-----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, D3Iiuy9ay3BXYvNnszCBSv8BEWEkYBk0kFyaso8McpsBYgPMXU3cXbkOavKaz7ch dVP9axeGfiIlQK8bFWMouw== 0000030419-97-000003.txt : 19970520 0000030419-97-000003.hdr.sgml : 19970520 ACCESSION NUMBER: 0000030419-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 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: 97602024 BUSINESS ADDRESS: STREET 1: ONE DIAMOND HILL ROAD CITY: MURRAY HILL STATE: NJ ZIP: 07974 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, 1997 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.) One Diamond Hill Road, Murray Hill, NJ 07974 - - ---------------------------------------- ------------------------------------ - - ---------------------------------------- ------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (908) 665-5000 -------------- 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, 1997 Common Stock, par value $1 per share 171,049,682 THE DUN & BRADSTREET CORPORATION INDEX TO FORM 10-Q PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 1997 and 1996 3 Consolidated Balance Sheets (Unaudited) March 31, 1997 and December 31, 1996 4 Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 1997 and 1996 5 Notes to Consolidated Financial Statements (Unaudited) 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES -2- The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statements of Operations (unaudited)
Three Months Ended March 31, ---------------------------------------- Dollar amounts in millions, except per share data 1997 1996 - - ------------------------------------------------------------------------------------------------------ ----------------- Operating Revenues $ 459.0 $ 450.4 - - ------------------------------------------------------------------------------------------------------ ----------------- Operating Costs 137.8 146.9 Selling and Administrative Expenses 200.1 210.7 Depreciation and Amortization 40.8 39.1 Reorganization Costs 0.0 1.4 - - ------------------------------------------------------------------------------------------------------ ----------------- Operating Income 80.3 52.3 - - ------------------------------------------------------------------------------------------------------ ----------------- Interest Expense (21.2) (6.3) Other Expense - Net (1.3) (11.6) - - ------------------------------------------------------------------------------------------------------ ----------------- Non-Operating Expense - Net (22.5) (17.9) - - ------------------------------------------------------------------------------------------------------ ----------------- Income from Continuing Operations before Provision for Income Taxes 57.8 34.4 Provision for Income Taxes 19.8 12.5 - - ------------------------------------------------------------------------------------------------------ ----------------- Income from Continuing Operations 38.0 21.9 - - ------------------------------------------------------------------------------------------------------ ----------------- Income from Discontinued Operations, Net of Income Taxes of $10.2 million for 1996 0.0 42.3 - - ------------------------------------------------------------------------------------------------------ ----------------- Net Income $ 38.0 $ 64.2 ====================================================================================================== ================= Earnings Per Share of Common Stock: Continuing Operations $ 0.22 $ 0.13 Discontinued Operations 0.00 0.25 - - ------------------------------------------------------------------------------------------------------ ----------------- Net Earnings Per Share of Common Stock $ 0.22 $ 0.38 ====================================================================================================== ================= - - ------------------------------------------------------------------------------------------------------ ----------------- Dividends Paid Per Share of Common Stock $ 0.22 $ 0.66 - - ------------------------------------------------------------------------------------------------------ ----------------- - - ------------------------------------------------------------------------------------------------------ ----------------- Weighted Average Number of Shares Outstanding 171.2 169.7 - - ------------------------------------------------------------------------------------------------------ ----------------- The accompanying notes are an integral part of the consolidated financial statements. -3-
The Dun & Bradstreet Corporation and Subsidiaries Consolidated Balance Sheets (unaudited)
March 31, December 31, Dollar amounts in millions, except per share data 1997 1996 - - ----------------------------------------------------------------------------------------------------------- --------------------- Assets Current Assets Cash and Cash Equivalents $152.5 $127.9 Accounts Receivable---Net of Allowance of $41.2 in 1997 and $38.1 in 1996 613.1 600.7 Other Current Assets 213.9 188.8 ---------------- --------------------- Total Current Assets 979.5 917.4 - - ----------------------------------------------------------------------------------------------------------- --------------------- Non-Current Assets Investments and Notes Receivable 256.8 292.2 Property, Plant and Equipment 359.8 373.1 Prepaid Pension Costs 170.2 172.1 Computer Software 149.0 150.7 Goodwill 202.5 218.4 Other Non-Current Assets 166.5 170.3 ---------------- --------------------- Total Non-Current Assets 1,304.8 1,376.8 - - ----------------------------------------------------------------------------------------------------------- --------------------- =========================================================================================================== ===================== Total Assets $2,284.3 $2,294.2 =========================================================================================================== ===================== Liabilities and Shareholders' Equity Current Liabilities Notes Payable $719.8 $1,120.7 Accrued and Other Current Liabilities 534.4 599.9 Unearned Subscription Income 437.0 297.0 ---------------- --------------------- Total Current Liabilities 1,691.2 2,017.6 Postretirement and Postemployment Benefits 347.2 354.1 Non-Current Notes Payable 300.0 0.0 Other Non-Current Liabilities 373.0 354.2 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 shares for 1997 and 1996 188.4 188.4 Capital Surplus 43.4 72.6 Retained Earnings 481.0 480.3 Treasury Stock, at cost, 16,990,015 and 17,612,776 shares for 1997 and 1996, respectively (979.1) (1,019.7) Cumulative Translation Adjustment (160.8) (153.3) - - ----------------------------------------------------------------------------------------------------------- --------------------- Total Shareholders' Equity (427.1) (431.7) =========================================================================================================== ===================== Total Liabilities and Shareholders' Equity $2,284.3 $2,294.2 =========================================================================================================== ===================== The accompanying notes are an integral part of the consolidated financial statements. -4-
The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statements of Cash Flows (unaudited) Three Months Ended March 31, ----------------------------------- Dollar amounts in millions 1997 1996
- - ---------------------------------------------------------------------------------------------------------------- -------------- Cash Flows from Operating Activities: Net Income $38.0 $64.2 Less: Income from Discontinued Operations - 42.3 - - ---------------------------------------------------------------------------------------------------------------- -------------- Income from Continuing Operations 38.0 21.9 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 40.8 39.1 Distributions Received in Excess of Equity Earnings 40.7 0.6 Restructuring Payments - (19.3) Postemployment Benefit Payments (9.9) (12.0) Net Increase in Accounts Receivable (25.0) (59.3) Deferred Income Taxes (1.6) (26.8) Accrued Income Taxes (8.4) 61.6 Net Decrease in Other Working Capital Items 76.9 70.4 Other 8.4 (5.9) - - ---------------------------------------------------------------------------------------------------------------- -------------- Net Cash Provided by Operating Activities 159.9 70.3 - - ---------------------------------------------------------------------------------------------------------------- -------------- Cash Flows from Investing Activities: Proceeds from Marketable Securities 0.1 3.6 Capital Expenditures (10.7) (22.1) Additions to Computer Software and Other Intangibles (16.0) (12.6) Other 19.4 13.6 - - ---------------------------------------------------------------------------------------------------------------- -------------- Net Cash Used In Investing Activities (7.2) (17.5) - - ---------------------------------------------------------------------------------------------------------------- -------------- Cash Flows from Financing Activities: Payment of Dividends (37.7) (112.0) Payments for Purchase of Treasury Shares (1.7) (3.1) Net Proceeds from Exercise of Stock Options 13.1 24.8 Decrease in Short-term Borrowings (99.2) - Other (0.3) (1.7) - - ---------------------------------------------------------------------------------------------------------------- -------------- Net Cash Used in Financing Activities (125.8) (92.0) - - ---------------------------------------------------------------------------------------------------------------- -------------- - - ---------------------------------------------------------------------------------------------------------------- -------------- Effect of Exchange Rate Changes on Cash and Cash Equivalents (2.3) (1.2) - - ---------------------------------------------------------------------------------------------------------------- -------------- Increase (Decrease) in Cash and Cash Equivalents 24.6 (40.4) Net Cash Provided By Discontinued Operations - 45.4 Cash and Cash Equivalents , Beginning of Year 127.9 147.1 ================================================================================================================ ============== Cash and Cash Equivalents, End of Year $152.5 $152.1 ================================================================================================================ ============== The accompanying notes are an integral part of the consolidated financial statements. -5-
