D&B Reports Second Quarter 2002 EPS of 41 Cents Per Diluted Share Before One-Time Items, Up 24 Percent

Transcription

1 July 22, 2002 D&B Reports Second Quarter 2002 EPS of 41 Cents Per Diluted Share Before One-Time Items, Up 24 Percent MURRAY HILL, N.J., Jul 22, 2002 (BUSINESS WIRE) --D&B (NYSE:DNB): Blueprint for Growth continues to deliver strong results Company increases full year EPS guidance and modifies revenue guidance for 2002 D&B (NYSE: DNB), the leading provider of global business information and technology solutions, today reported diluted earnings per share for the quarter ending June 30, 2002, of 41 cents, up 24 percent from 33 cents a year ago, before one-time items in both years, which are further described below. As reported after one-time items, diluted earnings per share for the 2002 second quarter was 13 cents, versus 44 cents in the 2001 quarter. (See Schedule 1 for results as reported after one-time items, Schedule 2 for results before one-time items, and Schedule 3 for details of one-time items.) Revenue for the quarter from the Company's core businesses (which include Risk Management Solutions, Sales & Marketing Solutions, and Supply Management Solutions) was $305.2 million, up 3 percent from the year-ago period before and after the effect of foreign exchange. Total revenue, which in 2001 included the results of divested businesses (see Schedule 3), was down 5 percent before and after the effect of foreign exchange. Consolidated operating income for the second quarter was $61.0 million, up 15 percent from the year-ago period before onetime items. As reported and after one-time items, consolidated operating income was $30.1 million, down 3 percent. Net income for the quarter was $31.8 million, up 16 percent from the year-ago period, before one-time items. As reported and after one-time items, net income was $10.2 million, down 72 percent. "Our Blueprint for Growth strategy continued to deliver strong results in the second quarter," said Allan Z. Loren, chairman and chief executive officer of D&B. "We produced solid revenue growth at a time when corporate spending in many sectors of the economy is depressed. Our financial flexibility actions have enabled us to deliver even stronger operating income and earnings per share growth, and continued to provide funds for investment." "The investments we have made reflect the importance we place on our customers, our brand, and our winning culture," Loren continued. "We are transforming our solution sets to add more value for our customers. We have initiated an advertising campaign showcasing our new brand tagline -- Decide With Confidence -- which conveys our ability to enable customers to make better, more confident business decisions. We are also focused on attracting and developing superb leaders, which we believe will continue to help us successfully execute our strategy." Second-Quarter Segment Results North America's second-quarter revenue from core businesses was $215.5 million, up 4 percent from the prior year period. The revenue increase resulted from growth in both Risk Management Solutions, up 2 percent, and in Sales & Marketing Solutions, up 8 percent. Supply Management Solutions revenue decreased by 2 percent. North America's operating income for the period was $66.3 million, up 5 percent from $63.3 million in the prior year period, reflecting improved profitability as a result of the company's financial flexibility actions, partially offset by increased investment for growth. Europe's second-quarter revenue from core businesses was $81.2 million, up 1 percent over the 2001 second quarter before and after the effect of foreign exchange. Risk Management Solutions was down 3 percent, which was more than offset by flat Sales & Marketing Solutions and growth in Supply Management Solutions, all before the effect of foreign exchange. Europe's operating income for the period was $10.8 million, more than double the $5.2 million reported in the prior year period. The Company's financial flexibility initiatives, which include a change to a "One Europe" business model, contributed significantly to the improved performance.

