Cost Basis

U.S. FEDERAL INCOME TAX INFORMATION FOR THE DUN & BRADSTREET CORPORATION SHAREHOLDERS

November 4, 1996

Dear Dun & Bradstreet Corporation Shareholders:

On November 1, 1996, The Dun & Bradstreet Corporation ("Dun & Bradstreet") distributed all of the shares of ACNielsen Corporation ("ACNielsen") and Cognizant Corporation ("Cognizant") to the holders of record of Dun & Bradstreet's common stock on October 21, 1996 (the "Record Date"). This letter contains information regarding:

  • the U.S. federal income tax implications of the spin-off of ACNielsen and Cognizant from Dun & Bradstreet;

     

  • calculating your U.S. federal income tax basis; and

     

  • determining your holding period.
Also included is:
  • a shareholder statement to be filed with your U.S. federal income tax return; and

     

  • a worksheet for calculating your U.S. federal income tax basis.
Tax Implications
Dun & Bradstreet obtained a ruling from the Internal Revenue Service ("IRS") stating that, except for tax resulting from the sale of fractional shares of ACNielsen, Dun & Bradstreet shareholders will incur no U.S. federal income tax liability due to the distribution of ACNielsen and Cognizant stock. However, the IRS requires that each taxpayer who received this tax-free distribution attach to their U.S. federal income return for the tax period including November 1, 1996 (the "Distribution Date"), a statement containing the details of the transaction. To assist you in complying with this requirement, a shareholder statement is enclosed which you can complete and attach to your U.S. federal income tax return for the period including November 1, 1996. For those shareholders who are calendar year taxpayers, the enclosed statement should be attached to your U.S. federal income tax return for 1996.

The distribution of one share of ACNielsen stock for every three shares of Dun & Bradstreet stock held on the Record Date may have entitled you to receive a fractional share of ACNielsen stock. However, fractional shares of ACNielsen were not distributed to Dun & Bradstreet shareholders. The fractional shares have been distributed to an agent acting on behalf of the holders of Dun & Bradstreet common stock entitled to receive fractional shares. The agent will accumulate such fractional shares, sell the shares, and distribute the cash proceeds from such sale (less any brokerage commissions, transfer taxes and other expenses of the sale) pro rata to the Dun & Bradstreet common shareholders entitled to receive the fractional shares of ACNielsen.

The ruling obtained from the IRS by Dun & Bradstreet stated that the cash received by a Dun & Bradstreet shareholder, in lieu of a fractional share of ACNielsen, will be treated as a sale by the shareholder of a fractional share of ACNielsen stock. The shareholder will recognize gain or loss for U.S. federal income tax purposes measured by the difference between the allocable tax basis of the fractional share (see tax basis discussed below) and the amount of cash received. Therefore, you should keep a record of the amount of cash you receive in lieu of receiving a fractional share of ACNielsen stock for purposes of completing your U.S. federal income tax return for the period including the Distribution Date.

U.S. Federal Income Tax Basis
The IRS has ruled for U.S. federal income tax purposes that, except for gain resulting from the sale of a fractional share of ACNielsen stock, you will not recognize any gain or loss when you receive ACNielsen and Cognizant shares due to the spin-off. However, as in any sale of stock, you must recognize any gain or loss you realize if you subsequently sell shares of Dun & Bradstreet, ACNielsen or Cognizant. To determine your gain or loss from the sale of Dun & Bradstreet, ACNielsen, or Cognizant stock, you will need to know your tax basis. Enclosed is a worksheet which illustrates how to allocate the tax basis in the Dun & Bradstreet shares you held on the Record Date among such shares and the ACNielsen and Cognizant shares distributed with respect to such Dun & Bradstreet shares.

To allocate the tax basis in your Dun & Bradstreet shares you will need:

  • the number of shares of Dun & Bradstreet you held on the Record Date, and

     

  • the total tax basis of those shares.
Generally, the total tax basis of Dun & Bradstreet stock you purchased is equal to the total price you paid plus any commissions or other fees you paid. If you received any of your shares by gift, bequest or through a merger, reorganization, stock split or similar corporate transaction, special rules apply for purposes of determining the tax basis of your shares which are beyond the scope of this letter. Please consult your tax advisor for additional guidance with respect to the determination of the tax basis of your Dun & Bradstreet shares.

You received one share of Cognizant stock for every share of Dun & Bradstreet you owned on the Record Date, and one share of ACNielsen stock for every three Dun & Bradstreet shares you owned on the Record Date. U.S. federal income tax law requires that you allocate the tax basis of the Dun & Bradstreet shares you owned on the Record Date between (i) those Dun & Bradstreet shares, (ii) the Cognizant shares received in the distribution, and (iii) the ACNielsen shares received in the distribution (including fractional shares sold on your behalf). This allocation depends on the ratio of the fair market values of the Dun & Bradstreet, ACNielsen and Cognizant shares.

The enclosed tax basis worksheet explains this calculation and includes a sample allocation of tax basis between Dun & Bradstreet, ACNielsen and Cognizant shares. The percentages of tax basis to be allocated to shares of Dun & Bradstreet, ACNielsen and Cognizant are based on the average of the high and low sale prices per share for the Distribution Date.

