The Dun & Bradstreet Corporation
Oct 27, 2011

D&B Announces Third Quarter 2011 Results; Reaffirms 2011 Guidance and Announces $500 Million Share Repurchase Program

SHORT HILLS, N.J.--(BUSINESS WIRE)-- D&B (NYSE: DNB), the world's leading source of commercial information and insight on businesses, today reported results for the third quarter ended September 30, 2011.

"As expected, our top line growth accelerated in the third quarter and we remain on track to deliver our 2011 guidance. We continue to make excellent progress on our Strategic Technology Investment with the launch of five new products in the third quarter. Looking ahead to the fourth quarter, we will maintain our revenue momentum and increase the level of marketing spend to drive organic top line growth," stated Sara Mathew, D&B's Chairman and Chief Executive Officer.

Third Quarter 2011 Results

Diluted earnings per share before non-core gains and charges for the quarter ended September 30, 2011 were $1.42, up 17% from $1.21 in the prior year similar period.

On a GAAP basis, diluted earnings per share for the quarter ended September 30, 2011 were $1.19, up 6% from $1.12 in the prior year similar period.

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 revenue for the third quarter of 2011 was $439.4 million, up 8% from the prior year similar period before the effect of foreign exchange (up 11% after the effect of foreign exchange). Deferred revenue was $516.2 million, flat from the prior year similar period.

Core revenue results for the third quarter of 2011 reflect the following by solution set:

See attached Schedules 4, 5 and 6 for additional detail.

Total revenue for the third quarter of 2011 was $439.4 million, up 7% before the effect of foreign exchange (up 10% after the effect of foreign exchange), as compared to the prior year similar period. As a reminder, total revenue for the third quarter of 2010 included the results of our North American Self Awareness Solutions business which we divested early in the third quarter of 2010.

Operating income before non-core gains and charges for the third quarter of 2011 was $118.5 million, up 14% from the prior year similar period, primarily due to higher revenue, reengineering savings and the positive impact from foreign exchange. On a GAAP basis, operating income was $100.7 million, up 34% from the prior year similar period, due primarily to a $13.6 million charge recorded in the third quarter of 2010 for impaired intangible assets related to our Purisma business.

See attached Schedule 3 for additional detail.

Net income attributable to D&B before non-core gains and charges for the third quarter of 2011 was $70.0 million, up 15% from the prior year similar period. On a GAAP basis, net income attributable to D&B for the third quarter of 2011 was $58.4 million, up 4% from the prior year similar period.

See attached Schedule 3 for additional detail.

Free cash flow for the first nine months of 2011, excluding the impact of legacy tax matters, was $230.9 million, including approximately $32 million related to the Strategic Technology Investment, compared with $225.5 million and $15 million in the prior year similar period, respectively. The Company defines free cash flow as net cash provided by operating activities less capital expenditures and additions to computer software and other intangibles. On a GAAP basis, net cash provided by operating activities for the first nine months of 2011 was $271.2 million, compared with $278.9 million in the prior year similar period.

See attached Schedule 4 for additional detail.

Share repurchases during the third quarter of 2011 under the Company's discretionary repurchase program totaled $33.1 million (approximately 0.5 million shares), while repurchases made to offset the dilutive effect of shares issued under employee benefit plans totaled an additional $21.0 million (approximately 0.3 million shares).

The Company ended the third quarter of 2011 with $89.5 million of cash and cash equivalents and total gross debt of $893.2 million.

Third Quarter 2011 Segment Results

North America

Core revenue for the third quarter of 2011 was $307.0 million, up 2% both before and after the effect of foreign exchange.

North America core revenue results for the third quarter of 2011 reflect the following:

See attached Schedules 4, 5 and 6 for additional details.

Total revenue for the third quarter of 2011 was $307.0 million, flat from the prior year similar period both before and after the effect of foreign exchange. Total revenue for the third quarter of 2010 included the results of our North American Self Awareness Solutions business which we divested early in the third quarter of 2010.

Operating income before non-core gains and charges for the third quarter of 2011 was $112.1 million, up 5% from the prior year similar period primarily due to reengineering savings. On a GAAP basis, operating income was $112.1 million, up 20% from the prior year similar period, primarily due to a $13.6 million charge recorded in the third quarter of 2010 for impaired intangible assets related to our Purisma business.

Asia Pacific

Core and total revenue for the third quarter of 2011 was $67.7 million, up 65% (the acquisition of D&B Australia contributed 59 percentage points of the third quarter 2011 growth) before the effect of foreign exchange (up 79% after the effect of foreign exchange), as compared to the prior year similar period.

Asia Pacific core and total revenue results for the third quarter of 2011 reflect the following:

See attached Schedules 4, 5 and 6 for additional detail.