THE DUN & BRADSTREET CORPORATION NOTES TO 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's (the "Company") 1996 Annual Report on Form 10-K, as amended by Form 10-K/A. The consolidated results for interim periods are not necessarily indicative of results for the full year or any subsequent period. 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 1997 presentation. Note 2 - Reorganization and Discontinued Operations On November 1, 1996, the Company reorganized into three publicly traded independent companies by spinning off through a tax-free distribution two new companies, (1) Cognizant Corporation ("Cognizant") and (2) ACNielsen Corporation ("ACNielsen") to shareholders. In conjunction with the reorganization, the Company also disposed of Dun & Bradstreet Software ("DBS") and NCH Promotional Services ("NCH"). Pursuant to Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," the prior year's consolidated financial statements of the Company have been reclassified to reflect the reorganization. Accordingly, the prior year's revenues, costs and expenses, assets and liabilities, and cash flows of Cognizant, ACNielsen, DBS and NCH have been excluded from the respective captions in the Consolidated Statements of Operations, Consolidated Balance Sheets and Consolidated Statements of Cash Flows. The net operating results of these entities have been reported, net of applicable income taxes, as "Income from Discontinued Operations" and the net cash flows of these entities have been reported as "Net Cash Provided by Discontinued Operations." Summarized financial information for the Discontinued Operations was as follows (in millions): Three Months Ended March 31, 1996 Operating Revenue $771.2 Income Before Provision for Income Taxes $52.5 Income from Discontinued Operations, net of Income Taxes $42.3 -6- Note 3 - Investment Partnership During 1993, the Company participated in the formation of a limited partnership to invest in various securities including those of the Company. Third-party investors held limited partner and special investors interests totaling $500.0 million. Funds raised by the partnership provided a source of financing for the Company's repurchase in 1993 of 8.3 million shares of its common stock. During the fourth quarter of 1996, the Company redeemed these partnership interests. This redemption was financed with short-term borrowings. The partnership is presently engaged in the business of licensing database assets and computer software. One of the Company's subsidiaries serves as managing general partner and two subsidiaries hold limited partner interests. In April 1997, the partnership raised $300.0 million of minority interest financing from a third-party investor. The Company's subsidiaries contributed assets to the partnership and the third-party investor contributed cash ($300.0 million) in exchange for a limited partner interest. Funds raised by the partnership were loaned to the Company and used to repay existing short-term debt in April 1997. In accordance with Statement of Financial Accounting Standards No. 6, "Classification of Short-Term Obligations Expected to be Refinanced," $300.0 million of Notes Payable were reclassified as long-term at March 31, 1997. At June 30, 1997, the amount will be classified as minority interest. For financial reporting purposes, the results of operations, the assets, liabilities and cash flows of the partnership described previously are included in the Company's consolidated financial statements. Note 4 - Financial Instruments with Off-Balance-Sheet Risk The Company is a party to financial instruments with off-balance-sheet risk, which are entered into in the normal course of business to reduce exposure to fluctuations in interest and foreign exchange rates. Interest rate swap agreements are entered into primarily as hedges against variable interest rate exposures. During the first quarter of 1997, the Company canceled interest rate swap agreements on $300.0 million of variable rate debt, at a cost of $2.9 million. The charge represents the cost to terminate these agreements. Note 5- Litigation The Company and its subsidiaries are involved in legal proceedings, claims and litigation arising in the ordinary course of business. In the opinion of management, the outcome of such current legal proceedings, claims and litigation could have a material effect on quarterly or annual operating results or cash flows when resolved in a future period. However, in the opinion of management, these matters will not materially affect the Company's consolidated financial position. In addition to the litigation referred to above, on July 29, 1996, Information Resources, Inc. ("IRI") filed a complaint in the United States District Court for the Southern District of New York, naming as defendants the Company, A.C. Nielsen Company (a subsidiary of ACNielsen) and IMS International, Inc. -7- The complaint alleges various violations of United States antitrust laws, including alleged violations of Section 1 and 2 of the Sherman Act. The complaint also alleges a claim of tortious interference with a contract and a claim of tortious interference with a prospective business relationship. These claims relate to the acquisition by defendants of Survey Research Group Limited ("SRG"). IRI alleges SRG violated an alleged agreement with IRI when it agreed to be acquired by the defendants and that the defendants induced SRG to breach that agreement. On October 15, 1996, defendants moved for an order dismissing all claims in the complaint. On May 6, 1997, the United States District Court for the Southern District of New York issued a decision dismissing IRI's claim of attempted monopolization in the United States, with leave to replead within sixty days. The Court denied defendants' motion with respect to the remaining claims in the complaint. IRI's complaint alleges damages in excess of $350 million, which amount IRI asked to be trebled under antitrust laws. IRI also seeks punitive damages in an unspecified amount. In connection with the IRI action, Cognizant, ACNielsen and the Company entered into an Indemnity and Joint Defense Agreement (the "Indemnity and Joint Defense Agreement") pursuant to which they have agreed (i) to certain arrangements allocating potential liabilities ("IRI Liabilities") that may arise out of or in connection with the IRI Action and (ii) to conduct a joint defense of such action. In particular, the Indemnity and Joint Defense Agreement provides that ACNielsen will assume exclusive liability for IRI Liabilities up to a maximum amount to be calculated at such time such liabilities, if any, become payable (the "ACN Maximum Amount"), and that the Company and Cognizant will share liability equally for any amounts in excess of the ACN Maximum Amount. The ACN Maximum Amount will be determined by an investment banking firm as the maximum amount which ACNielsen is able to pay after giving effect to (i) any plan submitted by such investment bank which is designed to maximize the claims paying ability of ACNielsen without impairing the investment banking firm's ability to deliver a viability opinion (but which will not require any action requiring stockholder approval), and (ii) payment of related fees and expenses. For these purposes, financial viability means the ability of ACNielsen, after giving effect to such plan, the payment of related fees and expenses, and the payment of the ACN Maximum Amount, to pay its debts as they become due and to finance the current and anticipated operating and capital requirements of its business, as reconstituted by such plan, for two years from the date any such plan is expected to be implemented. Management is unable to predict at this time the final outcome of the IRI Action or whether the resolution of this matter could materially affect the Company's results of operations, cash flows or financial position. Note 6 - DonTech The consolidated results of the Company include the results of DonTech, a partnership between Reuben H. Donnelley and Ameritech Advertising Services. For the quarters ended March 31, 1997 and 1996, DonTech's operating revenues were $10.9 million and $11.9 million, respectively, and net income was $0.3 million and $0.9 million, respectively. -8- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview On November 1, 1996, The Dun & Bradstreet Corporation (the "Company") reorganized into three publicly traded independent companies by spinning off through a tax-free distribution two new companies, (1) Cognizant Corporation ("Cognizant") and (2) ACNielsen Corporation ("ACNielsen") to shareholders. In conjunction with the reorganization, the Company also disposed of Dun & Bradstreet Software ("DBS") and NCH Promotional Services ("NCH"). The Company's continuing operations consist of Dun & Bradstreet, the operating company ("D&B"), Moody's Investors Service ("Moody's") and Reuben H. Donnelley ("RHD"). Pursuant to Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," the prior year's consolidated financial statements of the Company have been reclassified to reflect the reorganization. Accordingly, the prior year's revenues, costs and expenses, assets and liabilities, and cash flows of Cognizant, ACNielsen, DBS and NCH have been excluded from the respective captions in the Consolidated Statements of Operations, Consolidated Balance Sheets and Consolidated Statements of Cash Flows. The net operating results of these entities have been reported, net of applicable income taxes, as "Income from Discontinued Operations" and the net cash flows of these entities have been reported as "Net Cash Provided by Discontinued Operations." Results of Operations Consolidated Results The Company's first quarter 1997 net income of $38.0 million was up $16.1 million or 74% from the prior year's first quarter results from continuing operations. Earnings per share of $.22 was up 69% from the prior year's earnings per share from continuing operations of $.13. Operating revenues for the first quarter were up 2% to $459.0 million in 1997 from $450.4 million in 1996 from continuing operations. Excluding the results of American Credit Indemnity ("ACI") and the Propriety West Operations of R.H Donnelley ("P-West"), which were divested during 1996, revenues from continuing operations increased by 7%, driven by growth at Moody's and D&B U.S. Operating income for the first quarter of 1997 of $80.3 million was 53% higher than 1996 first quarter operating income of $52.3 million. The increase reflects the modest revenue growth noted above and strong cost controls. Operating