D&B Announces Third Quarter 2013 Results and Reaffirms Full Year 2013 Guidance

Business Wire

SHORT HILLS, N.J.--(BUSINESS WIRE)--

D&B (DNB), the world's leading source of commercial information and insight on businesses, today reported results for the third quarter ended September 30, 2013.

Third Quarter 2013 Highlights

  • Core and total revenue flat year over year, before the effect of foreign exchange (down 1% after the effect of foreign exchange);
  • Diluted EPS before non-core gains and charges up 14% year over year; GAAP diluted EPS up 6%;
  • Operating income before non-core gains and charges was flat year over year; GAAP operating income up 10%;
  • Free cash flow for the first nine months of 2013 was $263.0 million; Net cash provided by operating activities for the first nine months of 2013 was $299.3 million; and
  • We repurchased approximately 0.5 million shares for $55.0 million under the Company’s discretionary repurchase program and approximately 0.2 million for $20.0 million to offset the dilutive effect of shares issued under employee benefit plans.

See attached Schedules 3, 4 and 5 for additional detail.

Schedule 5 provides a reconciliation to GAAP, as well as the definitions of the non-GAAP financial measures that the Company uses to evaluate the business.

Deferred Revenue

  • Deferred Revenue as of September 30, 2013 for the total Company was flat at $541.3 million; North America down 1% (before the impact of foreign exchange) and total International up 5% (before the impact of foreign exchange).

Third Quarter 2013 Segment Results

North America

  • Core and total revenue were $305.8 million, down 1%, year over year, both before and after the effect of foreign exchange.
  • Operating income was $112.3 million, down 4%, year over year.

Asia Pacific

  • Core and total revenue were $44.4 million, up 5%, year over year, before the effect of foreign exchange (down 1% after the effect of foreign exchange).
  • Operating income before non-core gains and charges was $5.2 million, down 20%, year over year. On a GAAP basis, operating income was $5.1 million, up 1%.

Europe & Other International Markets

  • Core and total revenue were $60.9 million, up 1%, year over year, both before and after the effect of foreign exchange.
  • Operating income was $19.7 million, up 14%, year over year.

See attached Schedules 3 and 5 for additional detail.

Full Year 2013 Guidance

D&B today reaffirmed its financial guidance for the full year 2013:

  • Core revenue growth of 0% to 3%, before the effect of foreign exchange;
  • Operating income decline of 6% to 3%, before non-core gains and charges, including $25 million to $30 million in costs related to the deployment of the new data supply chain;
  • Diluted EPS growth of 8% to 11%, before non-core gains and charges; and
  • Free cash flow of $270 million to $300 million, which excludes the impact of legacy tax matters and any potential regulatory fines associated with our China operations.

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, legacy tax matters, and the Company’s ongoing China investigation, 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'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, such as legal and other professional expenses associated with the ongoing China investigation, 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.

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, 2012, filed February 28, 2013 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 5 attached to this press release.

Third Quarter 2013 Teleconference

As previously announced, D&B will review its third quarter financial results in a conference call with the investment community on Tuesday, November 5, 2013, 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.

About Dun & Bradstreet® (D&B)

Dun & Bradstreet (DNB) is the world’s leading source of commercial information and insight on businesses, enabling companies to Decide with Confidence® for 172 years. D&B’s global commercial database contains more than 230 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 two 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, and D&B Sales & Marketing Solutions™ to provide data management capabilities that provide effective and cost efficient marketing solutions and to convert prospects into clients by enabling business professionals to research companies, executives and industries.

Forward-Looking and Cautionary Statements

This press release, including, in particular, the section titled "Full Year 2013 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.

