10-K 1 a201710-k.htm 10-K Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
___________________________________
Form 10-K 
__________________________________
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2017
Commission file number 1-15967
_________________________________
The Dun & Bradstreet Corporation
(Exact name of registrant as specified in its charter) 
___________________________________
Delaware
22-3725387
(State of
incorporation)
(I.R.S. Employer
Identification No.)
 
 
103 JFK Parkway, Short Hills, NJ
07078
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (973) 921-5500
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange on which registered
Common Stock, par value $0.01 per share
 
New York Stock Exchange
Preferred Share Purchase Rights
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None  
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   x     No  o 
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes   o    No   x
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x    No   o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x    No   o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one:)
Large accelerated filer
ý
Accelerated filer
o
Non-accelerated filer (do not check if a smaller reporting company)
o
Smaller reporting company
o
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   o     No   x
As of June 30, 2017, the aggregate market value of all shares of Common Stock of The Dun & Bradstreet Corporation outstanding and held by nonaffiliates* (based upon its closing transaction price on the New York Stock Exchange Composite Tape on June 30, 2017) was approximately $3.988 billion.
As of January 31, 2018, 36,996,124 shares of Common Stock of The Dun & Bradstreet Corporation were outstanding.
Documents Incorporated by Reference
Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of shareholders, scheduled to be held on May 8, 2018, are incorporated into Part III of this Form 10-K.
*    Calculated by excluding all shares held by executive officers and directors of the registrant. Such exclusions will not be deemed to be an admission that all such persons are “affiliates” of the registrant for purposes of federal securities laws.
 




INDEX
 
 
 
Page
 
 
 
 
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
 
 
 
 
 
Item 9.
Item 9A.
 
 
 
 
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
 
 
 
 
 
 
Item 15.
Item 16.
 
 

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PART I
Item 1.    Business
Overview
The Dun & Bradstreet Corporation (“Dun & Bradstreet” or “we” or “us” or “our” or the “Company”) grows the most valuable relationships in business. By uncovering truth and meaning from data, we connect customers with the prospects, suppliers, clients and partners that matter most, and have since 1841. Nearly ninety percent of the Fortune 500, and companies of every size around the world, rely on our data, insights and analytics.
Dun & Bradstreet® is the world’s leading source of commercial data, analytics and insight on businesses. Our global commercial database as of December 31, 2017 contained more than 285 million business records. We transform commercial data into valuable insight which is the foundation of our global solutions that customers rely on to make critical business decisions.
Dun & Bradstreet provides solution sets that meet a diverse set of customer needs globally. Customers use Risk Management Solutions™ to mitigate credit, compliance and supplier risk, increase cash flow and drive increased profitability. Our Sales & Marketing Solutions™ help customers better use data to grow sales, digitally engage with customers and prospects, improve marketing effectiveness and also for data management capabilities that provide effective and cost efficient marketing solutions to increase revenue from new and existing customers.
Our Strategy
Dun & Bradstreet’s strategy is to become one global company delivering indispensable content through modern channels to serve new customer needs with our forward-leaning culture. We are focused on the commercial marketplace and continuing to be the world’s largest and best provider of insight about businesses.  Our strategy is designed to drive long-term sustainable growth in the years ahead and we remain committed to increasing Total Shareholder Return (“TSR”) through revenue growth.
Our strategy has five key components:
First, we continue to globalize the business, moving from a regional structure to an integrated global organization. As part of this transformation we continue to expand upon our relationships with our large, strategic customers, many of which also have global operations, while servicing them as global accounts. We are also continuing to create global, cloud-based solutions, to service our customers. This globalization of our business is being closely integrated with our Worldwide Network® partners. For example, over the past three years, we shifted our businesses based in Latin America, Belgium and the Netherlands (“Benelux”) and Australia and New Zealand (“ANZ”) to a Worldwide Network partner model in support of our global data strategy and customer-centric approach built on having the best data in every market;

Second, we continue to invest in content, which includes our data and analytics, that is indispensable to our customers’ growth. We are constantly improving the quality and consistency of our data around the globe, developing new analytic tools and scores to improve the predictive capability of our content, cultivating new proprietary data sources and acquiring companies and other third-party sources of data to combine with our existing data;

Third, we continue to modernize content delivery by transitioning from older, traditional platforms to more agile cloud-based and Data-as-a-Service (“DaaS”) approaches leveraging Application Programming Interface (“API”) connectors, and focus on alliance and third-party distribution in addition to our own products;

Fourth, we continue to modernize the brand. Building on our modernized brand efforts, in 2016 we unveiled a reimagined, data-driven, content-led digital experience for our customers, and made significant investments in our persona-based go-to-market strategy; and

Fifth, we continue to create an outside-in, forward-leaning culture with a team that is externally focused, and plugged into our customers’ needs and the markets in which we operate.

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The strategy is built on the valuable assets the Company possesses today that we believe provide a competitive advantage for Dun & Bradstreet:
Well Recognized Brand
Superior Content and Solutions
Loyal Customers
For the reasons described below, we believe that these core competitive advantages will enable successful execution of our strategy going forward.
Well Recognized Brand
For over 175 years, Dun & Bradstreet’s well-respected and well-recognized brand has strengthened our position in the marketplace. Our guiding purpose, “Dun & Bradstreet grows the most valuable relationships in business by uncovering truth and meaning from data” underscores our belief that growing strong relationships through data empowers our customers’ success, and we continue to believe that a modern, data-inspired, humanized brand is an important part of our growth strategy.
 
We continued to build our brand awareness this year.  In 2016, feedback showed that Dun & Bradstreet’s customers associate our brand with a company that is modern, data-inspired and useful.  In 2017, we saw our brand awareness increase among non-customers globally, and by leveraging our data-fueled, content-led websites, our digital experience has won awards for our reimagined digital presence, customizable user experiences and increased engagement.
Superior Content and Solutions
Risk Management Solutions
Risk Management Solutions is our largest customer solution set, accounting for 58%, 59% and 60% of our total revenue, for each of the years ended December 31, 2017, 2016 and 2015.
Our Risk Management Solutions help customers increase cash flow and profitability while mitigating credit, operational and regulatory risks by helping them answer questions such as:
Should I extend credit to this new customer?
Should I do business with this entity?
What credit limit should I set?
Will this customer pay me on time?
How can I avoid supply chain disruption?
How do I know whether I am in compliance with regulatory acts?
Does my business credit file reflect the true health of my business to those that wish to do business with me?
Our Risk Management Solutions fall into two categories: Trade Credit and Other Enterprise Risk.
Our principal Trade Credit Solutions are:
The D&B Credit Suite, which includes D&B Credit® and DNBi®, subscription-based online applications that offer customers real time access to our most complete and up-to-date global information, comprehensive monitoring and portfolio analysis; and

Various business information reports (e.g., Business Information Report, Comprehensive Report, and Global Report, etc.) that are consumed in a transactional manner across multiple platforms such as MyDNB.com.

Our principal Other Enterprise Risk Solutions are:

Our D&B Credibility solutions primarily for small businesses, which provide the opportunity to monitor and impact one’s own business credit profile;


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Supplier Risk Manager, an online application that helps businesses mitigate supply chain risk by certifying and onboarding suppliers and monitoring them for changes in risk. This solution can be paired with our new D&B Spend Intelligence solution, which enables businesses to quickly aggregate and cleanse data from all of their Enterprise Resource Planning (“ERP”) systems and build a single view of their third parties to identify potential expense savings;

Our Compliance product suite including D&B Onboard and D&B Compliance Check, which helps customers comply with anti-money laundering and global anti-bribery and corruption regulations through advanced onboarding, screening and monitoring of customers and third parties; and

Products that are part of our DaaS strategy, which integrate our content directly into the applications and platforms that our customers use every day. This includes D&B Direct®, an API that enables data integration inside Enterprise applications such as ERP, and enables master data management and Toolkit.
Certain solutions are available on a subscription pricing basis, including our DNBi and D&B Credit subscription pricing plans. Our subscription pricing plans represent a larger portion of our revenue and provide increased access to our risk management reports and data to help customers increase their profitability while mitigating their risk.
Sales & Marketing Solutions
Sales & Marketing Solutions accounted for 42%, 41% and 40% of our total revenue, for each of the years ended December 31, 2017, 2016 and 2015, respectively.
Our Sales & Marketing Solutions help customers increase revenue from new and existing customers by helping them answer questions such as:
Who are my best customers?

How can I find prospects that look like my best customers?

How can I capture untapped opportunities with my existing customers?

How can I measure the health and completeness of my customer, partner, and prospect data sets so I can make faster, more informed decisions?

Who are the best contacts at a business for my services?

How do I arm my sales force with the right intelligence to engage in a meaningful way and close faster?

How can I increase the productivity of my sales teams and eliminate manual efforts?

How can I accelerate the buyer’s journey and time to revenue?

How do I gain visibility into key markets and target my audiences across online and offline channels?

How can I identify anonymous web traffic to reveal new opportunities and personalize campaigns and experiences?
Our Sales & Marketing Solutions fall into two categories: Sales Acceleration and Advanced Marketing Solutions.

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Our principal Sales Acceleration Solutions are:
The D&B Hoovers Suite, which uses the world’s largest commercial database from Dun & Bradstreet and sophisticated analytics, to deliver sales acceleration solutions packed with insight. Sales acceleration solutions enable B2B sales and marketing professionals to accelerate sales, enhance go-to-market activity, engage in a meaningful way, and close business faster. The D&B Hoovers Suite is comprised of D&B Hoovers, traditional Hoover’s, and revenues from our joint product with Salesforce.com, Data.com.