income in 1996 was impacted by significantly higher corporate expenses associated with the Company before the reorganization. Non-operating expense-net was $22.5 million for the first quarter of 1997 compared with non-operating expense-net of $17.9 million for the first quarter of 1996. The increase was attributable to higher interest expense due to higher borrowings. Additionally, during the first quarter of 1997, the Company recognized a loss of $2.9 million as a result of canceling $300.0 million of swap agreements. -9- The effective tax rate was 34.3% for the first quarter of 1997 compared to 36.2% in 1996. In the first quarter of 1996, the Company's consolidated results included net income from discontinued operations of $42.3 million or $.25 per share. Segment Results The Risk Management Services segment reported first-quarter revenue growth of 8% to $440.1 million from $408.7 million a year ago, excluding the results of ACI which was divested during 1996. D&B, the operating company, reported first-quarter revenue growth of 5% to $326.6 million from $310.5 million a year ago, excluding the first-quarter 1996 results of ACI. D&B U.S. posted a 7% increase in first-quarter revenue, a result of strong performance in Marketing Information Services over the same quarter last year. D&B Europe's revenue was up 4% in the first quarter over the previous year reflecting modest growth. D&B Asia Pacific, Latin America and Canada was down 6% from the previous year primarily as a result of reorganizing the operations in Latin America. Moody's Investors Service showed the fastest growth during the quarter, driven by double-digit growth in its corporate bond ratings business. First-quarter revenue was $113.5 million in 1997, an increase of 16% over the prior year. The Directory Information Services segment reported first-quarter revenue of $19.0 million, a decrease of 11% from prior year, excluding the first-quarter 1996 results of P-West. The decline was primarily due to the timing of revenues from NYNEX and Central Florida directories. The low revenue level in the first quarter also reflects the seasonal nature of the directory business, in which the first quarter typically represents a small portion of the year's business. Adoption of Statements of Financial Accounting Standards ("SFAS") In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share" ("SFAS No. 128"), which simplifies existing computational guidelines, revises disclosure requirements and increases the comparability of earnings per share data on an international basis. The Company is currently evaluating the new statement. However, the impact of adoption of SFAS No. 128 on the Company's financial statements is not expected to be significant. This statement is effective for financial statements for periods ending after December 15, 1997 and requires restatement of all prior-period per share data presented. Liquidity and Financial Position At March 31, 1997, cash and cash equivalents totaled $152.5 million, an increase of $24.6 million from $127.9 million held at December 31, 1996. In comparison, during the first quarter of 1996, cash and cash equivalents from continuing operations decreased by $40.4 million. Operating activities generated net cash of $159.9 million during the first quarter of 1997 compared to $70.3 million in 1996. Timing of tax payments in 1997 as well as payments for restructuring and postemployment benefits in 1996 contributed to the increase in cash provided by operating activities during the first quarter of 1997 compared to 1996. -10- Net cash used in investing activities was $7.2 million for the first quarter of 1997 compared to $17.5 million in 1996. In 1997 the Company invested $26.7 million for capital expenditures and additions to computer software and other intangibles compared to $34.7 million in 1996. Net cash used in financing activities was $125.8 million during the first quarter of 1997 compared to $92.0 million in 1996. Payments of dividends accounted for $37.7 million during the first quarter of 1997 compared to $112.0 million in 1996. During the first quarter of 1997, the Company reduced short-term borrowings by $99.2 million. Proceeds from the exercise of stock options was $13.1 million for the first quarter of 1997 compared to $24.8 million in 1996. On April 1, 1997, the Company completed a $300.0 million minority interest financing. Funds raised by the minority interest financing were loaned to the Company and used to repay existing short-term debt in April 1997. In accordance with SFAS No. 6, the Company reclassified $300.0 million of short-term notes payable to long-term at March 31, 1997. Also in conjunction with the transaction, during the first quarter of 1997, the Company canceled $300.0 million of interest rate swap agreements at a cost of $2.9 million. Dividends On April 16, 1997, the Board of Directors approved a second quarter 1997 dividend of $.22 per share, payable June 10, 1997 to shareholders of record at the close of business May 20, 1997. -11- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: (10) Supplemental Executive Benefit Plan, as amended January 15, 1997. (11) Statement Re: Computation of Per Share Earnings (27) Financial Data Schedule (b) Reports on Form 8-K: There were no reports on Form 8-K filed during the quarter ended March 31, 1997. -12- 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 12, 1997 By: FRANK S. SOWINSKI =============================================== Frank S. Sowinski Senior Vice President - Chief Financial Officer Date: May 12, 1997 By: CHESTER J. GEVEDA, JR. =============================================== Chester J. Geveda, Jr. Vice President and Controller EX-10 2 Exhibit 10 SUPPLEMENTAL EXECUTIVE BENEFIT PLAN OF THE DUN & BRADSTREET CORPORATION (as amended effective January 15, 1997) PREAMBLE The principal purpose of this Supplemental Executive Benefit Plan is to ensure the payment of a competitive level of retirement income and disability benefits in order to attract, retain and motivate selected executives of the Corporation and its affiliated companies. SECTION 1 Definitions 1.1 "Affiliate" means any corporation, partnership, division or other organization controlling, controlled by or under common control with the Corporation or any joint venture entered into by the Corporation. 1.2 "Average Final Compensation" means the greater of (i) a Participant's or Vested Former Participant's average final compensation as defined in The Dun & Bradstreet Corporation Retirement Account as if no provision were set forth therein incorporating limitations imposed by Sections 401, 415 or any other applicable Section of the Internal Revenue Code, or, (ii) if the Participant is disabled at the time of his Retirement, the Participant's Basic Earnings. For purposes of (i), Average Final Compensation will not include an employee's compensation while the employee is a Vested Former Participant or a Former Participant and will include compensation from the date of the Participant's employment with the Corporation or an Affiliate. 1.3 "Basic Disability Plan" means as to any Participant either (i) the long-term disability plan of the Corporation or an Affiliate pursuant to which long-term disability benefits are payable to such Participant or, (ii) if 1 the Affiliate which employs such Participant has not adopted a long-term disability plan, the long-term disability plan of the Corporation. 1.4 "Basic Disability Plan Benefit" means the amount of benefits actually payable to a Participant from the Basic Disability Plan. For purposes of determining a Participant's Basic Disability Plan Benefit a disability benefit shall not be treated as actually payable to a Participant unless the Participant is actually covered by a long-term disability plan of the Corporation or an Affiliate. 1.5 "Basic Earnings" means a Participant's total earnings received as an employee as salary or wages in the twelve months immediately preceding the onset of the Participant's disability, including any amounts deferred under a plan qualified under Section 401(k) of the Internal Revenue Code, amounts contributed on a Participant's behalf on a salary reduction basis to a cafeteria plan described in Section 125 of the Internal Revenue Code, cash bonuses and commissions, but excluding any pension, retainers, severance pay, income derived from stock options, stock appreciation rights and restricted stock awards and dispositions of stock acquired thereunder, payments dependent upon any contingency after the period of Credited Service and other special remuneration (including performance units). 1.6 "Basic Plan" means as to any Participant or Vested Former Participant the qualified retirement or pension plan of the Corporation or an Affiliate pursuant to which retirement benefits are payable to such Participant or Vested Former Participant or to the Surviving Spouse or designated beneficiary of a deceased Participant or Vested Former Participant. 1.7 "Basic Plan Benefit" means the amount of benefits payable from the Basic Plan to a Participant or Vested Former Participant. 1.8 "Board" means the Board of Directors of The Dun & Bradstreet Corporation. 2 1.9 "Change in Control" means: (a) Any "person," as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Corporation, any trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, or any Corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 30% or more of the combined voting power of the Corporation's then outstanding securities; (b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clause (a), (c) or (d) of this Section) whose election by the Board or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute at least a majority thereof; (c) the stockholders of the Corporation approve a merger or consolidation of the Corporation with any other company, other than (1) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 50% of the combined voting power of the Corporation's then outstanding securities; or (d) the stockholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation's assets. 3 1.10 "Committee" means the Executive Compensation and Stock Option Committee of the Board. 1.11 "Corporation" means The Dun & Bradstreet Corporation, a Delaware corporation, and any successor or assigns thereto. 