Holding Period
The ruling obtained from the IRS by Dun & Bradstreet addressed the appropriate manner to calculate the holding period of your ACNielsen and Cognizant shares if you hold your Dun & Bradstreet shares as a capital asset. To determine your holding period, the ruling provides that you add (i) the period you hold the ACNielsen or Cognizant shares from the Distribution Date until you sell them plus (ii) the previous period during which you held the Dun & Bradstreet shares with respect to which you received the distribution of ACNielsen or Cognizant shares. For example, after receiving the ACNielsen and Cognizant shares, assume you hold such Cognizant shares for three months after the Distribution Date before disposing of that Cognizant stock. If you held the Dun & Bradstreet shares which entitled you to receive the Cognizant shares for ten months prior to the spin-off, you will be treated as having held the Cognizant shares for a total of thirteen months before the disposition. Since the holding period of the Cognizant stock exceeds one year, any gain or loss on the disposition would be long-term capital gain or loss if such stock had been held by you as a capital asset.

The information regarding the U.S federal income tax consequences of the spin-off presented in this letter is for general reference only and does not purport to cover all U.S. federal income tax consequences that may apply to all categories of shareholders. All shareholders should consult their own tax advisors regarding the particular federal, foreign, state and local tax consequences of the spin-off to them.

 

THE DUN & BRADSTREET CORPORATION

ACNIELSEN CORPORATION                     COGNIZANT CORPORATION

U.S. FEDERAL INCOME TAX BASIS WORKSHEET

    Hypothetical
Example
1. Number of Dun & Bradstreet shares held   100
2. Copy line 1. Number of Cognizant shares you were entitled to receive   100
3. Divide line 1 by 3. Number of ACNielsen shares you were entitled to receive   33.33
4. Tax basis of pre-spin Dun & Bradstreet shares $ $  6137.50
5. Percentage of the tax basis allocated to your post-spin Dun & Bradstreet shares 37.43% 37.43%
6. Percentage of the tax basis allocated to your Cognizant shares 53.74% 53.74%
7. Percentage of tax basis allocated to your ACNielsen shares 8.83% 8.83%
8. Line 4 multiplied by line 5. This is the new tax basis of your post-spin Dun & Bradstreet shares. $ $ 2,297.27
9. Divide line 8 by line 1. This is the new tax basis per share of your post-spin Dun & Bradstreet shares. $ $      22.97
10. Line 4 multiplied by line 6. This is the new tax basis of the Cognizant shares which were distributed to you. $ $ 3,298.29
11. Divide line 10 by line 2. This is the tax basis per share of your Cognizant shares. $ $      32.98
12. Line 4 multiplied by line 7. This is the tax basis of the ACNielsen shares you were entitled to receive. $ $    541.94
13. Divide line 12 by line 3. This is the tax basis per share of your ACNielsen shares. $ $      16.26
14. Line 3 less number of whole shares of ACNielsen distributed to you. This is the fractional share you were entitled to receive.   .33
15. Line 13 multiplied by line 14. This is the tax basis of the ACNielsen fractional share which is being sold for you. $ $        5.37
16. Line 12 less line 15. This is the tax basis of the ACNielsen shares which were distributed to you. $ $    536.57

SHAREHOLDER STATEMENT
PURSUANT TO TREASURY REGULATION §1.355-5(b)

Statement of shareholder receiving a distribution of stock in Cognizant Corporation (a controlled corporation) and ACNielsen Corporation (a controlled corporation), pursuant to Treasury Regulation §1.355-5(b).

  1. The undersigned, a shareholder owning shares in The Dun & Bradstreet Corporation as of October 21, 1996, received a distribution of stock in a controlled corporation pursuant to Section 355 of the Internal Revenue Code.

     

  2. The names and addresses of the corporations involved are as follows:
    1. The Dun & Bradstreet Corporation (Parent)
      One Diamond Hill Road
      Murray Hill, NJ 07974

       

    2. ACNielsen Corporation (Controlled Corporation)
      177 Broad Street
      Stamford, CT 06901

       

    3. Cognizant Corporation (Controlled Corporation)
      200 Nyala Farms
      Westport, CT 06880

     

  3. The undersigned surrendered no stock or securities in The Dun & Bradstreet Corporation in connection with the distribution.

     

  4. The undersigned received                  shares (including fractional shares) of ACNielsen Corporation and                  shares of Cognizant Corporation in the distribution constituting only common shares in such corporations.

     

  5. By letter dated August 6, 1996, the Internal Revenue Service ruled that the distribution by The Dun & Bradstreet Corporation of shares of ACNielsen Corporation and Cognizant Corporation was a nontaxable Section 355 corporate separation.

                                  
Shareholder's Signature

                                                           
Spouse's Signature (if stock held jointly)

ATTACH TO YOUR U.S. FEDERAL INCOME TAX RETURN
FOR THE TAX PERIOD INCLUDING NOVEMBER 1, 1996.

 

© 2000 Dun & Bradstreet, Inc. and Direct Report Corporation