MDR Integrated Education Marketing, a trusted source for education data services, lead-driven sales tools, digital marketing solutions and market research. MDR empowers marketers with know-how, hands-on experience and unparalleled market data, which covers institutions and educators from preschool to the college level.
Our principal Advanced Marketing Solutions are:
Optimizer, a master data solution that transforms our customers’ company data into up-to-date, accurate, and actionable commercial insight, facilitating a single customer view across multiple systems and touchpoints;

D&B Master Data empowers customers to quickly and deeply understand business relationships (customers, prospects, suppliers, partners) and leverage that information across the organization - enabling timely decisions and actions about those relationships to increase efficiency and both grow and protect their businesses;

D&B Audience Targeting, which helps customers serve the right ads to the right audiences, introducing more precision into their online advertising. It enables advertisers and agencies to intelligently target professionals in multiple ways via the insight created by our company and contact data; and

D&B Visitor Intelligence, which helps B2B marketers unmask anonymous web traffic in real-time to understand the companies and buyer personas visiting their website. This helps to perform richer web analytics, personalize experiences, mine for leads, prefill web forms, and retarget visitors when they leave the website.
Loyal Customers
We combine the majority of our customer-facing, go-to-market activities into segments called, “Lines of Business,” which creates a more focused approach to serving customers and a strong alignment between product and solutions and how we go to market.
We serve our customers through a multi-channel sales organization, which is centered around two primary areas: our Global Direct sales channel and Global Alliances and Partnerships.
This structure creates alignment with product and solutions, and how they work more closely with our go to market channels. We believe that this more aligned, integrated approach enables us to be more agile and effective in the marketplace and help us to serve our customers efficiently and effectively.
We support principal customers across communications, technology, government, strategic financial services and retail/telecommunications/manufacturing across our sales channels. None of our customers accounted for 10% or more of our total revenue in any of the past three fiscal years.
Segments
We manage and report our business through two segments:
Americas, which consists of our operations in the United States (“U.S.”), Canada, and our Latin America Worldwide Network (we divested our Latin America operations in September 2016); and

Non-Americas, which consists of our operations in the United Kingdom (“U.K.”), Greater China, India and our European and Asia Pacific Worldwide Networks (we divested our operations in both the Netherlands and Belgium in November 2016 and both Australia and New Zealand in June 2015).

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The following table presents the contribution by segment to revenue (See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K):
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
Americas
83
%
 
83
%
 
81
%
Non-Americas
17
%
 
17
%
 
19
%
We may also acquire, divest, or shut down businesses from time to time. For example:
In January 2017, we acquired Avention, Inc.;

In 2016, we completed the sales of our operations in Benelux and Latin America, converting these businesses to our Worldwide Network model; and

In 2015, we:

Acquired NetProspex, Inc. and Dun & Bradstreet Credibility Corp. (“DBCC”); and

Completed the sale of our operations in Australia and New Zealand, converting these businesses to our Worldwide Network model.
Segment data and other information for the years ended December 31, 2017, 2016 and 2015 are included in Note 14 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K. As our strategy evolves, we may modify our reporting structure, as appropriate, to reflect changes in the way we manage our business.
We also report and monitor our revenue performance as Risk Management Solutions and Sales & Marketing Solutions. Within Risk Management Solutions, we monitor the performance as Trade Credit and Other Enterprise Risk Management. Trade Credit represents our commercial credit products such as D&B Credit Suite (which includes DNBi® and D&B Credit solutions), and “Other Trade Credit” solutions, which are products and services used to manage credit risk and support our customers’ internal credit risk decisioning process. Other Enterprise Risk Management includes all of our remaining Risk Management products, such as our compliance, supply chain, credit on self and D&B Direct risk solutions. Effective January 1, 2017, we began managing and reporting our Sales and Marketing Solutions as Sales Acceleration and Advanced Marketing Solutions. Sales Acceleration includes solutions designed to align sales and marketing teams around the same refined and inter-connected information (data that is current, tied to buying signals, and delivered with context) to shorten sales cycles, increase win rates, and accelerate revenue growth more quickly. We provide these solutions through applications such as D&B Hoovers, as well as through direct access to our contact data. Advanced Marketing Solutions consists of our Master Data solutions, which enable our customers to integrate and organize data to create a single view of customers and prospects, enrich data, continuously manage data quality and link company identity and hierarchy. It also consists of Audience Solutions products, which use data and analytics to fuel enhanced programmatic targeting and web visitor intelligence.
Our Direct Sales Force
Our direct sales force consists of approximately 1,700 team members worldwide, of whom approximately 1,300 were in our Americas business and 400 were in our Non-Americas business as of December 31, 2017. Our sales force includes enterprise sales executives and customer solution specialists who sell to our vertically aligned strategic customers and our geographically aligned national commercial customers, a telesales team that sells to our small- and medium-sized customers, and a team that sells to federal, state and local governments.
Our Alliances and the Dun & Bradstreet Worldwide Network
In addition, we have sales teams who are dedicated specifically to our alliance partners. These teams are focused around: (i) alliance partners to whom we are a major supplier of data, which they specifically request and leverage as content to enhance their own products and services for sale to their customers; and (ii) alliance partners who enable the seamless delivery of our data, regardless of the content, to enable their end users to consume our content in a flexible, user friendly manner.
We also conduct business through our wholly-owned subsidiaries, majority-owned joint ventures, independent correspondents, strategic relationships through our Worldwide Network and minority equity investments. Our Worldwide Network is an alliance of network partners covering more than 230 countries. In those countries, we have determined it is

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beneficial to engage with dominant, well-known local partners to enable us to better collect data from such countries and to better sell our existing content into such countries. Our Worldwide Network enables our customers globally to make business decisions with confidence, because we incorporate data from the members of the Worldwide Network into our database and utilize it in our customer solutions. Our customers, therefore, have access to a more powerful database and global solution sets that they can rely on to make their business decisions.
Competition
We are subject to highly competitive conditions in all aspects of our business. However, we believe no competitor offers our complete line of solutions, global data breadth and consistency, analytic capabilities and multi-channel approach for commercial entities and the people who run them.
In North America, we are a market leader in our Risk Management Solutions business based upon revenue. We compete with our customers’ own internal business practices by continually developing more efficient alternatives to our customers’ risk management processes to capture more of their internal spend. We also directly compete with a broad range of companies, including consumer credit companies that also have commercial data, such as Equifax, Inc. (“Equifax®”) and Experian Information Solutions, Inc. (“Experian®”), as well as a number of low cost, vertical and regionally specific companies. In addition, competitors with unique assets and capabilities outside of commercial data create bundled offerings that are attractive to certain customer segments.
We also compete in North America with a broad range of companies offering solutions similar to our Sales & Marketing Solutions. Our direct competitors in Sales & Marketing Solutions vary significantly depending on the many possible uses for our solutions such as market segmentation, digital marketing lead generation, lead enrichment, sales effectiveness, and data management. We also face competition in data services from our customers’ own internal development and from data quality software solutions.
Outside the U.S., the competitive environment varies by region and country, and can be significantly impacted by the legislative actions of local governments, availability of data and local business preferences.
In the U.K. and Ireland, our direct competition is primarily from Experian and Moody’s /Bureau van Dijk®. We believe that we offer superior solutions when compared to these competitors. In addition, the Sales & Marketing Solutions landscape in these markets is both localized and fragmented, where numerous local players of varying size compete for business.
In Asia Pacific, we face competition in our Risk Management Solutions business from a mix of local and global providers. For example, we compete with Experian in India and with Sinotrust International Information & Consulting (Beijing) Co., Ltd. in China. In addition, as in the U.K., the Sales & Marketing Solutions landscape throughout Asia is localized and fragmented.
We also face significant competition from the in-house operations of the businesses we seek as customers, other general and specialized credit reporting and business information services, and credit insurers. In addition, business information solutions and services are becoming more readily available, principally due to greater availability of public data, greater use of modern analytical techniques such as machine learning and artificial intelligence, and the emergence of new providers of business information solutions and services.
We believe that our trusted brand, proprietary data assets, global identity resolution knowledge, globally recognized D-U-N-S® Number and analytic capabilities form a powerful competitive advantage.
Our ability to continue to compete effectively will be based on a number of factors, including our ability to:
Communicate and demonstrate to our customers the value of our existing and new products and services based upon our proprietary data, and as a result, improve customer satisfaction;

Maintain and develop our proprietary D-U-N-S® numbering classification system and information and services such as analytics;

Develop new content from both public and proprietary data sources;

Leverage our technology to significantly improve our value proposition for customers in order to make Dun & Bradstreet’s data available wherever and whenever our customers need it, as well as our brand perception and the value of our Worldwide Network;


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Maintain those third-party relationships on whom we rely for data and certain operational services; and

Attract and retain a high-performing workforce.
Intellectual Property
We own and control various intellectual property rights, such as trade secrets, confidential information, trademarks, service marks, trade names, copyrights, patents and applications to the foregoing. These rights, in the aggregate, are of material importance to our business. We also believe that the Dun & Bradstreet name and related trade names, marks and logos are of material importance to our business. We are licensed to use certain technology and other intellectual property rights owned and controlled by others, and other companies are licensed to use certain technology and other intellectual property rights owned and controlled by us. We consider our trademarks, service marks, databases, software, copyrights, patents, patent applications and other intellectual property to be proprietary, and we rely on a combination of statutory (e.g., copyright, trademark, trade secret, patent, etc.) and contract and liability safeguards for protecting them throughout the world.
Unless the context indicates otherwise, the names of our branded solutions and services referred to in this Annual Report on Form 10-K are common law or registered trademarks or service marks owned by or licensed to us or one or more of our subsidiaries.
We own patents and patent applications both in the U.S. and in other selected countries of importance to us. The patents and patent applications include claims which pertain to certain technologies and inventions which we have determined are proprietary and warrant patent protection. We believe that the protection of our innovative technology and inventions, such as our proprietary methods for data curation and identity resolution, through the filing of patent applications, is a prudent business strategy, and we will continue to seek to protect those certain assets for which we have expended substantial capital or otherwise deem to provide a competitive advantage. Filing of these patent applications may or may not provide us with a dominant position in the fields of technology. However, these patents and/or patent applications may provide us with legal defenses should subsequent patents in these fields be issued to third-parties and later asserted against us. Where appropriate, we may also consider asserting or cross-licensing our patents.
Employees
As of December 31, 2017, we employed approximately 4,900 employees worldwide, of whom approximately 3,500 were in our Americas segment and Corporate, and approximately 1,400 were in our Non-Americas segment. Our workforce also engages third-party consultants as an ongoing part of our business where appropriate. There are no unions in our U.S. or Canada operations, and works councils and trade unions represent a small portion of our employees outside of the U.S. and Canada.
We know we must have a passionate, forward-leaning culture to support our growth strategy and brand.  Toward that end, we are implementing our long-term plan to attract and retain top talent, deliver modern learning and development programs and deeply foster an environment of diversity and inclusion.  
In  2017, we launched a number of key people initiatives including, but not limited to:
Our Executive Talent Acquisition Program, including a global modern onboarding process and real-time learning and development efforts (inclusive of a global mentoring program), in order to better attract, accelerate and retain top talent.  

