Cost Basis

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

October 6, 2000

Dear "Old" Dun & Bradstreet Corporation Shareholder:

On September 30, 2000, The Dun & Bradstreet Corporation ("Old D&B") distributed all of the shares of The New D&B Corporation ("New D&B") to the holders of record of Old D&B stock on September 20, 2000 (the "Record Date"). This letter contains information regarding:

  • the U.S. federal income tax implications of the spin-off of New D&B from Old D&B;
  • the treatment of cash you receive in lieu of a fractional share of New D&B stock;
  • 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

Old D&B obtained a ruling from the Internal Revenue Service ("IRS") stating that, except for tax resulting from the receipt of cash in lieu of fractional shares of New D&B stock, Old D&B shareholders will incur no U.S. federal income tax liability due to the distribution of New D&B stock. However, the IRS requires that each taxpayer who received this tax-free distribution attach to his, her, or its U.S. federal income tax return for the tax period including September 30, 2000 (the "Distribution Date"), a statement containing the details of the transaction. To assist you in complying with this requirement, a shareholder statement is enclosed that you can complete and attach to your U.S. federal income tax return for the period including September 30, 2000. If you are a calendar year taxpayer, the enclosed statement should be attached to your U.S. federal income tax return for 2000.

The distribution of one share of New D&B stock for every two shares of Old D&B stock held on the Record Date may have entitled you to receive a fractional share of New D&B stock. However, fractional shares of New D&B stock were not distributed to Old D&B shareholders. Instead, the fractional shares have been distributed to an agent acting on behalf of the holders of Old D&B 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 Old D&B shareholders entitled to receive the fractional shares of New D&B stock.

The ruling obtained from the IRS by Old D&B stated that the cash received by an Old D&B shareholder in lieu of a fractional share of New D&B stock will be treated as a sale by the shareholder of a fractional share of New D&B 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 (as discussed below) and the amount of cash received. Therefore, you should keep a record of the amount of cash you receive in lieu of a fractional share of New D&B stock for purposes of completing your U.S. federal income tax return for the period that includes the Distribution Date.

U.S. Federal Income Tax Basis

The IRS has ruled for U.S. federal income tax purposes that, except for gain or loss resulting from the sale of a fractional share of New D&B stock, you will not recognize any gain or loss when you receive New D&B stock 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 Old D&B stock or New D&B stock. To determine your gain or loss from the sale of Old D&B stock or New D&B stock, you will need to know your tax basis. Enclosed is a worksheet which illustrates how to allocate the tax basis in the Old D&B stock you held on the Record Date between your Old D&B stock and the New D&B stock distributed with respect to your Old D&B stock.

To allocate the tax basis in the Old D&B stock you held on the Record Date you will need:

  • the number of shares of Old D&B stock you held on the Record Date, and
  • the tax basis of that stock.

Generally, the tax basis of Old D&B stock you purchased is equal to the 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, including any previous spin-off transaction that involved Old D&B, 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 Old D&B stock.

You received one share of New D&B stock for every two shares of Old D&B stock you owned on the Record Date. U.S. federal income tax law requires that you allocate the tax basis of the Old D&B stock you owned on the Record Date between (i) that stock and (ii) the New D&B stock received in the distribution (including fractional shares sold on your behalf). The enclosed tax basis worksheet explains the calculation of the ratio of the fair market values of the Old D&B stock and New D&B stock and includes a sample allocation of tax basis between Old D&B stock and New D&B stock. The percentages of tax basis to be allocated to shares of Old D&B stock and New D&B stock are based on the weighted average of the means between the highest and lowest sales prices on the business day immediately preceding the Distribution Date and the business day immediately following the Distribution Date. Based on such prices, *76.34% of your pre-distribution tax basis should be allocated to your Old D&B stock and *23.66% should be allocated to your New D&B stock. If your Old D&B stock was acquired at different times in separate lots, it would be appropriate to apportion your stock basis by applying these percentages to your basis for each lot.

Holding Period

The ruling obtained from the IRS by Old D&B addressed the appropriate manner to calculate the holding period of your New D&B stock if you held your Old D&B stock as a capital asset on the Distribution Date. Specifically, the ruling provides that your holding period for the New D&B stock will include the previous period during which you held, as a capital asset, the Old D&B stock with respect to which you received the distribution of New D&B stock. For example, after receiving the New D&B stock, assume you hold such New D&B stock for three months after the Distribution Date before disposing of that New D&B stock. If you held the Old D&B stock which entitled you to receive the New D&B stock for ten months prior to the spin-off as a capital asset, you will be treated as having held the New D&B stock for a total of thirteen months before the disposition. Since the holding period of the New D&B 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 particular types 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

Moody’s Corporation
The Dun & Bradstreet Corporation

U.S. Federal income Tax Basis Worksheet

 

 

 

 

 

 

Shareholder
Worksheet

 

Hypothetical
Example

 

         
  1. Number of Old D&B shares held
   

125

 
         
  • Divide line 1 by 2. Number of New D&B shares you were entitled to receive
   

62.5

 
         
  • Tax basis of pre-spin Old D&B stock

$

 

$2,500.00

 
         
  • Percentage of the tax basis allocated to your post-spin Old D&B stock

76.34%

 

76.34%

 
         
  • Percentage of the tax basis allocated to your New D&B stock

23.66%

 

23.66%

 
         
  • Line 3 multiplied by line 4. This is the new tax basis of your post-spin Old D&B stock

$

 

$1,908.50

 
         
  • Divide line 6 by line 1. This is the new tax basis per share of your post-spin Old D&B stock

$

 

$15.27

 
         
  • Line 3 multiplied by line 5. This is the tax basis of the New D&B stock you were entitled to receive

$

 

$591.50

 
         
  • Divide line 8 by line 2. This is the tax basis per share of your New D&B stock

$

 

$9.46

 
         
  • Line 2 less number of whole shares of New D&B stock distributed to you. This is the fractional share you were entitled to receive

$

 

.5

 
         
  • Line 9 multiplied by Line 10. This is the tax basis of the New D&B fractional share that is being sold for you

$

 

$4.73

 
         
  • Line 8 less Line 11. This is the tax basis of the New D&B stock that was distributed to you

$

 

$586.77

 
         

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

Statement of shareholder receiving a distribution of stock in The New D&B 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 September 20, 2000, 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. Moody’s Corporation (formerly The Dun & Bradstreet Corporation) ("Parent")
    99 Church Street
    New York, New York 10007




  2.  
  3.  
  4. The Dun & Bradstreet Corporation (formerly The New D&B Corporation) ("Controlled")
    One Diamond Hill Road
    Murray Hill, NJ 07974
  1. The undersigned surrendered no stock or securities in Parent in connection with the distribution.
  2. The undersigned received _________shares of Controlled in the distribution, constituting only common shares in such corporation.
  3. By letter dated June 15, 2000, the Internal Revenue Service ruled that the distribution by Parent of shares of Controlled 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 SEPTEMBER 30, 2000.


Calculation of Percentage of Tax Basis Allocable Between Dun & Bradstreet and Moody's Shares
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