1.12 "Credited Service" means a Participant's, Former Participant's or Vested Former Participant's credited service as defined in The Dun & Bradstreet Corporation Retirement Account, except that Credited Service will include service while the Participant is receiving Disability Benefits and service from the date the Participant, Former Participant or Vested Former Participant was employed by the Corporation or an Affiliate, but will not include service while an employee is a Former Participant or Vested Former Participant. However, in the case of an acquired company, the Participant's, Former Participant's or Vested Former Participant's service with that company prior to the date of acquisition will not be counted unless such service is recognized for benefit accrual purposes under the relevant Basic Plan. 1.13 "Disability Benefits" mean the benefits provided to Participants and Vested Former Participants pursuant to Section 5 of the Plan. 1.14 "Effective Date" means July 1, 1989. 1.15 "Election" means an election as to the form of benefit payment made pursuant to Section 4.5 of the Plan. 1.16 "Election Date" means the date that a properly completed election form with respect to an Election or a Special Election is received by the Corporation's Treasurer. 1.17 "Former Participant" means an employee who has not completed five or more years of Credited Service at the time his employment with the Corporation or an Affiliate terminates or at the time he was removed, upon written notice by the Chief Executive Officer of the Corporation and with the approval of the Committee, from further participation in the Plan. 1.18 "Other Disability Income" means (A) the disability insurance benefit that the Participant is entitled to receive under the Federal Social Security Act while he is receiving the Basic Disability Plan Benefit and (B) the disability income payable to a Participant from the following sources: (a) any supplemental executive disability plan of any Affiliate; and (b) any other contract, agreement or other arrangement with the Corporation or an Affiliate (excluding any Basic Disability Plan) to the extent it provides disability benefits. 4 1.19 "Other Retirement Income" means (A)(i)the Social Security retirement benefit that the Participant or Vested Former Participant is entitled to receive under the Federal Social Security Act as of the date of his Retirement or, (ii) if the Participant or Vested Former Participant is not eligible to receive a Social Security retirement benefit commencing on such date, the Social Security retirement benefit he is entitled to receive at the earliest age he is eligible to receive such a benefit, discounted to the date his Benefit under the Plan actually commences, using the actuarial assumptions then in use under the relevant Basic Plan, assuming for purposes of (i) and (ii) above that for years prior to the Participant's employment with the Corporation and for years following the Participant's termination of employment with the Corporation up until the Participant attains age 62, the Participant earned compensation so as to accrue the maximum Social Security benefits, and (B) the retirement income payable to a Participant or Vested Former Participant from the following sources: (a) any retirement benefits equalization plan of the Corporation or an Affiliate the purpose of which is to provide the Participant or Vested Former Participant with the benefits he is precluded from receiving under any relevant Basic Plan as a result of limitations under the Internal Revenue Code; and (b) any supplemental executive retirement plan of any Affiliate; and (c) any other contract, agreement or other arrangement with the Corporation or an Affiliate (excluding any Basic Plan) to the extent it provides retirement or pension benefits. 1.20 "Participant" means an employee of the Corporation or an Affiliate who becomes a participant in the Plan pursuant to Section 2. 1.21 "Plan" means this Supplemental Executive Benefit Plan of The Dun & Bradstreet Corporation, as amended from time to time. 1.22 "Potential Change in Control" means: (a) the Corporation enters into an agreement, the consummation of which would result in the occurrence of a Change in Control of the Corporation; (b) any person (including the Corporation) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control of the Corporation; 5 (c) any person, other than a trustee or their fiduciary holding securities under an employee benefit plan of the Corporation (or a Corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), who is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 9.5% or more of the combined voting power of the Corporation's then outstanding securities, increases his beneficial ownership of such securities by 5% or more over the percentage so owned by such person; or (d) the Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control of the Corporation has occurred. 1.23 "Retirement" means the termination, other than at death, of a Participant's or Vested Former Participant's employment with the Corporation or an Affiliate (i) after reaching age 55 and completing ten years of Credited Service, or (ii) immediately following the cessation of the payment of Disability Benefits under the Plan to such Participant or Vested Former Participant while he is still disabled, as such term is defined under the Basic Disability Plan. 1.24 "Retirement Benefits" means the benefits provided to Participants and Vested Former Participants pursuant to Section 4 of the Plan. 1.25 "Special Election" means an election as to the form of benefit payment made pursuant to Section 4.6 of the Plan. 1.26 "Surviving Spouse" means the spouse of a deceased Participant or Vested Former Participant to whom such Participant or Vested Former Participant is legally married immediately preceding such Participant or Vested Former Participant's death. 1.27 "Surviving Spouse's Benefits" mean the benefits provided to a Participant's or Vested Former Participant's Surviving Spouse pursuant to Section 6 of the Plan. 1.28 "Vested Former Participant" means an employee who completed five or more years of Credited Service at the time his employment with the Corporation or an Affiliate terminated or at the time he was removed, upon written notice by the Chief Executive Officer of the Corporation and with the approval of the Committee, from further participation in the Plan. 1.29 The masculine gender, where appearing in the Plan, will be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. 6 SECTION 2 Eligibility and Participation 2.1 All key management and other employees of the Corporation and its Affiliates who are responsible for the management, growth or protection of the business of the Corporation and its Affiliates, who are designated by the Chief Executive Officer of the Corporation as such, are eligible, upon approval by the Committee, for participation in the Plan as of the effective date of such designation. 2.2 A Participant may be removed, upon written notice by the Chief Executive Officer of the Corporation and with the approval of the Committee, from further participation in the Plan, and as of such date shall accrue no further benefits under the Plan. 7 SECTION 3 Eligibility For Benefits 3.1 Each Participant or Vested Former Participant is eligible for an annual Retirement Benefit under this Plan upon Retirement, or upon termination of employment with the Corporation before Retirement after completing five or more years of Credited Service. 3.2 Each Participant is eligible to commence receiving a Disability Benefit under this Plan upon the actual or deemed commencement of benefits under the relevant Basic Disability Plan. Notwithstanding the above, no Participant may receive any Disability Benefit if he has not previously enrolled for the maximum disability insurance coverage available under the relevant Basic Disability Plan. 3.3 Notwithstanding any other provision of the Plan to the contrary, no benefits or no further benefits, as the case may be, shall be paid to a Participant, Vested Former Participant or Surviving Spouse if the Committee reasonably determines that such Participant or Vested Former Participant has: (i) To the detriment of the Corporation or any Affiliate, directly or indirectly acquired, without the prior written consent of the Committee, an interest in any other company, firm, association, or organization (other than an investment interest of less than 1% in a publicly-owned company or organization), the business of which is in direct competition with the business (present or future) of the Corporation or any of its Affiliates; (ii) To the detriment of the Corporation or any Affiliate, directly or indirectly competed with the Corporation or any Affiliate as an owner, employee, partner, director or contractor of a business, in a field of business activity in which the Participant or Vested Former Participant has been primarily engaged on behalf of the Corporation or any Affiliate or in which he has considerable knowledge as a result of his employment by the Corporation or any Affiliate, either for his own benefit or with any person other than the Corporation or any Affiliate, without the prior written consent of the Committee; or 8 (iii) Been discharged from employment with the Corporation or any Affiliate for "Cause". "Cause" shall include the occurrence of any of the following events or such other dishonest or disloyal act or omission as the Committee reasonably determines to be "cause": (a) The Participant or Vested Former Participant has misappropriated any funds or property of the Corporation or any Affiliate; (b) The Participant or Vested Former Participant has, without the prior knowledge or written consent of the Committee, obtained personal profit as a result of any transaction by a third party with the Corporation or any Affiliate; or (c) The Participant or Vested Former Participant has sold or otherwise imparted to any person, firm, or corporation the names of the customers of the Corporation or any Affiliate or any confidential records, data, formulae, specifications and other trade secrets or other information of value to the Corporation or any Affiliate derived by his or her association with the Corporation or any Affiliate. In any case described in this Section 3.3, the Participant, Vested Former Participant or Surviving Spouse shall be given prior written notice that no benefits or no further benefits, as the case may be, will be paid to such Participant, Vested Former Participant or Surviving Spouse. Such written notice shall specify the particular act(s), or failures to act, on the basis of which the decision to terminate his benefits has been made. 3.4 (a) Notwithstanding any other provision of the Plan to the contrary, a Participant or Vested Former Participant who receives in a lump sum any portion of his Retirement Benefit pursuant to an Election or Special Election shall receive such lump sum portion of his Retirement Benefit subject to the condition that if such Participant or Vested Former Participant engages in any of the acts described in clause (i) or (ii) of Section 3.3, then such Participant or Vested Former Participant shall within 60 days after written notice by the Corporation repay to the Corporation the amount described in Section 3.4(b). 