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-- Diluted EPS Before Non-Core Gains and Charges Up 14%; GAAP
Diluted EPS Up 26%, due primarily to the favorable resolution
of tax matters
-- Core and Total Revenue Up 8% Before the Effect of Foreign
Exchange; Up 9% After the Effect of Foreign Exchange
-- Full year Core Revenue guidance updated to approximately 8%
growth, compared with original guidance of 8% to 10% growth;
all other guidance metrics remain unchanged
SHORT HILLS, N.J.--(BUSINESS WIRE)--Oct. 30, 2008--D&B (NYSE: DNB), the leading provider of global business information, tools and commercial insight, today reported results for the third quarter ended September 30, 2008.
Third Quarter 2008 Results
Diluted earnings per share before non-core gains and charges for the quarter ended September 30, 2008, were $1.13, up 14 percent from $0.99 in the prior year similar period. On a GAAP basis, diluted earnings per share for the quarter ended September 30, 2008, were $1.18, up 26 percent from $0.94 in the prior year similar period due primarily to the favorable resolution of tax matters.
See attached Schedule 3 for a reconciliation of diluted earnings per share before non-core gains and charges to earnings per share on a GAAP basis, as well as the definitions of the non-GAAP financial measures that the Company uses to evaluate the business.
Core and total revenue for the third quarter of 2008 was $409.2 million, up 8 percent from the prior year similar period before the effect of foreign exchange (up 9 percent after the effect of foreign exchange).
Core and total revenue results for the third quarter of 2008 reflect the following by solution set:
-- Risk Management Solutions revenue of $273.1 million, up 6
percent before the effect of foreign exchange (up 8 percent
after the effect of foreign exchange);
-- Sales & Marketing Solutions revenue of $105.1 million, up 12
percent both before and after the effect of foreign exchange;
and
-- Internet Solutions revenue of $31.0 million, up 14 percent
both before and after the effect of foreign exchange.
See attached Schedules 4 and 5 for additional detail.
Operating income before non-core gains and charges for the third quarter of 2008 was $108.4 million, up 12 percent from the prior year similar period. On a GAAP basis, operating income for the quarter was $91.2 million, down 5 percent from the prior year similar period. During the third quarter of 2008 and 2007, the Company also incurred transition costs of $3.1 million.
Net income before non-core gains and charges for the third quarter of 2008 was $62.1 million, up 6 percent from the prior year similar period. On a GAAP basis, net income for the quarter was $65.1 million, up 16 percent from the prior year similar period.
See attached Schedule 3 for additional detail.
Free cash flow for the first nine months of 2008, excluding the impact of legacy tax matters, was $273.3 million, up 9 percent from the first nine months of 2007. The Company defines free cash flow as net cash provided by operating activities less capital expenditures and additions to computer software and other intangibles. Net cash provided by operating activities for the first nine months of 2008, excluding the impact of legacy tax matters, was $322.4 million, up 7 percent from the first nine months of 2007. On a GAAP basis, net cash provided by operating activities for the first nine months of 2008 was $348.0 million, compared to $302.3 million in the prior year similar period.
See attached Schedule 4 for additional detail.
Share repurchases during the third quarter of 2008 under the Company's discretionary repurchase program totaled $57.7 million, while repurchases made to offset the dilutive effect of shares issued under employee benefit plans totaled an additional $27.8 million.
The Company ended the third quarter of 2008 with $230.6 million of cash and cash equivalents.
Third Quarter 2008 Segment Results
United States
Core and total revenue for the third quarter of 2008 was $311.0 million, up 7 percent from the prior year similar period. These results reflect continued strength in our core U.S. operation and were also helped in part by the timing of contract renewals, primarily in Sales and Marketing.
U.S. core and total revenue results for the third quarter of 2008 reflect the following:
-- Risk Management Solutions revenue of $193.5 million, up 4
percent;
-- Sales & Marketing Solutions revenue of $88.2 million, up 10
percent; and
-- Internet Solutions revenue of $29.3 million, up 15 percent.
See attached Schedules 4 and 5 for additional detail.
Operating income for the third quarter of 2008 was $109.6 million, up 7 percent from the prior year similar period. The increase was primarily due to revenue growth in the U.S. segment, partially offset by higher selling expenses and higher costs associated with acquisitions and investments to enhance the Company's strategic capabilities.
International
Core and total revenue for the third quarter of 2008 was $98.2 million, up 13 percent before the effect of foreign exchange (up 19 percent after the effect of foreign exchange) from the prior year similar period.
International core and total revenue results for the third quarter of 2008 reflect the following:
-- Risk Management Solutions revenue of $79.6 million, up 12
percent before the effect of foreign exchange (up 18 percent
after the effect of foreign exchange);
-- Sales & Marketing Solutions revenue of $16.9 million, up 20
percent before the effect of foreign exchange (up 24 percent
after the effect of foreign exchange); and
-- Internet Solutions revenue of $1.7 million, down 1 percent
both before and after the effect of foreign exchange.
See attached Schedules 4 and 5 for additional detail.
Operating income for the third quarter of 2008 was $19.2 million, up 36 percent from the prior year similar period. The increase was primarily due to revenue growth and the net impact of foreign exchange.
Non-Core Gains and Charges
During the third quarter of 2008 and 2007, the Company recorded:
-- Net pre-tax, non-core charges of $8.9 million and $0.7
million, respectively; and
-- Net after-tax, non-core gains of $3.0 million and net
after-tax, non-core charges of $3.2 million, respectively.
See attached Schedule 3 for additional explanations and details of these charges.
D&B's restructuring charges may be viewed as recurring as they are part of its Financial Flexibility initiatives. In addition to reporting GAAP results, the Company reports results before restructuring charges and other non-core gains and charges because they do not reflect the Company's underlying business performance and they may have a disproportionate positive or negative impact on the results of its ongoing business operations. For additional information, see the section titled "Use of Non-GAAP Financial Measures" below.
Full Year 2008 Guidance Updated
The Company updated its full-year revenue guidance for 2008 as follows:
-- Core revenue growth of approximately 8 percent, before the
effect of foreign exchange, compared with original guidance of
8% to 10% growth, before the effect of foreign exchange.
