three years ended December 31, 1995 are summarized as follows: Option Price Per Shares Share ($) Total Options outstanding, January 1, 1993 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 Granted 1,821,780 50.50 to 63.75 115.4 Exercised (736,145) 20.52 to 62.25 (33.9) Surrendered or Expired (671,079) 20.52 to 63.75 (38.1) - -------------------------------------------------------------------------------- Options outstanding,December 31, 1995 9,147,728 20.52 to 63.75 $511.3 ________________________________________________________________________________ Options which became exercisable during: 1993 1,231,406 41.50 to 58.38 $ 61.0 1994 1,344,876 41.50 to 62.25 $73.0 1995 1,493,507 44.63 to 62.50 $84.0 F-43 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, 1995, there were no stock appreciation rights attached to stock options; however, 788,869 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. In 1995, Pilot Software (Pilot), a wholly owned subsidiary of the Company, adopted an equity participation plan authorizing Pilot to grant options for up to 19.5% of its stock to its employees. The options are exercisable after nine years at fair market value, as determined by independent appraisal, however, vesting may be accelerated based on the occurrence of a "trigger event" as defined by the plan. Two-thirds of the authorized options were granted in February 1995 at an exercise price approximating $1.75 per share. The Company's majority-owned subsidiary Gartner Group, Inc. has several stock option plans to provide a method of retention and motivation of its senior personnel and also to align senior management's objectives with long-term stock price appreciation. In October 1995, the Financial Accounting Standards Board (FASB) issued SFAS No.123, "Accounting for Stock-Based Compensation," which requires that companies with stock-based compensation plans either recognize compensation expense based on new fair value accounting methods or continue to apply the existing accounting rules and disclose pro forma net income and earnings per share assuming the fair value method had been applied. The Company is evaluating the new statement and has not determined whether it will adopt the recognition or disclosure alternative of the statement. Therefore, the impact of adoption on the Company's financial statements has not been determined. The new disclosure requirements are generally effective for financial statements for fiscal years beginning after December 15, 1995. 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 1995, 1994 and 1993, 184,465, 117,262 and 102,540 restricted shares, respectively, were awarded under the plan. Forfeitures in 1995, 1994 and 1993 totaled 10,365, 2,332 and 8,652, 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-44 Note 9. Income Taxes Income before provision for income taxes consisted of: 1995 1994 1993 U.S. $270.6 $560.0 $367.6 Non-U.S. 173.1 319.2 220.4 -------------------------------- $443.7 $879.2 $588.0 -------------------------------- The provision (benefit) for income taxes consisted of: 1995 1994 1993 Current tax provision: U.S. Federal $156.5 $104.1 $224.2 State and Local 4.1 54.3 73.8 Non-U.S. 40.9 34.6 101.0 ------------------------ 201.5 193.0 399.0 ------------------------- Deferred tax provision (benefit): U.S. Federal (92.2) 11.6 (194.7) State and Local (15.9) (17.9) (16.5) Non-U.S. 29.5 63.0 (28.5) ------------------------- (78.6) 56.7 (239.7) ------------------------- $122.9 $249.7 $159.3 ----------------------------- ----------------------------- 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. 1995 1994 1993 -------------------------------- Statutory tax rate 35.0% 35.0% 35.0% State and Local income taxes, net of U.S. Federal tax benefit (3.1) 2.7 6.4 Non-U.S. taxes 5.6 (1.2) (.9) Recognition of capital and ordinary losses (15.9) (8.7) (15.2) Non-recurring charges 6.0 -- -- Other 0.1 .6 1.8 -------------------------------- Effective tax rate 27.7% 28.4% 27.1% Income taxes paid were approximately $119.9 million, $191.4 million and $236.3 million in 1995, 1994 and 1993, respectively. Income taxes refunded were approximately $17.8 million, $10.8 million and $9.5 million in 1995, 1994 and 1993, respectively. Deferred tax assets (liabilities) are comprised of the following at December 31: 1995 1994 Deferred Tax Assets: Operating Losses $191.2 $137.8 Postretirement Benefits 86.2 90.2 Postemployment Benefits 42.2 86.4 Non-Recurring Charges 42.0 0.0 Restructuring Costs 35.3 93.6 Bad Debts 26.9 26.3 Intangibles 4.0 15.0 Other 9.2 6.8 -------------------- 437.0 456.1 Valuation Allowance (91.8) (78.0) -------------------- 345.2 378.1 Deferred Tax Liabilities: Intangibles (127.3) (195.3) Revenue Recognition (87.3) (89.0) Tax Leasing Transactions (68.9) (80.3) Depreciation (14.4) (41.5) Other (3.9) (7.5) ---------------------- (301.8) (413.6) Net Deferred Tax (Liability) Asset $43.4 $(35.5) Undistributed earnings of non-U.S. subsidiaries aggregated approximately $924.7 million at December 31, 1995. 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 $51.3 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 1995, the Company recognized benefits of $6.0 million in other expense -- net related to these transactions. 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-45 Note 10. Notes Payable Notes payable consisted of the following at December 31: 1995 1994 ----------------------------- Commercial Paper $405.0 443.7 Bank Notes 29.2 45.2 Other 10.3 11.7 ----------------------------- $444.5 $500.6 The Company has short-term borrowing agreements with several banks to provide up to $750 million of borrowings, all of which support a commercial paper program. The Company also had unused lines of credit of $150 million at December 31, 1995, which were substantially 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, 1995 and 1994, respectively were 7.11 % and 7.53%. F-46 Note 11. 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 totaled approximately $625 million and were reflected in other liabilities and minority interests. The third-parties' investments in these partnerships at December 31, 1995 totaled approximately $625 million and were reflected in redeemable partnership interests. Third-parties' share of partnerships results of operations, including specified returns, is reflected in other expense-net. F-47 Note 12. 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 and 1995. In October 1988, the Company adopted a Shareholders' Rights Plan. The plan is intended to protect the shareholders' 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 shareholders 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 shareholders 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 Shareholders' 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 shareholders 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 shareholder approval. F-48 Note 13. 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 1995, 1994 and 1993 was $149.9 million, $156.3 million, and $168.9 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, 1995, was (in millions): 1996 - $138.4; 1997 - $118.9; 1998 - $106.3; 1999 - $91.6; 2000 - $77.0; and an aggregate of $192.7 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 $64.6 million, $71.6 million and $96.8 million for 1995, 1994 and 1993, respectively. At December 31, 1995, 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): 1996 - $91.9; 1997 - $79.6; 1998 - $55.2; 1999 - $41.1; 2000 - $20.7. The Company has agreements with various third parties to purchase certain data processing and telecommunication services, extending beyond one year. At December 31, 1995, the purchases covered by these agreements aggregate approximately (in millions): 1996 - $48.7; 1997 - $46.5; 1998 - $43.6; 1999 - $27.5; 2000 - $0.8 and an aggregate thereafter of $2.2. F-49 Note 14. Litigation The Company and its subsidiaries are involved in legal proceedings and litigation arising in the ordinary course of business. 