Our Diversity and Inclusion efforts where we live our Corporate Diversity Statement, build inclusion and community through a centralized site of content, site-specific global initiatives and learning and development opportunities to represent and foster the world’s mosaic in our workforce.

We continue to transform our culture through creative initiatives, modern systems and leading practices, including maximizing our People Technology solution to accelerate people analytics, continued Ampersand Awards recognition to team members who embody our values, and continuous Sustainable High Performance efforts throughout the year.
Available Information
We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Investors may read and copy any document that we file, including this Annual Report on Form 10-K, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Investors may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC

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maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, from which investors can electronically access our SEC filings.
We make available free of charge on or through our Internet site (www.dnb.com) our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish the material to, the SEC. The information on our Internet site or on any of our related Internet sites is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any other filings we make with the SEC.
Organizational Background of Our Company
As used in this report, except where the context indicates otherwise, the terms “Dun & Bradstreet,” “Company,” “we,” “us,” or “our” refer to The Dun & Bradstreet Corporation and our subsidiaries. We were incorporated in 2000 in the State of Delaware.

Item  1A.
Risk Factors
Our business model is dependent upon third parties to provide data and certain operational services, the loss of which would materially impact our business and financial results.
We rely significantly on third parties to support our business model. For example:

We obtain much of the data that we use from third parties, including public record sources;

We utilize single source providers in certain countries to support the needs of our customers around the globe and rely on members of our Worldwide Network to provide local data in countries in which we do not directly operate;

We have outsourced certain portions of our data acquisition, processing and delivery and customer service and call center processes; and

We have also outsourced various functions, such as our data center operations, technology help desk and network management functions in the U.S. and the U.K.
If one or more data providers were to experience financial or operational difficulties or were to unilaterally decide to withdraw their data, cease making it available, be unable to make it available due to changing industry standards or government regulations, substantially increase the cost of their data to us, not adhere to our data quality standards, or be acquired by a competitor who would cause any of these disruptions to occur, our ability to provide solutions and services to our customers could be materially adversely impacted, which could have a material adverse effect on our business and financial results. Similarly, if one of our outsource providers, including third parties with whom we have strategic relationships, were to experience financial, legal, operational or regulatory difficulties, their services to us would suffer or they may no longer be able to provide services to us at all, having a material adverse effect on our business and financial results. This could also be the case if some of our data providers that currently make their data available exclusively to us start to provide that data, or similar data, to our competitors or to other third parties.
We cannot be certain that we could replace our large third-party vendors in a timely manner or on terms commercially reasonable to us given, among other reasons, the vast scope of responsibilities undertaken by some of our providers, the depth of their experience and their familiarity with our intellectual property and operations generally. If we change a significant outsource provider, an existing provider makes significant changes to the way it conducts its operations, or is acquired, or we seek to bring in house certain services performed today by third parties, we may experience unexpected disruptions in the provision of our solutions, which could have a material adverse effect on our business and financial results.
Cyber-security risks could harm our operations, or the operations of our critical outsourcers, our third party service providers, or our partners on whom we rely for data and services to meet our customer needs, any of which could materially impact our business and financial results.
We rely upon the security of our information technology infrastructure to protect us from cyber-attacks and unauthorized access. Cyber-attacks that we have experienced, continue to experience, or in the future may experience, can include malware or ransomware, computer viruses, hacking, phishing or other significant disruption of our Information Technology (“IT”) networks and related systems.  The risk of cyber-attacks and other data incidents keeps rising as computer hackers, foreign governments and other actors routinely attempt to gain unauthorized access to IT systems and the confidential information that

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they contain. We experience cyber-attacks and other data incidents of varying severity in our IT systems, reflecting the increasing intensity and sophistication of these attacks from around the world.  We investigate these attacks and other incidents when we detect them to determine their impact as well as any remedial measures. We may face increasing cyber-security risks as we receive data from new sources such as social media sites or through data aggregators who provide us with information. Additionally, outside parties may attempt to fraudulently induce employees or users to disclose sensitive or confidential information in order to gain access to our data or our users’ data.
If we experience a problem with the functioning of an important IT system or a security breach of our IT systems, the resulting disruptions could have a material adverse effect on our business and financial results. We store information that may be sensitive in connection with our customers’ data, data we collect from a variety of public and private sources, data collected from our human resources operations and other aspects of our business which could be compromised by a cyber-attack. To the extent that any disruptions or security breach results in a loss or damage to any of this data, an inappropriate disclosure of this data or other confidential information, an inability to access data sources, or an inability to process data for or send data to our customers, it could cause significant damage to our reputation, affect our relationships with our customers, lead to claims against the Company and ultimately harm our business. Our servers and other hardware, as well as our operating systems software and applications may not contain sufficient protection from malware or unauthorized access. The costs to us to minimize or alleviate the effects of cyber-attacks, viruses, worms, malicious software programs or other security vulnerabilities are significant and could require significant upgrades to our IT infrastructure. We may be required to incur significant costs to undertake these actions and to protect against damage caused by these disruptions, security breaches, or cyber-attacks of the nature we have already incurred, in the future. Moreover, because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques, implement adequate preventative measures or remediate any intrusion on a timely or effective basis. Efforts we undertake to prevent these sorts of disruptions and breaches may not be successful. While we have insurance coverage for certain instances of a cyber-security breach, our coverage may not be sufficient now or in the future if we suffer additional significant or multiple attacks. Our insurance may not cover IT enhancements and upgrades we may undertake from time to time, or harm to our reputation, loss of customers or any related loss of revenue related to cyber-security incidents.
We rely on a number of outsourcing partners and third party service providers to design, build, and maintain critical components of our IT environment, including systems hosted in the cloud, and we rely significantly on third parties to supply clean data content and to resell our products in a secure manner. All of these third parties face risks relating to cyber-security similar to ours which could disrupt their businesses and therefore materially impact ours. While we provide guidance and specific requirements in some cases, we do not directly control any of such parties’ IT security operations, or the amount of investment they place in guarding against cyber-security threats. Accordingly, we are subject to any flaw in or breaches to their IT systems or those that they operate for us, often without sufficient contractual remedies or indemnification, should a claim arise, which could have a material adverse effect on our business and financial results.
Violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), and similar laws, and the investigation of such matters, as well as other internal related investigations and compliance reviews that we may conduct from time to time, could have a material adverse effect on our business.
The FCPA and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials and/or other persons for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-bribery law enforcement activity by regulators, with more frequent and aggressive investigations and enforcement proceedings by the U.S. Department of Justice (“DOJ”), the U.S. Securities and Exchange Commission (“SEC”), and the U.K. Serious Frauds Office (“SFO”) among others, and increases in criminal and civil proceedings brought against companies and individuals. Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that are recognized as having a greater potential for governmental and commercial corruption. We cannot assure that our policies and procedures will always protect us from reckless or criminal acts committed by our employees or third-party vendors. From time to time, we conduct internal investigations and compliance reviews, the findings of which could negatively impact our business. Any determination that our operations or activities are not, or were not, in compliance with existing U.S. or foreign laws or regulations could result in the imposition of substantial fines, interruptions of business, procurement suspension or debarment, loss of supplier, vendor or other third-party relationships, disruption or cessation of certain lines of business, termination of necessary licenses and permits, and other legal or equitable sanctions. Other internal or government investigations or legal or regulatory proceedings, including lawsuits brought by private litigants, including our shareholders, may also follow as a consequence. Violations of these laws by the Company, its employees or its third parties, such as vendors, brokers and agents, may result in a broad range of criminal or civil sanctions, including but not limited to, injunctive relief, disgorgement, fines, penalties, modifications to business practices, including the termination or modification of existing business relationships, and the imposition of compliance programs and the retention of a monitor to

11



oversee compliance with the FCPA. The imposition of any of these sanctions or remedial measures could have a material adverse effect on our reputation, business, results of operations and/or financial condition.
We face competition that may cause price reductions or loss of market share.
We are subject to competitive conditions in all aspects of our business. We compete directly with a broad range of companies offering business information services to customers. We also face competition from:

The in-house operations of the businesses we seek as customers;

Other general and specialized credit reporting and other business information providers;

Workflow-based software providers;

Credit insurers, factors and other alternative risk mitigation providers; and

Analytics providers.
Business information solutions and services are becoming more readily available, principally due to greater availability of public data and the emergence of new techniques for capturing, managing and analyzing data. These industry changes have lowered barriers to entry in many of the global customer segments that Dun & Bradstreet targets. Internet-based aggregators can provide low-cost alternatives to data gathering and change how our customers perform key activities such as marketing campaigns, or collect information on customers, suppliers and competitors. Aggregators, and other third-parties which may not be readily apparent today, may become significant low-cost or no-cost competitors and adversely impact the demand for our solutions and services, or limit our growth potential.
Weak economic conditions can result in customers seeking to utilize free or lower-cost information that is available from alternative sources. Intense competition could adversely impact us by causing, among other things, price reductions, reduced operating margins and loss of market share.
We face competition globally, and our competitors could develop an alternative to our Worldwide Network.
We face competition from consumer credit companies that offer consumer information solutions to help their customers make credit decisions regarding small businesses. Consumer information companies are expanding their operations more broadly into aspects of the business information space and, given the size of the consumer market in which they operate, they have scale advantages in terms of scope of operations and size of relationship with customers, which they can potentially leverage to their advantage.
Our ability to continue to compete effectively will depend upon a number of factors, including our ability to:

Maintain, communicate and demonstrate to our customers the value of our products and services based upon our global, proprietary D-U-N-S numbering classification system, identity resolution capabilities and predictive insights;

Maintain and develop proprietary information and solutions such as predictive analytics, and sources of data not publicly available, such as detailed trade data;

Demonstrate and deliver value through our decision-making tools, integration capabilities and embeddedness with leading enterprise application providers;

Leverage our brand perception and the value of our Worldwide Network;

Obtain and deliver reliable and high-quality business and professional contact information through various media and distribution channels in formats tailored to customer requirements;

Attract and retain a high-performance workforce;

Enhance our existing products and services, and introduce new products and services;

Enter new customer markets;

12




Operate within changing regulatory schemes or with restrictions imposed by foreign governments that favor local competitors; and