All of the Company's other full-year guidance metrics for 2008 remain unchanged:
-- Operating income growth of 11 percent to 13 percent, or $501
million to $510 million, before non-core gains and charges;
-- Diluted EPS growth of 14 percent to 16 percent, or $5.19 to
$5.29, before non-core gains and charges;
-- Free cash flow of $337 million to $352 million, excluding the
impact of legacy tax matters; and
-- Tax rate of approximately 37 percent to 37.5 percent, before
non-core gains and charges.
D&B does not provide guidance on a GAAP basis because D&B is unable to predict, with reasonable certainty, the future movement of foreign exchange rates or the future impact of non-core gains and charges, such as restructuring charges and legacy tax matters, which are a component of the most comparable financial measures calculated in accordance with GAAP. Non-core gains and charges are uncertain and will depend on several factors, including industry conditions, and could be material to D&B's results computed in accordance with GAAP.
Use of Non-GAAP Financial Measures
D&B reports non-GAAP financial measures in this press release and the schedules attached. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - How We Manage Our Business" in the Company's Annual Report on Form 10-K for the year ending December 31, 2007, filed February 25, 2008 with the SEC, for a discussion of how the Company defines these measures, why it uses them and why it believes they provide useful information to investors. Additionally, these measures are defined in Schedule 3 attached to this press release
Third Quarter Teleconference
As previously announced, D&B will review its third quarter financial results in a conference call with the investment community on Friday, October 31, 2008, at 10 a.m. ET. Live audio, as well as a replay of the conference call and other related information, will be accessible on D&B's Investor Relations Web site at http://investor.dnb.com.
About D&B
D&B (NYSE:DNB) is the world's leading source of commercial information and insight on businesses, enabling companies to Decide with Confidence® for 167 years. D&B's global commercial database contains more than 130 million business records. The database is enhanced by D&B's proprietary DUNSRight® Quality Process, which provides our customers with quality business information. This quality information is the foundation of our global solutions that customers rely on to make critical business decisions.
D&B provides solution sets that meet a diverse set of customer needs globally. Customers use D&B Risk Management Solutions™ to mitigate credit and supplier risk, increase cash flow and drive increased profitability; D&B Sales & Marketing Solutions™ to increase revenue from new and existing customers; and D&B Internet Solutions™ to convert prospects into clients faster by enabling business professionals to research companies, executives and industries. For more information, please visit www.dnb.com.
Forward-Looking and Cautionary Statements
This press release, including, in particular, the section titled "Full Year 2008 Guidance Updated," contains projections of future results and other forward-looking statements that involve a number of trends, risks and uncertainties, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
The following important factors could cause actual results to differ materially from those projected in such forward-looking statements.
-- D&B relies significantly on third parties to support critical
components of its business model in a continuous and
high-quality manner, including third-party data providers,
strategic third party members in its Worldwide Network, and
third parties with which it has outsourcing arrangements.
-- Demand for D&B's products is subject to intense competition,
changes in customer preferences and economic conditions which
impact customer behavior.
-- D&B's solutions and brand image are dependent upon the
integrity and security of its global database and the
continued availability thereof through the Internet and by
other means, as well as our ability to protect key assets,
such as our data centers.
-- D&B's ability to maintain the integrity of its brand and
reputation, which it believes are key assets and competitive
advantages.
-- D&B's ability to renew large contracts, the related revenue
recognition and the timing thereof may impact its results of
operations from period to period.
-- D&B's results are subject to the effects of foreign economies,
exchange rate fluctuations, legislative or regulatory
requirements, such as the adoption of new or changes in
accounting policies and practices, including pronouncements by
the Financial Accounting Standards Board or other
standard-setting bodies, and the implementation or
modification of fees or taxes that we must pay to acquire,
use, and/or redistribute data.
-- As a result of the credit market crisis and other
macro-economic challenges currently affecting the global
economy, our customers or vendors may experience cash flow
problems. This may cause our customers to delay, cancel or
significantly decrease their purchases from us and impact
their ability to pay amounts owed to us. In addition, our
vendors may substantially increase their prices without
notice. Such behavior may adversely affect our earnings and
cash flow. In addition, if economic conditions in the United
States and other key markets deteriorate further or do not
show improvement, we may experience material adverse impacts
to our business and operating results.
-- D&B's ability to introduce new solutions or services in a
seamless way and without disruption to existing solutions such
as DNBi.
-- D&B's ability to acquire and successfully integrate other
complementary businesses, products and technologies into its
existing business, without significant disruption to its
existing business or to its financial results.
-- The continued adherence by third party members of our D&B
Worldwide Network to our quality standards, our brand and
communication standards and to the terms and conditions of our
commercial services arrangements.
-- D&B's future success requires that it attract and retain
qualified personnel, including members of its sales force, in
regions throughout the world.
-- The profitability of D&B's International segment depends on
its ability to identify and execute on various initiatives,
such as the implementation of subscription plan pricing and
successfully managing its D&B Worldwide Network, and its
ability to identify and contend with various challenges
present in foreign markets, such as local competition and the
availability of public records at no cost.
-- D&B's ability to successfully implement its Blueprint for
Growth Strategy requires that it successfully reduce its
expense base through its Financial Flexibility initiatives,
and reallocate certain of the expense-base reductions into
initiatives that produce desired revenue growth.
-- D&B is involved in various tax matters and legal proceedings,
the outcomes of which are unknown and uncertain with respect
to the impact on D&B's cash flow and profitability. See the
Company's most recent Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q and notes to the financial statements
included therewith, for a more detailed description of these
matters.
-- D&B's ability to repurchase shares is subject to market
conditions, including trading volume in its stock, and its
ability to repurchase shares in accordance with applicable
securities laws.
-- D&B's projection for free cash flow is dependent upon its
ability to generate revenue, its collection processes,
customer payment patterns, the timing and volume of stock
option exercises and the amount and timing of payments related
to the tax and other matters and legal proceedings in which it
is involved, as referenced above and as more fully described
in the Company's filings with the SEC, including its most
recent Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q and notes to the financial statements included
therewith.
For a more detailed discussion of the trends, risks and uncertainties that may affect D&B's operating and financial results and its ability to achieve the financial objectives discussed in this press release, readers should review the Company's most recent filings with the SEC, including the Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Copies of the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q are available on its Web site at www.dnb.com and on the SEC's web site at www.sec.gov. D&B cautions that the foregoing list of important factors is not complete and except as otherwise required by federal securities laws does not undertake any obligation to update any forward-looking statements.