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 managment, these matters will not materially affect the Company's consolidated financial position. F-50 Note 15. Supplemental Financial Data Accounts Receivable - Net: 1995 1994 Trade $1,411.6 $1,254.4 Less: allowance for doubtful accounts (74.4) (76.8) 1,337.2 1,177.6 Other 114.5 78.9 - ------------------------------------------------------------ $1,451.7 $1,256.5 Other Current Assets: 1995 1994 Unbilled expenditures $49.8 $51.1 Deferred taxes 211.1 173.8 Prepaid expenses 121.7 113.6 Inventories 25.9 23.7 - --------------------------------------------------------------- $408.5 $362.2 Property, Plant and Equipment - Net, carried at cost, 1995 1994 Buildings $403.6 $439.3 Machinery and Equipment 1,324.7 1,296.1 -------------------------- 1,728.3 1,735.4 Less: accumulated depreciation 977.5 935.3 -------------------------- 750.8 800.1 - ------------------------------------------------------------ Leasehold improvements, less: Acumulated amortization of $98.6 and $107.7 76.7 67.4 Land 46.9 51.0 - ------------------------------------------------------------- $874.4 $918.5 Computer Software, Other Intangibles and Goodwill: Computer Other Software Intangibles Goodwill January 1,1994 $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 Additions at cost 198.6 33.3 17.9 Amortization (119.8) (50.5) (61.8) Other deductions and reclassifications (102.4) (20.3) (96.6) - --------------------------------------------------------- December 31,1995 $312.3 $178.5 $1,009.4 Accounts and Notes Payable: 1995 1994 Trade $117.5 $86.4 Customer advances 121.8 125.9 Taxes other than income taxes 83.4 54.6 Notes 444.5 500.6 Other 34.9 23.3 - -------------------------------------------- $802.1 $790.8 Accrued and Other Current Liabilities: 1995 1994 Salaries, wages, bonuses and other compensation $184.3 $255.1 Profit-sharing 40.0 34.7 Deferred revenues on uncompleted contracts 305.1 270.8 Restructuring costs 72.7 145.0 Postemployment benefits 100.0 100.0 Other 662.2 494.8 - ----------------------------------------------------- $1,364.3 $1,300.4 F-51 Dollar Amounts in Millions
Note 16. Operations by Business Segments The Company, operating in over 70 countries, delivers information,software and related services principally through five business segments referenced below. Risk Management(2) Marketing(1) and Business Directory Other Information Marketing Software Information Business Year Ended December 31, 1995 Services Information Services Services Services Services Total Operating Revenue $2,388.1 $1,734.1 $457.4 $423.7 $411.8 $5,415.1 Restructuring Income (Expense) - Net(3) $32.5 $90.0 $(12.8) $0 $10.6 $120.3 Segment Operating Income (Loss) (4) $125.6 $449.5 $10.3) $186.3 $61.2 $812.3 General Corporate Expenses (290.5)(5) Non-Operating Expense - Net (78.1) Income Before Provision for Income Taxes $443.7 Segment Depreciation and Amortization(6) $233.8 $113.6 $70.6 $16.6 $18.6 $453.2 Segment Capital Expenditures $131.2 $75.0 $14.6 $19.3 $25.1 $265.2 Identifiable Assets at December 31, 1995 $1,844.3 $1,491.7 $603.9 $539.7 $480.2 $4,959.8 - ------------------------------------------------------------------------------------------------------------------------------------ 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 (5) Segment Operating Income (Loss) $285.3 $447.0 $(3.6) $248.0 $110.0 $1,086.7 General Corporate Expenses (161.2) (5) Non-Operating Income - Net (46.3) Income Before Provision for Income Taxes $879.2 Segment Depreciation and Amortization(6) $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 - Net(3) $(53.0) $(97.0) $(68.3) $(14.9) $(3.2) $(236.4) (5) Segment Operating Income (Loss) $243.5 $307.6 $(24.6) $170.3 $24.8 $721.6 General Corporate Expenses (169.1) (5) Non-Operating Income - Net 35.5 Income Before Provision for Income Taxes and Accounting Changes $588.0 Segment Depreciation and Amortization(6) $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 - ------------------------------------------------------------------------------------------------------------------------------------ (1) A.C. Nielsen's operating revenue was $1,286.1 in 1995, $1,102.0 in 1994 and $1,051.8 in 1993. IMS' operating revenue was $818.5 in 1995, $691.1 in 1994 and $613.9 in 1993. (2) Operating revenue from worldwide credit services was $993.7 in 1995, $917.0 in 1994 and $892.7 in 1993. (3) See Note 3 to the Consolidated Financial Statements. (4) 1995 Operating Income includes a non-recurring charge of $189.1 in Marketing Information, $45.6 in Risk Management and Business Marketing Information, $17.7 in Directory Information, $22.7 in Software, and $4.0 in Other Business in the fourth quarter for costs principally associated with the Company's plan to reorganize into three independent companies. (5) General Corporate Expenses include a non-recurring charge of $169.3 million in 1995 and $62.7 and $41.1 of restructuring expense in 1994 and 1993, respectively. (6) Includes depreciation and amortization of Property, Plant and Equipment, Computer Software, Other Intangibles and Goodwill.
F-52 Note 16 continued Directory Information Services' operating revenue includes $121.7 million, $134.0 million and $110.2 million in 1995, 1994 and 1993, respectively, relating to the Company's share of earnings of DonTech, a partnership with Ameritech. As of December 31, 1995, DonTech's assets and liabilities were as follows: current assets, $213.0 million; other assets, $46.0 million; current liabilities, $15.0 million . DonTech's December 31, 1994, assets and liabilities were as follows: current assets, $198.5 million; other assets, $48.0 million; current liabilities, $18.7 million. In 1995, DonTech's revenues totaled $420.5 million compared to $411.7 million and $382.8 million in 1994 and 1993, respectively. Pre-tax income was $232.2 million, $216.4 million and $175.0 million in 1995, 1994 and 1993, respectively. At December 31, 1995 and 1994, the Company's investment in DonTech was $238.2 million and $227.8 million, respectively. Non-operating assets of $556.0 million, $535.7 million and $578.4 million at December 31, 1995, 1994 and 1993, 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-53 Note 17. 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 1995 Operating Revenue $3,016.3 $1,560.9 $837.9 $5,415.1 Restructuring Income - Net(1) $120.3 $0 $0 $120.3 Operating Income(2) $359.2 $90.8 $71.8 $521.8 Identifiable Assets $2,756.2 $1,670.9 $532.7 $4,959.8 - ----------------------------------------------------------------------------------------------------------------------------------- 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 $638.5 $214.3 $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 - ------------------------------------------------------------------------------------------------------------------------------------ (1) See Note 3 to the Consolidated Financial Statements. (2) 1995 Operating Income includes a non-recurring charge of $448.4 million ($369.7 million in the U.S., $46.3 million in Europe, and $32.4 million in Other Non-U.S.) in the fourth quarter for costs principally associated with the Company's plan to reorganize into three independent companies.
F-54 Note 18. Quarterly Financial Data (Unaudited)
Three Months Ended March 31 June 30 September 30 December 31 Year 1995 Operating Revenue $1,219.6 $1,307.4 $1,333.4 $1,554.7 $5,415.1 Restructuring Income---Net $28.0 $---- $77.2 $15.1 $120.3 Operating Income (Loss) (1) $172.8 $220.0 $260.7 $(131.7) $521.8 Net Income (Loss) (1) $108.9 $146.1 $171.5 $(105.7) $320.8 Earnings (Loss) Per Share (1) $.64 $.86 $1.01 $(.62) $1.89 - ---------------------------------------------------------------------------------------------------------------------- 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 (1)Includes a non-recurring charge of $448.4 million in the fourth quarter for costs principally associated with the Company's plan to reorganize into three independent companies. (See Note 2 to the Consolidated Financial Statements).