9 (b) The amount described under this Section 3.4(b) shall equal the amount, as determined by the Committee, of the Participant's or Vested Former Participant's lump sum benefit paid under this Plan to which such Participant or Vested Former Participant would not have been entitled, if such lump sum benefit had instead been payable in the form of an annuity under this Plan and such annuity payments were subject to the provisions of Section 3.3. SECTION 4 Amount and Form of Retirement Benefits 4.1 The Retirement Benefit provided by the Plan is designed to provide each Participant and Vested Former Participant with an annual pension from the Plan and certain other sources equal to his Retirement Benefit as hereinafter specified. Thus, the Retirement Benefits described hereunder as payable to Participants and Vested Former Participants will be offset by retirement benefits payable from sources outside the Plan as specified herein. 4.2 (a) The Retirement Benefit of a Participant or Vested Former Participant shall be an annual benefit equal to (i) for a Participant or Vested Former Participant who had attained age fifty and had been credited with at least ten years of Credited Service as of January 15, 1997 or a Participant or Vested Former Participant whose age plus years of Credited Service is equal to or greater than 70 as of January 15, 1997, or other individuals designated by the Chief Executive Officer; 50% of his Average Final Compensation with respect to his first ten years of Credited Service, plus 2% of such earnings for each of his next five years of Credited Service, inclusive of his Other Retirement Income and his Basic Plan Benefit. A full month is credited for each completed and partial month of age and Credited Service; (ii) for all other Participants or Vested Former Participants; 40% of his Average Final Compensation with respect to his first ten years of credited service, plus 2% of such earnings for each of his next ten years of Credited Service, inclusive of his Other Retirement Income and his Basic Plan Benefit. A full month is credited for each completed and partial month of Credited Service. If such a Participant or Vested Former Participant retires before age 60 without the Corporation's consent, his Retirement Benefit shall be reduced by 3% for each year or fraction thereof his Retirement commenced prior to his reaching age 60. 10 (b) Any portion of the Retirement Benefit provided under this Section 4.2 payable in the form of an annuity pursuant to Section 4.4 shall be payable in monthly installments and will commence on the first day of the calendar month coinciding with or next following the day the Participant or Vested Former Participant retires, and any portion of such Retirement Benefit payable in a lump sum pursuant to Section 4.4 shall be paid on the date that is sixty days after the date when annuity payments under this Section 4.2 commence, or would commence if any portion of the Retirement Benefit were payable in the form of an annuity, or as soon as practicable thereafter, provided the Committee has approved any such payments. 4.3 (a) Subject to Section 4.3(c), the Retirement Benefit of a Participant or Vested Former Participant who terminates employment with the Corporation with five or more years of Credited Service before he is eligible to retire under the relevant Basic Plan shall be an annual benefit equal to (i) for a Participant or Vested Former Participant who had attained age fifty and had been credited with at least ten years of Credited Service as of January 15, 1997 or a Participant or Vested Former Participant whose age plus years of Credited Service is equal to or greater than 70 as of January 15, 1997, or other individuals designated by the Chief Executive Officer; 25% of his Average Final Compensation for his first five years of Credited Service, plus 5% of such earnings for each additional year of Credited Service between six and ten years of Credited Service and 2% for each additional year of Credited Service from 11 to 15 years, inclusive of his Other Retirement Income and his Basic Plan Benefit. A full month is credited for each completed and partial month of Credited Service, (ii) for all other Participants or Vested Former Participants; 20% of his Average Final Compensation with respect to his first five years of credited service, plus 4% of such earnings for each additional year of Credited Service between six and ten years of Credited Service and 2% for each additional year of Credited Service from 11 to 20 years, inclusive of his Other Retirement Income and his Basic Plan Benefit. A full month is credited for each completed and partial month of Credited Service, (b) Any portion of the Retirement Benefit provided under this Section 4.3 payable in the form of an annuity pursuant to Section 4.4 shall be payable in monthly installments and will commence on the first day of the calendar month coinciding with or next following the day the Participant or Vested Former Participant reaches age 55 or the date of his 11 termination, if later, and any portion of such Retirement Benefit payable in a lump sum pursuant to Section 4.4 shall be paid on the date that is 60 days after the date when annuity payments under this Section 4.3 commence, or would commence if any portion of the Retirement Benefit were payable in the form of an annuity, or as soon as practicable thereafter, provided the Committee has approved any such payments. (c) If a Participant or Vested Former Participant terminates employment with the Corporation without the Corporation's consent, and the payment of his Retirement Benefit commences, or would commence if it were payable in the form of an annuity, before he reaches age 60, his Retirement Benefit shall be reduced by 10% for each year or fraction thereof that the payment of his Retirement Benefit commences, or would commence if it were payable in the form of an annuity, prior to his reaching age 60. 4.4 (a) Except as provided under Section 4.4(b) or Section 4.4(c), a Retirement Benefit under this Plan shall be payable to a Participant or Vested Former Participant in the form of a straight life annuity and without regard to any optional form of benefits elected under the Basic Plan. (b) If a Participant or a Vested Former Participant has made an Election while he was a Participant pursuant to Section 4.5 or a Special Election pursuant to Section 4.6 and such Election or Special Election becomes effective (i) prior to the date such Participant or such Vested Former Participant retires or terminates employment with the Corporation or an Affiliate and (ii) while he was still a Participant, a Retirement Benefit under this Plan shall be payable to such Participant or such Vested Former Participant in the form or combination of forms of payment elected pursuant to such Election or Special Election under Section 4.5 or Section 4.6, as the case may be, and without regard to any optional form of benefits elected under the Basic Plan. Any lump sum distribution of a Participant's or Vested Former Participant's Retirement Benefit under the Plan shall fully satisfy all present and future Plan liability with respect to such Participant or Vested Former Participant for such portion or all of such Retirement Benefit so distributed. (c) Notwithstanding any Election or Special Election made under Section 4.5 or 4.6,if the lump sum value, determined in the same manner as provided under Section 4.5(a), of a Participant's or Vested Former Participant's Retirement Benefit is $10,000 or less at the time such Retirement Benefit is payable under this Plan, such benefit shall be payable as a lump sum. 12 (d) If the Retirement Benefit under this Plan is payable to a Participant or Vested Former Participant in a different form and/or at a different time than his Other Retirement Income or his Basic Plan Benefits, the offset provided in this Plan for such Participant's or Vested Former Participant's Other Retirement Income and Basic Plan Benefit shall be converted, using actuarial assumptions that are reasonable and appropriate and in accordance with applicable law at the time the annuity under this Plan is determined, to the extent required as follows, but solely for purposes of calculating the amount of such offset: (i) a percentage of the benefits to be offset equal to the percentage of such Participant's or Vested Former Participant's benefits payable in the form of an annuity under this Plan shall be actuarially converted to the extent required into the form of a straight life annuity, commencing at the time such benefits payable under this Plan commence or on the date such Participant or Vested Former Participant would first become eligible for the payment of such benefits under this Plan, if earlier; and (ii) the balance, if any, of the benefits to be offset shall be actuarially converted to a lump sum payment payable on the date which is 60 days after the date described in Section 4.4(d)(i). 