The Dun & Bradstreet Corporation Schedule 1
Consolidated Statement of Operations (unaudited) - GAAP Results
----------------------------------------------------------------------
Amounts in Effects of
millions, except Quarter Ended AFX Foreign BFX
per share data September 30, % Change Exchange % Change
---------------
2008 2007 Fav/(Unfav) Fav/(Unfav) Fav/(Unfav)
------- ------- ----------- ----------- -----------
Revenue:
U.S. $311.0 $291.9 7% 0% 7%
International 98.2 82.8 19% 6% 13%
----------------- ------- -------
Core and Total
Revenue $409.2 $374.7 9% 1% 8%
----------------- ------- -------
Operating Income
(Loss):
U.S. $109.6 $102.8 7%
International
(1) 19.2 14.1 36%
------- -------
Total
Divisions 128.8 116.9 10%
Corporate and
Other (2) (37.6) (21.5) (75)%
----------------- ------- -------
Operating Income 91.2 95.4 (5)%
----------------- ------- -------
Interest Income 2.9 2.3 27%
Interest Expense (11.7) (6.9) (70)%
Other Income
(Expense) - Net
(3) 9.9 0.1 N/M
----------------- ------- -------
Non-Operating
Income (Expense)
- Net 1.1 (4.5) N/M
----------------- ------- -------
Income before
Provision for
Income Taxes 92.3 90.9 2%
Provision for
Income Taxes 27.3 36.1 25%
Minority Interest
Income (Expense) (0.2) 0.4 N/M
Equity in Net
Income (Loss) of
Affiliates 0.3 0.4 (22)%
----------------- ------- -------
Income From
Continuing
Operations 65.1 55.6 17%
Discontinued
Operations:
Income from
Discontinued
Operations, Net
of Income Taxes - 0.5 N/M
Gain on Disposal
of Italian Real
Estate business,
No Income Tax
Impact - - N/M
----------------- ------- -------
Income from
Discontinued
Operations, Net
of Income Taxes - 0.5 N/M
----------------- ------- -------
Net Income (4) $ 65.1 $ 56.1 16%
----------------- ------- -------
Basic Earnings
Per Share of
Common Stock:
Continuing
Operations $ 1.21 $ 0.96 26%
Discontinued
Operations - 0.01 N/M
----------------- ------- -------
Basic Earnings
Per Share of
Common Stock $ 1.21 $ 0.97 25%
----------------- ------- -------
Diluted Earnings
Per Share of
Common Stock:
Continuing
Operations $ 1.18 $ 0.93 27%
Discontinued
Operations - 0.01 N/M
----------------- ------- -------
Diluted Earnings
Per Share of
Common Stock (5) $ 1.18 $ 0.94 26%
----------------- ------- -------
----------------- ------- -------
Weighted Average
Number of Shares
Outstanding:
Basic 53.9 58.1 7%
----------------- ------- -------
Diluted 55.0 59.6 8%
----------------- ------- -------
Amounts in
millions, Effects of
except per Year-To-Date AFX Foreign BFX
share data September 30, % Change Exchange % Change
-------------------
2008 2007 Fav/(Unfav) Fav/(Unfav) Fav/(Unfav)
--------- --------- ----------- ----------- -----------
Revenue:
U.S. $ 951.5 $ 886.0 7% 0% 7%
International 300.1 248.5 21% 9% 12%
------------------------ ---------
Core and Total
Revenue $1,251.6 $1,134.5 10% 1% 9%
------------------------ ---------
Operating
Income (Loss):
U.S. $ 333.3 $ 307.9 8%
International
(1) 57.9 45.5 27%
--------- ---------
Total
Divisions 391.2 353.4 11%
Corporate and
Other (2) (93.7) (83.6) (12)%
------------------------ ---------
Operating
Income 297.5 269.8 10%
------------------------ ---------
Interest Income 9.0 5.3 71%
Interest
Expense (34.3) (19.8) (74)%
Other Income
(Expense) -
Net (3) 1.8 7.7 76%
------------------------ ---------
Non-Operating
Income
(Expense) -
Net (23.5) (6.8) N/M
------------------------ ---------
Income before
Provision for
Income Taxes 274.0 263.0 4%
Provision for
Income Taxes 64.8 70.4 8%
Minority
Interest
Income
(Expense) (0.7) 0.9 N/M
Equity in Net
Income (Loss)
of Affiliates 0.9 0.8 12%
------------------------ ---------
Income From
Continuing
Operations 209.4 194.3 8%
Discontinued
Operations:
Income from
Discontinued
Operations,
Net of Income
Taxes 0.7 2.1 (67)%
Gain on
Disposal of
Italian Real
Estate
business, No
Income Tax
Impact 0.4 - N/M
------------------------ ---------
Income from
Discontinued
Operations,
Net of Income
Taxes 1.1 2.1 (48)%
------------------------ ---------
Net Income (4) $ 210.5 $ 196.4 7%
------------------------ ---------
Basic Earnings
Per Share of
Common Stock:
Continuing
Operations $ 3.82 $ 3.31 15%
Discontinued
Operations 0.02 0.04 (50)%
------------------------ ---------
Basic Earnings
Per Share of
Common Stock $ 3.84 $ 3.35 15%
------------------------ ---------
Diluted
Earnings Per
Share of
Common Stock:
Continuing
Operations $ 3.74 $ 3.23 16%
Discontinued
Operations 0.02 0.04 (50)%
------------------------ ---------
Diluted
Earnings Per
Share of
Common Stock
(5) $ 3.76 $ 3.27 15%
------------------------ ---------
------------------------ ---------
Weighted
Average Number
of Shares
Outstanding:
Basic 54.8 58.7 7%
------------------------ ---------
Diluted 56.0 60.2 7%
------------------------ ---------
AFX - After Effects of Foreign Exchange
BFX - Before Effects of Foreign Exchange
N/M - Not Meaningful
See Schedule 3 (Notes to Schedules), which is an integral part of the
consolidated statement of operations.