F-55 Note 19. Reorganization Plan On January 9, 1996 the Company announced a plan to reorganize into three publicly traded independent companies by spinning off through a tax-free distribution two of its businesses to shareholders. The three companies will be: Cognizant Corporation, consisting of IMS International, Gartner Group, Nielsen Media Research, Pilot Software and Erisco; The Dun & Bradstreet Corporation, consisting of Dun & Bradstreet Information Services, Moody's Investors Service and Reuben H. Donnelley; and A.C. Nielsen, the marketer of information, analysis and insight to the worldwide consumer-products and services industry. In connection with the reorganization, several other divisions, such as Dun & Bradstreet Software and American Credit Indemnity, will be divested. The distribution is subject to final approval by the Company's board of directors and obtaining a ruling from the Internal Revenue Service with respect to the tax-free treatment of the distribution. The Company expects to complete the reorganization by the end of 1996. F-56 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 1995 1994 1993 1992 1991 - ---------------------------------------------- ------- ------- ------- ------- ------- Continuing Operations: Operating Revenue 5,415.1 4,895.7 4,710.4 4,750.7 4,651.0 Costs and Expenses(1) 4,893.3 3,970.2 4,157.9 3,964.8 3,906.7 - ---------------------------------------------- ------- ------- ------- ------- ------- Operating Income (1) 521.8 925.5 552.5 785.9 744.3 Non-Operating (Expense)Income - Net (78.1) (46.3) 35.5 9.3 (7.0) - ---------------------------------------------- ------- ------- ------- ------- ------- Income from Continuing Operations Before Provision for Income Taxes 443.7 879.2 588.0 795.2 737.3 Provision for Income Taxes 122.9 249.7 159.3 241.7 230.8 - ---------------------------------------------- ------- ------- ------- ------- ------- Income from Continuing Operations 320.8 629.5 428.7 553.5 506.5 Income from Discontinued Operations, Net of Income Taxes 0 0 0 0 0 - ---------------------------------------------- ------- ------- ------- ------- ------- Income from Operations, Net of Income Taxes(2) 320.8 629.5 428.7 553.5 506.5 - ---------------------------------------------- ------- ------- ------- ------- ------- Cumulative Effect of Accounting Changes(3) 0 0 (390.6) 0 0 - ---------------------------------------------- ------- ------- ------- ------- ------- Net Income 320.8 629.5 38.1 553.5 506.5 - ---------------------------------------------- ------- ------- ------- ------- ------- Dividends 446.1 435.2 423.0 401.3 383.9 - ---------------------------------------------- ------- ------- ------- ------- ------- Earnings Per Share of Common Stock: Continuing Operations 1.89(7) 3.70 2.42(4) 3.10 2.84 Discontinued Operations .00 .00 .00 .00 .00 - ---------------------------------------------- ------- ------- ------- ------- ------- Income from Operations(2) 1.89(7) 3.70 2.42(4) 3.10 2.84 - ---------------------------------------------- ------- ------- ------- ------- ------- Cumulative Effect of Accounting Changes(3) .00 .00 (2.19) .00 .00 - ---------------------------------------------- ------- ------- ------- ------- ------- Total 1.89 3.70 .23 3.10 2.84 - ---------------------------------------------- ------- ------- ------- ------- ------- Dividends Per Share 2.63 2.56 2.40 2.25 2.15 - ---------------------------------------------- ------- ------- ------- ------- ------- Average Number of Shares Outstanding(in millions)169.5 169.9 177.2 178.3 178.6 - ---------------------------------------------- ------- ------- ------- ------- ------- As a Percentage of Operating Revenue: Operating Income 9.6(8) 18.9 11.7(5) 16.5 16.0(1) Income from Operations, Net of Income Taxes 5.9(9) 12.9 9.1(6) 11.7 10.9 - ---------------------------------------------- ------- ------- ------- ------- ------- Return on Average Shareholders' Equity Percentage 24.6(9) 55.6 24.9(6) 26.1 25.2(1) - ---------------------------------------------- ------- ------- ------- ------- ------- Shareholders' Equity 1,182.5 1,318.6 1,111.3 2,156.0 2,123.1 - ---------------------------------------------- ------- ------- ------- ------- ------- Total Assets 5,515.8 5,463.9 5,170.4 4,914.9 4,828.7 - --------------------------------------------- --------- -------- ------- ------- ------- (1)Includes in 1995 a non-recurring charge of $448.4 million for costs principally associated with the reorganization of the Company (See Note 2 to the Consolidated Financial Statements). Also includes impact of $120.3 million restructuring income - net in 1995 and $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 7 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)17.6% excluding net restructuring expense of $277.5 million as described in Note 3 to the Consolidated Financial Statements. (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 7, Return on Average Shareholders' Equity is 34.6% and Income from Operations, Net of Income Taxes is 12.6% of Operating Revenue. (7)$3.80 excluding the non-recurring charge of $448.4 million. (8)17.9% excluding the non-recurring charge of $448.4 million. (9)Excluding $448.4 million non-recurring charge, Return on Average Shareholders' Equity is 48.6% and Income from Operations, Net of Income Taxes is 11.9% of Operating Revenue.
F-57 All amounts except per share data, average number of shares outstanding and percentages are shown in millions of dollars 1990 1989 1988 1987 1986 - ---------------------------------------------- ------- ------- ------- ------- ------- Continuing Operations: Operating Revenue 4,837.3 4,318.9 4,267.4 3,788.5 3,463.2 Costs and Expenses(1) 4,050.4 3,455.8 3,497.7 3,098.6 2,859.8 - ---------------------------------------------- ------- ------- ------- ------- ------- Operating Income (1) 786.9 863.1 769.7 689.9 603.4 Non-Operating (Expense)Income - Net (19.1) 49.0 21.0 43.9 43.5 - ---------------------------------------------- ------- ------- ------- ------- ------- Income from Continuing Operations Before Provision for Income Taxes 767.8 912.1 790.7 733.8 646.9 Provision for Income Taxes 261.1 327.9 291.7 295.4 270.0 - ---------------------------------------------- ------- ------- ------- ------- ------- Income from Continuing Operations 506.7 584.2 499.0 438.4 376.9 Income from Discontinued Operations, Net of Income Taxes 0 0 0 .6 2.3 - ---------------------------------------------- ------- ------- ------- ------- ------- Income from Operations, Net of Income Taxes(2) 506.7 584.2 499.0 439.0 379.2 - ---------------------------------------------- ------- ------- ------- ------- ------- Cumulative Effect of Accounting Changes(3) 0 (31.9) 0 0 0 - ---------------------------------------------- ------- ------- ------- ------- ------- Net Income 506.7 552.3 499.0 439.0 379.2 - ---------------------------------------------- ------- ------- ------- ------- ------- Dividends 379.1 361.9 288.1 226.8 193.2 - ---------------------------------------------- ------- ------- ------- ------- ------- Earnings Per Share of Common Stock: Continuing Operations 2.79 3.13 2.67 2.36 2.03 Discontinued Operations .00 .00 .00 .00 .01 - ---------------------------------------------- ------- ------- ------- ------- ------- Income from Operations(2) 2.79 3.13 2.67 2.36 2.04 - ---------------------------------------------- ------- ------- ------- ------- ------- Cumulative Effect of Accounting Changes(3) .00 (.17) .00 .00 .00 - ---------------------------------------------- ------- ------- ------- ------- ------- Total 2.79 2.96 2.67 2.36 2.04 - ---------------------------------------------- ------- ------- ------- ------- ------- Dividends Per Share 2.09 1.935 1.68 1.445 1.235 - ---------------------------------------------- ------- ------- ------- ------- ------- Average Number of Shares Outstanding(in millions)181.6 186.9 187.1 186.1 185.9 - ---------------------------------------------- ------- ------- ------- ------- ------- As a Percentage of Operating Revenue: Operating Income 16.3 20.0 18.0(1) 18.2(1) 17.4(1) Income from Operations, Net of Income Taxes 10.5 13.5 11.7 11.6 10.9 - ---------------------------------------------- ------- ------- ------- ------- ------- Return on Average Shareholders' Equity Percentage 24.4 28.1 25.2(1) 25.0 24.4(1) - ---------------------------------------------- ------- ------- ------- ------- ------- Shareholders' Equity 2,044.1 2,150.6 2,093.2 1,899.3 1,650.9 - ---------------------------------------------- ------- ------- ------- ------- ------- Total Assets 4,810.3 5,264.5 5,023.8 3,753.7 3,484.0 - ---------------------------------------------- ------- ------- ------- ------- ------- (1)Includes in 1995 a non-recurring charge of $448.4 million for costs principally associated with the reorganization of the Company (See Note 2 to the Consolidated Financial Statements). Also includes impact of $120.3 million restructuring income - net in 1995 and $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 7 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)17.6% excluding net restructuring expense of $277.5 million as described in Note 3 to the Consolidated Financial Statements. (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 7, Return on Average Shareholders' Equity is 34.6% and Income from Operations, Net of Income Taxes is 12.6% of Operating Revenue. (7)$3.80 excluding the non-recurring charge of $448.4 million. (8)17.9% excluding the non-recurring charge of $448.4 million. (9)Excluding $448.4 million non-recurring charge, Return on Average Shareholders' Equity is 48.6% and Income from Operations, Net of Income Taxes is 11.9% of Operating Revenue.