4.5 (a) A Participant may elect, on a form supplied by the Committee, to receive all, none, or a specified portion, as provided in Section 4.5(c), of his Retirement Benefit under the Plan in a lump sum and to receive any balance of such Retirement Benefit in the form of an annuity; provided that any such Election shall be effective for purposes of this Plan only if the conditions of Section 4.5(b) are satisfied. A Participant may elect a payment form different than the payment form previously elected by him under this Section 4.5(a) by filing a revised election form; provided that any such new Election shall be effective only if the conditions of Section 4.5(b) are satisfied with respect to such new Election. Any prior Election made by a Participant that has satisfied the conditions of Section 4.5(b) remains effective for purposes of the Plan until such Participant has made a new Election satisfying the conditions of Section 4.5(b). The amount of any portion of a Participant's or a Vested Former Participant's Retirement Benefit payable as a lump sum under this Section 4.5 will equal the present value of such portion of the Retirement Benefit, and such present value shall be determined 13 (i) based on a discount rate equal to the average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the close of business on the last business day of each of the three months immediately preceding the date the annuity value is determined and (ii) using the 1983 Group Annuity Mortality Table. (b) A Participant's Election under Section 4.5(a) becomes effective only if the following conditions are satisfied: (i) such Participant remains in the employment of the Corporation or an Affiliate, as the case may be, for the full twelve calendar months immediately following the Election Date of such Election, except in case of death or disability of such Participant as provided in Section 4.5(d) and (ii) such Participant complies with the administrative procedures set forth by the Committee with respect to the making of the Election. (c) A Participant making an election under Section 4.5(a) may specify the portion of his Retirement Benefit under the Plan to be received in a lump sum as follows: 0 percent, 25 percent, 50 percent, 75 percent or 100 percent. (d) In the event a Participant who has made an Election pursuant to Section 4.5(a) dies or becomes totally and permanently disabled for purposes of the relevant Basic Disability Plan while employed by the Corporation or an Affiliate and such death or total and permanent disability occurs during the twelve-calendar-month period, as described under Section 4.5(b)(i), immediately following the Election Date of such Election, the condition under Section 4.5(b)(i) shall be deemed satisfied with respect to such Participant. 14 4.6 (a) Any Participant (except the Chairman of the Board of Directors of the Corporation on December 21, 1994) who as of December 31, 1994 (i) is age 54 or older and (ii) has at least 4 years of Credited Service may elect, on a form supplied by the Committee, to receive all, none, or a specified portion, in the same percentages as described in Section 4.5(c), of his Retirement Benefit under the Plan in a lump sum and to receive any balance of such Retirement Benefit in the form of an annuity; provided that any such Special Election shall be effective for purposes of this Plan only if such Participant remains in employment with the Corporation or an Affiliate, as the case may be, for the one calendar month immediately following the Election Date, except in the case of death or total and permanent disability as provided in Section 4.6(b), and complies with the administrative procedures set forth by the Committee for making such Special Election; and provided further that the Election Date with respect to any such Special Election is not later than January 31, 1995. The amount of any portion of a Participant's or a Vested Former Participant's Retirement Benefit payable as a lump sum under this Section 4.6 will equal the present value of such portion of the Retirement Benefit, and such present value shall be determined (i) based on a discount rate equal to the average of 85% of the 15-year non-callable U.S. Treasury bond yields as of the close of business on the last business day of each of the three months immediately preceding the date the annuity value is determined and (ii) using the 1993 Group Annuity Mortality Table. (b) In the event a Participant who has made a Special Election pursuant to Section 4.6(a) dies or becomes totally and permanently disabled for purposes of the relevant Basic Disability Plan while employed by the Corporation or an Affiliate and such death or total and permanent disability occurs during the one-calendar-month period, as described under Section 4.6(a) immediately following the Election Date of such Special Election, the condition under Section 4.6(a) requiring that such Participant remain employed with the Corporation or an Affiliate, as the case may be, for the one-calendar-month period immediately following the Election Date of such Election shall be deemed satisfied. 4.7 Subject to Section 3.3, Section 3.4 and the foregoing limitations of this Section 4, the Retirement Benefit of each Participant and Vested Former Participant under the Plan shall at all times be 100% vested and nonforfeitable. 4.8 (a) Subject to Section 4.8(c), the Corporation shall indemnify each Participant, Vested Former Participant and Surviving Spouse who receives any portion of a Retirement Benefit or Surviving Spouse's Benefit under this 15 Plan in the form of an annuity for any interest and penalties that may be assessed by the U.S. Internal Revenue Service (the "Service") with respect to U.S. Federal income tax on such benefits (payable under the Plan in the form of an annuity) upon final settlement or judgment with respect to any such assessment in favor of the Service, provided the basis for the assessment is that the amendment of the Plan to provide for the Election or the Special Election causes the Participant, Vested Former Participant or Surviving Spouse, as the case may be, to be treated as being in constructive receipt of such benefits prior to the time when such benefits are actually payable under the Plan. (b) In case any assessment shall be made against a Participant, Vested Former Participant or Surviving Spouse as described in Section 4.8(a), such Participant, Vested Former Participant or Surviving Spouse, as the case may be (the "indemnified party"), shall promptly notify the Corporation's Treasurer in writing and the Corporation, upon request of such indemnified party, shall select and retain an accountant or legal counsel reasonably satisfactory to the indemnified party to represent the indemnified party in connection with such assessment and shall pay the fees and expenses of such an accountant or legal counsel related to such representation, and the Corporation shall have the right to determine how and when such assessment by the Service should be settled, litigated or appealed. In connection with any such assessment, any indemnified party shall have the right to retain his own accountant or legal counsel, but the fees and expenses of such accountant or legal counsel shall be at the expense of such indemnified party unless the Corporation and the indemnified party shall have mutually agreed to the retention of such accountant or legal counsel. (c) The Corporation shall not be liable for any payments under this Section 4.8 with respect to any assessment described in Section 4.8(a) if a Participant, Vested Former Participant or Surviving Spouse against whom such assessment is made has not notified or allowed the Corporation to participate with respect to such assessment in the manner described in Section 4.8(b) or, following demand by the Corporation, has not made the deposit to avoid additional interest or penalties as described in Section 4.8(d) or has agreed to, or otherwise settled with the Service with respect to, such assessment without the Corporation's written consent, provided, however, (i) if such assessment is settled with such consent or if there is a final judgment for the Service, (ii) the Corporation has been notified and allowed to participate 16 in the manner as provided in Section 4.8(b) and (iii) such Participant, Vested Former Participant or Surviving Spouse has made any required deposit to avoid additional interest or penalty as described in Section 4.8(d), the Corporation agrees to indemnify the indemnified party to the extent set forth in this Section 4.8. (d) In the event a final settlement or judgment with respect to an assessment as described under Section 4.8 has been made against a Participant, Vested Former Participant or Surviving Spouse, such Participant, Vested Former Participant or Surviving Spouse may elect to receive a portion or all of his Retirement Benefit or Surviving Spouse's Benefit that is otherwise payable as an annuity under the Plan in the form of a lump sum in accordance with procedures as the Committee may set forth, and such lump sum distribution will be made as soon as practicable after any such election. At the time such assessment is made against such Participant, Vested Former Participant or Surviving Spouse (the "assessed party") and prior to any final settlement or judgment with respect to such assessment, if so directed by the Corporation, such assessed party shall, as a condition to receiving any indemnity under this Section 4.8, as soon as practicable after notification of such assessment make a deposit with the Service to avoid any additional interest or penalties with respect to such assessment and, upon the request of such assessed party, the Corporation shall lend, or arrange for the lending to, such assessed party a portion of his remaining Retirement Benefit or Surviving Spouse's Benefit under the Plan, not to exceed the lump sum value of such benefit under the Plan, determined using the actuarial assumptions set forth in Section 4.5(a), solely for purposes of providing the assessed party with funds to make a deposit with the Service to avoid any additional interest or penalties with respect to such assessment. 17 SECTION 5 Disability Benefits 5.1 The Disability Benefit provided by the Plan is designed to provide each Participant with a disability benefit from the Plan and certain other sources equal to his Disability Benefit as hereinafter specified. Thus, Disability Benefits described hereunder as payable to Participants will be offset by disability benefits payable from sources outside the Plan (other than benefits payable under the relevant Basic Disability Plan) as specified herein. 5.2 In the event that a Participant has become totally and permanently disabled for the purposes of the relevant Basic Disability Plan, an annual Disability Benefit shall be payable in monthly installments under this Plan during the same period as disability benefits are actually or deemed paid by the relevant Basic Disability Plan, in an amount equal to 60% of the Participant's Basic Earnings. Such Disability Benefit shall be offset by the Participant's Other Disability Income, if any. A Participant's Disability Benefits shall also be offset by the Participant's Basic Plan Benefit, if the Participant's Basic Disability Plan Benefit does not already include such an offset. SECTION 6 Surviving Spouse's Benefits 6.1 Upon the death of a Participant or Vested Former Participant, while employed by the Corporation or an Affiliate, who has completed at least ten years of Credited Service with the Corporation or an Affiliate and has attained age 55, his Surviving Spouse will be entitled to a Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement Benefit that would have been provided from the Plan had the Participant or Vested Former Participant retired from the Corporation or an Affiliate with the Corporation's consent, on the date of his death. 