  • We rely significantly on third parties to support critical components of our business model in a continuous and high quality manner, including third-party data providers, strategic third-party members in our D&B Worldwide Network, and third parties with whom we have significant outsourcing arrangements.
  • The effectiveness of our technology investments and our ability to maintain sufficient investment in a technology infrastructure that assists us in achieving our strategic goals.
  • Our ability to achieve our financial and operational expectations which are based upon the successful implementation of our business strategy for the next several years.
  • Risks associated with potential violations of the Foreign Corrupt Practices Act and similar laws, and any consequences of the investigations of our China operations.
  • Demand for our products is subject to intense competition, changes in customer preferences and economic conditions which impact customer behavior.
  • Our solutions and brand image are dependent upon the integrity and security of our 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.
  • Our ability to secure our information technology infrastructure from cyber attack and unauthorized access.
  • Our ability to maintain the integrity of our brand and reputation, which we believe are key assets and competitive advantages.
  • Our ability to renew large contracts, including from various government institutions, the related revenue recognition and the timing thereof, a shift in product mix or a significant decrease in government spending, may impact our results of operations from period-to-period.
  • As a result of the macro-economic challenges currently affecting the global economy, our customers or vendors may experience problems with their earnings, cash flow or both. 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 materially, adversely affect our earnings and cash flow. In addition, if economic conditions in the United States, including any possible impact of efforts to balance government deficits, and/or other key markets deteriorate further or do not show improvement, we may experience material adverse impacts to our business, operating results and/or access to credit markets.
  • Our 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, the implementation or modification of fees or taxes that we must pay to acquire, use and/or redistribute data, and the evolving standards of emerging markets in which we operate. Future laws or regulations with respect to the collection, compilation, use and/or publication of information and adverse publicity or litigation concerning the commercial use of such information, or changes in the rules governing the operation of the Internet, could have a material adverse effect on our business and financial results.
  • Our ability to acquire and successfully integrate other complementary businesses, products and technologies into our existing business, without significant disruption to our existing business or to our financial results.
  • The continued adherence by third-party members of our D&B Worldwide Network, or other third parties who license and sell under the D&B name, to our quality standards, our brand and communication standards, and to the terms and conditions of our commercial services arrangements and the renewal by third-party members of the D&B Worldwide Network of their agreements with D&B.
  • The profitability of our international businesses depends on our ability to identify and execute on various initiatives, such as successfully managing our D&B Worldwide Network, enforcing agreements, collecting receivables and protecting assets in non-U.S. legal systems, complying with the Foreign Corrupt Practices Act and other anti-bribery and anti-corruption laws in all jurisdictions, and our 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, or the adoption of new laws or regulations governing the collection, compilation, use and/or publication of information, particularly in emerging markets.
  • Our future success requires that we attract and retain qualified personnel, including members of our sales force and technology teams, in regions throughout the world.
  • Our ability to successfully implement our growth strategy requires that we successfully reduce our expense base through our Financial Flexibility initiatives and reallocate certain of the expense-base reductions into initiatives that produce revenue growth.
  • Our ability to fund our obligations under our retirement and post retirement pension plans which are subject to financial market risks.
  • We are involved in various legal proceedings, the outcomes of which are unknown and uncertain with respect to the impact on our cash flow and profitability.
  • Our ability to repurchase shares is subject to market conditions, including trading volume in our stock, and our ability to repurchase shares in accordance with applicable securities laws.
  • Our projection for free cash flow is dependent upon our ability to generate revenue, our 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 we are involved.

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 statement.

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
September 30, % Change Exchange % Change September 30, % Change Exchange % Change
Dollar amounts in millions, except per share data 2013 2012 Fav (Unfav) Fav (Unfav) Fav (Unfav) 2013 2012 Fav (Unfav) Fav (Unfav) Fav (Unfav)
 
Revenue:
 
North America $ 305.8 $ 308.3 (1 %) 0 % (1 %) $ 867.7 $ 872.8 (1 %) 0 % (1 %)
 
Asia Pacific 44.4 44.7 (1 %) (6 %) 5 % 135.1 132.6 2 % (3 %) 5 %
Europe and Other International Markets   60.9     60.1   1 % 0 % 1 %   175.7     175.8   0 % (1 %) 1 %
International 105.3 104.8 0 % (2 %) 2 % 310.8 308.4 1 % (1 %) 2 %
         
Core Revenue $ 411.1 $ 413.1 (1 %) (1 %) 0 % $ 1,178.5 $ 1,181.2 0 % 0 % 0 %
 
Divested and Other Business (1) - 0.1 N/M N/M N/M - 18.7 N/M N/M N/M
         
Total Revenue $ 411.1   $ 413.2   (1 %) (1 %) 0 % $ 1,178.5   $ 1,199.9   (2 %) (1 %) (1 %)
 
Operating Income (Loss):
 
North America $ 112.3 $ 117.3 (4 %) $ 282.8 $ 323.0 (12 %)
 
Asia Pacific (2) 5.1 5.1 1 % 15.9 (0.4 ) N/M
Europe and Other International Markets   19.7     17.3   14 %   49.4     46.1   7 %
International 24.8 22.4 11 % 65.3 45.7 43 %
 
Corporate and Other (3) (16.6 ) (30.0 ) 45 % (45.9 ) (95.3 ) 52 %
         
Total Operating Income (4) 120.5 109.7 10 % 302.2 273.4 11 %
 
Interest Income 0.3 0.2 N/M 0.9 0.5 76 %
Interest Expense (10.3 ) (9.5 ) (9 %) (30.2 ) (27.8 ) (9 %)
Other Income (Expense) - Net (5) (0.2 ) (15.4 ) 99 % (1.5 ) (8.8 ) 83 %
         