Improve our global business model and data quality through the successful relationship with members of our Worldwide Network and through potentially undertaking acquisitions or entering into joint ventures, partnership arrangements or similar relationships.
In addition, our ability to successfully compete depends on our ability to adapt our solutions to our customers’ preferences and to meet any specific contractual requirements that they impose upon us which may require significant or ongoing investments. Advances in information technology and uncertain or changing economic conditions are impacting the way our customers use and purchase business information. As a result, our customers are demanding both lower prices and more features from our solutions, such as decision-making tools like credit scores, and are expecting real-time content provided in a manner relevant to them.
If we do not successfully adapt our solutions to our customers’ preferences, our business and financial results may be materially adversely affected. Specifically, for our larger customers, including our alliance partners, our continued success will be dependent on our ability to satisfy more of their needs by providing more breadth and depth of content and allowing them more flexibility to use our content through web services and third-party solutions. For our smaller customers, our success will depend in part on our ability to develop a strong value proposition, including simplifying our solutions and pricing offerings, to enhance our marketing efforts to these customers and to improve our service to them.
Competitive pressures or our failure to compete successfully could have a material adverse effect on our future business and financial results.
If we cannot successfully execute on our strategy, our long-term business and financial results may be adversely impacted and we may not meet the financial guidance that we provide publicly.
Our strategy is designed to drive long-term sustainable growth as one global company delivering indispensable content through modern channels to serve new customer needs with our forward-leaning culture. We may not be able to successfully implement our strategic initiatives in accordance with our expectations, or in the timeframe we desire, which may result in an adverse impact on our business and financial results. In addition, the success of our strategic initiatives depends in part upon parties whom we do not control. For example, each year we negotiate new multi-year arrangements, or the renewal of existing arrangements, with alliance partners and other third parties in order to modernize our content delivery.  If our larger alliance partners or third parties fail to renew their arrangements with us, or they are unable to successfully fulfill their obligations, it could have a negative impact on our business and financial results. Furthermore, we cannot be certain that even upon successful execution of our strategy, we will continue to meet our customers’ changing needs, which could significantly harm our business and financial results.
In addition, in February 2018, we announced that we had recently engaged a management consulting firm to undertake a strategic and operational review of our business to help us find ways to accelerate value realization. Based on this review, we intend to undertake certain strategic initiatives which we believe will help us to achieve this goal.  We cannot guarantee we will be able to successfully implement these strategic initiatives. Furthermore, we could be unable to achieve, or may be delayed in achieving, some or all of the benefits from such initiatives. Additionally, even if we achieve these goals, we may not receive the expected benefits of the initiatives, or the costs of implementing these initiatives could exceed the related benefits.  If we are unable to successfully implement these initiatives, if these initiatives are not as successful as planned, or if we do not receive the expected benefits of these initiatives, we may not be able to meet our value realization expectations, which could in turn adversely affect our business.
We also provide financial guidance and metrics to the public which are based, among other things, upon our assumptions regarding our expected financial performance.  These include, for example, assumptions regarding our ability to grow revenue and operating income, and to achieve desired tax rates and to generate free cash flow. Such financial guidance and metrics may not always be accurate, due to our inability to meet the assumptions we make and the impact on our financial performance that could occur as a result of the various risks and uncertainties to our business as set forth in these risk factors and in our public filings with the SEC or otherwise. Our focus on, and dedication of resources to, achieving our strategy in order to drive long-term sustainable growth, or a failure to effectively implement our strategy, could further impact our ability to meet our financial guidance or our metrics in a given year. If we fail to meet the financial guidance that we provide or if we find it necessary to revise such guidance as we conduct our operations throughout the year, or if we fail to achieve sufficient performance against the metrics we have provided externally, the market value of our common stock or other securities could be materially adversely affected.

13




Recent changes in the Company's executive management team and Board of Directors may be disruptive to, or cause uncertainty in, its business, results of operations and the price of the Company's common stock.
On February 12, 2018, Robert P. Carrigan stepped down from his positions as Chief Executive Officer, Chairman of the Board of Directors and Director of the Company, and the Company’s Board of Directors appointed Thomas J. Manning, formerly Lead Director, as the Company’s interim Chief Executive Officer and Chairman of the Board. The Company's Board of Directors has commenced a search to recruit a permanent successor with the assistance of a leading executive search firm.  In connection with Mr. Manning’s appointment as interim Chief Executive Officer and Chairman of the Board, Mr. Manning was removed from the role as Lead Director, and the Company’s Board of Directors appointed James N. Fernandez as the Lead Director.  These changes in the Company's executive management team and to the Board of Directors, may be disruptive to, or cause uncertainty in, the Company's business, and any additional changes to the executive management team or the Board of Directors could have a negative impact on the Company's ability to manage and grow its business effectively. In addition, if the Company is not effective in succession planning, there may be a negative impact on the Company's ability to successfully hire for key executive management roles, including the Chief Executive Officer position, in a timely manner. Any such disruption or uncertainty or difficulty in efficiently and effectively filling key roles could have a material adverse impact on the Company's results of operations and the price of the Company's common stock.
We may lose key business assets or suffer interruptions in product delivery, including loss of data center capacity or the interruption of telecommunications links, the Internet, or power sources which could significantly impede our ability to do business.
Our operations depend on our ability to protect data centers and related technology against damage from hardware failure, fire, power loss, telecommunications failure, impacts of terrorism, breaches in security (such as the actions of computer hackers), the theft of services, natural disasters, or other disasters. The online services we provide are also completely dependent on cloud services and links to telecommunications providers. We generate a significant amount of our revenue through our support centers and Internet sites that we use in the acquisition of new customers, fulfillment of services and responding to customer inquiries. We may not have sufficient redundant infrastructure to prevent a loss or failure across the full application and support sites to recover access in a timely manner. Any damage to, or failure by our service providers to properly maintain our data centers, telecommunications links or ability to provide access to our telesales centers or Internet sites could cause interruptions in operations that adversely affect our ability to meet our customers’ requirements and materially adversely affect our business and financial results.
A failure in the integrity of our databases or the systems upon which we rely could harm our brand and result in a loss of sales and an increase in legal claims.
The reliability of our solutions is dependent upon the integrity of the data in our global databases. A failure in the integrity of our databases, or an inability to ensure that our usage of data is consistent with any terms or restrictions on such use, whether inadvertently or through the actions of a third party, could harm us by exposing us to customer or third-party claims or by causing a loss of customer confidence in our solutions. We may experience an increase in risks to the integrity of our databases as we move toward real-time data feeds, including those from social media sources, and as we acquire content through the acquisitions of companies with existing databases that may not be of the same quality or integrity as our existing Dun & Bradstreet databases. In addition, although we are continually evolving the systems upon which we rely to sustain product delivery, meet customer demands and support the development of new solutions, certain of our existing infrastructure is comprised of complex legacy technology that requires time and investment to upgrade without disruption to the business. We have in the past been subject to customer and third-party complaints and lawsuits regarding our data, which have occasionally been resolved by the payment of monetary damages. We have also licensed, and we may license in the future, proprietary rights to third-parties. While we attempt to ensure that the quality of our brand is maintained by the third parties to whom we grant such licenses and by customers, they may take actions that could materially adversely affect the value of our proprietary rights or our reputation. It cannot be assured that these licensees and customers will take the same steps we have taken to prevent misappropriation of our data solutions or technologies.
Our brand and reputation are key assets and competitive advantages of our Company and our business may be affected by how we are perceived in the marketplace.
Our Brand and its attributes are key assets of the Company. Our ability to attract and retain customers is highly dependent upon the external perceptions of our level of data quality, effective provision of services, business practices, including the actions of our employees, third-party providers, members of the Worldwide Network and other brand licensees that are not consistent with Dun & Bradstreet’s policies and standards, and overall financial condition. Negative perception or publicity regarding these matters could damage our reputation with customers and the public, which could make it difficult for us to

14



attract and maintain customers. Adverse developments with respect to our industry may also, by association, negatively impact our reputation, or result in higher regulatory or legislative scrutiny. Negative perceptions or publicity could have a material adverse effect on our business and financial results.
We rely on annual contract renewals for a substantial part of our revenue, and our quarterly results may be significantly impacted by the timing of these renewals, including from various government institutions, a shift in product mix that results in a change in the timing of revenue recognition or a significant decrease in government spending.
We derive a substantial portion of our revenue from annual customer contracts, including from various government institutions. If we are unable to renew a significant number of these contracts, our revenue and results of operations would be negatively impacted. Such loss in renewals could result, for example, from the acquisition of one of our customers by a business that does not use our products, or the acquisition by an existing customer whose combined entity generates less revenue for us than was generated by the two distinct entities.  Similarly, an existing customer may cease to do business with us, or do less business with us, as a result of general economic conditions on their business, which could also push them toward a less expensive, lower quality provider. In addition, our results of operations from period to period may vary due to the timing of customer contract renewals or a change in our sales practices. As contracts are renewed, we have experienced, and may continue to experience, a shift in product mix underlying such contracts. This could result in the deferral of increased amounts of revenue into future periods as a larger portion of revenue is recognized over the term of our contracts rather than up front at contract signing or the acceleration of deferred revenue into an earlier reporting period, driven by a change in a customer’s usage patterns of our products. Although this may cause our financial results from period to period to vary substantially, such change in revenue recognition would not change the total revenue recognized over the life of our contracts. A reduction in government spending on our products could, however, have a material adverse impact on our business. We derive a portion of our revenue from direct and indirect sales to U.S., state, local and foreign governments and their respective agencies and our competitors are increasingly targeting such governmental agencies as potential customers. Such government contracts are subject to various procurement laws and regulations, as well as contractual provisions, and violations could result in the imposition of various civil and criminal penalties, termination of contracts, forfeiture of profits, suspension of payments, or suspension of future government contracting. In addition, governments continue to struggle with sustained debt and social obligations, and efforts to balance government deficits could result in lower spending by the government with Dun & Bradstreet. If we were to lose government customers to our competitors, or our government contracts are not renewed or are terminated, or we are suspended from government work, or our ability to compete for new contracts is adversely affected, our business and financial results could experience material adverse effects.
We may be adversely affected by the global economic environment and the evolving standards of markets in which we operate.
We operate in both emerging and mature global markets. 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 we may experience delays in payment or their inability to pay amounts owed to us. Customers are increasingly asking for delayed payment terms, which could impact our cash flows, our need for short-term borrowing, and possibly our ability to get paid. In addition, as the number of competitors increases, our competitive pressures intensify, including increasing price pressure. Also, our vendors may substantially increase their prices to us and without notice. Any such change in the behavior of our customers or vendors may materially adversely affect our earnings and cash flow. In addition, as we continue to compete in various emerging markets, potential customers may show a significant preference for local vendors. Our ability to compete in emerging markets depends on our ability to provide products in a manner that is sufficiently flexible to meet local needs, and to continue to undertake technological advances in local markets in a cost effective manner, utilizing local labor forces. If economic conditions in the U.S. and other key markets deteriorate, or we are not able to successfully compete in emerging markets, we may experience material adverse impacts to our business, operating results, and/or access to credit markets.
Changes in the legislative, regulatory and commercial environments in which we operate could adversely impact our ability to collect, compile, store, use, cross-border transfer, publish, and/or sell data and could impact our financial results.
Certain types of information we collect, compile, store, use, transfer, publish and/or sell are subject to regulation by governmental authorities in various jurisdictions in which we operate, particularly in our global markets. There are increasing legislative and regulatory actions regarding the governance of personal, credit and adverse data (that is, negative data about individuals), even in the context of businesses. These actions may result in new or amended laws and regulations or regulatory actions that could adversely impact our business. Legislation or regulatory actions regarding cyber-security, imposing licensing or record filing requirements, content restrictions, requiring access to our network to conduct security assessments, or requirements that databases containing information on local businesses or individuals be stored in-country and at times coupled with restrictions on exporting the data out of the country, increasing the rights of those who are the subject of data, and/or increasing restrictions on automated decision making could have a material adverse effect on our business and financial results.