F-58 EX-10.D 6 PROFIT PARTICIPATION BENEFIT EQUALIZATION PLAN OF THE DUN & BRADSTREET CORPORATION AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1995 I. Purpose of the Plan ------------------- The purpose of the Profit Participation 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 Profit Participation Plan for Employees of The Dun & Bradstreet Corporation (the "Profit Participation Plan") whose funded benefits under the Profit Participation 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 Profit Participation 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 Profit Participation 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" or the "Company") 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 Profit Participation Plan shall be eligible to participate in this Plan whenever their benefits under the Profit Participation 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 Profit Participation 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 Profit Participation 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 the participant's defined contribution plan fraction equals 1.0, as such fractions are computed for purposes of Section 415 of the Code and Section 14.4 of the Profit Participation Plan. V. Equalized Benefits ------------------ If member participating contributions or Company contributions to the Profit Participation Plan are suspended during any calendar year because any such contributions would cause the participant's account under such plan to exceed the benefit limitations related to such plan as described in Section III of this Plan, the Corporation shall pay the participant, on or about March 1st of the following year, an amount equal to: (1) the Company contributions that otherwise would have been credited to such participant's account under the Profit Participation Plan for the balance of the year in which such suspension occurs, as if no provision were set forth therein incorporating limitations imposed by Section 401, 415 or any other applicable Section of the Code, and the participant had continued his participating contributions to the Profit Participation Plan at the rate in effect at the time such contributions were suspended for the balance of the year in which such suspension occurs, plus (2) an interest factor equal to one-half of the annual return which would have been received by the participant had such payment been invested eighty percent (80%) in the Special Fixed Income Fund (Fund C) of the Profit Participation Plan and twenty percent (20%) in the Wells Fargo Equity Index Fund (Fund A) of the Profit Participation Plan during the year in which such suspension occurs, less (3) any applicable withholding taxes. VI. Change in Control ----------------- Upon the occurrence of a "Change in Control" of the Corporation, as such term is defined in the Profit Participation Plan, each participant under the Plan shall receive a lump sum distribution equal to: (1) the total amount which such participant had accrued under the Plan which had not yet been distributed to such participant pursuant to Section V(1) hereof as of the date of such Change in Control, plus (2) an interest factor equal to one-half of the return which would have been received by the participant had such amount been invested eighty percent (80%) in the Special Fixed Income Fund (Fund C) of the Profit Participation Plan and twenty (20%) in the Wells Fargo Equity Index Fund (Fund A) of the Profit Participation Plan during the portion of the calendar year subsequent to the date contributions to such participant's account were suspended under the Profit Participation Plan and prior to such Change in Control, less (3) any applicable withholding taxes. Any such lump sum distribution shall be paid to the participant within sixty days of the Change in Control provided, however, that any such payment will not prevent the further accrual of benefits under the Plan after the date of such Change in Control. VII. 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 benefits accrued at the time of such amendment. 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 a trust fund as an alternate source of benefits payable under the Plan and to the extent payments are made from such trust, such payments will satisfy the Corporation's obligations under this Plan. 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. VIII. 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. EX-10.E 7 1982 KEY EMPLOYEES STOCK OPTION PLAN FOR THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES 1. Purpose of the Plan The purpose of the Plan is to aid The Dun & Bradstreet Corporation (herein called the "Company") and its subsidiaries in securing and retaining key employees of outstanding ability and to motivate such employees to exert their best efforts on behalf of the Company and its subsidiaries by providing incentive through the award of stock options and stock appreciation rights. The Company expects that it will benefit from the added interest which such key employees will have in the welfare of the Company as a result of their proprietary interest in the Company's success. 2. Stock Subject to the Plan The total number of shares of Common Stock of the Company which may be issued under the Plan is 7,600,000. The shares may consist, in whole or in part, of unissued shares or treasury shares. Issuance of shares of Common Stock upon exercise of an option or reduction of the number of shares of Common Stock subject to an option upon exercise of a stock appreciation right shall reduce the total number of shares of Common Stock available under the Plan. Shares which are subject to unexercised stock options which terminate or lapse may be optioned again under the Plan. 3. Administration The Board of Directors of the Company shall appoint an Executive Compensation and Stock Option Committee (herein called the "Committee") consisting of at least three members of the Board of Directors who shall administer the Plan and serve at the pleasure of the Board. Each member of the Committee shall not be eligible to participate in the Plan and shall not at any time within one year prior to appointment have been eligible for selection as a person to whom stock may have been allocated or to whom stock options or stock appreciation rights of the Company or any of its affiliates may have been granted pursuant to the Plan or any other plan of the Company or its affiliates. The Committee shall have the authority, consistent with the Plan, to determine the provisions of the stock options and stock appreciation rights to be granted, to interpret the Plan and the stock options and the stock appreciation rights granted under the Plan, to adopt, amend and rescind rules and regulations for the administration of the Plan, the stock options and the stock appreciation rights and generally to conduct and administer the Plan and to make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Committee shall be binding upon all participants. The Committee shall require payment of any amount the Company may determine to be necessary to withhold for federal, state or local taxes as a result of the exercise of a stock option or a stock appreciation right. Fair market value of the Common Stock as of a given date shall be determined in accordance with procedures established by the Committee. 4. Eligibility Key employees (but not members of the Committee and any person who serves only as a director) of the Company and its subsidiaries (within the meaning of Section 425(f) of the Internal Revenue Code of 1954, as amended (the "Code")), who are from time to time responsible for the management, growth and protection of the business of the Company and its subsidiaries, are eligible to be granted stock options or stock appreciation rights under the Plan. The participants under the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible, and the Committee shall determine, in its sole discretion, the number of shares to be covered by the stock options or stock appreciation rights or both granted to each participant. An employee may not be granted a stock option, however, if at the time such option is to be granted, such employee owns stock of the Company or any of its subsidiaries possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any such subsidiary. For purposes of the preceding sentence, the attribution rules of stock ownership set forth in Section 425(d) of the Code shall apply. The granting of a stock option or stock appreciation right under the Plan shall impose no obligation on the Company or any subsidiary to continue the employment of an optionee and shall not lessen or affect the right to terminate the employment of an optionee. 5. Limitations No stock option may be granted under the Plan after January 19, 1992, but stock options theretofore granted may extend beyond that date. 6. Terms and Conditions of Stock Options Stock options granted under the Plan shall be, as determined by the Committee, non-qualified, incentive or other stock options for federal income tax purposes, as evidenced by option grants, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall determine: (a) Option Price. The option price per share shall be determined by the Committee, but shall not be less than 100% of the fair market value of the Common Stock on the date an option is granted. (b) Exercisability. Stock options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee, but in no event shall an option be exercisable more than ten years after the date it is granted. (c) First Year Non-Exercisability. Except as provided in Paragraph 9 of the Plan, no stock option shall be exercisable during the year ending on the first anniversary date of the granting of the option. (d) Limitation on Incentive Stock Options. The aggregate fair market value (determined as of the time the options are granted) of the stock with respect to which incentive stock options may be exercised for the first time by any optionee in any calendar year shall not exceed $100,000. This limitation shall apply to incentive stock options granted after December 31, 1986 under all stock option plans of the optionee's employer corporation and its parent and subsidiary corporations, if any. (e) Exercise of Stock Options. Except as otherwise provided in the Plan or the option, a stock option may be exercised for all, or from time to time any part, of the shares for which it is then exercisable. The purchase price for the shares as to which an option is exercised shall be paid to the Company in full at the time of exercise at the election of the optionee (i) in cash, (ii) in shares of Common Stock of the Company having a fair market value equal to the option price for the shares being purchased and satisfying such other requirements as may be imposed by the Committee or (iii) partly in cash and partly in such shares of Common Stock of the Company. The Committee may permit the optionee to elect, subject to such terms and conditions as the Committee shall determine, to have the number of shares deliverable to the optionee as a result of the exercise reduced by a number sufficient to pay the amount the Company determines to be necessary to withhold for federal, state or local taxes as a result of the exercise of the option, up to the amount calculated by applying the optionee's maximum marginal tax rate. No optionee shall