Non-Operating Income (Expense) - Net (10.2 ) (24.7 ) 59 % (30.8 ) (36.1 ) 15 %
         
Income Before Provision for Income Taxes 110.3 85.0 30 % 271.4 237.3 14 %
 
Less: Provision for Income Taxes 37.4 4.8 N/M 87.6 37.3 N/M
Equity in Net Income (Loss) of Affiliates 0.6 0.5 43 % 1.7 1.3 38 %
         
Net Income 73.5 80.7 (9 %) 185.5 201.3 (8 %)
 
Less: Net (Income) Loss Attributable to the Noncontrolling Interest (6) (0.7 ) (1.1 ) 32 % (2.3 ) (1.8 ) (30 %)
         
Net Income Attributable to D&B (7)   72.8     79.6   (8 %)   183.2     199.5   (8 %)
 
Less: Allocation to Participating Securities - - N/M - (0.1 ) N/M
         
Net Income Attributable to D&B Common Shareholders $ 72.8   $ 79.6   (8 %) $ 183.2   $ 199.4   (8 %)
 

Basic Earnings Per Share of Common Stock Attributable to D&B Common Shareholders

  $ 1.89   $ 1.77   7 % $ 4.64   $ 4.29   8 %
 

Diluted Earnings Per Share of Common Stock Attributable to D&B Common Shareholders (8)

  $ 1.87   $ 1.76   6 % $ 4.59   $ 4.26   8 %
         
Weighted Average Number of Shares Outstanding:
Basic   38.5     44.8   14 %   39.5     46.4   15 %
Diluted   38.9     45.2   14 %   39.9     46.8   15 %
 
 
Operating Margins (Calculated on Total Revenue)
 
North America 36.7 % 38.1 % 32.6 % 37.0 %
Asia Pacific 11.5 % 11.3 % 11.8 % (0.3 %)
Europe and Other International Markets 32.4 % 28.7 % 28.1 % 26.2 %
International 23.6 % 21.3 % 21.0 % 14.0 %
Total Company   29.3 %   26.5 %   25.6 %   22.8 %
 
Effective Tax Rate   33.8 %   5.6 %   32.3 %   15.7 %
 
AFX - After Effects of Foreign Exchange BFX - Before Effects of Foreign Exchange N/M - Not Meaningful
 
See Schedule 5 (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) - Before Non-Core Gains and Charges

 
Effects of Effects of
Quarter Ended AFX Foreign BFX Year-To-Date AFX Foreign BFX
September 30, % Change Exchange % Change September 30, % Change Exchange % Change
Dollar amounts in millions, except per share data 2013 2012 Fav (Unfav) Fav (Unfav) Fav (Unfav) 2013 2012 Fav (Unfav) Fav (Unfav) Fav (Unfav)
 
Revenue:
 
North America $ 305.8 $ 308.3 (1 %) 0 % (1 %) $ 867.7 $ 872.8 (1 %) 0 % (1 %)
 
Asia Pacific 44.4 44.7 (1 %) (6 %) 5 % 135.1 132.6 2 % (3 %) 5 %
Europe and Other International Markets   60.9     60.1   1 % 0 % 1 %   175.7     175.8   0 % (1 %) 1 %
International 105.3 104.8 0 % (2 %) 2 % 310.8 308.4 1 % (1 %) 2 %
         
Core Revenue $ 411.1 $ 413.1 (1 %) (1 %) 0 % $ 1,178.5 $ 1,181.2 0 % 0 % 0 %
 
Divested and Other Business (1) - 0.1 N/M N/M N/M - 18.7 N/M N/M N/M
         
Total Revenue $ 411.1   $ 413.2   (1 %) (1 %) 0 % $ 1,178.5   $ 1,199.9   (2 %) (1 %) (1 %)
 
Operating Income (Loss):
 
North America $ 112.3 $ 117.3 (4 %) $ 282.8 $ 323.0 (12 %)
 
Asia Pacific (2) 5.2 6.4 (20 %) 15.9 14.3 11 %
Europe and Other International Markets   19.7     17.3   14 %   49.4     46.1   7 %
International 24.9 23.7 5 % 65.3 60.4 8 %
 
Corporate and Other (3) (9.6 ) (13.1 ) 27 % (29.1 ) (35.5 ) 18 %
         
Total Operating Income (4) 127.6 127.9 0 % 319.0 347.9 (8 %)
 
Interest Income 0.3 0.2 N/M 0.9 0.5 76 %
Interest Expense (10.3 ) (9.5 ) (9 %) (30.2 ) (27.8 ) (9 %)
Other Income (Expense) - Net (5) (0.4 ) - N/M (2.1 ) 0.2 N/M
         
Non-Operating Income (Expense) - Net (10.4 ) (9.3 ) (12 %) (31.4 ) (27.1 ) (16 %)
         
Income Before Provision for Income Taxes 117.2 118.6 (1 %) 287.6 320.8 (10 %)
 