15



In addition, any other legislation, court actions, or laws and regulations (such as the European Union’s General Data Protection Regulation, which will become effective in May 2018, requiring additional protections of certain personal information and carrying significant fines and sanctions for non-compliance), with respect to the collection, compilation, storage, use, cross-border transfer, publication and/or sale of credit-related, adverse, or personal information, or adverse publicity or litigation concerning the improper use or hacking of such information, could result in limitations being imposed on our operations, increased compliance or litigation costs and/or loss of revenue, which could have a material adverse effect on our business and financial results.
Governmental agencies and commercial entities from which we acquire data may seek to increase the costs we must pay to acquire, use and/or redistribute such data. Governmental agencies or laws may also limit or restrict access to, or use of, data and information that are currently publicly available, which could have a material adverse impact on our business and financial results. In addition, as more federal, state, and foreign governments continue to struggle with significant fiscal pressure, we may be faced with changes to tax laws that could have immediate negative consequences to our business. While we would seek to pass along any such cost increases or tax impacts to our customers or provide alternative services, there is no guarantee that we would be able to do so, given competitive pressures or other considerations. Should our proportion of multi-year contracts increase, our risk of not being able to recover such additional costs further increases.  Any such price increases or change to alternative services may result in reduced usage by our customers and/or loss of market share, which could have a material adverse effect on our business and financial results.
Acquisitions, joint ventures or similar strategic relationships, or dispositions of any of our businesses may disrupt or otherwise have a material adverse effect on our business and financial results.
As part of our strategy, we may seek to acquire other complementary businesses, products and technologies or enter into joint ventures or similar strategic relationships. We may also undertake a disposition of certain of our businesses. These transactions are subject to the following risks which could have a material adverse effect on our business and financial results:

Acquisitions, joint ventures or similar relationships or the disposition of any of our businesses may cause a disruption in our ongoing business, distract our management and make it difficult to maintain our standards, controls and procedures;

We may not be able to integrate successfully the services, content, including data, products and people, of any such transaction into our operations;

The acquisition of a third party that has operations in territories covered by one or more of our Worldwide Network partners may conflict with the terms of our agreements with such partners, and if a mutual resolution cannot be achieved, may cause us to realize less than the expected full value of the transaction, or may cause us not to do a transaction that we otherwise deem valuable to the business;

We could experience downgrades to our credit ratings as a result of these transactions which could increase our cost of funding;

We may not derive the revenue improvements, cost savings and other intended benefits of any such transaction; and

There may be risks, exposures and liabilities of acquired entities or other third-parties with whom we undertake a transaction, that may arise from such third-parties’ activities prior to undertaking a transaction with us and which we may not discover or fully understand through the due diligence process.
While we have certain contractual commitments with each of the third-party members of the Worldwide Network, we have no direct management control over such third-parties or other third-parties who conduct business under the Dun & Bradstreet brand name in local markets or who license and sell under the Dun & Bradstreet name, and the renewal by third-party members of the Worldwide Network of their agreements with Dun & Bradstreet is subject to mutual agreement.
The Worldwide Network is comprised of wholly-owned subsidiaries, joint ventures that we control or hold a minority interest in, and unaffiliated third-party members who conduct business using the Dun & Bradstreet brand in local markets. While third-party member participation in the Worldwide Network and certain of our relationships with other third-parties are governed by commercial services agreements and the use of our trademarks is governed by license agreements, we have no direct management control over these members or third-parties beyond the terms of the agreements. We license data to certain third-parties to be included in the data solutions that they sell to their customers and such arrangements may increase as a percentage of our total revenue in the future. We do not have direct control over such third-parties’ sales people or practices,

16



and their failure to successfully sell products which include our data will impact the revenue we receive and could have a material adverse effect on our business and financial results. Conversely, we license data from certain third-parties for inclusion in the data solutions that we sell to our customers, and while we have guidelines and quality control requirements in place, we do not have absolute control over such third-parties’ data collection and compliance practices. In addition, in certain markets we rely solely on correspondent coverage, with annual, rolling contracts which may or may not be renewed. As a result, actions or inactions taken by these third-parties or their failure to renew their contractual relationships with us could have a material adverse effect on our business and financial results. For example, one or more third-parties or members may:

Provide a product or service that does not adhere to our data quality standards;

Fail to comply with Dun & Bradstreet brand and communication standards or behave in a manner that tarnishes our brand;

Engage in illegal or unethical business or marketing practices;

Elect not to support new or revised products and services or other strategic initiatives or elect to operate on platforms and technologies that are incompatible with new developments that Dun & Bradstreet may rollout in our various markets from time to time;

Fail to execute subsequent agreements to remain a part of the Worldwide Network on terms and conditions that are mutually agreeable to Dun & Bradstreet, upon the expiration of their existing agreements;

Fail to execute other data or distribution contract requirements; or

Refuse to provide new sources of data.
Such actions or inactions could materially adversely impact our business and financial results directly or have an impact on customer confidence in the Dun & Bradstreet brand globally which could in turn, materially adversely impact our business and financial results.

Our businesses around the globe are subject to various risks associated with operations in foreign countries, which could materially adversely affect our business and financial results.
Our success depends in part on our various businesses around the globe. For each of the three years ended December 31, 2017, 2016 and 2015, our businesses outside of the U.S. accounted for 19%, 19% and 22% of total revenue, respectively. Our business in the U.S. is also dependent on our ability to provide information from other markets at a reasonable cost. These businesses are subject to many of the same challenges as our domestic business, as well as the following:

Our competition in Asian markets is primarily local, and our customers may have greater loyalty to our local competitors which may have a competitive advantage because they are not restricted by U.S. and foreign laws with which we require our businesses around the globe to comply, such as the FCPA;

Our data suppliers or partners in foreign markets may be subject to local regulation that could impact their ability to provide data to Dun & Bradstreet;

Although our services have not usually been regulated, governments may adopt legislation or regulations (such as the European Union’s General Data Protection Regulation), or we may learn that our current methods of operation violate existing legislation or regulations, governing the collection, compilation, storage, use, cross-border transfer, publication, and/or sale of the kinds of information we collect, compile, store, use, transfer cross border, publish, and/or sell, which could bar or impede our ability to operate and this could adversely impact our business;

Credit insurance is a significant credit risk mitigation tool in certain global markets that may reduce the demand for our Risk Management Solutions; and

In some markets, key data elements are generally available from public-sector sources, thus reducing a customer’s need to purchase that data from us.
In addition, the FCPA and anti-bribery and anti-corruption laws in other jurisdictions generally prohibit improper payments to government officials or other persons for the purpose of obtaining or retaining business. We cannot assure you that our

17



policies and procedures will always protect us from acts committed by our employees or third-parties, such as our vendors, brokers and agents. From time to time, under appropriate circumstances, we have undertaken and will continue to undertake investigations of the relevant facts and circumstances and, when appropriate, take remedial actions, which can be expensive and require significant time and attention from senior management, and which may also lead to disclosure to the SEC and/or DOJ. Violations of these laws may result in criminal or civil sanctions, which could disrupt our business and result in a material adverse effect on our business and financial results.
Our global strategy includes leveraging our Worldwide Network to improve our data quality. We form and manage strategic relationships to create a competitive advantage for us over the long term; however, these strategic relationships may not be successful or may be subject to ownership change.
The issue of data privacy is an increasingly important area of public policy in various global markets, and we operate in an evolving regulatory environment. If our existing business practices were deemed to violate existing data privacy laws or such laws as they may evolve from time to time, our business or the business of third-parties on whom we depend could be adversely impacted.
Our operating results could be negatively affected by a variety of other factors affecting our foreign operations, many of which are beyond our control. These factors may include currency fluctuations, economic, political or regulatory conditions, competition from government agencies in a specific country or region, trade protection measures and other regulatory requirements. Additional risks inherent in global business activities generally include, among others:

The costs and difficulties of managing global operations and strategic alliances, including our Worldwide Network;

The costs and difficulties of enforcing agreements, collecting receivables and protecting assets, especially our intellectual property rights, in non-U.S. legal systems; and

The need to comply with a broader array of regulatory and licensing requirements, the failure of which could result in fines, penalties or business suspensions.
We may not be able to attract and retain qualified people, which could impact the quality of our performance and customer satisfaction.
Our success and financial results depend in part on our continuing ability to attract, retain and motivate highly qualified people at all levels. Competition for these individuals is intense, especially in roles requiring skills, capabilities and experiences that are in high demand. As a priority, we continue to focus on attracting and retaining our key people, building a strong employment brand and creating a forward-leaning culture. Any inability to retain or attract highly-qualified individuals could have a material adverse effect on our business and financial results.
Our retirement and post retirement pension plans are subject to financial market risks that could adversely affect our future results of operations and cash flow.
We have significant retirement and post retirement pension plan assets and funding obligations. The performance of the financial and capital markets impacts our plan expenses and funding obligations. Significant decreases in market interest rates, decreases in the fair value of plan assets and investment losses on plan assets will increase our funding obligations, and could adversely impact our results of operations and cash flows.
We are involved in legal proceedings that could have a material adverse impact on us.
We are involved in legal proceedings, claims and litigation that arise in the ordinary course of business. As discussed in greater detail under “Note 13. Contingencies” in “Notes to Consolidated Financial Statements” in Part II, Item 8. of this Annual Report on Form 10-K, certain of these matters could materially adversely affect our business and financial results.
Item 1B.
Unresolved Staff Comments
Not applicable.
Item 2.
Properties
Our corporate office is located at 103 JFK Parkway, Short Hills, New Jersey 07078, in a 123,000 square-foot property that we lease. This property also serves as our executive offices. In December 2014, we supplemented this space with the addition of 69,280 square feet of leased office space located at 101 JFK Parkway, Short Hills, New Jersey. Both of these leases are co-terminus and expire on March 31, 2023, with two five-year renewal options.

