-----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, MYGH8NNRpsZrNZnd2wwHJ55/71EBaosXgggrcraOURNae0ZD00vILdVbXn0roMEI C2R9X0MjYvCThvQvF8QCrg== 0000030419-96-000014.txt : 19960730 0000030419-96-000014.hdr.sgml : 19960730 ACCESSION NUMBER: 0000030419-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960507 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUN & BRADSTREET CORP CENTRAL INDEX KEY: 0000030419 STANDARD INDUSTRIAL CLASSIFICATION: 8700 IRS NUMBER: 132740040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07155 FILM NUMBER: 96557354 BUSINESS ADDRESS: STREET 1: 187 DANBURY ROAD CITY: WILTON STATE: CT ZIP: 06897 BUSINESS PHONE: 2032224200 MAIL ADDRESS: STREET 1: 187 DANBURY ROAD STREET 2: 34TH FLOOR CITY: WILTON STATE: CT ZIP: 06897 FORMER COMPANY: FORMER CONFORMED NAME: DUN & BRADSTREET COMPANIES INC DATE OF NAME CHANGE: 19790429 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark one) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------------------- ----------------------------- Commission file number 1-7155 THE DUN & BRADSTREET CORPORATION - - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-2740040 - - ---------------------------------- --------------------- - - ---------------------------------- --------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 187 Danbury Road, Wilton, CT 06897 - - ---------------------------------- --------------------- - - ---------------------------------- --------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 834-4200 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Shares Outstanding Title of Class at April 30, 1996 - - -------------------- ------------------------- Common Stock, par value $1 per share 169,933,000 THE DUN & BRADSTREET CORPORATION INDEX TO FORM 10-Q PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Condensed Consolidated Statement of Income (Unaudited) Three Months Ended March 31, 1996 and 1995 3 Condensed Consolidated Statement of Cash Flows (Unaudited) Three Months Ended March 31, 1996 and 1995 4 Condensed Consolidated Statement of Financial Position (Unaudited) March 31, 1996 and December 31, 1995 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10 PART I. FINANCIAL INFORMATION Item I. FINANCIAL STATEMENTS THE DUN & BRADSTREET CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) (In millions except per share amounts)
Three Months Ended March 31 --------------------------------------------- 1996 1995 ------------------ ----------------- Operating Revenue $1,272.0 $1,219.6 Operating Costs 647.9 599.0 Selling and Administrative Expenses 481.5 475.8 Restructuring (Income) - Net 0.0 (28.0) ------------------ ----------------- Operating Income 142.6 172.8 Interest Expense - Net 3.6 6.5 Other Expense - Net 16.4 15.7 ------------------ ----------------- Non-Operating Expense - Net 20.0 22.2 Income Before Provision for Taxes 122.6 150.6 Provision for Income Taxes 34.8 41.7 ------------------ ----------------- Net Income $87.8 $108.9 ================== ================= Earnings Per Share of Common Stock $0.52 $0.64 ================== ================= Dividends Paid Per Share of Common Stock $0.66 $0.65 ================== ================= Average Number of Shares Outstanding 169.7 169.7 See accompanying notes to the condensed consolidated financial statements (unaudited). -3-
THE DUN & BRADSTREET CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - - ------------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------------ Three Months Ended March 31, (Amounts in millions) 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Operating Activities: Net Income $87.8 $108.9 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Depreciation and 107.5 116.0 Amortization Gain from Sale of 0.0 (28.0) Business Restructuring Provisions 0.0 0.0 Restructuring Payments (28.9) (37.1) Postemployment Benefits 5.0 3.5 Expense Postemployment Benefits 0.0 0.0 Curtailment Loss/(Gain) Postemployment Benefit (21.3) (26.7) Payments Net Decrease (Increase) 16.2 (46.7) in Accounts Receivable Unearned Subscription 144.5 151.5 Income Income Taxes 5.6 (6.6) Refunded/(Paid) - Net Net Changes in Other (104.2) (65.9) Working Capital Items - - ------------------------------------------------------------------------------------------------------------------------------ Net Cash Provided by 212.2 168.9 Operating Activities - - ------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Investing Activities: Proceeds from Marketable 14.0 9.1 Securities Payments for Marketable (32.0) (4.5) Securities Capital Expenditures (61.9) (80.0) Additions to Computer (47.7) (37.2) Software and Other Intangibles Decrease (Increase) in 2.2 (11.9) Other Investments and Notes Receivable Other 8.6 28.2 - - ---------------------------------------------------------------------------------------------------------------------------------- Net Cash Used in Investing (116.8) (96.3) Activities - - ---------------------------------------------------------------------------------------------------------------------------------- Cash Flows from Financing Activities: Payment of Dividends (112.0) (110.9) Payments for Purchase of (3.1) (18.6) Treasury Shares Net Proceeds from Exercise 24.8 7.5 of Stock Options Increase in U.S. Short-term 2.2 113.1 Borrowings Other (0.3) 6.9 - - ---------------------------------------------------------------------------------------------------------------------------------- Net Cash Used in Financing Activities (88.4) (2.0) - - --------------------------------------------------------------------------------------------------------------------------------- Effect of Exchange Rate Changes on Cash and Cash Equivalents (2.5) 9.2 - - --------------------------------------------------------------------------------------------------------------------------------- Increase in Cash and Cash 4.5 79.8 Equivalents Cash and Cash Equivalents, 385.5 335.4 Beginning of Year - - ----------------------------------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents, $390.0 $415.2 End of Period - - ------------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------------ See accompanying notes to the condensed consolidated financial statements (unaudited). - 4 -
THE DUN & BRADSTREET CORPORATION Condensed Consolidated Statement of Financial Position (Unaudited) (Amounts in millions)
- - ------------------------------------------------------------------------------------------ March 31 December 31 1996 1995 - - ------------------------------------------------------------------------------------------ Assets Current Assets Cash and Cash Equivalents $390.0 $385.5 Marketable Securities 74.4 52.8 Accounts Receivable-Net 1,427.1 1,451.7 Other Current Assets 437.8 408.5 ------------------ -------------- Total Current Assets 2,329.3 2,298.5 - - ------------------------------------------------------------------------------------------------------------------- Investments Marketable Securities 134.9 139.5 Other Investments and Notes Receivable 335.2 336.9 ------------------ -------------- Total Investments 470.1 476.4 - - ------------------------------------------------------------------------------------------------------------------- Property, Plant and Equipment-Net 879.4 874.4 - - ------------------------------------------------------------------------------------------------------------------- Other Assets-Net Deferred Charges 361.8 366.3 Computer Software 336.0 312.3 Other Intangibles 161.6 178.5 Goodwill 1,002.6 1,009.4 ------------------ -------------- Total Other Assets-Net 1,862.0 1,866.5 - - ------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $5,540.8 $5,515.8 - - ------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current Liabilities Accounts Payable $321.8 $357.6 Short-term Debt 446.6 444.5 Accrued and Other Current Liabilities 1,273.5 1,364.3 Accrued Income Taxes 73.8 42.1 Redeemable Partnership Interests 625.0 625.0 ------------------ -------------- Total Current Liabilities 2,740.7 2,833.5 - - ------------------------------------------------------------------------------------------------------------------- Unearned Subscription Income 463.1 319.6 Postretirement and Postemployment Benefits 560.6 553.3 Deferred Income Taxes 164.9 167.7 Other Liabilities and Minority Interests 432.2 459.2 - - ------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES $4,361.5 $4,333.3 - - ------------------------------------------------------------------------------------------------------------------- Shareholders' Equity $1,179.3 $1,182.5 - - ------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,540.8 $5,515.8 - - ------------------------------------------------------------------------------------------------------------------- See accompanying notes to the condensed consolidated financial statements (unaudited). -5-
THE DUN & BRADSTREET CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - Interim Consolidated Financial Statements These interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and related notes of The Dun & Bradstreet Corporation (the "Company" or "D&B") 1995 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. Certain prior year amounts have been reclassified to conform with the 1996 presentation. 