Less: Provision for Income Taxes 38.8 38.6 (1 %) 92.0 105.3 13 %
Equity in Net Income (Loss) of Affiliates 0.6 0.5 43 % 1.7 1.3 38 %
         
Net Income 79.0 80.5 (2 %) 197.3 216.8 (9 %)
 
Less: Net (Income) Loss Attributable to the Noncontrolling Interest (6) (0.7 ) (1.1 ) 32 % (2.3 ) (1.7 ) (39 %)
         
Net Income Attributable to D&B (7)   78.3     79.4   (1 %)   195.0     215.1   (9 %)
 
Less: Allocation to Participating Securities - - N/M - - N/M
         
Net Income Attributable to D&B Common Shareholders $ 78.3   $ 79.4   (1 %) $ 195.0   $ 215.1   (9 %)
 

Basic Earnings Per Share of Common Stock Attributable to D&B Common Shareholders

  $ 2.03   $ 1.77   15 % $ 4.93   $ 4.63   7 %
 

Diluted Earnings Per Share of Common Stock Attributable to D&B Common Shareholders (8)

$ 2.01   $ 1.76   14 % $ 4.88   $ 4.60   6 %
         
Weighted Average Number of Shares Outstanding:
Basic   38.5     44.8   14 %   39.5     46.4   15 %
Diluted   38.9     45.2   14 %   39.9     46.8   15 %
 
 
Operating Margins (Calculated on Total Revenue)
 
North America 36.7 % 38.1 % 32.6 % 37.0 %
Asia Pacific 11.6 % 14.4 % 11.8 % 9.5 %
Europe and Other International Markets 32.4 % 28.7 % 28.1 % 26.2 %
International 23.6 % 22.6 % 21.0 % 18.5 %
Total Company   31.1 %   31.0 %   27.1 %   29.0 %
 
Effective Tax Rate   33.1 %   32.5 %   32.0 %   32.8 %
 
AFX - After Effects of Foreign Exchange BFX - Before Effects of Foreign Exchange N/M - Not Meaningful
 
See Schedule 5 (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 3
Supplemental Revenue Detail (unaudited)
           
 
 
Quarter Ended Effects of Year-To-Date Effects of
September 30, AFX Foreign BFX September 30, AFX Foreign BFX
% Change Exchange % Change % Change Exchange % Change
Amounts in millions 2013 2012 Fav/(Unfav) Fav/(Unfav) Fav/(Unfav) 2013 2012 Fav/(Unfav) Fav/(Unfav) Fav/(Unfav)
 
Geographic and Customer Solution Set Revenue:
North America:
Risk Management Solutions $ 176.7 $ 178.8 (1 )% 0 % (1 )% $ 510.8 $ 518.5 (1.5 )% (0.1 )% (1 )%
Sales & Marketing Solutions 129.1 129.5 0 % 0 % 0 % 356.9 354.3 0.8 % 0.0 % 1 %
       
Subtotal Core Revenue 305.8 308.3 (1 )% 0 % (1 )% 867.7 872.8 (0.6 )% (0.1 )% (1 )%
 
Divested and Other Business 1 - - N/M N/M N/M - - N/M N/M N/M
       
Total North America Revenue $ 305.8 $ 308.3 (1 )% 0 % (1 )% $ 867.7 $ 872.8 (0.6 )% (0.1 )% (1 )%
 
Asia Pacific:
Risk Management Solutions $ 38.2 $ 38.1 1 % (6 )% 7 % $ 116.4 $ 111.6 5 % (3 )% 8 %
Sales & Marketing Solutions 6.2 6.6 (8 )% (3 )% (5 )% 18.7 21.0 (11 )% (1 )% (10 )%
       
Subtotal Core Revenue 44.4 44.7 (1 )% (6 )% 5 % 135.1 132.6 2 % (3 )% 5 %
 
Divested and Other Business 1 - 0.1 N/M N/M N/M - 18.7 N/M N/M N/M
       
Total Asia Pacific Revenue $ 44.4 $ 44.8 (1 )% (6 )% 5 % $ 135.1 $ 151.3 (11 )% (3 )% (8 )%
 
Europe and Other International Markets:
Risk Management Solutions $ 48.6 $ 48.9 (1 )% 1 % (2 )% $ 143.5 $ 145.1 (1 )% 0 % (1 )%
Sales & Marketing Solutions 12.3 11.2 10 % (1 )% 11 % 32.2 30.7 5 % (1 )% 6 %
       
Subtotal Core Revenue 60.9 60.1 1 % 0 % 1 % 175.7 175.8 0 % (1 )% 1 %
 
Divested and Other Business 1 - - N/M N/M N/M - - N/M N/M N/M
       
Total Europe and Other International Markets Revenue $ 60.9 $ 60.1 1 % 0 % 1 % $ 175.7 $ 175.8 0 % (1 )% 1 %
 