This financial information should be read in conjunction with the
consolidated financial statements and related notes of The Dun &
Bradstreet Corporation contained in filings with the Securities and
Exchange Commission.
The Dun & Bradstreet Corporation Schedule 2
Consolidated Statement of Operations (unaudited) - (On a Continuing
Operations Basis) - Before Non-Core Gains and Charges
----------------------------------------------------------------------
Amounts in Effects of
millions, except Quarter Ended AFX Foreign BFX
per share data September 30, % Change Exchange % Change
---------------
2008 2007 Fav/(Unfav) Fav/(Unfav) Fav/(Unfav)
------- ------- ----------- ----------- -----------
Revenue:
U.S. $311.0 $291.9 7% 0% 7%
International 98.2 82.8 19% 6% 13%
----------------- ------- -------
Core and Total
Revenue $409.2 $374.7 9% 1% 8%
----------------- ------- -------
Operating Income
(Loss):
U.S. $109.6 $102.8 7%
International
(1) 19.2 14.1 36%
------- -------
Total
Divisions 128.8 116.9 10%
Corporate and
Other (2) (20.4) (20.4) 0%
----------------- ------- -------
Operating Income 108.4 96.5 12%
----------------- ------- -------
Interest Income 2.9 2.3 27%
Interest Expense (11.7) (6.9) (70)%
Other Income
(Expense) - Net
(3) 1.6 (0.3) N/M
----------------- ------- -------
Non-Operating
Income (Expense)
- Net (7.2) (4.9) (49)%
----------------- ------- -------
Income before
Provision for
Income Taxes 101.2 91.6 10%
Provision for
Income Taxes 39.2 33.6 (17)%
Minority Interest
Income (Expense) (0.2) 0.4 N/M
Equity in Net
Income (Loss) of
Affiliates 0.3 0.4 (22)%
----------------- ------- -------
Net Income (4) $ 62.1 $ 58.8 6%
----------------- ------- -------
Basic Earnings
Per Share of
Common Stock $ 1.15 $ 1.01 14%
----------------- ------- -------
Diluted Earnings
Per Share of
Common Stock (5) $ 1.13 $ 0.99 14%
----------------- ------- -------
----------------- ------- -------
Weighted Average
Number of Shares
Outstanding:
Basic 53.9 58.1 7%
----------------- ------- -------
Diluted 55.0 59.6 8%
----------------- ------- -------
Amounts in
millions, Effects of
except per Year-To-Date AFX Foreign BFX
share data September 30, % Change Exchange % Change
-------------------
2008 2007 Fav/(Unfav) Fav/(Unfav) Fav/(Unfav)
--------- --------- ----------- ----------- -----------
Revenue:
U.S. $ 951.5 $ 886.0 7% 0% 7%
International 300.1 248.5 21% 9% 12%
------------------------ ---------
Core and Total
Revenue $1,251.6 $1,134.5 10% 1% 9%
------------------------ ---------
Operating
Income (Loss):
U.S. $ 333.3 $ 307.9 8%
International
(1) 57.9 46.3 25%
--------- ---------
Total
Divisions 391.2 354.2 10%
Corporate and
Other (2) (64.9) (62.8) (3)%
------------------------ ---------
Operating
Income 326.3 291.4 12%
------------------------ ---------
Interest Income 9.0 5.3 71%
Interest
Expense (34.3) (19.8) (74)%
Other Income
(Expense) -
Net (3) 0.5 (0.2) N/M
------------------------ ---------
Non-Operating
Income
(Expense) -
Net (24.8) (14.7) (69)%
------------------------ ---------
Income before
Provision for
Income Taxes 301.5 276.7 9%
Provision for
Income Taxes 110.3 102.6 (8)%
Minority
Interest
Income
(Expense) (0.7) 0.9 N/M
Equity in Net
Income (Loss)
of Affiliates 0.9 0.8 12%
------------------------ ---------
Net Income (4) $ 191.4 $ 175.8 9%
------------------------ ---------
Basic Earnings
Per Share of
Common Stock $ 3.49 $ 3.00 16%
------------------------ ---------
Diluted
Earnings Per
Share of
Common Stock
(5) $ 3.42 $ 2.92 17%
------------------------ ---------
------------------------ ---------
Weighted
Average Number
of Shares
Outstanding:
Basic 54.8 58.7 7%
------------------------ ---------
Diluted 56.0 60.2 7%
------------------------ ---------
AFX - After Effects of Foreign Exchange
BFX - Before Effects of Foreign Exchange
N/M - Not Meaningful
See Schedule 3 (Notes to Schedules) for a definition of Non-GAAP
measures and a reconciliation of non-core gains and charges.
This financial information should be read in conjunction with the
consolidated financial statements and related notes of The Dun &
Bradstreet Corporation contained in filings with the Securities and
Exchange Commission.