Operating income for the third quarter of 2011 was $4.9 million, up from zero in the prior year similar period. This increase was primarily related to revenue from our acquisition of D&B Australia, and related transaction costs during the third quarter of 2010.

Europe & Other International Markets

Core and total revenue for the third quarter of 2011 was $64.7 million, up 5% before the effect of foreign exchange (up 14% after the effect of foreign exchange), as compared to the prior year similar period.

Europe & Other International Markets core and total revenue results for the third quarter of 2011 reflect the following:

See attached Schedules 4, 5 and 6 for additional detail.

Operating income for the third quarter of 2011 was $15.5 million, up 8% from the prior year similar period. The increase was primarily related to increased revenue, the timing of investment activity and the positive impact from foreign exchange.

Strategic Technology Investment

In February 2010, D&B announced a Strategic Technology Investment program aimed at strengthening its leading position in commercial data and improving its current technology platform to meet the emerging needs of customers.

In the third quarter of 2011, the Company incurred $12.5 million of total pre-tax expenses (or $0.19 per diluted share) on the Strategic Technology Investment, which is included in the Non-Core Gains and Charges noted below, and $4.3 million of capital expenditures and additions to computer software and other intangibles related to the Strategic Technology Investment.

For the full year 2011, the Company anticipates spending between $55 million to $65 million for the Strategic Technology Investment.

See attached Schedule 3 for additional detail.

D&B announces the following transactions:

New $500 Million Share Repurchase Program

The Company announced today that its Board of Directors has authorized a new $500 million share repurchase program.

The new authorization is in addition to the remaining $25 million (as of September 30, 2011) under the previous $200 million authorization, which the Company plans to complete by the end of 2011.

The Company intends to continue its policy of returning excess free cash flow to shareholders in the form of share buybacks and/or dividends.

New $800 Million Five-Year Revolving Credit Facility

The company announced today it has entered into a new five-year $800 million revolving credit facility, and effective immediately, terminated its existing five-year $650 million facility. Borrowings under the new facility will be available at prevailing short-term interest rates.

The increase in the size of the facility is intended to give the company additional flexibility as a safeguard against potential dislocation in the credit markets over the next few years. There are no immediate plans to utilize the additional $150 million of capacity.

Non-Core Gains and Charges

During the third quarters of 2011 and 2010, the Company recorded:

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 2011 Guidance

D&B today reaffirmed its financial guidance for the full year 2011:

The impact of our Strategic Technology Investment has been excluded from our operating income and diluted EPS guidance and included in our free cash flow guidance, which is consistent with our treatment of non-core items.

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, 2010, filed March 1, 2011 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 2011 Teleconference

As previously announced, D&B will review its third quarter financial results in a conference call with the investment community on Friday, October 28, 2011, at 8 a.m. ET. Live audio as well as a replay of the conference call, will be accessible on D&B's Investor Relations Web site at http://investor.dnb.com.

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About Dun & Bradstreet® (D&B)

Dun & Bradstreet (NYSE:DNB) is the world's leading source of commercial information and insight on businesses, enabling companies to Decide with Confidence® for 170 years. D&B's global commercial database contains more than 200 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 SolutionsTM to mitigate credit and supplier risk, increase cash flow and drive increased profitability; D&B Sales & Marketing SolutionsTM to increase revenue from new and existing customers; and D&B Internet SolutionsTM to convert prospects into clients faster by enabling business professionals to research companies, executives and industries, over the web. For more information, please visit www.dnb.com.

Forward-Looking and Cautionary Statements

This press release, including, in particular, the section titled "Full Year 2011 Guidance," 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.

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 filings with the SEC, including its most recent 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

 
        Effects of Effects of  
Quarter Ended AFX Foreign BFX Year-to-Date AFX Foreign BFX

Dollar amounts in millions,

September 30, % Change Exchange % Change September 30, % Change Exchange % Change

except per share data

2011 2010 Fav (Unfav) Fav (Unfav) Fav (Unfav) 2011 2010 Fav (Unfav) Fav (Unfav) Fav (Unfav)
 
Revenue:
 
North America (1) $ 307.0 $ 301.2 2 % 0 % 2 % $ 886.5 $ 878.5 1 % 0 % 1 %
 
Asia Pacific 67.7 37.9 79 % 14 % 65 % 187.4 107.3 75 % 12 % 63 %
Europe and Other International Markets   64.7     56.9   14 % 9 % 5 %   185.9     176.2   5 % 4 % 1 %
International 132.4 94.8 40 % 12 % 28 % 373.3 283.5 32 % 7 % 25 %
         

Core Revenue

$ 439.4 $ 396.0 11 % 3 % 8 % $ 1,259.8