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Our other properties, most of which are leased, are geographically distributed worldwide to meet sales and operating requirements. We consider all of these properties to be both suitable and adequate to meet current operating requirements. As of December 31, 2017, the most notable of these other properties included the following sites:
A 178,330 square-foot leased office building in Center Valley, Pennsylvania, housing various sales, emerging businesses, finance, fulfillment and data operations groups;

A 61,471 square-foot leased office building in Austin, Texas, housing technology development, certain product development and sales operations;

A 51,810 square-foot leased space in Marlow, England, housing our U.K. business, global technology and certain other international groups; and

A 47,782 square-foot leased space in Dublin, Ireland, housing technology development, data operations and sales operations groups.
Item 3.
Legal Proceedings
Information in response to this Item is included in Part II, Item 8. “Note 13. Contingencies” and is incorporated by reference into Part I of this Annual Report on Form 10-K.
Item  4.
Mine Safety Disclosures
Not applicable.

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PART II

Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is listed on the New York Stock Exchange and trades under the symbol DNB. We had 1,477 shareholders of record as of December 31, 2017.
The following table summarizes the high and low sales prices for our common stock, as reported in the periods shown:
 
2017
 
2016
 
High
 
Low
 
High
 
Low
First Quarter
$
125.41

 
$
100.75

 
$
103.52

 
$
87.91

Second Quarter
$
113.17

 
$
102.24

 
$
128.36

 
$
102.71

Third Quarter
$
116.41

 
$
105.35

 
$
140.73

 
$
122.14

Fourth Quarter
$
123.11

 
$
112.95

 
$
135.52

 
$
115.60

We paid quarterly dividends to our shareholders totaling $74.2 million, $70.5 million and $66.7 million during the years ended December 31, 2017, 2016 and 2015, respectively. In February 2018, we declared a dividend of $0.5225 per share for the first quarter of 2018. This cash dividend will be payable on March 9, 2018 to shareholders of record at the close of business on February 22, 2018.
Issuer Purchases of Equity Securities
The following table provides information about purchases made by us or on our behalf during the quarter ended December 31, 2017 of shares of equity that are registered pursuant to Section 12 of the Exchange Act:
Period
Total Number of Shares Purchased (a)
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)
 
Approximate Dollar Value of Currently Authorized Shares That May Yet Be Purchased Under the Plans or Programs (a)
 
(Dollar amounts in millions, except share data)
October 1 - 31, 2017

 
$

 

 
$

November 1 - 30, 2017

 
$

 

 
$

December 1 - 31, 2017

 
$

 

 
$

 

 
$

 

 
$
100.0


(a)
In August 2014, our Board of Directors approved a $100 million share repurchase program to mitigate the dilutive effect of shares issued under our stock incentive plans and Employee Stock Purchase Program, and to be used for discretionary share repurchases from time to time. The $100 million share repurchase program will remain open until it has been fully utilized. There is currently no definitive timeline under which the program will be completed. As of December 31, 2017, we had not yet commenced share repurchases under this program.


20



FINANCIAL PERFORMANCE COMPARISON GRAPH*
SINCE DECEMBER 31, 2012
In accordance with SEC rules, the graph below compares the Company’s cumulative total shareholder return against the cumulative total return of the Standard & Poor’s MidCap 400 Index and a published industry index starting on December 31, 2012. Our past performance may not be indicative of future performance.

As an industry index, the Company chose the S&P 400 Commercial & Professional Services index, a subset of the S&P MidCap 400 Index that includes companies that provide business-to-business services.
On April 5, 2017, we became listed within the S&P MidCap 400 Index. Prior to such date, we were listed within the S&P 500 Index. Accordingly, and for comparative purposes to our prior year presentation, we have included in the following graph the performances of the S&P MidCap 400 Index, S&P 400 Commercial & Professional Services, S&P 500 Commercial & Professional Services and the S&P 500 Index.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG DUN & BRADSTREET, S&P MIDCAP 400 INDEX, S&P 400 COMMERCIAL & PROFESSIONAL SERVICES, S&P 500 COMMERCIAL & PROFESSIONAL SERVICES AND THE S&P 500 INDEX

stockperformancegraph17v2.jpg
*
Assumes $100 invested on December 31, 2012, and reinvestment of dividends.

21



 Item 6.      Selected Financial Data
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
2014
 
2013
 
(Amounts in millions, except per share data)
Results of Operations:
 
 
 
 
 
 
 
 
 
Revenue
$
1,742.5

 
$
1,703.7

 
$
1,637.1

 
$
1,584.5

 
$
1,558.4

Costs and Expenses
1,359.6

 
1,344.5

 
1,300.1

 
1,173.1

 
1,132.3

Operating Income (1)
382.9

 
359.2

 
337.0

 
411.4

 
426.1

Non-Operating Income (Expense) - Net (2)
(60.2
)
 
(155.6
)
 
(57.0
)
 
(71.2
)
 
(39.8
)
Income Before Provision for Income Taxes and Equity in Net Income of Affiliates
322.7

 
203.6

 
280.0

 
340.2

 
386.3

Provision for Income Taxes (3)
179.7

 
99.9

 
74.2

 
54.3

 
135.6

Equity in Net Income of Affiliates
2.8

 
2.8

 
2.7

 
1.9

 
1.6

Net Income (Loss) from Continuing Operations
145.8

 
106.5

 
208.5

 
287.8

 
252.3

Less: Net (Income) Loss Attributable to the Noncontrolling Interest
(4.1
)
 
(5.0
)
 
(4.3
)
 
(3.5
)
 
(3.6
)
Net Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet
141.7

 
101.5

 
204.2

 
284.3

 
248.7

Income from Discontinued Operations, Net of Income Taxes (4)

 

 
2.1

 
10.1

 
9.8

Loss on Disposal of Business, Net of Income Taxes
(0.8
)
 
(4.1
)
 
(37.5
)
 

 

Income (Loss) from Discontinued Operations, Net of Income Taxes (5)
(0.8
)
 
(4.1
)
 
(35.4
)
 
10.1

 
9.8

Net Income (Loss) Attributable to Dun & Bradstreet
$
140.9

 
$
97.4

 
$
168.8

 
$
294.4

 
$
258.5

Basic Earnings (Loss) Per Share of Common Stock:
 
 
 
 
 
 
 
 
 
Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet Common Shareholders
$
3.84

 
$
2.78

 
$
5.66

 
$
7.79

 
$
6.36

Income (Loss) from Discontinued Operations Attributable to Dun & Bradstreet Common Shareholders
(0.02
)
 
(0.11
)
 
(0.98
)
 
0.27

 
0.25

Net Income (Loss) Attributable to Dun & Bradstreet Common Shareholders
$
3.82

 
$
2.67

 
$
4.68

 
$
8.06

 
$
6.61

Diluted Earnings (Loss) Per Share of Common Stock:
 
 
 
 
 
 
 
 
 
Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet Common Shareholders
$
3.81

 
$
2.76

 
$
5.61

 
$
7.71

 
$
6.29

Income (Loss) from Discontinued Operations Attributable to Dun & Bradstreet Common Shareholders
(0.02
)
 
(0.11
)
 
(0.97
)
 
0.28

 
0.25

Net Income (Loss) Attributable to Dun & Bradstreet Common Shareholders
$
3.79

 
$
2.65

 
$
4.64

 
$
7.99

 
$
6.54

 
 
 
 
 
 
 
 
 
 
Other Data:
 
 
 
 
 
 
 
 
 
Weighted Average Number of Shares Outstanding - Basic
36.9

 
36.5

 
36.1

 
36.5

 
39.1

Weighted Average Number of Shares - Diluted
37.2

 
36.8

 
36.4

 
36.9

 
39.5

 
 
 
 
 
 
 
 
 
 
Cash Dividends Paid per Common Share
$
2.01

 
$
1.93

 
$
1.85

 
$
1.76

 
$
1.60

Cash Dividends Declared per Common Share
$
2.01

 
$
1.93

 
$
1.85

 
$
1.76

 
$
1.60

Other Comprehensive Income, Net of Tax:
 
 
 
 
 
 
 
 
 
Net Income (Loss) from Continuing Operations
$
145.8

 
$
106.5

 
$
208.5

 
$
287.8

 
$
252.3

Income (Loss) from Discontinued Operations, Net of Income Taxes
(0.8
)
 
(4.1
)
 
(35.4
)
 
10.1

 
9.8

Net Income (Loss)
145.0

 
102.4

 
173.1

 
297.9

 
262.1

Foreign Currency Translation Adjustments, no Tax Impact
48.9

 
24.9

 
(59.0
)
 
(46.9
)
 
(35.6
)
Defined Benefit Pension Plans:
 
 
 
 
 
 
 
 
 
Prior Service (Credits) Costs, Net of Tax Income (Expense) (6)
(0.4
)
 
(0.9
)
 
(0.9
)
 
1.8

 
(5.6
)
Net Actuarial Gain (Loss), Net of Tax Income (Expense) (7)
35.6

 
(8.7
)
 
15.8

 
(138.3
)
 