The Dun & Bradstreet Corporation Schedule 3
Notes to Schedules 1 and 2 (unaudited) and Definitions of Non-GAAP
Measures
(1) The following table reconciles International Operating Income
included in Schedule 1 and Schedule 2:
Quarter Ended
September 30,
---------------
% Change
Amounts in millions 2008 2007 Fav/(Unfav)
-------------------------------------- ------- ------- -----------
International Operating Income - GAAP
Results (Schedule 1) $19.2 $14.1 36%
Settlement of International Payroll
Tax Matter Related to a Divested
Entity - - N/M
------- -------
International Operating Income -
Before Non-Core Gains and Charges
(Schedule 2) $19.2 $14.1 36%
------- -------
(2) The following table reconciles Corporate and Other expenses
included in Schedule 1 and Schedule 2:
Quarter Ended
September 30,
---------------
% Change
Amounts in millions 2008 2007 Fav/(Unfav)
-------------------------------------- ------- ------- -----------
Corporate and Other - GAAP Results
(Schedule 1) $(37.6) $(21.5) (75)%
Restructuring Charges (17.2) (1.1) N/M
------- -------
Corporate and Other - Before Non-Core
Gains and Charges (Schedule 2) $(20.4) $(20.4) 0%
------- -------
(3) The following table reconciles Other Income (Expense)-Net
included in Schedule 1 and Schedule 2:
Quarter Ended
September 30,
---------------
% Change
Amounts in millions 2008 2007 Fav/(Unfav)
-------------------------------------- ------- ------- -----------
Other Income (Expense)-Net - GAAP
Results (Schedule 1) $9.9 $0.1 N/M
Effect of Legacy Tax Matters 0.2 0.4 (50)%
Legacy Tax Matter related to the
settlement of 2003 tax year - - N/M
Gain Associated with Huaxia/D&B China
Joint Venture - - N/M
Net Gain (Loss) on the Sale of Other
Investments - - N/M
Settlement of Legacy Tax Matter
Arbitration 8.1 - N/M
------- -------
Other Income (Expense)-Net - Before
Non-Core Gains and Charges (Schedule
2) $1.6 $(0.3) N/M
------- -------
(4) The following table reconciles Net Income included in Schedule 1
and Schedule 2:
Quarter Ended
September 30,
---------------
% Change
Amounts in millions 2008 2007 Fav/(Unfav)
-------------------------------------- ------- ------- -----------
Net Income - GAAP Results (Schedule 1) $65.1 $56.1 16%
Restructuring Charges (11.0) (0.7) N/M
Gain Associated with Huaxia/D&B China
Joint Venture - - N/M
Settlement of International Payroll
Tax Matter Related to a Divested
Entity - - N/M
Settlement of Legacy Tax Matter
Arbitration 5.0 - N/M
Net Gain (Loss) on the Sale of Other
Investments - - N/M
Tax Reserve true-up for the
Settlement of 1997-2002 tax years,
primarily related to the
"Amortization and Royalty Expense
Deductions/Royalty Income 1997-2007"
transactions - - N/M
Tax Reserve true-up for the
Settlement of 2003 tax year, related
to the "Amortization and Royalty
Expense Deductions" transaction - - N/M
Favorable resolution of Global Tax
Audits including the Liquidation of
Dormant International Corporations
and/or Divested Entities 9.0 - N/M
Impact of Revaluing the Net Deferred
Tax Assets in the UK as a Result of
a UK Tax Law Change, Enacted in Q3
2007, Which Reduces the General UK
Tax Rate From 30% to 28% - (2.5) N/M
Interest on IRS Deposit - - N/M
Income from Discontinued Operations,
Net of Income Taxes - 0.5 N/M
Gain on Disposal of Italian Real
Estate business - - N/M
------- -------
Net Income - (On a Continuing
Operations Basis) - Before Non-Core
Gains and Charges (Schedule 2) $62.1 $58.8 6%
------- -------
(5) The following table reconciles Diluted Earnings Per Share
included in Schedule 1 and Schedule 2:
Quarter Ended
September 30,
---------------
% Change
2008 2007 Fav/(Unfav)
-------------------------------------- ------- ------- -----------
Diluted EPS - GAAP Results (Schedule
1) $1.18 $0.94 26%
Restructuring Charges (0.20) (0.01) N/M
Gain Associated with Huaxia/D&B China
Joint Venture - - N/M
Settlement of International Payroll
Tax Matter Related to a Divested
Entity - - N/M
Settlement of Legacy Tax Matter
Arbitration 0.09 - N/M
Net Gain (Loss) on the Sale of Other
Investments - - N/M
Tax Reserve true-up for the
Settlement of 1997-2002 tax years,
primarily related to the
"Amortization and Royalty Expense
Deductions/Royalty Income 1997-2007"
transactions - - N/M
Tax Reserve true-up for the
Settlement of 2003 tax year, related
to the "Amortization and Royalty
Expense Deductions" transaction - - N/M
Favorable resolution of Global Tax
Audits including the Liquidation of
Dormant International Corporations
and/or Divested Entities 0.16 - N/M
Impact of Revaluing the Net Deferred
Tax Assets in the UK as a Result of
a UK Tax Law Change, Enacted in Q3
2007, Which Reduces the General UK
Tax Rate From 30% to 28% - (0.05) N/M
Interest on IRS Deposit - - N/M
Income from Discontinued Operations,
Net of Income Taxes - 0.01 N/M
------- -------
Diluted EPS - (On a Continuing
Operations Basis) - Before Non-Core
Gains and Charges (Schedule 2) $1.13 $0.99 14%
------- -------
(1) The following table reconciles International Operating Income
included in Schedule 1 and Schedule 2:
Year-to-Date
September 30,
----------------
% Change
Amounts in millions 2008 2007 Fav/(Unfav)
--------------------------------------- ------- ------- -------------
International Operating Income - GAAP
Results (Schedule 1) $57.9 $45.5 27%
Settlement of International Payroll
Tax Matter Related to a Divested
Entity - (0.8) N/M
-------- -------
International Operating Income - Before
Non-Core Gains and Charges (Schedule
2) $57.9 $46.3 25%
-------- -------
(2) The following table reconciles Corporate and Other expenses
included in Schedule 1 and Schedule 2:
Year-to-Date
September 30,
----------------
% Change
Amounts in millions 2008 2007 Fav/(Unfav)
--------------------------------------- ------- ------- -------------
Corporate and Other - GAAP Results
(Schedule 1) $(93.7) $(83.6) (12)%
Restructuring Charges (28.8) (20.8) (39)%
-------- -------
Corporate and Other - Before Non-Core
Gains and Charges (Schedule 2) $(64.9) $(62.8) (3)%
-------- -------
(3) The following table reconciles Other Income (Expense)-Net
included in Schedule 1 and Schedule 2:
Year-to-Date
September 30,
----------------
% Change
Amounts in millions 2008 2007 Fav/(Unfav)
--------------------------------------- ------- ------- -------------
Other Income (Expense)-Net - GAAP
Results (Schedule 1) $1.8 $7.7 76%
Effect of Legacy Tax Matters 0.9 1.3 (31)%
Legacy Tax Matter related to the
settlement of 2003 tax year (7.7) - N/M
Gain Associated with Huaxia/D&B China