have any rights to dividends or other rights of a shareowner with respect to shares subject to an option until the optionee has given written notice of exercise of the option, paid in full for such shares and, if requested, given the representation described in Paragraph 6(i) of the Plan. (f) Exercisability Upon Termination of Employment by Death. If an optionee's employment by the Company or a subsidiary terminates by reason of death one year or more after the date of grant of a stock option, the option thereafter may be exercised, during the three years after the date of death or the remaining stated period of the option, whichever period is shorter, to the extent to which such option was exercisable at the time of death or thereafter would become exercisable during the three-year period after the date of death in accordance with its terms. (g) Exercisability Upon Termination of Employment by Disability or Retirement. If an optionee's employment by the Company or a subsidiary terminates by reason of disability or retirement one year or more after the date of grant of an option, the option thereafter may be exercised, during the five years after the date of such termination of employment or the remaining stated period of the option, whichever period is shorter, to the extent to which such option was exercisable at the time of such termination of employment or thereafter would become exercisable during such period in accordance with its terms; provided, however, that if the optionee dies within a period of five years after such termination of employment, any unexercised stock option may be exercised thereafter, during either (1) the period ending on the later of (i) five years after such termination of employment and (ii) one year after the date of death or (2) the period remaining in the stated term of the option, whichever period is shorter, to the extent to which such option was exercisable at the time of his death or thereafter would become exercisable during the remainder of the five-year period after such termination of employment in accordance with its terms. For purposes of this Section 6, "retirement" shall mean termination of employment with the Company or a subsidiary after the optionee has attained age 55 and completed ten or more years of employment; or after the optionee has attained age 65, regardless of the length of such optionee's employment. An optionee shall not be considered disabled for purposes of this Section 6, unless he or she furnishes such medical or other evidence of the existence of the disability as the Committee, in its sole discretion, may require. (h) Effect of Other Termination of Employment. If a participant's employment terminates for any reason, other than disability, death or retirement one year or more after the date of grant of a stock option or stock appreciation right, each stock option and stock appreciation right held by such participant shall thereupon terminate. (i) Additional Agreements of Optionee and Restrictions on Transfer. The Committee may require each person purchasing shares pursuant to exercise of a stock option to represent to and agree with the Company in writing that the shares are being acquired without a view to distribution thereof. The certificates for shares so purchased may include any legend which the Committee deems appropriate to reflect any restrictions on transfers. The Committee also may impose, in its discretion, as a condition of any option, any restrictions on the transferability of shares acquired through the exercise of such option as it may deem fit. Without limiting the generality of the foregoing, the Committee may impose conditions restricting absolutely the transferability of shares acquired through the exercise of options for such periods as the Committee may determine and, further, in the event the optionee's employment by the Company or a subsidiary terminates during the period in which such shares are nontransferable, the optionee may be required, if required by the related option agreement, to sell such shares back to the Company at such price and on such other terms as the Committee may have specified in the option agreement. (j) Nontransferability of Stock Options. A stock option shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution. During the lifetime of an optionee an option shall be exercisable only by the optionee. An option exercisable after the death of an optionee may be exercised by the legatees, personal representatives or distributees of the optionee. 7. Terms and Conditions of Stock Appreciation Rights (a) Grants. The Committee also may grant stock appreciation rights in connection with stock options granted under the Plan, either at the time of grant of options or subsequently. Stock appreciation rights shall cover the same shares covered by an option (or such lesser number of shares of Common Stock as the Committee may determine) and shall be subject to the same terms and conditions as the option except for such additional limitations as are contemplated by this Paragraph 7 (or as may be included in a stock appreciation right granted hereunder). (b) Terms. Each stock appreciation right shall entitle an optionee to surrender to the Company an unexercised option, or any portion thereof, and to receive from the Company in exchange therefor an amount equal to the excess of the fair market value on the exercise date of one share of Common Stock over the option price per share times the number of shares covered by the option, or portion thereof, which is surrendered. The date a notice of exercise is received by the Company shall be the exercise date. Payment shall be made in shares of Common Stock or in cash, or partly in shares and partly in cash, valued at such fair market value, all as shall be determined by the Committee. Stock appreciation rights may be exercised from time to time upon actual receipt by the Company of written notice of exercise stating the number of shares of Common Stock subject to an exercisable option with respect to which the stock appreciation right is being exercised. No fractional shares of Common Stock will be issued in payment for stock appreciation rights, but instead cash will be paid for a fraction or, if the Committee should so determine, the number of shares will be rounded downward to the next whole share. (c) Limitations on Exercisability. The Committee shall impose such conditions upon the exercisability of stock appreciation rights as will result, except upon the occurrence of an event contemplated by limited stock appreciation rights granted pursuant to Paragraph 7(d) or contemplated by the provisions of Paragraph 9, in the amount to be charged against the Company's consolidated income by reason of stock appreciation rights not to exceed, in any one calendar year, two percent of the Company's prior calendar year's consolidated income before income taxes. The Committee also may impose, in its discretion, such other conditions upon the exercisability of stock appreciation rights as it may deem fit. (d) Limited Stock Appreciation Rights. The Committee may grant limited stock appreciation rights which are exercisable upon the occurrence of specified contingent events. Such stock appreciation rights may provide for a different method of determining appreciation, may specify that payment will be made only in cash and may provide that related stock options or stock appreciation rights or both are not exercisable while such limited stock appreciation rights are exercisable. Unless the context otherwise requires, whenever the term "stock appreciation right" is used in the Plan, such term shall include limited stock appreciation rights. 8. Transfers and Leaves of Absence For purposes of the Plan: (a) a transfer of an employee from the Company to a 50% or more owned subsidiary, partnership, venture or other affiliate (whether or not incorporated) or vice versa, or from one such subsidiary, partnership, venture or other affiliate to another, (b) a leave of absence, duly authorized by the Company, for military service or sickness or for any other purpose approved by the Company if the period of such leave does not exceed 90 days, or (c) a leave of absence in excess of 90 days, duly authorized in writing by the Company, provided the employee's right to re-employment is guaranteed either by statute or by contract, shall not be deemed a termination of employment under the Plan. 9. Adjustments Upon Changes in Capitalization or Other Events Upon changes in the Common Stock of the Company by reason of a stock dividend, stock split, reverse split, recapitalization, merger, consolidation, combination or exchange of shares, separation, reorganization or liquidation, the number and class of shares available under the Plan as to which stock options or stock appreciation rights may be granted, the number and class of shares under each option and the option price per share, and the terms of stock appreciation rights shall be correspondingly adjusted by the Committee, such adjustments to be made in the case of outstanding options without change in the total price applicable to such options. In the event of a merger, consolidation, combination, reorganization or other transaction in which the Company will not be the surviving corporation, an optionee shall be entitled to options on that number of shares of stock in the new corporation which the optionee would have received had the optionee exercised all of the unexercised options available to the optionee under the Plan, whether or not then exercisable, at the instant immediately prior to the effective date of such transaction, and if such unexercised options had related stock appreciation rights the optionee also will receive new stock appreciation rights related to the new options. Thereafter, adjustments as provided above shall relate to the options or stock appreciation rights of the new corporation. Except as otherwise specifically provided in the stock option or stock appreciation right, in the event of a Change in Control, merger, consolidation, combination, reorganization or other transaction in which the shareowners of the Company will receive cash or securities (other than common stock) or in the event that an offer is made to the holders of Common Stock of the Company to sell or exchange such Common Stock for cash, securities or stock of another corporation and such offer, if accepted, would result in the offeror becoming the owner of (a) at least 50% of the outstanding Common Stock of the Company or (b) such lesser percentage of the outstanding Common Stock which the Committee in its sole discretion determines will materially adversely affect the market value of the Common Stock after the tender or exchange offer, the Committee shall, prior to the shareowners' vote on such transaction or prior to the expiration date (without extensions) of the tender or exchange offer, (i) accelerate the time of exercise so that all stock options and stock appreciation rights which are outstanding shall become immediately exercisable in full without regard to any limitations of time or amount otherwise contained in the Plan or the options or stock appreciation rights and/or (ii) determine that the options and stock appreciation rights shall be adjusted and make such adjustments by substituting for Common Stock of the Company subject to options and stock appreciation