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 ACNielsen. In connection with the reorganization, several other divisions, such as Dun & Bradstreet Software (DBS) and American Credit Indemnity (ACI) 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. Note 2 - Assets Held for Sale The Company plans to divest DBS and ACI in 1996, in connection with plans to reorganize into three separate companies later in 1996. The aggregate carrying amount of the businesses held for sale totaled $490 million at March 31, 1996. For the quarter ended March 31, 1996 aggregate operating revenue and operating losses of the businesses to be divested were $95 million and $7 million, respectively. Additionally, in April, the Company obtained authorization to sell the Proprietary West division of Reuben H. Donnelley. Note 3 - Investment Partnerships During 1993, three of the Company's subsidiaries contributed assets and third-party investors contributed cash ($125 million) to a limited partnership. One of the Company's subsidiaries serves as general partner. All of the other partners, including the third-party investors, hold limited partner interests. The partnership, which is a separate and distinct legal entity, is in the business of licensing database assets and computer software. In addition, during 1993, the Company participated in the formation of a limited partnership to invest in various securities including those of the Company. One of the company's subsidiaries serves as managing general partner. Third-party investors hold limited partner and special investors interests totaling $500 million. The special investors are entitled to a specified return on their investments. Funds raised by the partnership provided a source of the financing for the Company's repurchase in 1993 of 8.3 million shares of its common stock. -6- For financial reporting purposes, the assets, liabilities, results of operations and cash flow of the partnerships described above are included in the Company's consolidated financial statements. The third-parties investments in these partnerships at March 31, 1996 and December 31, 1995 totaled approximately $625 million, and are reflected in redeemable partnership interests. Third-parties share of partnerships results of operations, including specified returns, is reflected in other income and expense-net. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Earnings per share in the first quarter were $.52 compared with year-ago earnings of $.64, which included a $.12 per share, or $28 million pre-tax restructuring gain related to the sale of warrants received in connection with the divestiture of Donnelley Marketing. Excluding the gain, D&B's first-quarter earnings were unchanged. Earnings were held down by $.03 a share, or $7 million, due to operating losses at businesses that will be divested by D&B in connection with the Company's reorganization. First-quarter revenue rose to $1.27 billion, up 4.3% from $1.22 billion a year ago. Revenue for the quarter was held down by a decline at DBS, lower revenue at Directory Information Services, and the divestiture of Interactive Data Corporation. Operating income in the first quarter was $142.6 million, compared with $172.8 million a year ago. The decline reflected in part the impact of the year-ago gain, first-quarter losses from businesses to be divested, and the absence of income from Interactive Data Corporation. Excluding these factors, operating income was up slightly. Non-operating expense-net in the first quarter was $20.0 million, compared with $22.2 million of expense in 1995. Non-operating expense-net decreased, in part, due to a lower level of borrowings. Net income in the first quarter was $87.8 million, compared with $108.9 million in the first quarter of 1995, also reflecting the year-ago gain, first-quarter losses at DBS and ACI, and the absence of income from Interactive Data Corporation in late 1995. The Company's first-quarter effective tax rate was 28.4%, compared with the first-quarter 1995 effective tax rate of 27.7%. Business Segment Highlights Marketing Information Services reported a 9.2% increase in first-quarter revenue to $575.8 million from $527.4 million a year ago. IMS reported first-quarter revenue of $191.1 million, up 9.9% from a year ago. IMS's revenue growth in the U.S. was driven by the impact of client winbacks attributable to the Xponent prescriber database service; by increased sales of SNAP/Pharma marketed by IMS's Sales Technologies unit; and by sales of new products, including the Xplorer decision-support system. IMS Japan generated growth in its sales territory reports and usage of its online database service. IMS International generated strong revenue growth in Germany, Iberia and Southeast Asia. -7- Nielsen Media Research reported double-digit revenue growth for the period, driven by accelerating revenue growth from new products, a robust advertising environment, and the continued impact of new broadcast and cable network subscribers. ACNielsen's worldwide revenue increased by 7%. In Asia/Pacific, revenues continued to increase at double digit