Joint Venture - 5.8 N/M
Net Gain (Loss) on the Sale of Other
Investments - 0.8 N/M
Settlement of Legacy Tax Matter
Arbitration 8.1 - N/M
------- -------
Other Income (Expense)-Net - Before
Non-Core Gains and Charges (Schedule
2) $0.5 $(0.2) N/M
-------- -------
(4) The following table reconciles Net Income included in Schedule 1
and Schedule 2:
Year-to-Date
September 30,
----------------
% Change
Amounts in millions 2008 2007 Fav/(Unfav)
--------------------------------------- ------- ------- -------------
Net Income - GAAP Results (Schedule 1) $210.5 $196.4 7%
Restructuring Charges (18.7) (13.0) (44)%
Gain Associated with Huaxia/D&B China
Joint Venture - 2.9 N/M
Settlement of International Payroll
Tax Matter Related to a Divested
Entity - (0.6) N/M
Settlement of Legacy Tax Matter
Arbitration 5.0 - N/M
Net Gain (Loss) on the Sale of Other
Investments - 0.5 N/M
Tax Reserve true-up for the Settlement
of 1997-2002 tax years, primarily
related to the "Amortization and
Royalty Expense Deductions/Royalty
Income 1997-2007" transactions - 31.2 N/M
Tax Reserve true-up for the Settlement
of 2003 tax year, related to the
"Amortization and Royalty Expense
Deductions" transaction 7.7 - N/M
Favorable resolution of Global Tax
Audits including the Liquidation of
Dormant International Corporations
and/or Divested Entities 22.7 - N/M
Impact of Revaluing the Net Deferred
Tax Assets in the UK as a Result of a
UK Tax Law Change, Enacted in Q3
2007, Which Reduces the General UK
Tax Rate From 30% to 28% - (2.5) N/M
Interest on IRS Deposit 1.3 - N/M
Income from Discontinued Operations,
Net of Income Taxes 0.7 2.1 (67)%
Gain on Disposal of Italian Real
Estate business 0.4 - N/M
-------- -------
Net Income - (On a Continuing
Operations Basis) - Before Non-Core
Gains and Charges (Schedule 2) $191.4 $175.8 9%
-------- -------
(5) The following table reconciles Diluted Earnings Per Share
included in Schedule 1 and Schedule 2:
Year-to-Date
September 30,
----------------
% Change
2008 2007 Fav/(Unfav)
----------------------------------------------- ------- -------------
Diluted EPS - GAAP Results (Schedule 1) $3.76 $3.27 15%
Restructuring Charges (0.34) (0.22) (55)%
Gain Associated with Huaxia/D&B China
Joint Venture - 0.05 N/M
Settlement of International Payroll
Tax Matter Related to a Divested
Entity - (0.01) N/M
Settlement of Legacy Tax Matter
Arbitration 0.09 - N/M
Net Gain (Loss) on the Sale of Other
Investments - 0.01 N/M
Tax Reserve true-up for the Settlement
of 1997-2002 tax years, primarily
related to the "Amortization and
Royalty Expense Deductions/Royalty
Income 1997-2007" transactions - 0.52 N/M
Tax Reserve true-up for the Settlement
of 2003 tax year, related to the
"Amortization and Royalty Expense
Deductions" transaction 0.14 - N/M
Favorable resolution of Global Tax
Audits including the Liquidation of
Dormant International Corporations
and/or Divested Entities 0.41 - N/M
Impact of Revaluing the Net Deferred
Tax Assets in the UK as a Result of a
UK Tax Law Change, Enacted in Q3
2007, Which Reduces the General UK
Tax Rate From 30% to 28% - (0.04) N/M
Interest on IRS Deposit 0.02 - N/M
Income from Discontinued Operations,
Net of Income Taxes 0.02 0.04 (50)%
-------- -------
Diluted EPS - (On a Continuing
Operations Basis) - Before Non-Core
Gains and Charges (Schedule 2) $3.42 $2.92 17%
-------- -------
N/M - Not Meaningful
The following defines the non-GAAP measures used to evaluate
performance:
* For 2008, our non-GAAP measures reflect results on a "Continuing
Operations" basis.
* Total revenue excluding the revenue of divested businesses is
referred to as "core revenue." Core revenue includes the revenue
from acquired businesses from the date of acquisition.
* Core revenue growth, excluding the effects of foreign exchange, is
referred to as "core revenue growth before the effects of foreign
exchange." We also separately, from time to time, analyze core
revenue growth before the effects of foreign exchange among two
components, "organic core revenue growth" and "core revenue growth
from acquisitions."
* Results (such as operating income, operating income growth,
operating margin, net income, tax rate and diluted earnings per
share) exclude Restructuring Charges (whether recurring or non-
recurring) and certain other items that we consider do not reflect
our underlying business performance. We refer to these Restructuring
Charges and other items as "non-core gains and (charges)."
* Net cash provided by operating activities minus capital
expenditures and additions to computer software and other
intangibles is referred to as "free cash flow."
This financial information should be read in conjunction with the
consolidated financial statements and related notes of The Dun &
Bradstreet Corporation contained in filings with the Securities and
Exchange Commission.
The Dun & Bradstreet Corporation Schedule 4
Supplemental GAAP Financial Data (unaudited)
Effects
of
Quarter Ended AFX Foreign BFX
September 30, % Change Exchange % Change
-------------
Fav/ Fav/ Fav/
Amounts in millions 2008 2007 (Unfav) (Unfav) (Unfav)
-------------------------- ------ ------ -------- --------- --------
Geographic and Customer
Solution Set Revenue:
U.S.:
Risk Management
Solutions(1) 193.5 186.6 4% 0% 4%
Sales & Marketing
Solutions 88.2 79.9 10% 0% 10%
Internet Solutions 29.3 25.4 15% 0% 15%
------ ------
Core and Total U.S. 311.0 291.9 7% 0% 7%
------ ------
International:
Risk Management
Solutions(1) 79.6 67.3 18% 6% 12%
Sales & Marketing
Solutions 16.9 13.7 24% 4% 20%
Internet Solutions 1.7 1.8 (1)% 0% (1)%
------ ------
Core and Total
International 98.2 82.8 19% 6% 13%
------ ------
Total Corporation:
Risk Management
Solutions(1) 273.1 253.9 8% 2% 6%
Sales & Marketing
Solutions 105.1 93.6 12% 0% 12%
Internet Solutions 31.0 27.2 14% 0% 14%
------ ------
Core and Total Revenue $409.2 $374.7 9% 1% 8%
------ ------
Operating Costs:
Operating Expenses $116.6 $103.5 (13)%
Selling and
Administrative
Expenses 169.8 164.2 (3)%
Depreciation and
Amortization 14.4 10.5 (37)%
Restructuring Expense 17.2 1.1 N/M
------ ------
Total Operating Costs $318.0 $279.3 (14)%
------ ------
Capital Expenditures $ 3.8 $ 2.1 (81)%
------ ------
Additions to Computer
Software & Other
Intangibles $ 11.8 $ 17.2 31%
------ ------
Notes:
(1) On January 1, 2008, we began managing our Supply Management
Solutions set as part of our Risk Management Solutions and have
reclassified our historical financial results to reflect this change.