rights, common stock of the surviving corporation or offeror if such stock of such corporation is publicly traded or, if such stock is not publicly traded, by substituting common stock of a parent of the surviving corporation or offeror if the stock of such parent is publicly traded, in which event the aggregate option price shall remain the same and the number of shares subject to option shall be the number of shares which could have been purchased on the closing day of such transaction or the expiration date of the offer with the proceeds which would have been received by the optionee if the option had been exercised in full prior to such transaction or expiration date and the optionee had exchanged all of such shares in the transaction or sold or exchanged all of such shares pursuant to the tender or exchange offer, and if any such option has related stock appreciation rights, the stock appreciation rights shall likewise be adjusted. No optionee shall have any right to prevent the consummation of any of the foregoing acts affecting the number of shares available to the optionee, but the optionee's remedy shall be limited to a determination by an appropriate court of the number of shares or cash to which the optionee shall thereafter be entitled and appropriate orders for the issuance of such shares or payment of such cash. For purposes of this Paragraph 9, "Change in Control" means (i) 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 Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the shareowners of the Company in substantially the same proportion as their ownership of stock of the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities; (ii) 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 Company to effect a transaction described in clause (i), (iii), or (iv) of this sentence) whose election by the Board or nomination for election by the Company's shareowners 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; (iii) the shareowners of the Company approve a merger or consolidation of the Company with any other company, other than (1) a merger or consolidation which would result in the voting securities of the Company 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 Company or such surviving entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 50% of the combined voting power of the Company's then outstanding securities; or (iv) the shareowners of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. 10. Use of Proceeds Proceeds from the sale of shares of Common Stock pursuant to exercise of stock options granted under the Plan shall constitute general funds of the Company. 11. Amendments The Board of Directors may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would impair the rights of any optionee under any option theretofore granted, without the optionee's consent, or which, without the approval of the shareowners of the Company, would: (a) Except as is provided in Paragraph 9 of the Plan, increase the total number of shares reserved for the purposes of the Plan. (b) Decrease the option price to less than 100% of fair market value on the date of grant of an option. (c) Change the employees (or class of employees) eligible to receive stock options under the Plan. (d) Materially increase the benefits accruing to employees participating under the Plan. 12. Effectiveness of the Plan The Plan shall be submitted within one year of the date of its adoption to the shareowners of the Company for their approval, and if not so approved within that period, the Plan and all options and stock appreciation rights granted hereunder shall be void and of no force or effect. EX-10.U 8 THE DUN & BRADSTREET EXECUTIVE TRANSITION PLAN The Dun & Bradstreet Corporation (the "Company") wishes to define those circumstances under which it will provide assistance to an Eligible Employee in the event of his or her Eligible Termination (as such terms are defined herein). Accordingly, the Company hereby establishes The Dun & Bradstreet Executive Transition Plan (the "Plan"). 1 - DEFINITIONS ----------- 1.1 "Administrative Committee" shall mean a committee of Company management employees heretofore established by the Committee. 1.2 "Cause" shall mean (a) willful malfeasance or willful misconduct by the Eligible Employee in connection with his or her employment, (b) continuing failure to perform such duties as are requested by any employee to whom the Eligible Employee reports or the Company's board of directors, (c) failure by the Eligible Employee to observe material policies of the Company applicable to the Eligible Employee or (d) the commission by an Eligible Employee of (i) any felony or (ii) any misdemeanor involving moral turpitude. 1.3 "Committee" shall mean the Executive Compensation and Stock Option Committee of the Board of Directors of the Company. 1.4 "Eligible Employee" shall mean the Chief Executive Officer of the Company and such other executive officers of the Company or its affiliates as are designated in writing by the Chief Executive Officer. 1.5 "Eligible Termination" shall mean (a) an involuntary termination of employment with the Company by reason of a reduction in force program, job elimination or unsatisfactory performance in the execution of an Eligible Employee's duties or (b) a resignation mutually agreed to in writing by the Company and the Eligible Employee. Notwithstanding the foregoing, an Eligible Termination shall not include (w) a unilateral resignation, (x) a termination by the Company for Cause, (y) a termination as a result of a sale (whether in whole or in part, of stock or assets), merger or other combination, spinoff, reorganization or liquidation, dissolution or other winding up or other similar transactions involving the Company or (z) any termination where an offer of employment is made to the Eligible Employee of a comparable position at the Company concurrently with his or her Eligible Termination. 1.6 "Salary" shall mean an Eligible Employee's annual base salary at the time his or her employment terminates, except as otherwise provided in Schedule A hereto. 1.7 "Severance and Release Agreement" shall mean an agreement signed by the Eligible Employee substantially in the form attached hereto as Exhibit 1. Notwithstanding the foregoing, the Company may, by action of its chief human resources officer or chief legal counsel, modify the form of Severance and Release Agreement to be signed by any Eligible Employee in a manner approved by the Administrative Committee. 2 - SEVERANCE BENEFITS ------------------ 2.1 Subject to the provisions of this Section 2, in the event of an Eligible Termination, an Eligible Employee shall be entitled to receive from the Company the benefits set forth on Schedule A hereto. 2.2 The grant of severance benefits pursuant to Section 2.1 hereof is conditioned upon an Eligible Employee's (a) signing a Severance and Release Agreement and the expiration of any revocation period set forth therein and, (b) relinquishment of any right to benefits under the Dun & Bradstreet Career Transition Plan. 2.3 Notwithstanding any other provision contained herein, the Chief Executive Officer of the Company may, at any time, take such action as such officer, in such officer's sole discretion, deems appropriate to reduce or increase by any amount the benefits otherwise payable to an Eligible Employee pursuant to Schedule A or otherwise modify the terms and conditions applicable to an Eligible Employee under this Plan provided that the Chief Executive Officer reports any reduction or increase in benefits or other modification of the terms and conditions hereof to the Committee and provided further that with respect to benefits payable, or other modifications applicable, to the Chief Executive Officer, only the Committee may take such action. Benefits granted hereunder may not exceed an amount nor be paid over a period which would cause the Plan to be other than a "welfare benefit plan" under section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 2.4 In the event the Company, in its sole discretion, grants an Eligible Employee a period of inactive employee status, then, in such event, any amounts paid to such Eligible Employee during any such period shall offset the benefits payable under this Plan. For this purpose, a period of inactive employee status shall mean the period beginning on the date such status commences (of which the Eligible Employee shall be notified) and ending on the date of such Eligible Employee's termination of employment. 3 - AMENDMENT AND TERMINATION ------------------------- 3.1 The Company reserves the right to terminate the Plan at any time and without any further obligation by action of its board of directors or such other person or persons to whom the board properly delegates such authority. 3.2 The Company shall have the right to modify or amend the terms of the Plan at any time, or from time to time, to any extent that it may deem advisable by action of its board of directors, the Committee or such other person or persons to whom the board or the Committee properly delegates such authority. 3.3 All modifications of or amendments to the Plan shall be in writing. 4 - ADMINISTRATION OF THE PLAN -------------------------- 4.1 The Committee shall be the Plan Administrator and shall have the exclusive right, power and authority to: (a) interpret, in its sole discretion, any and all of the provisions of the Plan; (b) establish a claims and appeals procedures; and (c) consider and decide conclusively any questions (whether of fact or otherwise) arising in connection with the administration of the Plan or any claim for severance benefits arising under the Plan. Any decision or action of the Committee pursuant to this Section 4.1 shall be conclusive and binding on any affected person. 4.2 The Committee may, in its sole discretion, cause the Administrative Committee or its designee to function as the Committee for purposes of this section 4. 4.3 The Company shall indemnify any individual who is a director, officer or employee of the Company or any affiliate, or his or her heirs and legal representatives, against all liability and reasonable expense, including counsel fees, amounts paid in settlement and amounts of judgments, fines or penalties, incurred or imposed upon him or her in connection with any claim, action, suit or proceeding, whether civil, criminal, administrative or investigative, in connection with his or her duties with respect to the Plan, provided that any act or omission giving rise to such claim, action, suit or proceeding does not constitute willful misconduct or is not performed or omitted in bad faith. 5 - MISCELLANEOUS 5.1 Neither the establishment of the Plan nor any action of the Company, the Committee, or any fiduciary shall be held or construed to confer upon any person any legal right to continue employment with the Company. The Company expressly reserves the right to discharge any employee whenever the interest of the Company, in its sole judgment, may so require, without any liability on the part of the Company, the Committee, or any fiduciary. 