rates, growing by $10 million in the first quarter. ACNielsen's Americas region achieved break-even results in the 1996 quarter, its best performance since 1993. This was a direct result of the back-to-front re-engineering efforts that began in mid-1995 in the United States. To date, these efforts have not only reduced costs but improved customer service and overall productivity. In Europe, ACNielsen continues to invest in improving customer service, data quality and delivery. The European re-engineering efforts, although similar in structure to the U.S. initiatives, did not begin until late 1995. Progress is already apparent, as European delivery time of scanning information has been improved by 30%. In line with expectations, increased investments in ACNielsen's European business have resulted in a reduction of the region's profitability, compared with historical levels. Risk Management and Business Marketing Information Services reported first-quarter revenue growth of 4.9% to $429.4 million from $409.2 million a year ago. Dun & Bradstreet Information Services (DBIS) reported first-quarter revenue growth of 4.7% to $320.5 million from $306.2 million, excluding ACI. DBIS U.S. reported a 3% increase in first-quarter revenue. While first-quarter revenue growth for DBIS U.S. was held down by the timing of several major contracts, significant additional revenue was generated by the new-customer acquisition program launched in 1995. DBIS Europe's revenue was up 6% in the quarter, reflecting investments in new product development, the database and technology. Moody's Investors Service reported excellent revenue growth for the quarter, driven by a substantial increase in bond volume in both the corporate and public-finance sectors. Software Services reported a 14.2% decline in first-quarter revenue to $90.8 million from $105.8 million a year ago, reflecting in part, a decline in revenue at DBS. Directory Information Services reported first-quarter revenue of $71.8 million down 7.6% from $77.6 million a year ago, primarily due to the effect of changes in publication dates at Reuben H. Donnelley for certain yellow pages directories. Excluding the impact of these changes, Donnelley's revenue increased modestly for the quarter. Other Business Services reported first-quarter revenue of $104.3 million up 4.7% from $99.7 million a year ago. Gartner Group achieved excellent first-quarter revenue growth, while introducing seven new products, including INET, which provides analysis on Internet technologies, trends and strategies. -8- Changes in Financial Position at March 31, 1996 Compared with December 31, 1995 Unearned Subscription Income increased to $463.1 million at March 31, 1996, from $319.6 million at December 31, 1995, reflecting the cyclical pattern of higher subscription sales in the first quarter. Condensed Consolidated Statement of Cash Flows Three Months Ended March 31, 1996 and 1995 Net cash provided by operating activities for the three months ended March 31, 1996 totaled $212.2 million compared with $168.9 million for the comparable period in 1995. The increase of $43.4 million primarily reflected a net decrease ($16.2 million), in accounts receivable in the current period compared with an increase ($46.7 million) in the comparable period in 1995, reflecting a number of timing factors, substantially offset by an increase in other working capital items at several divisions. Net cash used in financing activities for the three months ended March 31, 1996 totaled $88.4 million compared with $2.0 million for the comparable period in 1995. The increase in cash usage reflected lower U.S. short-term borrowings ($110.9 million) partially offset by higher net proceeds from exercise of stock options ($17.3 million). Other The Board of Directors declared on April 17, 1996, a dividend of 66 cents per share payable June 10, 1996, to shareowners of record at the close of business May 20, 1996. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. None. (b) Reports on Form 8-K. A report on Form 8-K was filed on January 12, 1996 to report under Item 5 - Other Events that 1) the Company announced its plan to reorganize into three public independent companies by spinning off two of its businesses to shareholders and 2) gave initial financial indicators for the three new companies. -9- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE DUN & BRADSTREET CORPORATION Date: May 7, 1996 By:/s/ Nicholas L. Trivisonno ========================================== Nicholas L. Trivisonno Executive Vice President - Finance and Chief Financial Officer Date: May 7, 1996 By:/s/ Thomas W. Young =========================================== Thomas W. Young Senior Vice President and Controller -10- EX-27 2
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