Quarter Ended September 30,
2008
---------------------------
Effects
of
AFX Foreign BFX
% Change Exchange % Change
Fav/ Fav/ Fav/
(Unfav) (Unfav) (Unfav)
-------- --------- --------
Risk Management Solutions
without Supply Management
Solutions:
--------------------------
U.S. 4% 0% 4%
International 19% 6% 13%
Total Corporation 8% 1% 7%
Effects
of
Year-to-Date AFX Foreign BFX
September 30, % Change Exchange % Change
-----------------
Fav/ Fav/ Fav/
Amounts in millions 2008 2007 (Unfav) (Unfav) (Unfav)
--------------------------------- -------- -------- --------- --------
Geographic and Customer
Solution Set Revenue:
U.S.:
Risk Management
Solutions(1) 590.0 563.6 5% 0% 5%
Sales & Marketing
Solutions 274.0 249.5 10% 0% 10%
Internet Solutions 87.5 72.9 20% 0% 20%
--------- --------
Core and Total U.S. 951.5 886.0 7% 0% 7%
--------- --------
International:
Risk Management
Solutions(1) 238.4 197.6 21% 9% 12%
Sales & Marketing
Solutions 56.4 45.6 24% 8% 16%
Internet Solutions 5.3 5.3 2% 3% (1)%
--------- --------
Core and Total
International 300.1 248.5 21% 9% 12%
--------- --------
Total Corporation:
Risk Management
Solutions(1) 828.4 761.2 9% 2% 7%
Sales & Marketing
Solutions 330.4 295.1 12% 1% 11%
Internet Solutions 92.8 78.2 19% 0% 19%
--------- --------
Core and Total Revenue $1,251.6 $1,134.5 10% 1% 9%
--------- --------
Operating Costs:
Operating Expenses $ 362.5 $ 319.3 (14)%
Selling and
Administrative
Expenses 521.1 495.1 (5)%
Depreciation and
Amortization 41.7 29.5 (41)%
Restructuring
Expense 28.8 20.8 (39)%
--------- --------
Total Operating Costs $ 954.1 $ 864.7 (10)%
--------- --------
Capital Expenditures $ 9.3 $ 11.2 17%
--------- --------
Additions to Computer
Software & Other
Intangibles $ 39.8 $ 40.7 2%
--------- --------
Notes:
(1) On January 1, 2008, we began managing our Supply Management
Solutions set as part of our Risk Management Solutions and have
reclassified our historical financial results to reflect this change.
Year-To-Date September 30,
2008
---------------------------
Effects
of
AFX Foreign BFX
% Change Exchange % Change
Fav/ Fav/ Fav/
(Unfav) (Unfav) (Unfav)
-------- --------- --------
Risk Management
Solutions without
Supply Management
Solutions:
------------------------
U.S. 4% 0% 4%
International 21% 9% 12%
Total Corporation 9% 3% 6%
AFX - After Effects of Foreign Exchange
BFX - Before Effects of Foreign Exchange
N/M - Not Meaningful
This financial information should be read in conjunction with the
consolidated financial statements and related notes of The Dun &
Bradstreet Corporation contained in filings with the Securities and
Exchange Commission.
Quarter Ended
-------------------------------------
Sep 30, June 30, Mar 31, Dec 31,
Amounts in millions 2008 2008 2008 2007
-------------------------------- -------- -------- -------- --------
Net Debt Position:
Cash and Cash
Equivalents $ 230.6 $ 245.5 $ 215.7 $ 175.8
Short-Term Debt - - - -
Long-Term Debt (864.6) (825.6) (790.0) (724.8)
-------- -------- -------- --------
Net Debt $(634.0) $(580.1) $(574.3) $(549.0)
-------- -------- -------- --------
Quarter Ended
------------------------------------
Sep 30, Jun 30, Mar 31,
Amounts in millions 2007 2007 2007
---------------------------------------------- ----------- -----------
Net Debt Position:
Cash and Cash Equivalents $ 156.1 $ 145.4 $ 130.7
Short-Term Debt - (0.1) (0.1)
Long-Term Debt (546.2) (475.8) (484.1)
------------ ----------- -----------
Net Debt $ (390.1) $ (330.5) $ (353.5)
------------ ----------- -----------
Year-To-Date
---------------------------
% Change
Sep 30, Sep 30, Fav/(Unfav)
Amounts in millions 2008 2007
------------------------------------------ ------- ------- -----------
Free Cash Flow:
Net Cash Provided By Operating
Activities from Continuing Operations
(GAAP Results) $348.0 $302.3 15%
Less:
Capital Expenditures (GAAP Results) 9.3 11.2 17%
Additions to Computer Software & Other
Intangibles (GAAP Results) 39.8 40.7 2%
------- -------
Free Cash Flow 298.9 250.4 19%
Legacy Tax Matters (Refund) Payment (25.6) - N/M
------- -------
Free Cash Flow Excluding Legacy Tax
Matters $273.3 $250.4 9%
------- -------
Year-To-Date
---------------------------
% Change
Sep 30, Sep 30, Fav/(Unfav)
Amounts in millions 2008 2007
------------------------------------------ ------- ------- -----------
Net Cash Provided By Operating Activities
excluding Legacy Tax Matters:
Net Cash Provided By Operating
Activities from Continuing Operations
(GAAP Results) $348.0 $302.3 15%
Legacy Tax Matters (Refund) Payment (25.6) - N/M
------- -------
Net Cash Provided By Operating
Activities Excluding Legacy Tax
Matters $322.4 $302.3 7%
------- -------
N/M - Not Meaningful
This financial information should be read in conjunction with the
consolidated financial statements and related notes of The Dun &
Bradstreet Corporation contained in filings with the Securities and
Exchange Commission.