2 Asia Pacific/Latin America's ("APLA") second-quarter revenue from core businesses was $8.5 million, a 16 percent increase over the prior year period before the effect of foreign exchange and an 11 percent increase after the effect of foreign exchange. The revenue increase resulted from a 25 percent growth in Risk Management Solutions, partially offset by a 7 percent decline in Sales & Marketing Solutions, before the effect of foreign exchange. APLA's operating income for the period was $2.3 million, more than double the $1.0 million reported in the prior year period and the highest quarterly operating income delivered in the past 6 years. This improvement is due to the business model changes that have been made over the past two years to align investment in the region with revenue growth and profit potential. See Schedule 4 for revenue by product line for each geographic segment and other supplemental information. First-Half Results The Company reported diluted earnings per share from continuing operations for the first six months of 2002 of 87 cents, up 23 percent from 71 cents a year ago, before one-time items. As reported after one-time items, diluted earnings per share was 59 cents, down 28 percent from 82 cents a year ago. Core revenue for the first half of 2002 was $623.7 million, up 3 percent from the 2001 first half before and after the effect of foreign exchange. Consolidated operating revenue, which in 2001 included the results of divested businesses, was down 8 percent before and after the effect of foreign exchange. Consolidated operating income for the first half was $123.8 million, up 11 percent, before one-time items. As reported after one-time items, consolidated operating income was $92.9 million, up 4 percent for the same period. Net income for the first half was up 16 percent from the 2001 first half, before one-time items. As reported after one-time items, net income was $45.8 million, down 32 percent for the same period. First-Half Segment Results For the 2002 first half, North America's core revenue was $459.8 million, up 4 percent from the prior year period. Operating income was $151.1 million, up 2 percent from $148.1 million in the prior year period. North America's operating income growth reflects the Company's financial flexibility initiatives, offset by planned investments in E-Business and the loss of operating income from the business sold in the second quarter of last year. First-half core revenue from Europe was $147.7 million, down 1 percent from the prior year period before the effect of foreign exchange and down 2 percent after the effect of foreign exchange. Europe's operating income was $6.7 million for the period compared to a $2.2 million loss in the prior year period. First-half core revenue from APLA was $16.2 million, a 16 percent increase over the prior year period before the effect of foreign exchange and a 12 percent increase after the effect of foreign exchange. APLA's operating income was $1.6 million for the period compared to a $2.3 million loss in the prior year period. See Schedule 4 for revenue by product line for each geographic segment and other supplemental information. One-Time Items As previously announced in April, the Company recorded a $30.9 million pre-tax ($21.6 million after-tax or 28 cents per diluted share) restructuring charge in the 2002 second quarter, primarily for severance and the write-off of assets resulting from the Company's financial flexibility initiatives. The Company previously said the charge was expected to be between $30 and $35 million pre-tax. These actions are expected to capture approximately $80 million in funds that can be reallocated in In the 2001 second quarter, the Company recorded a $28.8 million pre-tax ($24.1 million after-tax or 29 cents per diluted share) charge related to restructuring initiatives. Offsetting this charge were one-time gains totaling $43.4 million pre-tax ($33.4 million after-tax or 41 cents per diluted share). Details of one-time items are outlined on Schedule Outlook "When we launched our strategy in October 2000, we made a commitment to increase shareholder value as we transformed D&B to a growth company," said Loren. "Even in these challenging times, our Blueprint strategy has provided us with the ability to deliver on this commitment. Because we initiated our financial flexibility actions 20 months ago, we now have funds to invest