18 6.2 Upon the death of a Participant or Vested Former Participant, while employed by the Corporation or an Affiliate, who has completed at least five years of Credited Service with the Corporation or an Affiliate and has not attained age 55, his Surviving Spouse will be entitled to a Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement Benefit that would have been provided from the Plan had the Participant or Vested Former Participant terminated employment with the Corporation or an Affiliate on the date of his death with the Corporation's consent, and elected to have the payment of his Basic Plan Benefit commence at age 55 in the form of a straight life annuity. 6.3 Upon the death of a Vested Former Participant while no longer employed by the Corporation or an Affiliate, who has not attained age 55, his Surviving Spouse will be entitled to a Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement Benefit that would have been provided from the Plan to the Vested Former Participant at age 55, taking into account whether the Corporation consented to the termination. 6.4 Upon the death of a Participant or Vested Former Participant, while employed by the Corporation or an Affiliate, who has completed at least five, but less than ten years of Credited Service with the Corporation or an Affiliate and has attained age 55, his Surviving Spouse will be entitled to a Surviving Spouse's Benefit under this Plan equal to 50% of the Retirement Benefit that would have been provided from the Plan had the Participant or Vested Former Participant terminated employment with the Corporation or an Affiliate on the date of his death with the Corporation's consent and his Basic Plan Benefit commenced immediately in the form of a straight life annuity. 6.5 Upon the death of a Vested Former Participant while he is receiving Retirement Benefits, his Surviving Spouse shall receive a Surviving Spouse's Benefit equal to 50% of the Retirement Benefit he was receiving at the time of his death. 6.6 Except as provided in Section 6.8, the Surviving Spouse's Benefit provided under Section 6.1, 6.4 and 6.5 will be payable monthly, will commence on the first day of the month coincident with or next following the 19 month in which the Participant or Vested Former Participant dies, and will continue until the first day of the month in which the Surviving Spouse dies. 6.7 Except as provided in Section 6.8, the Surviving Spouse's Benefit provided under Section 6.2 and 6.3 will be payable monthly, will commence on the first day of the month coincident with or next following the month in which the Participant or Vested Former Participant would have attained age 55 and will continue until the first day of the month in which the Surviving Spouse dies. 6.8 (a) If a Participant or a Vested Former Participant while he was a Participant has made an Election under Section 4.5 or a Special Election under Section 4.6 and such Election or Special Election is effective on the date of such Participant's or Vested Former Participant's death, the Surviving Spouse's Benefit payable to a Surviving Spouse of such Participant or Vested Former Participant will be payable in the form or combination of forms of payment so elected by such Participant or Vested Former Participant pursuant to such Election or Special Election. The amount of any lump sum payment under this Section 6.8 shall be the present value of the applicable portion of the Surviving Spouse's Benefit payable under the Plan, and such present value shall be determined using the actuarial assumptions set forth in Section 4.5(a). Any lump sum distribution of a Surviving Spouse's Surviving Spouse's Benefit under the Plan shall fully satisfy all present and future Plan liability with respect to such Surviving Spouse for such portion or all of such Surviving Spouse's Benefit so distributed. (b) Notwithstanding any Election or Special Election made under Section 4.5 or 4.6, if the lump sum value, determined in the same manner as provided under Section 4.5(a), of a Surviving Spouse's Benefit is $10,000 or less at the time such Surviving Spouse's Benefit is payable under this Plan, such benefit shall be payable as a lump sum. (c) Any portion of a Surviving Spouse's Benefit provided under Section 6.1, 6.4 and 6.5 which is payable as an annuity shall be paid in the manner and at such time as set forth in Section 6.6, and any such benefit which is payable as a lump sum shall be paid 60 days after the date when annuity payments commence, or would commence if any portion of such Surviving Spouse's Benefit were payable as an annuity as set forth in Section 6.6. 20 (d) Any portion of a Surviving Spouse's Benefit provided under Section 6.2 and 6.3 which is payable as an annuity shall be paid in the manner and at such time as set forth in Section 6.7, and any such benefit which is payable as a lump sum shall be paid 60 days after the date when annuity payments commence, or would commence if any portion of such Surviving Spouse's Benefit were payable as an annuity, as set forth in Section 6.7. 6.9 Notwithstanding the foregoing provisions of Section 6, the amount of a Surviving Spouse's Benefit shall be reduced by one percentage point for each year (including a half year or more as a full year) in excess of ten that the age of the Participant or Vested Former Participant exceeds the age of the Surviving Spouse. SECTION 7 Committee 7.1 The Committee shall be responsible for the administration of the Plan and may delegate to any management committee, employee, director or agent its responsibility to perform any act hereunder, including without limitation those matters involving the exercise of discretion, provided that such delegation shall be subject to revocation at any time at its discretion. The Committee shall have the authority to interpret the provisions of the Plan and construe all of its terms, to adopt, amend, and rescind rules and regulations for the administration of the Plan, and generally to conduct and administer the Plan and to make all determinations in connection with the Plan as may be necessary or advisable, other than those determinations delegated to management employees or independent third parties by the Board. All such actions of the Committee shall be conclusive and binding upon all Participants, Former Participants, Vested Former Participants and Surviving Spouses. 21 SECTION 8 Miscellaneous 8.1 The Board may, in its sole discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in part. However, no termination, suspension or amendment of the Plan may adversely affect a Participant's or Vested Former Participant's vested benefit under the Plan, or a retired Participant's or Vested Former Participant's right or the right of a Surviving Spouse to receive or to continue to receive a benefit in accordance with the Plan as in effect on the date immediately preceding the date of such termination, suspension or amendment. 8.2 Nothing contained herein will confer upon any Participant, Former Participant or Vested Former Participant the right to be retained in the service of the Corporation or any Affiliate, nor will it interfere with the right of the Corporation or any Affiliate to discharge or otherwise deal with Participants, Former Participants or Vested Former Participants with respect to matters of employment without regard to the existence of the Plan. 8.3 Notwithstanding anything herein to the contrary, at any time following the termination of service of a Participant or Vested Former Participant, the Committee may authorize, under uniform rules applicable to all Participants, Vested Former Participants and Surviving Spouses under the Plan, a lump sum distribution of a Participant's, Vested Former Participant's and/or Surviving Spouse's Retirement Benefit or Surviving Spouse's Benefit under the Plan in an amount equal to the present value of such Retirement Benefit or Surviving Spouse's Benefit, using the actuarial assumptions then in use for funding purposes under The Dun & Bradstreet Corporation Retirement Account, in full satisfaction of all present and future Plan liability with respect to such Participant, Vested Former Participant and/or Surviving Spouse, if the amount of such present value is less than $250,000. Such lump sum distribution may be made without the consent of the Participant, Vested Former Participant or Surviving Spouse. 22 8.4 (a) Notwithstanding anything in this Plan to the contrary, if a Participant has less than five years of Credited Service at the time of a Change in Control, and as a result of the Change in Control, and before he completes five years of Credited Service, (i) the Plan is terminated, (ii) the Participant is removed from further participation in the Plan, or (iii) the Participant is terminated as a result of action initiated directly or indirectly by the Corporation or any Affiliate, such Participant shall be entitled to a Benefit of 20% of his Average Final Compensation and the Corporation will remain obligated to pay all benefits under the Plan. (b) Notwithstanding anything in this Plan to the contrary, upon the occurrence of a Change in Control, (i) no reduction shall be made in a Participant's or Vested Former Participant's Retirement Benefit, notwithstanding his termination of employment or Retirement prior to age 60 without the Corporation's consent, (ii) the provisions of Section 3.3(i) and (ii) shall not apply to any Participant, Vested Former Participant or Surviving Spouse, (iii) each Participant and Vested Former Participant already receiving a Retirement Benefit under the Plan shall receive a lump sum distribution of his unpaid Retirement Benefit and, if he is married, his Surviving Spouse's Benefit under the Plan within 30 days of the Change of Control in an amount equal to the present value of such Retirement Benefit and Surviving Spouse's Benefit in full satisfaction of all present and future Plan liability with respect to such Participant, Vested Former Participant and Surviving Spouse, if any, and each Surviving Spouse already receiving a Surviving Spouse's Benefit under the Plan shall receive a