International
Risk Management Solutions $ 86.8 $ 87.0 0 % (2 )% 2 % $ 259.9 $ 256.7 1 % (2 )% 3 %
Sales & Marketing Solutions 18.5 17.8 3 % (2 )% 5 % 50.9 51.7 (2 )% (2 )% 0 %
       
Subtotal Core Revenue 105.3 104.8 0 % (2 )% 2 % 310.8 308.4 1 % (1 )% 2 %
 
Divested and Other Business 1 - 0.1 N/M N/M N/M - 18.7 N/M N/M N/M
       
Total International Revenue $ 105.3 $ 104.9 0 % (2 )% 2 % $ 310.8 $ 327.1 (5 )% (1 )% (4 )%
 
Total Corporation:
Risk Management Solutions $ 263.5 $ 265.8 (1 )% (1 )% 0 % $ 770.7 $ 775.2 (1 )% (1 )% 0 %
Sales & Marketing Solutions 147.6 147.3 0 % 0 % 0 % 407.8 406.0 0 % (1 )% 1 %
       
Subtotal Core Revenue 411.1 413.1 (1 )% (1 )% 0 % 1,178.5 1,181.2 0 % 0 % 0 %
 
Divested and Other Business 1 - 0.1 N/M N/M N/M - 18.7 N/M N/M N/M
       
Total Corporation Revenue $ 411.1 $ 413.2 (1 )% (1 )% 0 % $ 1,178.5 $ 1,199.9 (2 )% (1 )% (1 )%
 
Amounts in millions
 
North America Risk Management Solutions (Core)
DNBi Subscription Plans2 $ 105.0 $ 107.3 (2 )% 0 % (2 )% $ ... 317.7 $ 321.8 (1.3 )% (0.1 )% (1 )%
Non-DNBi Subscription Plans3 13.9 14.1 (2 )% 0 % (2 )% 42.4 44.3 (4.5 )% (0.1 )% (4 )%
       
Total RMS Subscription Plans 118.9 121.4 (2 )% 0 % (2 )% 360.1 366.1 (1.7 )% (0.1 )% (2 )%
Projects and Other Risk Management Solutions 4 57.8 57.4 1 % 0 % 1 % 150.7 152.4 (1.1 )% (0.1 )% (1 )%
       
Total North America Risk Management Solutions (Core) $ 176.7 $ 178.8 (1 )% 0 % (1 )% $ 510.8 $ 518.5 (1.5 )% (0.1 )% (1 )%
 
North America Sales & Marketing Solutions (Core)
Traditional 5 $ 53.2 $ 54.7 (3 )% 0 % (3 )% $ 140.6 $ 150.9 (6.9 )% (0.1 )% (7 )%
VAPS 75.9 74.8 2 % 0 % 2 % 216.3 203.4 6.4 % (0.1 )% 7 %
       
Total North America Sales & Marketing Solutions (Core) $ 129.1 $ 129.5 0 % 0 % 0 % $ 356.9 $ 354.3 0.8 % 0.0 % 1 %
 
 
Quarter Ended
 
Amounts in millions Sep 30, 2013 Jun 30, 2013 Mar 31, 2013 Dec 31, 2012 Sep 30, 2012 Jun 30, 2012 Mar 31, 2012 Dec 31, 2011
 
North America Risk Management Solutions (Core)
DNBi Subscription Plans2 $ 105.0 $ 106.2 $ 106.5 $ 106.7 $ 107.3 $ 106.8 $ 107.7 $ 108.3
Non-DNBi Subscription Plans3 13.9 14.4 14.1 14.8 14.1 14.5 15.7 17.0
               
Total RMS Subscription Plans 118.9 120.6 120.6 121.5 121.4 121.3 123.4 125.3
Projects and Other Risk Management Solutions 4 57.8 47.5 45.4 60.6 57.4 48.2 46.8 64.6
               
Total North America Risk Management Solutions (Core) $ 176.7 $ 168.1 $ 166.0 $ 182.1 $ 178.8 $ 169.5 $ 170.2 $ 189.9
 
North America Sales & Marketing Solutions (Core)
Traditional 5 $ 53.2 $ 41.1 $ 46.3 $ 63.7 $ 54.7 $ 44.7 $ 51.5 $ 67.2
VAPS 75.9 69.5 70.9 107.0 74.8 64.8 63.8 101.8
               
Total North America Sales & Marketing Solutions (Core) $ 129.1 $ 110.6 $ 117.2 $ 170.7 $ 129.5 $ 109.5 $ 115.3 $ 169.0
               
 
 
 
Notes:
 