3 for growth and to improve the bottom line. And our leadership team is ensuring that we manage our investments and operating expenses prudently." "As a result, we are confident that we can deliver even stronger earnings growth for the year than we originally anticipated," Loren said. "We are raising our guidance for diluted earnings per share growth to a range of 22 to 24 percent, before one-time items, up from our previous guidance of 18 to 20 percent growth, on the same basis." "In North America, we have shown solid revenue performance year-to-date, which should improve in the second half as our prior investments begin to gain traction," Loren continued. "In Europe, revenue performance has been inconsistent, reflecting a weaker economy and our transformation to a "One Europe" business model. We expect market conditions to continue to deteriorate, and as a result, we expect lower European revenue growth in the second half." Therefore, the Company now expects full-year revenue growth from its core businesses to be 3 percent before the effect of foreign exchange, at the low end of previous guidance of 3 to 5 percent. The Company continues to expect international margins to be between 10 to 12 percent of core revenue in 2002, unchanged from prior guidance. In the second quarter, D&B delivered 52 percent of its revenue over the Web, a more efficient delivery channel for its products and services. As a result, the Company now expects to deliver about 60 percent of its revenue over the Web by the end of the year, up from previous guidance between 50 and 55 percent. Further with respect to guidance for full year 2002, the Company expects: Capital expenditures and capitalized software costs will be between $45 and $50 million, lower than previous guidance of between $50 and $55 million, due to the previously-announced sales of the Company's New Jersey headquarters, and of a data center and print facility in connection with the outsourcing of technology infrastructure services, Depreciation and amortization expense will be between $70 and $80 million, unchanged from previous guidance, and Its effective tax rate will be about 38 percent, unchanged from previous guidance. Second Quarter Teleconference D&B will review its second-quarter financial results in a conference call with the investment community on Tuesday, July 23, at 10 a.m. ET. Live audio of the conference call will be accessible on D&B's Investor Relations Web site at A replay of the conference call will be available on the Website through July 30. D&B (NYSE: DNB) provides the information, tools and expertise to help customers Decide with Confidence. D&B enables customers quick access to objective, global information whenever and wherever they need it. Customers use D&B Risk Management Solutions to manage credit exposure, D&B Sales & Marketing Solutions to find profitable customers and D&B Supply Management Solutions to manage suppliers efficiently. D&B's E-Commerce Solutions are also used to authenticate and verify potential trading partners online, increasing trust and confidence in e-commerce transactions. Over 90 percent of the Business Week Global 1000 rely on D&B as a trusted partner to make confident business decisions. For more information, please visit Certain statements in this press release are forward-looking statements. Statements that are not historical facts are forwardlooking statements. In addition, words such as "expects," "anticipates," "believes," "plans," "guidance" and similar expressions are intended to identify forward-looking statements. All such forward-looking statements are based on D&B's reasonable expectations at the time that they are made. However, forward-looking statements are not guarantees of future performance as they involve risks, uncertainties and assumptions that may prove to be incorrect and that may cause D&B's actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks, uncertainties and assumptions that may affect D&B's performance include: the possibility that economic or other conditions might lead to a reduction in the demand for D&B products and services worldwide; the possibility that the current economic slowdown may worsen and/or persist for an unpredictable period of time; D&B's ability to successfully implement its Blueprint for Growth, including the ability to achieve its financial flexibility objectives on terms and conditions contemplated by D&B; changes in the business information and risk management industries and markets, including changes in customer preferences for products and product delivery formats resulting from advances in information technology; competitive pressures causing price reductions and/or loss of market share; risks associated with investments and operations in foreign countries, including foreign economic conditions, exchange rate fluctuations, regulatory environment, and cultural factors; D&B's ability to successfully integrate recent and future acquisitions, alliances and investments; D&B's ability to protect its proprietary information and technology or to obtain necessary licenses and services on commercially reasonable terms; the potential loss of key business assets, including data center capacity, or interruption of telecommunication links or power sources; changes in the legislative, accounting, regulatory and commercial environments affecting D&B's ability to collect, manage, aggregate, use and distribute data; D&B's ability to attract and retain key employees; and the competitive implications that the conversion to the euro may have on D&B's pricing and marketing strategies. D&B undertakes no obligations to update any forward-looking statements to reflect future events or circumstances.

4 The Dun & Bradstreet Corporation Consolidated Statement of Operations (unaudited) Schedule 1 Amounts in millions, except per share data Fav/(Unfav) Operating Revenues: North America $ $ % Europe % Asia Pacific/Latin America % Total Core Revenues % and Other Divested Businesses (1) % Consolidated Operating Revenues $ $ % Operating Income (Loss): North America $ 66.3 $ 63.3 Europe Asia Pacific/Latin America Total Divisions Corporate and Other (2) (49.3) (38.5) Consolidated Operating Income Interest Income Interest Expense (4.9) (5.6) Minority Interest Expense - - Other Income (Expense) - Net (3) (3.5) 34.8 Non-Operating Income (Expense) - Net (7.8) 30.7 Income before Provision for Income Taxes Provision for Income Taxes Equity in Net Losses of Affiliates (1.2) (1.1) Net Income (4) $ 10.2 $ 36.7 Basic Earnings Per Share of Common Stock $.14 $.46 Diluted Earnings Per Share of Common Stock (5) $.13 $.44 Weighted Average Number of Shares Outstanding: Basic Diluted Fav/(Unfav) Operating Revenues: North America $ $ % Europe % Asia Pacific/Latin America % Total Core Revenues % and Other Divested Businesses (1) % Consolidated Operating Revenues $ $ % Operating Income (Loss): North America $ $ Europe 6.7 (2.2) Asia Pacific/Latin America 1.6 (2.3) Total Divisions Corporate and Other (2) (66.5) (54.3) Consolidated Operating Income