154.4

Derivative Financial Instruments, Net of Tax Income (Expense) (8)

 

 

 
(0.1
)
 

Total Other Comprehensive Income (Loss), Net of Tax
84.1

 
15.3

 
(44.1
)
 
(183.5
)
 
113.2

Comprehensive Income (Loss), Net of Income Taxes
229.1

 
117.7

 
129.0

 
114.4

 
375.3

Less: Comprehensive Income (Loss) Attributable to the Noncontrolling Interest
(5.0
)
 
(4.4
)
 
(3.6
)
 
(3.3
)
 
(3.5
)
Comprehensive Income (Loss) Attributable to Dun & Bradstreet
$
224.1

 
$
113.3

 
$
125.4

 
$
111.1

 
$
371.8

 
 
 
 
 
 
 
 
 
 
Balance Sheet:
 
 
 
 
 
 
 
 
 
Total Assets (9) (10)
$
2,480.9

 
$
2,209.2

 
$
2,266.5

 
$
1,981.9

 
$
1,884.6

Long-Term Debt (10)
$
1,645.6

 
$
1,594.5

 
$
1,797.0

 
$
1,348.3

 
$
1,510.4

Total Dun & Bradstreet Shareholders Equity (Deficit)
$
(827.3
)
 
$
(1,002.0
)
 
$
(1,116.8
)
 
$
(1,203.3
)
 
$
(1,048.4
)
Noncontrolling Interest
$
16.1

 
$
14.2

 
$
11.5

 
$
8.7

 
$
6.1

Total Equity (Deficit)
$
(811.2
)
 
$
(987.8
)
 
$
(1,105.3
)
 
$
(1,194.6
)
 
$
(1,042.3
)

22




(1) Restructuring, non-core gains and (charges) and acquisition and divestiture-related charges(a) included in Operating Income:
 
For the Years Ended December 31,
Gain (Charge):
2017
 
2016
 
2015
 
2014
 
2013
Restructuring Charges
$
(32.1
)
 
$
(22.1
)
 
$
(32.3
)
 
$
(14.9
)
 
$
(13.9
)
Legal and Other Professional Fees and Shut-Down Costs Related to Matters in China
$
(0.2
)
 
$
(2.0
)
 
$
(1.6
)
 
$
(3.7
)
 
$
(7.4
)
Decrease (Increase) of Accrual for Legal Matters
$
8.0

 
$
(26.0
)
 
$

 
$

 
$

Acquisition/Divestiture Related Costs
$
(15.8
)
 
$
(9.5
)
 
$
(21.9
)
 
$

 
$

Amortization of Acquisition Related Intangibles
$
(31.5
)
 
$
(24.2
)
 
$
(17.8
)
 
$

 
$

Impairment of Assets
$

 
$
(2.4
)
 
$
(6.8
)
 
$
(7.3
)
 
$
(33.3
)
(a)
See Item 7. included in this Annual Report on Form 10-K for further detail.

(2)
Restructuring, non-core gains and (charges) and acquisition and divestiture-related charges(a) included in Non-Operating Income (Expense) – Net:
 
For the Years Ended December 31,
Gain (Charge):
2017
 
2016
 
2015
 
2014
 
2013
Effect of Legacy Tax Matters (b)
$

 
$
(1.7
)
 
$
(6.9
)
 
$
(28.6
)
 
$
0.8

Gain (Loss) on Sale of Businesses (c)
$
(0.7
)
 
$
(95.1
)
 
$

 
$

 
$

Gain (Loss) on Investment
$

 
$
(6.7
)
 
$
(1.2
)
 
$

 
$

Acquisition/Divestiture Related Costs
$

 
$
(0.1
)
 
$
(0.3
)
 
$

 
$

(a)
See Item 7. included in this Annual Report on Form 10-K for further detail.
(b) During the year ended December 31, 2016, we recognized the reduction of a contractual receipt under a tax allocation agreement between Moody’s Corporation and Dun & Bradstreet as a result of the expiration of a statute of limitations for the 2012 tax year.
During the year ended December 31, 2015, we recognized the reduction of a contractual receipt under a tax allocation agreement between Moody’s Corporation and Dun & Bradstreet as a result of the expiration of a statute of limitations for the 2011 tax year.
During the year ended December 31, 2014, we recognized the reduction of a contractual receipt under a tax allocation agreement between Moody’s Corporation and Dun & Bradstreet as a result of the effective settlement of audits for the 2007 - 2009 tax years and the expiration of a statute of limitations for the 2010 tax year.
(c)
During the year ended December 31, 2016, we recognized a total pre-tax loss on the sale of our operations Belgium, Netherlands and Latin America. During the year ended December 31, 2017, we recorded an additional pre-tax loss of $0.7 million on the sale of our Belgium and Netherlands businesses related to a working capital adjustment. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
(3)
Restructuring, non-core gains and (charges) and acquisition and divestiture-related charges(a) included in Provision for Income Taxes:
 
For the Years Ended December 31,
Tax Benefit (Expense):
2017
 
2016
 
2015
 
2014
 
2013
Restructuring Charges
$
10.9

 
$
7.7

 
$
11.7

 
$
4.1

 
$
3.6

Legal and Other Professional Fees and Shut-Down Costs Related to Matters in China
$
0.1

 
$
0.7

 
$
0.8

 
$
1.3

 
$
2.8

Accrual for Legal Matters
$
(0.1
)
 
$
3.4

 
$

 
$

 
$

Gain (Loss) on Sale of Businesses
$
0.2

 
$
(2.7
)
 
$

 
$

 
$

Acquisition/Divestiture Related Costs
$
2.0

 
$
1.6

 
$
3.8

 
$

 
$

Amortization of Acquisition Related Intangibles
$
11.7

 
$
9.1

 
$
6.8

 
$

 
$

Cash Repatriation Tax Benefit
$

 
$

 
$
2.9

 
$

 
$

Impairment of Assets
$

 
$

 
$
2.1

 
$
2.8

 
$
6.2

Gain (Loss) on Investment
$

 
$

 
$
0.3

 
$

 
$

Effect of Legacy and Other Tax Matters
$

 
$
3.4

 
$
14.3

 
$
65.8

 
$
(0.8
)
Impact of the 2017 Tax Cuts and Jobs Act
$
80.7

 
$

 
$

 
$

 
$

(a)
See Item 7. included in this Annual Report on Form 10-K for further detail.


23



(4) Tax Benefit (Expense) of $2.2 million, $1.7 million and $0.1 million during the years ended December 31, 2015, 2014 and 2013, respectively.
(5) In June 2015, we divested our operations in Australia and New Zealand (“ANZ”) for $169.8 million, which was part of our Non-Americas segment. Accordingly, we have reclassified the historical financial results of our business in ANZ as discontinued operations for all periods presented in this Annual Report on Form 10-K and recorded a loss on the disposal of the business of $0.8 million, $4.1 million and $37.5 million (both pre-tax and after tax) for the years ended December 31, 2017, 2016 and 2015, respectively, in the consolidated statement of operations and comprehensive income (loss). See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
(6)
Tax Benefit (Expense) of $0.2 million, $0.4 million, $0.5 million, $(1.1) million and $3.3 million during the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively. See Note 10 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
(7)
Tax Benefit (Expense) of $(15.3) million, $4.3 million, $(9.6) million, $84.9 million and $(91.7) million during the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively. See Note 10 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
(8) Tax Benefit (Expense) of $(0.1) million for the year ended December 31, 2014.
(9) During the year ended December 31, 2017, we acquired Avention, Inc. During the year ended December 31, 2015, we acquired NetProspex and Dun & Bradstreet Credibility Corp. See Note 18 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
(10)
We adopted Accounting Standards Update (“ASU”) No. 2015-03 “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” in the first quarter of 2016. As a result, the prior period consolidated balance sheets were adjusted. The impact resulted in adjustments of $7.1 million, $3.9 million and $5.6 million to the consolidated balance sheet at December 31, 2015, 2014 and 2013, respectively.



24



Item 7.     Managements Discussion and Analysis of Financial Condition and Results of Operations
How We Manage Our Business
In addition to reporting generally accepted accounting principles in the United States of America (“GAAP”) results, the Company evaluates performance and reports on a total company basis and on a business segment level basis its results (such as revenue, operating income, operating income growth, operating margin, net income, tax rate and diluted earnings per share) on an “As Adjusted” basis. The term “As Adjusted” refers to the following: the elimination of the effect on revenue due to purchase accounting fair value adjustments to deferred revenue; restructuring charges; other non-core gains and charges that are not in the normal course of our business (such as gains and losses on sales of businesses, impairment charges, effect of significant changes in tax laws and material tax and legal settlements); acquisition and divestiture-related fees (such as costs for bankers, legal fees, due diligence, retention payments and contingent consideration adjustments); and acquisition-related intangible amortization expense. A recurring component excluded from our “As Adjusted” results is our restructuring charges, which we believe do not reflect our underlying business performance. Such charges are variable from period to period based upon actions identified and taken during each period. Additionally, our “As Adjusted” results exclude the results of Discontinued Operations. Management reviews operating results on an “As Adjusted” basis on a monthly basis and establishes internal budgets and forecasts based upon such measures. Management further establishes annual and long-term compensation such as salaries, target cash bonuses and target equity compensation amounts based on performance on an “As Adjusted” basis and a significant percentage weight is placed upon performance on an “As Adjusted” basis in determining whether performance objectives have been achieved. Management believes that by reflecting these adjustments to our GAAP financial measures, business leaders are provided incentives to recommend and execute actions that support our long-term growth strategy rather than being influenced by the potential impact one of these items can have in a particular period on their compensation. The Company adjusts for these items because they do not reflect the Companys underlying business performance and they may have a disproportionate positive or negative impact on the results of its ongoing business operations. We believe that the use of our non-GAAP financial measures provides useful supplemental information to our investors.
We also isolate the effects of changes in foreign exchange rates on our revenue growth because we believe it is useful for investors to be able to compare revenue from one period to another, both after and before the effects of foreign exchange. The change in our operating performance attributable to foreign currency rates is determined by converting both our prior and current periods by a constant rate. As a result, we monitor our “As Adjusted” revenue growth both after and before the effects of foreign exchange.
We also analyze “As Adjusted” revenue growth on an organic basis because management believes this information provides important insight into the underlying/ongoing performance of the business. Organic revenue excludes the estimated revenue contributed from acquired businesses for one year from the date of the acquisition and net divested revenue which we define as the historical revenues from the divested businesses net of the annual ongoing future revenue streams resulting from the commercial arrangements entered into in connection with such divestitures.
We may from time to time use the term sales, which we define as the annual value of committed customer contracts. This term is often referred to as bookings or commitments by other companies.
In June 2015, we divested our operations in Australia and New Zealand (“ANZ”) for $169.8 million, which was part of our Non-Americas segment. Accordingly, the historical financial results of our business in ANZ are classified as discontinued operations for all periods presented as set forth in Item 8. of this Annual Report on Form 10-K. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
In the fourth quarter of 2016, we divested our operations in the Netherlands and Belgium (“Benelux”) and Latin America, which were reported within our Non-Americas and Americas segments, respectively.
We monitor free cash flow as a measure of our business. We define free cash flow as net cash provided by operating activities minus capital expenditures and additions to computer software and other intangibles. Free cash flow measures our available cash flow for potential debt repayment, acquisitions, share repurchases, dividend payments and additions to cash, cash equivalents and short-term investments. We believe free cash flow to be relevant and useful to our investors as this measure is used by our management in evaluating the funding available after supporting our ongoing business operations and our portfolio of investments.
Free cash flow should not be considered as a substitute measure for, or superior to, net cash flows provided by operating activities, investing activities or financing activities. Therefore, we believe it is important to view free cash flow as a complement to the consolidated statements of cash flows.