Quarter Ended Year-To-Date
September 30, September 30,
 
2013 2012 2013 2012
1 Divested and Other Business:
North America:
Risk Management Solutions $ 0.0 $ 0.0 $ 0.0 $ 0.0
Sales & Marketing Solutions   0.0   0.0   0.0   0.0
Total Divested and Other Business $ 0.0 $ 0.0 $ 0.0 $ 0.0
Asia Pacific:
Risk Management Solutions $ 0.0 $ 0.1 $ 0.0 $ 9.3
Sales & Marketing Solutions   0.0   0.0   0.0   9.4
Total Divested and Other Business $ 0.0 $ 0.1 $ 0.0 $ 18.7
Europe and Other International Markets:
Risk Management Solutions $ 0.0 $ 0.0 $ 0.0 $ 0.0
Sales & Marketing Solutions   0.0   0.0   0.0   0.0
Total Divested and Other Business $ 0.0 $ 0.0 $ 0.0 $ 0.0
Total Corporation:
Risk Management Solutions $ 0.0 $ 0.1 $ 0.0 $ 9.3
Sales & Marketing Solutions   0.0   0.0   0.0   9.4
Total Divested and Other Business $ 0.0 $ 0.1 $ 0.0 $ 18.7
 
2  

DNBi subscription plans - interactive, customizable online application that offers our customers real time access to our most complete and up-to-date global DUNSRight information, comprehensive monitoring and portfolio analysis. DNBi subscription plans are contracts that allow customers unlimited use, within pre-defined ranges. In these instances, we recognize revenue ratably over the term of the contract.

 
3

Non-DNBi subscription plans - subscription contracts which provide increased access to our risk management reports and data to help customers increase their profitability while mitigating their risk. The non-DNBi subscription plans allow customers unlimited use, within pre-defined ranges. In these instances, we recognize revenue ratably over the term of the contract.

 
4 Projects and other risk management solutions - all other revenue streams. This includes, for example, our Business Information Report, our Comprehensive Report, our International Report, and D&B Direct.
 
5 Sales & Marketing Solutions traditional - includes the former Internet Solutions.
 
The Dun & Bradstreet Corporation           Schedule 4
Supplemental Financial Data (unaudited)
 
    Quarter Ended   Year-To-Date
September 30, AFX September 30, AFX
  % Change % Change
Amounts in millions 2013 2012 Fav/(Unfav) 2013 2012 Fav/(Unfav)
 
Operating Costs - GAAP Results:
Operating Expenses $ 131.9 $ 124.2 (6 )% $ 388.2 $ 395.2 2 %
Selling and Administrative Expenses 135.2 154.5 13 % 423.9 448.2 5 %
Depreciation and Amortization 17.4 20.0 13 % 53.6 59.9 11 %
Restructuring Expense   6.1     4.8   (26 )%   10.6     23.2   54 %
 
Total Operating Costs - GAAP Results $ 290.6   $ 303.5   4 % $ 876.3   $ 926.5   5 %
 
Capital Expenditures - GAAP Results $ 1.8   $ 1.0   (85 )% $ 6.3   $ 2.1   N/M
 

Additions to Computer Software & Other Intangibles - GAAP Results

$ 7.8   $ 16.7   53 % $ 30.0   $ 49.8   40 %
 
Operating Costs - Before Non-Core Gains and Charges:
Operating Expenses $ 131.9 $ 117.0 (13 )% $ 388.1 $ 363.2 (7 )%
Selling and Administrative Expenses 134.2 148.4 10 % 417.8 429.6 3 %
Depreciation and Amortization 17.4 19.9 12 % 53.6 59.2 9 %
Restructuring Expense   -     -   N/M   -     -   N/M
 
Total Operating Costs - Before Non-Core Gains and Charges $ 283.5   $ 285.3   1 % $ 859.5   $ 852.0   (1 )%
 
 
 
 
Quarter Ended Year-To-Date
September 30, September 30,
 
Amounts in millions 2013 2012 2013 2012
 
Operating Expenses - GAAP Results $ 131.9 $ 124.2 $ 388.2 $ 395.2
MaxCV - (6.6 ) - (26.8 )
Impairments Related to Matters in China - - - (4.1 )

Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China

- (0.6 ) (0.1 ) (1.1 )
       
Operating Expenses -
Before Non-Core Gains and (Charges) $ 131.9   $ 117.0   $ 388.1   $ 363.2  
 
Selling and Admin - GAAP Results $ 135.2 $ 154.5 $ 423.9 $ 448.2
MaxCV - - - 1.8

Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China

(1.0 ) (6.1 ) (6.1 ) (11.6 )
Impairments Related to Matters in China - - - (8.8 )
       
Selling and Admin -
Before Non-Core Gains and (Charges) $ 134.2   $ 148.4   $ 417.8   $ 429.6  
 
Depreciation and Amortization - GAAP Results $ 17.4 $ 20.0 $ 53.6 $ 59.9
MaxCV - (0.1 ) - (0.6 )

Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China

- - - (0.1 )
       
Depreciation and Amortization -
Before Non-Core Gains and (Charges) $ 17.4   $ 19.9   $ 53.6   $ 59.2  
 
Restructuring - GAAP Results $ 6.1 $ 4.8 $ 10.6 $ 23.2
Restructuring (6.1 ) (4.8 ) (10.6 ) (23.2 )
       
Restructuring - Before Non-Core Gains and (Charges) $ -   $ -   $ -   $ -  
 
 
Quarter Ended
 
Amounts in millions Sep 30, 2013 Jun 30, 2013 Mar 31, 2013 Dec 31, 2012 Sep 30, 2012 Jun 30, 2012 Mar 31, 2012 Dec 31, 2011
 
Net Debt Position:
Cash and Cash Equivalents $ 214.3 $ 196.5 $ 172.8 $ 149.1 $ 137.0 $ 118.6 $ 117.7 $ 84.4
Short-Term Debt (0.1 ) (0.1 ) (0.1 ) (0.2 ) (400.2 ) (400.6 ) (1.0 ) (1.1 )
Long-Term Debt   (1,455.9 )   (1,408.0 )   (1,302.7 )   (1,290.7 )   (623.9 )   (613.0 )   (841.8 )   (963.9 )
 
Net Debt $ (1,241.7 ) $ (1,211.6 ) $ (1,130.0 ) $ (1,141.8 ) $ (887.1 ) $ (895.0 ) $ (725.1 ) $ (880.6 )
 
 
Year-To-Date
 
 
Amounts in millions Sep 30, 2013 Sep 30, 2012

% Change
Fav/(Unfav)

 
Free Cash Flow:
Net Cash Provided By Operating Activities - GAAP Results $ 299.3 $ 307.1 (3 )%
Less:
Capital Expenditures - GAAP Results 6.3 2.1 N/M
Additions to Computer Software & Other Intangibles - GAAP Results   30.0     49.8   40 %
 
Free Cash Flow $ 263.0 $ 255.2 3 %
Legacy Tax Matters (Refund) Payment   -     -   N/M
Free Cash Flow Excluding Legacy Tax Matters $ 263.0   $ 255.2   3 %
 
 
Year-To-Date
 
 
Amounts in millions Sep 30, 2013 Sep 30, 2012

% Change
Fav/(Unfav)

 
Net Cash Provided By Operating Activities excluding Legacy Tax Matters:
Net Cash Provided By Operating Activities - GAAP Results $ 299.3 $ 307.1 (3 )%
Legacy Tax Matters (Refund) Payment   -     -   N/M
 
Net Cash Provided By Operating Activities Excluding Legacy Tax Matters $ 299.3   $ 307.1   (3 )%
 

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
Notes to Schedules 1 and 2 (unaudited) and Definitions of Non-GAAP Measures
 
(1) The following table reconciles Divested and Other Business included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions 2013 2012 2013 2012
 
Divested and Other Business:
Domestic Portion of Japan Operations $ - $ - $ - $ 12.7
Roadway China - - - 5.4
India Research and Advisory Services   -     0.1     -     0.6  
 
Total Divested and Other Business $ -   $ 0.1   $ -   $ 18.7  
 
(2) The following table reconciles Asia Pacific Operating Income included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions 2013 2012 2013 2012
 
Asia Pacific Operating Income - GAAP Results (Schedule 1) $ 5.1 $ 5.1 $ 15.9 $ (0.4 )
 
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China (0.1 ) (1.3 ) - (1.8 )
Impairments Related to Matters in China   -     -     -     (12.9 )
 
Asia Pacific Operating Income - Before Non-Core Gains and (Charges) (Schedule 2) $ 5.2   $ 6.4   $ 15.9   $ 14.3  
 
(3) The following table reconciles Corporate and Other expenses included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions 2013 2012 2013 2012
 
Corporate and Other - GAAP Results (Schedule 1) $ (16.6 ) $ (30.0 ) $ (45.9 ) $ (95.3 )
 
Restructuring Charges (6.1 ) (4.8 ) (10.6 ) (23.2 )
MaxCV - (6.7 ) - (25.6 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China   (0.9 )   (5.4 )   (6.2 )   (11.0 )
 
Corporate and Other - Before Non-Core Gains and (Charges) (Schedule 2) $ (9.6 ) $ (13.1 ) $ (29.1 ) $ (35.5 )
 
(4) The following table reconciles Total Operating Income included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions 2013 2012 2013 2012
 
Total Operating Income - GAAP Results $ 120.5 $ 109.7 $ 302.2 $ 273.4
 
Restructuring Charges (6.1 ) (4.8 ) (10.6 ) (23.2 )
MaxCV - (6.7 ) - (25.6 )

Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China

(1.0 ) (6.7 ) (6.2 ) (12.8 )
Impairments Related to Matters in China   -     -     -     (12.9 )
 
Total Operating Income - Before Non-Core Gains and (Charges) $ 127.6   $ 127.9   $ 319.0   $ 347.9  
 
(5)

The following table reconciles Other Income (Expense)-Net included in Schedule 1 and Schedule 2:

Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions 2013 2012 2013 2012
 
Other Income (Expense)-Net - GAAP Results (Schedule 1) $ (0.2 ) $ (15.4 ) $ (1.5 ) $ (8.8 )
Effect of Legacy Tax Matters 0.2 (15.4 ) 0.6 (15.0 )
Gain (Loss) on Sale of Businesses - - - 6.0
       

Other Income (Expense)-Net - Before Non-Core Gains and (Charges) (Schedule 2)

$ (0.4 ) $ -   $ (2.1 ) $ 0.2  
 
Total Pre-Tax Impacts:
(Summarizes the Effects on Operating Income and Other Income (Expense) - Net)
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions 2013 2012 2013 2012
 
Restructuring Charges $ (6.1 ) $ (4.8 ) $ (10.6 ) $ (23.2 )
MaxCV - (6.7 ) - (25.6 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China (1.0 ) (6.7 ) (6.2 ) (12.8 )
Impairments Related to Matters in China - - - (12.9 )
Effect of Legacy Tax Matters 0.2 (15.4 ) 0.6 (15.0 )
Gain (Loss) on Sale of Businesses - - - 6.0
       
Total Pre-Tax Impacts $ (6.9 ) $ (33.6 ) $ (16.2 ) $ (83.5 )
 
(6) The following table reconciles Net Income (Loss) Attributable to the Noncontrolling Interest Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions 2013 2012 2013 2012
 
Net Income (Loss) Attributable to the Noncontrolling Interest - GAAP Results (Schedule 1) $ (0.7 ) $ (1.1 ) $ (2.3 ) $ (1.8 )
Minority Share of Gain on Sale of Business - - - (0.9 )
Impairments Related to Matters in China - - - 0.8
       
Net Income (Loss) Attributable to the Noncontrolling Interest - Before Non-Core Gains and (Charges) (Schedule 2) $ (0.7 ) $ (1.1 ) $ (2.3 ) $ (1.7 )
 
(7) The following table reconciles Net Income Attributable to D&B included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions 2013 2012 2013 2012
 
Net Income Attributable to D&B - GAAP Results (Schedule 1) $ 72.8 $ 79.6 $ 183.2 $ 199.5
 
Restructuring Charges (4.8 ) (3.0 ) (7.9 ) (14.7 )
MaxCV - (5.1 ) - (18.3 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China (0.7 ) (4.7 ) (3.9 ) (8.6 )
Impairments Related to Matters in China - - - (12.1 )
Effect of Legacy Tax Matters - 13.0 - 13.0
Gain (Loss) on Sale of Businesses - - - 11.1
Minority Share of Gain on Sale of Business - - - (0.9 )
Tax Benefit on a Loss on the Tax Basis of a Legal Entity - - - 14.9
       
After-Tax Impact (5.5 ) 0.2 (11.8 ) (15.6 )
       
Net Income Attributable to D&B - Before Non-Core Gains and (Charges) (Schedule 2) $ 78.3   $ 79.4   $ 195.0   $ 215.1  
 
(8) The following table reconciles Diluted Earnings Per Share Attributable to D&B included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
  2013 2012 2013 2012
 
Diluted EPS Attributable to D&B - GAAP Results (Schedule 1) $ 1.87 $ 1.76 $ 4.59 $ 4.26
 
Restructuring Charges (0.13 ) (0.07 ) (0.20 ) (0.32 )
MaxCV - (0.11 ) - (0.39 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China (0.01 ) (0.11 ) (0.09 ) (0.19 )
Impairments Related to Matters in China - - - (0.26 )
Minority Share of Gain on Sale of Business - - - (0.02 )
Effect of Legacy Tax Matters - 0.29 - 0.28
Gain (Loss) on Sale of Businesses - - - 0.24
Tax Benefit on a Loss on the Tax Basis of a Legal Entity - - - 0.32
       
Diluted EPS Attributable to D&B - Before Non-Core Gains and (Charges) (Schedule 2) $ 2.01   $ 1.76   $ 4.88   $ 4.60  
 

N/M - Not Meaningful

 

The following defines the non-GAAP measures used to evaluate performance:

*Total revenue excluding the revenue of divested and shut-down 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.

Contact:
D&B
Media
Patricia Colpitts, 512-578-8016
colpittsp@dnb.com
or
Investors/Analysts
Roger Sachs, CFA
973-921-5914
sachsr@dnb.com

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