5 Interest Income Interest Expense (9.9) (6.8) Minority Interest Expense - (5.4) Other Income (Expense) - Net (3) (3.8) 34.5 Non-Operating Income (Expense) - Net (12.4) 24.6 Income before Provision for Income Taxes Provision for Income Taxes Equity in Net Losses of Affiliates (1.7) (1.8) Net Income (4) $ 45.8 $ 67.6 Basic Earnings Per Share of Common Stock $.61 $.84 Diluted Earnings Per Share of Common Stock (5) $.59 $.82 Weighted Average Number of Shares Outstanding: Basic Diluted See Schedule 3 (Notes to Schedules), which is an integral part of the consolidated statement of operations. - Before the effect 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. Schedule 2 The Dun & Bradstreet Corporation Consolidated Statement of Operations (unaudited) - Before One Time Items Amounts in millions, except per share data Fav/(Unfav) Operating Revenues: North America $ $ % Europe % Asia Pacific/Latin America % Total Core Revenues % and Other Divested Businesses (1) % Consolidated Operating Revenues $ $ % Operating Income (Loss): North America $ 66.3 $ 63.3 Europe Asia Pacific/Latin America Total Divisions Corporate and Other (2) (18.4) (16.7) Consolidated Operating Income Interest Income Interest Expense (4.9) (5.6) Minority Interest Expense - - Other Expense - Net (3) (3.5) (1.6) Non-Operating Expense - Net (7.8) (5.7) Income before Provision for Income Taxes Provision for Income Taxes Equity in Net Losses of Affiliates (1.2) (1.1) Net Income (4) $ 31.8 $ 27.4

6 Basic Earnings Per Share of Common Stock $.43 $.34 Diluted Earnings Per Share of Common Stock (5) $.41 $.33 Weighted Average Number of Shares Outstanding: Basic Diluted Fav/(Unfav) Operating Revenues: North America $ $ % Europe % Asia Pacific/Latin America % Total Core Revenues % and Other Divested Businesses (1) % Consolidated Operating Revenues $ $ % Operating Income (Loss): North America $ $ Europe 6.7 (2.2) Asia Pacific/Latin America 1.6 (2.3) Total Divisions Corporate and Other (2) (35.6) (32.5) Consolidated Operating Income Interest Income Interest Expense (9.9) (6.8) Minority Interest Expense - (5.4) Other Expense - Net (3) (3.8) (1.9) Non-Operating Expense - Net (12.4) (11.8) Income before Provision for Income Taxes Provision for Income Taxes Equity in Net Losses of Affiliates (1.7) (1.8) Net Income (4) $ 67.4 $ 58.3 Basic Earnings Per Share of Common Stock $.90 $.73 Diluted Earnings Per Share of Common Stock (5) $.87 $.71 Weighted Average Number of Shares Outstanding: Basic Diluted See Schedule 3 (Notes to Schedules), which is an integral part of the consolidated statement of operations. - Before the effect 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. Schedule 3 The Dun & Bradstreet Corporation Notes to Schedules (unaudited) (1) 2001 includes revenues from the (RMS) business, which was divested in the quarter ended 2001 and the effect of other business model changes in the Asia Pacific/Latin America segment. (2) The following table reconciles between the Corporate and Other expenses included in Schedule 1 and Schedule 2:

7 Amounts in millions Corporate and Other - As Reported $ (49.3) $ (38.5) $ (66.5) $ (54.3) Restructuring Expense - Net (30.9) (28.8) (30.9) (28.8) Reorganization Costs Corporate and Other - Before One-Time Items $ (18.4) $ (16.7) $ (35.6) $ (32.5) In 2002 the Company recorded, within Corporate and Other, a charge for restructuring related to the financial flexibility program. In 2001 the Company recorded, within Corporate and Other, a charge for restructuring related to the financial flexibility program. Partially offsetting this charge was a reversal of excess accrued reorganization costs incurred in connection with the 2000 separation from Moody's. (3) The following table reconciles between the Other Income (Expense) - Net included in Schedule 1 and Schedule 2: Amounts in millions Other Income (Expense) - Net -- As Reported $ (3.5) $ 34.8 $ (3.8) $ 34.5 Gain on Sale of RMS Business Other Income (Expense) - Net -- Before One-Time Items $ (3.5) $ (1.6) $ (3.8) $ (1.9) In 2001, the Company recorded within Other Income (Expense) - Net a gain on the sale of the business. Schedule 3 (cont'd) The Dun & Bradstreet Corporation Notes to Schedules (unaudited) (4) The following table reconciles between the Net Income included in Schedule 1 and Schedule 2: Amounts in millions Net Income - As Reported (Excluding Discontinued Operations) $ 10.2 $ 36.7 $ 45.8 $ 67.6 Restructuring Expense - Net (21.6) (24.1) (21.6) (24.1) Reorganization Costs Gain on Sale of RMS Business Net Income - Before One-Time Items $ 31.8 $ 27.4 $ 67.4 $ 58.3 (5) The following table reconciles between the Diluted Earnings Per Share included in Schedule 1 and Schedule 2: Amounts in millions Diluted EPS - As Reported (Excluding Discontinued Operations) $.13 $.44 $.59 $.82 Restructuring Expense - Net (.28) (.29) (.28) (.29) Reorganization Costs Gain on Sale of RMS Business Diluted EPS - Before

8 One-Time Items $.41 $.33 $.87 $.71 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. Schedule 4 The Dun & Bradstreet Corporation Supplemental Financial Data for Continuing Operations (unaudited) Amounts in millions Fav/(Unfav) Product Line Revenues: North America: Risk Management Solutions $ $ % Sales & Marketing Solutions % Supply Management Solutions % Core Businesses % and Other Divested Businesses % Total North America % Europe: Risk Management Solutions % Sales & Marketing Solutions % Supply Management Solutions Core Businesses % and Other Divested Businesses % Total Europe % APLA: Risk Management Solutions % Sales & Marketing Solutions % Supply Management Solutions Core Businesses % and Other Divested Businesses % Total APLA % Total Corporation: Risk Management Solutions % Sales & Marketing Solutions % Supply Management Solutions % Core Businesses % and Other Divested Businesses % Total Corporation $ $ % Geographic Revenues: United States $ $ International Total $ $ Operating Costs: Operating Expenses $ $ Selling and Administrative Expenses Depreciation and Amortization Restructuring Expense - Net Reorganization Costs - (7.0) Total $ $ Capital Expenditures $ 2.8 $ 3.7 Additions to Computer Software & Other Intangibles $ 9.0 $ 12.8 Jun 30, 2002 Mar 31, 2002

9 Cash and Debt Position: Cash and Cash Equivalents $ $ 89.4 Notes Payable (.1) (35.7) Long-Term Debt (299.7) (299.6) Net Debt $(152.7) $(245.9) Amounts in millions Fav/(Unfav) Product Line Revenues: North America: Risk Management Solutions $ $ % Sales & Marketing Solutions % Supply Management Solutions % Core Businesses % and Other Divested Businesses % Total North America % Europe: Risk Management Solutions % Sales & Marketing Solutions % Supply Management Solutions Core Businesses % and Other Divested Businesses % Total Europe % APLA: Risk Management Solutions % Sales & Marketing Solutions % Supply Management Solutions Core Businesses % and Other Divested Businesses % Total APLA % Total Corporation: Risk Management Solutions % Sales & Marketing Solutions % Supply Management Solutions % Core Businesses % and Other Divested Businesses % Total Corporation $ $ % Geographic Revenues: United States $ $ International Total $ $ Operating Costs: Operating Expenses $ $ Selling and Administrative Expenses Depreciation and Amortization Restructuring Expense - Net Reorganization Costs - (7.0) Total $ $ Capital Expenditures $ 6.1 $ 8.5 Additions to Computer Software & Other Intangibles $ 15.0 $ 18.7 Dec 31, 2001 Jun 30, 2001 Cash and Debt Position: Cash and Cash Equivalents $ $ Notes Payable - (.1) Long-Term Debt (299.6) (299.6)

10 Net Debt $(154.3) $(114.5) - Before the effect 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 Media: Joanne Carson, 908/ Carsonj@dnb.com Investors/Analysts: Sandy Parker, 908/ Parkerr@dnb.com