The Dun & Bradstreet Corporation

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The Dun & Bradstreet Corporation

founded: 1841 as the mercantile agency

Contact Information:

headquarters: 1 diamond hill rd. murray hill, nj 07974 phone: (908)665-5000 fax: (908)665-5524 url: http://www.dnbcorp.com

OVERVIEW

The Dun & Bradstreet Corporation (D&B) is a holding company for Dun & Bradstreet, Reuben H. Donnelley, and Moody's Investor Service. Dun & Bradstreet is one of the world's largest credit reporting agencies. Their service covers over 48 million businesses in nearly 40 countries. Moody's Investor Service publishes debt ratings on corporate and government securities, as well as other business and financial information. Reuben H. Donnelley publishes yellow pages directories.

Previously a much larger company, D&B reorganized and spun off A.C. Nielsen (their marketing information services) and Cognizant (their market research and high-tech advisory services) into independent, publicly held companies in 1996. In 1998 the company announced a plan to split off Reuben H. Donnelley as well.

COMPANY FINANCES

In 1995, the last full year before the split, worldwide sales totaled $5.4 billion. In 1997 worldwide sales totaled $2.15 billion. Of this, 74 percent of revenues are from U.S. sales and 22 percent are from European sales. Approximately 64 percent of revenues came from The Dun & Bradstreet operating company, 18 percent from Moody's, and 18 percent from R.H. Donnelley.

As of February 20, 1998, more than 171 million shares of The Dun & Bradstreet's common stock were outstanding. The total market value of the common stocks held by non affiliates (i.e., people not considered officers of the company) was approximately $5.63 billion. The stock price ranged from $23.75 to $31.25 per share over the prior 12-month period.

ANALYSTS' OPINIONS

In a 1995 Money article, seven leading money managers offered advice for poor stock performers, with Dun & Bradstreet leading the list. They warned that the company was due for a major restructuring. Yet when Dun & Bradstreet formally announced their restructuring, it created very little excitement among market analysts. According to Business Week, if Dun & Bradstreet's leadership hoped to thrill investors with their announcement, they were headed for a disappointment, or a "deafening silence." Likewise Barron's reported in the same month that in spite of the good news, the market had not responded. But six months later, the same publication speculated that, because of the restructuring, good things lay in Dun & Bradstreet's future.

Standard & Poor's includes Dun & Bradstreet in their S&P 500 index. Their Feburary 1998 Stock Report lists D&B as a "secure investment," with yield of 2.7 percent, and a price earnings ratio of 18.3. They expect a 9 percent "earnings per share" growth in 1998.

HISTORY

In 1841, Lewis Tappan founded the Mercantile Agency for the purpose of "obtaining, in a proper manner, intelligence of the responsibility of merchants visiting the market." The first company of its kind, it helped New York store owners to evaluate credit applications and determine potential bad-risk customers. John Brad-street of Cincinnati, Ohio, formed a similar company after he obtained a large store of credit information from the liquidation of a client's estate in 1849.

The growing Mercantile Agency hired attorneys and other observers in communities throughout the United States to help prepare credit reports on local businesses. These observers included four future U.S. presidents: Abraham Lincoln, Ulysses S. Grant, Grover Cleveland, and William McKinley.

Robert Graham Dun headed up the Mercantile Agency from 1859 to 1900, after which the company assumed the name R.G. Dun & Company. Two other subsidiaries of Dun & Bradstreet, R.H. Donnelley and Moody's, were also formed around the turn of the century. Reuben H. Donnelley of Chicago published his first telephone directory in 1886, and John Moody put out the first of his industrial manuals in 1900.

R.G. Dun & Company's chief rival in the credit reporting business was the Bradstreet Company, and for many years the two fought a costly feud. In 1933 Dun's president, Arthur Whiteside, proposed merging the companies to save them both from economic ruin. Thus Dun & Bradstreet was born. The company merged with the R.H. Donnelley Company in 1961, and with Moody's Investors Service in 1962. Throughout the 1960s and 1970s, the company progressed in innovative uses of information technology. In the 1970s and 1980s, it acquired other information companies, most notably television ratings giant A.C. Nielsen in 1984.

In 1995, Dun & Bradstreet did $5.4 billion in business worldwide. However, poor stock performance led to the company's divesting itself of many of its holdings. In 1996 Dun & Bradstreet separated from two of its biggest holdings, Nielsen and Cognizant, splitting them off into independent publicly held companies. In 1998 the company announced a plan to split Reuben H. Donnelley as well.

By narrowing its scope, Dun & Bradstreet returned to the elements on which its business was built: credit reporting and business information.

STRATEGY

In a pamphlet with which it introduced "The New Dun & Bradstreet" to the public in 1996, the company proclaimed, "We've been working on the Information Highway for 155 years." Similar statements at its web site emphasize Dun & Bradstreet's tradition of innovation. Given that Lewis Tappan's Mercantile Agency was the first of its kind, it should not be surprising that the company would stress its history of innovation. But Dun & Bradstreet's image as a long-standing provider of business information has been just as important. Longevity implies reliability, and reliability is even more important in the information industry than in many other businesses.

INFLUENCES

The technology of information gathering and storage has influenced Dun & Bradstreet from its beginnings. Mercantile Agency partner Benjamin Douglass in 1847 helped his firm become one of the first to make use of the telegraph, invented only three years before; and in 1874 the agency became the first commercial customers of the Remington typewriter. In the 1970s the company established its National Business Information Center, a large computer network and one of the first intranets, a computer network internal to a specific company. Dun & Bradstreet continued to stay abreast of information-age innovations in the 1990s.