5.2 Benefits payable under the Plan shall be paid out of the general assets of the Company or an affiliate. The Company need not fund the benefits payable under this Plan; however, nothing in this Section 5.2 shall be interpreted as precluding the Company from funding or setting aside amounts in anticipation of paying such benefits. Any benefits payable to an Eligible Employee under this Plan shall represent an unsecured claim by such Eligible Employee against the general assets of the Company that employed such Eligible Employee. 5.3 The Company shall deduct from the amount of any severance benefits payable hereunder the amount required by law to be withheld for the payment of any taxes and any other amount, properly to be withheld. 5.4 Benefits payable under the Plan shall not be subject to assignment, alienation, transfer, pledge, encumbrance, commutation or anticipation by the Eligible Employee. Any attempt to assign, alienate, transfer, pledge, encumber, commute or anticipate Plan benefits shall be void. 5.5 This Plan shall be interpreted and applied in accordance with the laws of the State of New York, except to the extent superseded by applicable federal law. 5.6 This Plan will be of no force or effect to the extent superseded by foreign law. 5.7 This Plan supersedes any and all prior severance arrangements, policies, plans or practices of the Company (whether written or unwritten). Notwithstanding the preceding sentence, the Plan does not affect the severance provisions of any written individual employment contracts or written agreements between an Eligible Employee and the Company. Benefits payable under the Plan shall be offset by any other severance or termination payment made by the Company including, but not limited to, amounts paid pursuant to any agreement or law. 5.8 This Plan shall be effective as of May 17, 1995. Schedule A An Eligible Employee entitled to benefits hereunder shall, subject to section 2 of the Plan, receive the following: 1 Salary Continuation The Eligible Employee shall receive 104 weeks of Salary continuation, provided, however, that for purposes of determining the Salary continuation amount, in the event the Eligible Employee has incurred an Eligible Termination other than by reason of unsatisfactory performance, "Salary" shall include the Eligible Employee's guideline bonus opportunity under The Dun & Bradstreet Corporation Corporate Management Incentive Plan or other annual bonus plan for the year of termination, payment of which will be prorated annually over a period equal to the number of weeks of Salary continuation (the "Salary Continuation Period") and made at the same time as other Salary continuation amounts. Salary continuation hereunder shall be paid at the times the Eligible Employee's Salary would have been paid if employment had not terminated, over the Salary Continuation Period. In the event the Eligible Employee performs services for an entity other than the Company or a Participating Company during the Salary Continuation Period, such employee shall notify the Company on or prior to the commencement thereof and, as soon as practicable thereafter, receive one-half the remaining amount of his or her Salary continuation payments in a lump sum. No further Salary continuation payments shall be made hereunder and the Salary Continuation Period shall end upon the commencement of such services. In the event the Eligible Employee fails to notify the Company of the performance of such services on or prior to the commencement thereof, the Eligible Employee shall not be entitled to any further Salary continuation payments hereunder, the Salary Continuation Period shall end and any amounts previously paid to the Eligible Employee pursuant to the Plan shall be immediately repaid to the Company. For purposes of this Schedule A, to "perform services" shall mean employment or services as a full-time employee, partner, associate, agent or otherwise on behalf of any person, principal, partnership, firm or corporation (other than the Company or a Participating Company). All Salary continuation payments shall cease upon reemployment by the Company or a Participating Company. For purposes of this paragraph 1, a "Participating Company" shall mean the Company or any other affiliated entity more than 50% of the voting interests of which are owned, directly or indirectly, by the Company and which has elected to participate in The Dun & Bradstreet Corporation Career Transition Plan. 2 Welfare Benefit Continuation Medical, dental and life insurance benefits shall be provided throughout the Salary Continuation Period at the levels in effect for the Eligible Employee immediately prior to termination of employment but in no event greater than the levels in effect for active employees generally during the Salary Continuation Period, provided that the Eligible Employee shall pay the employee portion of any required premium payments at the level in effect for employees generally of the Company for such benefits. For purposes of determining an Eligible Employee's entitlement to continuation coverage as required by Title I, Subtitle B, Part 6 of ERISA, such employee's 18 month or other period of coverage shall commence on his or her termination of employment. 3 Annual Bonus Payment Subject to the provisions of this paragraph 3, a cash bonus for the calendar year of termination may be paid in an amount equal to the actual bonus which would have been payable to the Eligible Employee under The Dun & Bradstreet Corporation Corporate Management Incentive Plan or other annual bonus plan (the "Incentive Plan") had such employee remained employed through the end of the year of such termination multiplied by a fraction the numerator of which is the number of full months of employment during the calendar year of termination and the denominator of which is 12. Such bonus shall be payable at the time otherwise payable under the Incentive Plan had employment not terminated. Notwithstanding the foregoing, no amount shall be paid under this paragraph in the event the Eligible Employee incurred an Eligible Termination by reason of unsatisfactory performance. The foregoing provisions of this paragraph 3 shall be appropriately modified in the case of any plan not on a calendar year basis. 4 Long Term Awards Cash payments shall be made to an Eligible Employee as set forth in this paragraph in respect of "Units" (as such term is defined in the Key Employees Performance Unit Plan for the Dun & Bradstreet Corporation and Subsidiaries (the "PUP")) otherwise payable under the PUP had the employee remained employed through the end of the applicable "Award Period" (as defined in the PUP) in the event the Eligible Employee was employed by the Company for at least 18 consecutive months of any such Award Period. In such event, cash payments shall be made to an Eligible Employee in amounts equal to the value of (i) the Units, as earned, and (ii) the restricted stock match, otherwise payable under the PUP had the employee remained employed through the end of the applicable Award Period multiplied by a fraction the numerator of which is the number of full months of employment with the Company from the beginning of the Award Period to termination of employment, and the denominator of which is the full number of months in the Award Period. Such payments shall be made at the times the Units in respect of which such payments are made would otherwise be payable under the PUP had employment not terminated. Notwithstanding the foregoing, no amounts shall be paid under this paragraph in the event the Eligible Employee incurred an Eligible Termination by reason of unsatisfactory performance. Nothing contained herein shall reduce any amounts otherwise required to be paid under the PUP except to the extent such amounts are paid hereunder. 5 Death Upon the death of an Eligible Employee during the Salary Continuation Period, the benefits described in paragraphs 1, 3 and 4 of this Schedule shall continue to be paid to his or her estate, as applicable, at the time or times otherwise provided for herein. 6 Cash Equivalency Payment The Eligible Employee shall receive, as soon as practicable following the date of termination, an amount in cash equal to the fair market value on such date of termination of the number of shares of restricted Company common stock then held by such employee. For purposes of this paragraph 6, the fair market value of Company common stock shall equal the closing price of such stock on the New York Stock Exchange composite tape on the date of termination or, if such date is not a trading day, on the trading day immediately prior thereto. Notwithstanding the foregoing, no amounts shall be paid under this paragraph in the event the Eligible Employee incurred an Eligible Termination by reason of unsatisfactory performance. 7 Other Benefits The Eligible Employee shall be entitled to such executive outplacement services during the Salary Continuation Period as shall be provided by the Company. During the Salary continuation period, financial planning/counseling shall be afforded to the Eligible Employee to the same extent afforded immediately prior to termination of employment in the event the Eligible Employee incurred an Eligible Termination other than by reason of unsatisfactory performance. 8 No Further Grants, Etc. Following an Eligible Employee's termination of employment, no further grants, awards, contributions, accruals or continued participation (except as otherwise provided for herein) shall be made to or on behalf of such employee under any plan or program maintained by the Company including, but not limited to, the Incentive Plan, the PUP or any qualified or nonqualified retirement, profit sharing, stock option or restricted stock plan of the Company. Any unvested or unexercised options, unvested restricted stock and all other benefits under any plan or program maintained by the Company (including, but not limited to, the Incentive Plan, the PUP or any qualified or nonqualified retirement, profit sharing, stock option or restricted stock plan) which are held or accrued by an Eligible Employee at the time of his or her termination of employment, shall be treated in accordance with the terms of such plans and programs under which such options, restricted stock or other benefits were granted or accrued. Exhibit 1 SEVERANCE AGREEMENT AND RELEASE THIS SEVERANCE AGREEMENT AND RELEASE, made by and between (hereinafter referred to as "Employee"), and The Dun & Bradstreet Corporation (hereinafter deemed to include its worldwide subsidiaries and affiliates and referred to as "the Company"). WITNESSETH THAT: WHEREAS, Employee has been employed by the Company since the date specified in the Appendix; and WHEREAS, the parties to this Agreement desire to enter into an agreement in order to provide certain benefits and salary continuation to Employee; NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter provided and of the actions taken pursuant thereto, the parties agree as follows: (1) Employee has resigned from the positions with the Company specified in the Appendix, and from any committees of which Employee is a member, effective on the date set forth in the Appendix. (2) Effective on the date set forth in the Appendix, Employee will incur an "Eligible Termination" under The Dun & Bradstreet Executive Transition Plan (the "Plan"), a summary plan description of which Employee hereby acknowledges receipt, and will, accordingly, be entitled to the benefits set forth therein subject to the terms and conditions of such Plan. A summary of the benefits to which Employee is entitled