lump sum distribution of his unpaid Surviving Spouse's Benefit at the same time in an amount equal to the present value of such Surviving Spouse's Benefit in full satisfaction of Plan liability to such Surviving Spouse, (iv) each Vested Former Participant who is not already receiving a Retirement Benefit under the Plan shall receive a lump sum distribution of his unpaid Retirement Benefit and, if he is married, his Surviving Spouse's Benefit within 30 days of the Change in Control in an amount equal to the present value of such Retirement Benefit and Surviving Spouse's Benefit, and each Surviving Spouse of either a Vested Former Participant or a Participant with five or more years of Credited Service who is not already receiving a Surviving Spouse's Benefit under the Plan shall receive a lump sum distribution of his unpaid Surviving Spouse's Benefit at the same time in amount equal to the present value of such Surviving Spouse's Benefit, (v) each Participant with less than five years of Credited Service who is entitled to a benefit under Section 8.4(a) shall receive a lump sum distribution of the present value of such Retirement 23 Benefit within 30 days from the earlier of the date the Plan is terminated, the date he is removed from further participation in the Plan, or the date his employment with the Corporation is terminated, and of his Surviving Spouse's Benefit based upon the amount of such Retirement Benefit if he is married on the applicable date, and (vi) each Participant who is not included in (v) above and who is not already receiving a Retirement Benefit under the Plan shall receive (a) within 30 days of the later to occur of the date of such Change in Control or the date he completes five years of Credited Service a lump sum distribution of the present value of his accrued Retirement Benefit under the Plan as of the applicable date and, if he is married on such date, the present value of his Surviving Spouse's Benefit, and (b) within 30 days from the earliest of the date of his Retirement or termination of employment with the Corporation, the date the Plan is terminated or the date he is removed from further participation in the Plan, a lump sum distribution of the present value of his additional Retirement Benefit accrued after the applicable event in (a) computed as of the applicable date herein set forth in (b) and, if he is married on such applicable date, the present value of his surviving Spouse's Benefit. In determining the amount of the lump sum distributions to be paid under this Section 8.4, the following actuarial assumptions shall be used: (i) the interest rate used shall be the interest rate used by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities as of January 1st of either the year of the occurrence of the Change in Control or the participant's retirement or termination of employment, whichever is applicable, (ii) the 1983 Group Annuity Mortality Table shall be used; and (iii) it shall be assumed that all participants retired or terminated employment with the Corporation on the date of the occurrence of the Change in Control and with the Corporation's consent for purposes of determining the amount of the lump sum distribution to be paid upon the occurrence of the Change in Control. 24 8.5 The Plan is unfunded, and the Corporation will make Plan benefit payments solely on a current disbursement basis, provided, however, that the Corporation reserves the right to purchase insurance contracts, which may or may not be in the name of a Participant or Vested Former Participant, or establish one or more trusts to provide alternative sources of benefit payments under this Plan, provided, further, however, that upon the occurrence of a "Potential Change in Control" the appropriate officers of the Corporation are authorized to make such contributions to such trust or trusts as are necessary to fund the lump sum distributions to Plan participants required pursuant to Section 8.4 of this Plan in the event of a Change in Control. In determining the amount of the necessary contribution to the trust or trusts in the event of a Potential Change in Control, the following actuarial assumptions shall be used: (i) the interest rate used shall be the interest rate used by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities as of January 1st of the year of the occurrence of the Potential Change in Control, (ii) the 1983 Group Annuity Mortality Table shall be used; and (iii) it shall be assumed that all participants will retire or terminate employment with the Corporation as soon as practicable after the occurrence of the Potential Change in Control and with the Corporation's consent. The existence of any such insurance contracts, trust or trusts shall not relieve the Corporation of any liability to make benefit payments under this Plan, but to the extent any benefit payments are made from any such insurance contract in the name of the Corporation or any Affiliate or from any such trust, such payment shall be in satisfaction of and shall reduce the Corporation's liabilities under this Plan. Further, in the event of the Corporation's bankruptcy or insolvency, all benefits accrued under this Plan shall immediately become due and payable in a lump sum and all Participants, Vested Former Participants and Surviving Spouses shall be entitled to share in the Corporation's assets in the same manner and to the same extent as general unsecured creditors of the Corporation. 25 8.6 If any dispute arises under the Plan between the Corporation and a Participant, Former Participant, Vested Former Participant or Surviving Spouse (collectively or individually referred to as "Participant" in this Section 8.6) as to the amount or timing of any benefit payable under the Plan or as to the persons entitled thereto, such dispute shall be resolved by binding arbitration proceedings initiated by either party to the dispute in accordance with the rules of the American Arbitration Association and the results of such proceedings shall be conclusive on both parties and shall not be subject to judicial review. If the disputed benefits involve the benefits of a Participant who is no longer employed by the Corporation or any Affiliate, the Corporation shall pay or continue to pay the benefits claimed by the Participant until the results of the arbitration proceedings are determined unless such claim is patently without merit; provided, however, that if the results of the arbitration proceedings are adverse to the Participant, then in such event the recipient of the benefits shall be obligated to repay the excess benefits to the Corporation. The Corporation expressly acknowledges that the amounts payable under the Plan are necessary to the livelihood of Participants and their family members and that any refusal or neglect to pay benefits under the preceding sentence prior to the resolution of any dispute shall be prima facie evidence of bad faith on its part and will be conclusive grounds for an arbitration award resulting in an immediate lump sum payment to the Participant, of the Participant's benefits under the Plan then due and payable to him, unless the arbitrator determines that the claim for the disputed benefits was without merit. The amount of such lump sum payment shall be equal to the then actuarial value of such benefits calculated by utilizing the actuarial assumptions then in use for funding purposes under The Dun & Bradstreet Corporation Retirement Account. In addition, in the event of any dispute covered by this Section 8.6 the Corporation agrees to pay the entire costs of any arbitration proceeding or legal proceeding brought hereunder, including the fees and expenses of counsel and pension experts engaged by a Participant and that such expenses shall be reimbursed promptly upon evidence that such expenses have been incurred without awaiting the outcome of the arbitration proceedings; provided, however, that such costs and expenses shall be repaid to the Corporation by the recipient of same if it is finally determined by the arbitrators that the position taken by such person was without merit. 8.7 To the maximum extent permitted by law, no benefit under the Plan shall be assignable or subject in any manner to alienation, sale, transfer, claims of creditors, pledge, attachment or encumbrances of any kind. 26 8.8 The Corporation may withhold from any benefit under the Plan an amount sufficient to satisfy its tax withholding obligations. 8.9 The Plan is established under and will be construed according to the laws of the State of New York. 27 EX-11 3 Exhibit 11 THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK ON A FULLY DILUTED BASIS FOR THE QUARTER ENDED MARCH 31, Amounts in Millions, Except Per Share Data 1997 1996
---- ---- (Average share data in thousands) Weighted average number of shares. . . . . . . . . . . . . . . . . . . . . . . . . 171,189 169,669 . . . . . . . . . . . Dilutive effect of shares issuable as of year-end under stock option plans, stock appreciation rights and restricted stock plan. . . . . . . . . . . 2,146 986 . . . . . . . Adjustment of shares applicable to stock options and stock appreciation rights exercised during the year. . . . . . . . . . . . . . . . . 173 113 . . . . . . . . . . . --------- ----------- ========= =========== Weighted average number of shares on a fully diluted basis . . . . . . . . . . . 173,508 170,768 . . . . .. ========= =========== ========= =========== Income from Continuing Operations. . . . . . . . . . . . . . . .. . . . . . . . . $38.0 $21.9 . . . . . . . . . . . Income from Discontinued Operations. .. . . . . . . . . . . . . . . . . . . . . . - 42.3 . . . . . . . . . . ========= ====== =========== Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38.0 $64.2 . . . . . . . . . . . . . . . . . . . ========= ====== =========== Earnings Per Share of Common Stock on a Fully Diluted Basis: Continuing Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.22 $0.13 . . . . . . . . . . . . . . . . Discontinued Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 0.25 . . . . . . . . . . . . . . . ========= ====== =========== Earnings Per Share of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . $0.22 $0.38 . . . . . . . . . . ========= ====== ===========
EX-27 4
5 1000 3-MOS DEC-31-1997 MAR-31-1997 152485 1277 613116 0 0 212589 807094 447326 2284341 1991206 0 0 0 188421 (615495) 2284341 0 459044 0 378790 (694) 0 21095 57783 19820 37963 0 0 0 37963 0.22 0.22
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