In the 1990s Dun & Bradstreet, known for its reports on other businesses, was ironically forced to undergo rigorous self-analysis. In 1933, when it came to settling the long-standing feud between the Dun and Bradstreet companies, a merger had been a perfect cure. But like many companies in the 1970s and 1980s, Dun & Bradstreet succumbed to a mania for rapid growth and diversification. This led to the purchases of Technical Publishing in 1978, National CSS (a computer company) in 1979, McCormack & Dodge software in 1983, A.C. Nielsen in 1984, pharmaceutical market-research giant IMS International in 1988, and Management Science America in 1989.

Dun & Bradstreet would have also purchased Information Resources Inc., a competitor of Nielsen, but a 1987 antitrust suit stopped it from doing so. What ultimately quashed merger mania at Dun & Bradstreet, however, was not legal action but the bottom line. In the early 1990s the company started selling off unprofitable subsidiaries, consolidating its worldwide data centers, and downsizing its work force. Still, profits did not improve. Like competitor Dow Jones, Dun & Bradstreet had seen its revenues grow dramatically in a decade, but net income had stayed the same despite a few high years. The company's stock, as Barron's reported in August 1995, was still trading at the same price as in 1989, $56 per share.

In 1996 management decided to spin off Nielsen and Cognizant, and to return the core Dun & Bradstreet Corporation to its original focus: business information services.

FAST FACTS: About The Dun & BradstreetCorporation

Ownership: Dun & Bradstreet is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: DNB

Officers: Volney Taylor, Chmn. & CEO, 58, $2,147,449; Frank S. Sowinski, Sr. VP & CFO, 41, $701,746; John Rugherford, Jr., Pres.—Moody's Investor Service; Frank R. Noonan, Sr. VP & Pres.—Reuben H. Donnelley, 55, $693,913

Employees: 15,100

Principal Subsidiary Companies: The Dun & Brad-street Corporation is composed of the Dun & Brad-street operating company, Moody's Investor Service, and Reuben H. Donnelley.

Chief Competitors: Dun & Bradstreet's primary competitors are: American Business Information; Dow Jones; Hoover's Inc.; Morningstar Inc.; Reuters; and Thomson Corp.

CURRENT TRENDS

The biggest trend at Dun & Bradstreet is its renewed focus on its core business, which is information. The company continues to develop new products, particularly ones that are computer-based. In a move linked with its reorganization, in August 1996 the company increased its available line of credit, a back-up to its bonds, to $1.2 billion; hence the money should be there for innovation as needed.

PRODUCTS

Dun & Bradstreet Information Systems' most important product is its database of information on 48 million businesses worldwide. Its Data Universal Numbering System or D-U-N-S™, a nine-digit designation for individual businesses that has proven more efficient than alphabetical cataloging, helps the company keep track of the multitudinous enterprises in its database. Parts of this database, which is updated continually, go into a wide variety of books and electronic products such as the D&B regional Business Directory, a CD-ROM introduced in October 1996. In addition, Dun & Bradstreet provides custom credit reports on specific businesses, similar to the reports Equifax and TRW provide on individuals.

Moody's Investor Service likewise produces a number of business guides, including a debt rating service that analyzes corporate and government securities. At the end of 1997, Moody's had outstanding ratings on approximately 85,000 corporate and 62,000 public finance obligations. R.H. Donnelley's yellow page advertising and directory business has clients throughout the United States, including NYNEX, Cincinnati Bell, and Sprint.

GLOBAL PRESENCE

Dun & Bradstreet maintains offices in 36 countries including the United States, and has independent correspondents in over 150 other countries worldwide. Moody's also has offices in the United States, Canada, the larger countries of western Europe, and Oceania. R.H. Donnelley's business is confined to the United States.

CHRONOLOGY: Key Dates for The Dun &Bradstreet Corporation

1841:: Lewis Tappan founded Dun & Bradstreet as the Mercantile Agency
1849:: John M. Bradstreet Company is founded
1859:: Robert Dun takes over the Mercantile Agency and changes the name to R.G. Dun & Co.
1869:: The firm opens an office in San Francisco
1896:: Robert Dun Douglass becomes general manager of the firm
1900:: The firm begins operation as a common-law trust with Douglass in charge as an executive trustee
1931:: R.G. Dun acquires National Credit Office and reorganizes into the holding company R.G. Dun Corporation
1933:: R.G. Dun Corporation merges with Bradstreet Company
1942:: Acquires Credit Clearing House
1961:: Dun & Bradstreet merges with R.H. Donnelley
1962:: Merges with Moody's Investors Service; introduces a nine digit numbering system called Data Universal Numbering system (D-U-N-S) to identify companies in their databases
1978:: Purchases Technical Publishing
1979:: Acquires National CSS; first edition of Dun's Financial Profiles is published
1983:: Purchases McCormack & Dodge
1984:: Acquires A.C. Nielsen
1988:: Buys IMS International
1996:: Dun & Bradstreet spins off both A.C. Nielsen and Cognizant
1997:: Sells NCH Promotional Services

EMPLOYMENT

Downsizing will continue to be a part of Dun & Bradstreet's strategy, but that downsizing is turning the company into a more focused and profitable enterprise.