under the Plan is set forth in the Appendix. (3) Through the Termination Date specified in the Appendix, Employee will be reasonably available to consult on matters, and will cooperate fully with respect to any claims, litigations or investigations, relating to the Company. No reimbursement for expenses incurred after the commencement of a period of inactive employee status, or if there is no such period, after termination of employment, shall be made to Employee unless authorized in advance by the Company. A period of inactive employee status means the period beginning on the date such status commences (of which Employee will be notified) and ending on the date of Employee's termination of employment. (4) Employee agrees that until the Termination Date Employee will not become a stockholder (unless such stock is listed on a national securities exchange or traded on a daily basis in the over-the-counter market and the Employee's ownership interest is not in excess of 2% of the company whose shares are being purchased), employee, officer, director or consultant of or to a corporation, or a member or an employee of or a consultant to a partnership or any other business or firm, which competes with any of the businesses owned or operated by the Company; nor if Employee becomes associated with a company, partnership or individual which company, partnership or individual acts as a consultant to businesses in competition with the Company will Employee provide services to such competing businesses. The restrictions contained in this paragraph shall apply whether or not Employee accepts any form of compensation from such competing entity or consultant. Employee also agrees that until the Termination Date Employee will not recruit or solicit any customers of the Company to become customers of any business entity which competes with any of the businesses owned or operated by the Company. In addition, Employee agrees that until the Termination Date neither Employee nor any company or entity Employee controls or manages, shall recruit or solicit any employee of the Company to become an employee of any business entity. (5) If Employee performs services for an entity other than the Company at any time prior to the Termination Date (whether or not such entity is in competition with the Company), Employee shall notify the Company on or prior to the commencement thereof. To "perform services" shall mean employment or services as a full-time employee, partner, associate, agent or otherwise on behalf of any person, principal, partnership, firm or corporation. For purposes of this paragraph 5 only, "Company" shall mean The Dun & Bradstreet Corporation and any other affiliated entity more than 50% of the voting interests of which are owned, directly or indirectly, by The Dun & Bradstreet Corporation and which has elected to participate in The Dun & Bradstreet Career Transition Plan by action of its board of directors. (6) Employee agrees that Employee will not directly or indirectly disclose any proprietary or confidential information, records, data, formulae, specifications and other trade secrets owned by the Company, whether oral or written, to any person or use any such information, except pursuant to court order (in which case Employee will first provide the Company with written notice of such). All records, files, drawings, documents, models, disks, equipment and the like relating to the businesses of the Company shall remain the sole property of the Company and shall not be removed from the premises of the Company. Employee further agrees to return to the Company any property of the Company which Employee may have, no matter where located, and not to keep any copies or portions thereof. (7) Employee shall not make any derogatory statements about the Company and shall not make any written or oral statement, news release or other announcement relating to Employee's employment by the Company or relating to the Company, its subsidiaries, customers or personnel, which is designed to embarrass or criticize any of the foregoing. (8) Employee agrees that in the event of any breach of the covenants contained in paragraphs 3, 4, 5, 6 or 7 in addition to any remedies that may be available to the Company, the Company may cease all payments required to be made to Employee under the Plan and recover all such payments previously made to Employee pursuant to the Plan. The parties agree that any such breach would cause injury to the Company which cannot reasonably or adequately be quantified and that such relief does not constitute in any way a penalty or a forfeiture. (9) Employee, for Employee, Employee's family, representatives, successors and assigns releases and forever discharges the Company and its successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents and trustees or administrators of any Company plan from any and all claims, demands, debts, damages, injuries, actions or rights of action of any nature whatsoever, whether known or unknown, which Employee had, now has or may have against the Company, its successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents and trustees or administrators of any Company plan, from the beginning of Employee's employment to and including the date of this Agreement relating to or arising out of Employee's employment with the Company or the termination of such employment other than a claim with respect to a vested right Employee may have to receive benefits under any plan maintained by the Company. Employee represents that Employee has not filed any action, complaint, charge, grievance or arbitration against the Company or any of its successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents and trustees or administrators of any Company plan. (10) Employee covenants that neither Employee, nor any of Employee's respective heirs, representatives, successors or assigns, will commence, prosecute or cause to be commenced or prosecuted against the Company or any of its successors, assigns, subsidiaries, affiliates, directors, officers, employees, attorneys, agents and trustees or administrators of any Company plan any action or other proceeding based upon any claims, demands, causes of action, obligations, damages or liabilities which are being released by this Agreement, nor will Employee seek to challenge the validity of this Agreement, except that this covenant not to sue does not affect Employee's future right to enforce appropriately the terms of this Agreement in a court of competent jurisdiction. (11) Employee acknowledges that (a) Employee has been advised to consult with an attorney at Employee's own expense before executing this Agreement and that Employee has been advised by an attorney or has knowingly waived Employee's right to do so, (b) Employee has had a period of at least twenty-one (21) days within which to consider this Agreement, (c) Employee has a period of seven (7) days from the date that Employee signs this Agreement within which to revoke it and that this Agreement will not become effective or enforceable until the expiration of this seven (7) day revocation period, (d) Employee fully understands the terms and contents of this Agreement and freely, voluntarily, knowingly and without coercion enters into this Agreement, (e) Employee is receiving greater consideration hereunder than Employee would receive had Employee not signed this Agreement and that the consideration hereunder is given in exchange for all of the provisions hereof and (f) the waiver or release by Employee of rights or claims Employee may have under Title VII of the Civil Rights Act of 1964, The Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Fair Labor Standards Act, the Americans with Disabilities Act, the Rehabilitation Act, the Worker Adjustment and Retraining Act (all as amended) and/or any other local, state or federal law dealing with employment or the termination thereof is knowing and voluntary and, accordingly, that it shall be a breach of this Agreement to institute any action or to recover any damages that would be in conflict with or contrary to this acknowledgement or the releases Employee has granted hereunder. Employee understands and agrees that the Company's payment of money and other benefits to Employee and Employee's signing of this Agreement does not in any way indicate that Employee has any viable claims against the Company or that the Company admits any liability whatsoever. (12) This Agreement constitutes the entire agreement of the parties and all prior negotiations or representations are merged herein. It shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and legal representatives but neither this Agreement nor any rights hereunder shall be assignable by either party without the other party's consent. In addition, this Agreement supersedes any prior employment or compensation agreement, whether written, oral or implied in law or implied in fact between Employee and the Company, other than those contracts and agreements excepted from the application of section 5.7 of the Plan pursuant to the terms of such section, which prior agreements are hereby terminated. (13) If for any reason any one or more of the provisions of this Agreement shall be held or deemed to be inoperative, unenforceable or invalid by a court of competent jurisdiction, such circumstances shall not have the effect of rendering such provision invalid in any other case or rendering any other provisions of this Agreement inoperative, unenforceable or invalid. (14) This Agreement shall be construed in accordance with the laws of the State of _____________, except to the extent superseded by applicable federal law. (15) This Agreement shall terminate in its entirety the Change in Control Severance Agreement between the Company and Employee. [USE PROVISION IF APPLICABLE] IN WITNESS WHEREOF, Employee and The Dun & Bradstreet Corporation, by its duly authorized agent, have hereunder executed this Agreement. Dated: Employee THE DUN & BRADSTREET CORPORATION Title: Appendix Summary of Benefit Entitlements Under the Dun & Bradstreet Executive Transition Plan
Employment with Company Since: ______________________________ Effective Date of Resignation: ______________________________ Positions Resigned: ______________________________ Effective Date of Eligible Termination: ______________________________ Termination Date: ______________________________ Salary Continuation: $____ per week for ____ weeks Welfare Benefit Continuation: [LIST NAMES OF MEDICAL, DENTAL, LIFE PLANS UNDER WHICH EMPLOYEE COVERED] Annual Bonus Payment: [x] 12 of the annual bonus otherwise payable to you at time of normal payment. Long-Term Award: [x] [y] of the long-term awards otherwise payable to you for the _______ cycles at time of normal payment. Cash Equivalency Payment: Executive Outplacement: As provided by the Company. [Financial Planning/Counseling:] The description of benefits contained in this Appendix is only a summary and is subject to the terms and conditions of the Plan. Refer to your summary plan description for more detail.
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5 1000 12-MOS DEC-31-1995 DEC-31-1995 385479 52762 1451671 0 0 2298438 1951140 1076703 5515788 2208475 0 0 0 188417 994048 5515788 0 5415141 0 4893294 57190 0 20941 443716 122909 320807 0 0 0 320807 1.89 1.89
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