The Dun & Bradstreet Corporation Schedule 5
GAAP Revenue Reconciliation and Detail (unaudited)
Quarter Ended September 30, 2008 vs. 2007
----------------------------------------------------
Traditional/VAPs as a
% of Total Customer
AFX Effects of BFX Solution Sets/Total
-----------------------
% Change Foreign % Change 2008 2007
Fav/ Exchange Fav/ % Product % Product
(Unfav) (Unfav) Line/Total Line/Total
-------- ---------- -------- ----------- -----------
Revenue:
----------------
U.S.:
Risk
Management
Solutions:
Traditional 4% 0% 4% 73% 46% 73% 47%
VAPs 6% 0% 6% 20% 12% 20% 13%
Supply
Management
Solutions (3)% 0% (3)% 7% 4% 7% 4%
Total Risk
Management
Solutions(1) 4% 0% 4% 62% 64%
Sales &
Marketing
Solutions:
Traditional 11% 0% 11% 45% 13% 45% 12%
VAPs 10% 0% 10% 55% 16% 55% 15%
Total Sales &
Marketing
Solutions 10% 0% 10% 29% 27%
Internet
Solutions 15% 0% 15% 9% 9%
Core and Total
U.S. Revenue 7% 0% 7%
International:
Risk
Management
Solutions:
Traditional 24% 8% 16% 83% 67% 79% 65%
VAPs 1% 3% (2)% 16% 13% 19% 15%
Supply
Management
Solutions (39)% 6% (45)% 1% 1% 2% 1%
Total Risk
Management
Solutions(1) 18% 6% 12% 81% 81%
Sales &
Marketing
Solutions:
Traditional (12)% 2% (14)% 43% 7% 61% 10%
VAPs 76% 5% 71% 57% 10% 39% 7%
Total Sales &
Marketing
Solutions 24% 4% 20% 17% 17%
Internet
Solutions (1)% 0% (1)% 2% 2%
Core and Total
International
Revenue 19% 6% 13%
Total
Corporation:
Risk
Management
Solutions:
Traditional 9% 2% 7% 76% 51% 75% 51%
VAPs 5% 1% 4% 19% 13% 20% 13%
Supply
Management
Solutions (6)% 1% (7)% 5% 3% 5% 4%
Total Risk
Management
Solutions(1) 8% 2% 6% 67% 68%
Sales &
Marketing
Solutions:
Traditional 7% 0% 7% 45% 12% 47% 12%
VAPs 17% 1% 16% 55% 14% 53% 13%
Total Sales &
Marketing
Solutions 12% 0% 12% 26% 25%
Internet
Solutions 14% 0% 14% 7% 7%
Core and Total
Revenue 9% 1% 8%
Year-to-Date September 30, 2008 vs. 2007
----------------------------------------------------
Traditional/VAPs as a
% of Total Customer
AFX Effects of BFX Solution Sets/Total
-----------------------
% Change Foreign % Change 2008 2007
Fav/ Exchange Fav/ % Product % Product
(Unfav) (Unfav) Line/Total Line/Total
-------- ---------- -------- ----------- -----------
Revenue:
------------------
U.S.:
Risk Management
Solutions:
Traditional 4% 0% 4% 73% 45% 74% 47%
VAPs 6% 0% 6% 21% 13% 21% 13%
Supply
Management
Solutions 17% 0% 17% 6% 4% 5% 4%
Total Risk
Management
Solutions(1) 5% 0% 5% 62% 64%
Sales &
Marketing
Solutions:
Traditional 5% 0% 5% 41% 12% 43% 12%
VAPs 13% 0% 13% 59% 17% 57% 16%
Total Sales &
Marketing
Solutions 10% 0% 10% 29% 28%
Internet
Solutions 20% 0% 20% 9% 8%
Core and Total
U.S. Revenue 7% 0% 7%
International:
Risk Management
Solutions:
Traditional 22% 9% 13% 82% 65% 81% 65%
VAPs 17% 6% 11% 17% 13% 17% 14%
Supply
Management
Solutions 2% 10% (8)% 1% 1% 2% 1%
Total Risk
Management
Solutions(1) 21% 9% 12% 79% 80%
Sales &
Marketing
Solutions:
Traditional (1)% 4% (5)% 44% 8% 55% 10%
VAPs 53% 11% 42% 56% 11% 45% 8%
Total Sales &
Marketing
Solutions 24% 8% 16% 19% 18%
Internet Solutions 2% 3% (1)% 2% 2%
Core and Total
International
Revenue 21% 9% 12%
Total Corporation:
Risk Management
Solutions:
Traditional 9% 3% 6% 75% 50% 76% 51%
VAPs 8% 1% 7% 20% 13% 20% 14%
Supply
Management
Solutions 16% 1% 15% 5% 3% 4% 3%
Total Risk
Management
Solutions(1) 9% 2% 7% 66% 68%
Sales &
Marketing
Solutions:
Traditional 4% 1% 3% 41% 11% 45% 11%
VAPs 18% 1% 17% 59% 16% 55% 14%
Total Sales &
Marketing
Solutions 12% 1% 11% 27% 25%
Internet
Solutions 19% 0% 19% 7% 7%
Core and Total
Revenue 10% 1% 9%
Notes:
(1) On January 1, 2008, we began managing our Supply Management
Solutions set as part of our Risk Management Solutions and have
reclassified our historical financial results to reflect this
change.
Risk Management Solutions without Supply Management Solutions:
---------------------------------------------------------------------
Quarter Ended Year-To-Date
September 30, 2008 September 30, 2008
-------------------- --------------------
U.S. 4% 0% 4% 4% 0% 4%
International 19% 6% 13% 21% 9% 12%
Total Corporation 8% 1% 7% 9% 3% 6%
AFX - After Effects of Foreign Exchange
BFX - Before Effects of Foreign Exchange
This financial information should be read in conjunction with the
consolidated financial statements and related notes of The Dun &
Bradstreet Corporation contained in filings with the Securities and
Exchange Commission.
CONTACT: D&B
Joseph Jones (Media)
973-921-5732
jonesjo@dnb.com
or
Paul Krieg (Investors/Analysts)
973-921-5158
kriegpa@dnb.com
SOURCE: D&B