25



We also monitor deferred revenue after adjusting for the effect of foreign exchange, dispositions, acquisitions and the impacts of the write-down of deferred revenue due to purchase accounting.
We report and monitor our revenue performance as Risk Management Solutions and Sales & Marketing Solutions. Within Risk Management Solutions, we monitor the performance as Trade Credit and Other Enterprise Risk Management. Trade Credit represents our commercial credit products such as D&B Credit Suite (which includes D&B Credit and DNBi® solutions), and “Other Trade Credit” solutions, which are products and services used to manage credit risk and support our customers’ internal credit risk decisioning process. Other Enterprise Risk Management includes all of our remaining Risk Management products, such as our compliance, supply chain, credit on self and D&B Direct risk solutions. Effective January 1, 2017, we began managing and reporting our Sales and Marketing Solutions as Sales Acceleration and Advanced Marketing Solutions. Sales Acceleration includes solutions designed to align sales and marketing teams around the same refined and inter-connected information (data that is current, tied to buying signals, and delivered with context) to shorten sales cycles, increase win rates, and accelerate revenue growth more quickly. Our customers want to target more intelligently to enhance sales productivity; that is to know who they are selling to, what their customers might be buying, how things are changing at their customers’ companies, where their customers have purchased before, and how to most efficiently engage with them. We provide these solutions through applications such as D&B Hoovers Suite, as well as direct access to our contact data. Advanced Marketing Solutions consists of our Master Data solutions, which enable our customers to integrate and organize data to create a single view of customers and prospects, enrich data, continuously manage data quality and link company identity and hierarchy. It also consists of Audience Solutions products, which use data and analytics to fuel enhanced programmatic targeting and web visitor intelligence.
We also evaluate our business and provide the following supplemental revenue metrics. For Trade Credit, we further provide revenue for the D&B Credit Suite and Other Trade Credit. Prior to January 1, 2017, the D&B Credit Suite was referred to as DNBi®. Also effective January 1, 2017, we began providing a new revenue metric called D&B Hoovers Suite. This new metric encompasses our legacy Hoover’s product, our new D&B Hoovers product, our Salesforce alliance revenue through data.com and our Avention, Inc. (“Avention”) product portfolio.
Management believes that these measures provide further insight into our performance and the growth of our business.
We no longer report our Sales and Marketing Solutions as Traditional Prospecting Solutions or use the prior definition of Advanced Marketing Solutions and we no longer report our total revenue on a Direct or Alliances & Partners basis.
Where appropriate, we have reclassified certain prior year amounts to conform to the current year presentation.
The adjustments discussed herein to our results as determined under GAAP are among the primary indicators management uses as a basis for our planning and forecasting of future periods, to allocate resources, to evaluate business performance and, as noted above, for compensation purposes. However, these financial measures (e.g., results on an “As Adjusted” basis and free cash flow) are not prepared in accordance with GAAP, and should not be considered in isolation or as a substitute for total revenue, operating income, operating income growth, operating margin, net income, tax rate, diluted earnings per share, or net cash provided by operating activities, investing activities and financing activities prepared in accordance with GAAP. In addition, it should be noted that because not all companies calculate these financial measures similarly, or at all, the presentation of these financial measures is not likely to be comparable to similar measures of other companies.
See “Results of Operations” below for a discussion of our results reported on a GAAP basis.
Overview
We manage and report our business through the following two segments:
Americas, which consists of our operations in the United States (“U.S.”), Canada, and our Latin America Worldwide Network (we divested our Latin America operations in September 2016); and

Non-Americas, which consists of our operations in the United Kingdom (“U.K.”), Greater China, India and our European and Asia Pacific Worldwide Networks (we divested our operations in Benelux in November 2016 and in ANZ in June 2015).
The financial statements of our subsidiaries outside of the U.S. and Canada reflect a fiscal year ended November 30 to facilitate the timely reporting of our consolidated financial results and consolidated financial position.

26



The following table presents the contribution by segment to revenue:
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
Americas
83
%
 
83
%
 
81
%
Non-Americas
17
%
 
17
%
 
19
%
The following table presents contributions by customer solution set to revenue:
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
Revenue by Customer Solution Set:
 
 
 
 
 
Risk Management Solutions
58
%
 
59
%
 
60
%
Sales & Marketing Solutions
42
%
 
41
%
 
40
%
Our customer solution sets are discussed in greater detail in “Item 1. Business” of this Annual Report on Form 10-K.
Critical Accounting Policies and Estimates
In preparing our consolidated financial statements and accounting for the underlying transactions and balances reflected therein, we have applied the significant accounting policies described in Note 1 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K. Of those policies, we consider the policies described below to be critical because they are both most important to the portrayal of our financial condition and results, and they require management’s subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We base our estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
If actual results in a given period ultimately differ from previous estimates, the actual results could have a material impact on such period.
We have discussed the selection and application of our critical accounting policies and estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed the disclosure regarding critical accounting policies and estimates as well as the other sections in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Pension and Postretirement Benefit Obligations
Through June 30, 2007, we offered coverage to substantially all of our U.S. based employees under a defined benefit plan called The Dun & Bradstreet Corporation Retirement Account (“U.S. Qualified Plan”). Prior to that time, the U.S. Qualified Plan covered active and retired employees. The benefits to be paid upon retirement were based on a percentage of the employee’s annual compensation. The percentage of compensation allocated annually to a retirement account ranged from 3% to 12.5% based on age and years of service. Amounts allocated under the U.S. Qualified Plan also receive interest credits based on the 30-year Treasury rate or equivalent rate published by the Internal Revenue Service. Pension costs are determined actuarially and funded in accordance with the Internal Revenue Code.
We also maintain supplemental and excess plans in the United States (“U.S. Non-Qualified Plans”) to provide additional retirement benefits to certain key employees of the Company. These plans are unfunded, pay-as-you-go plans. The U.S. Qualified Plan and the U.S. Non-Qualified Plans account for approximately 71% and 14% of our pension obligation, respectively, at December 31, 2017.
Effective June 30, 2007, we amended the U.S. Qualified Plan and one of the U.S. Non-Qualified Plans, known as the U.S. Pension Benefit Equalization Plan (the “PBEP”). Any pension benefit that had been accrued through such date under the two plans was “frozen” at its then current value and no additional benefits, other than interest on such amounts, will accrue under the U.S. Qualified Plan and the PBEP. Effective April 2011, we amended our Executive Retirement Plan to close the plan to new participants. Our employees in certain of our international operations are also provided with retirement benefits through defined benefit plans, representing the remaining balance of our pension obligations.
We also provide various health care benefits for retirees. U.S. based employees, hired before January 1, 2004, who retire with 10 years of vesting service after age 45, are eligible to receive benefits. Postretirement benefit costs and obligations are determined actuarially. In July 2014, we amended our post-65 retiree health plan to eliminate our group-based retiree medical

27



and prescription plans effective December 31, 2014. Effective January 1, 2015, we provide eligible retirees and dependents age 65 or older access to coverage in the individual Medicare market. We also provide an annual contribution towards retirees’ premiums and other out-of-pocket costs.
Certain of our non-U.S. based employees receive postretirement benefits through government-sponsored or administered programs.
The key assumptions used in the measurement of the pension and postretirement obligations and net periodic pension and postretirement cost are:
Expected long-term rate of return on pension plan assets, which is based on a target asset allocation as well as expected returns on asset categories of plan investments;

Discount rate, which is used to measure the present value of pension plan obligations and postretirement health care obligations. The discount rates are derived using a yield curve approach which matches projected plan benefit payment streams with bond portfolios, reflecting actual liability duration unique to our plans;

Mortality rates, which are used to estimate life expectancy of plan participants, determining the period over which retirement plan benefits are expected to be paid; and

Rates of compensation increase and cash balance accumulation/conversion rates, which are based on an evaluation of internal plans and external market indicators.
We believe that the assumptions used are appropriate, though changes in these assumptions would affect our pension and other postretirement benefit costs.
The factor with the most immediate impact on our pension costs is a change in the expected long-term rate of return on pension plan assets for the U.S. Qualified Plan. This assumption was 7.00%, 7.25% and 7.75% for 2017, 2016 and 2015, respectively. For 2018, we will continue to use a long-term rate of return of 7.00%. The 7.00% assumption represents our best estimate of the expected long-term future investment performance of the U.S. Qualified Plan, after considering expectations for future capital market returns and the plan’s asset allocation. As of December 31, 2017, the U.S. Qualified Plan was 55% invested in publicly traded equity securities, 41% invested in debt securities and 4% invested in alternative investments (e.g. real estate).
A change in the discount rate also has an effect on our pension costs and financial position. Effective January 1, 2016, we changed the approach used to measure service and interest cost components of net periodic benefit costs for our pension and postretirement benefit plans. Previously, we measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. Beginning in 2016, we elected to measure service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows (“Spot Rate Approach”). We believe the new approach provides a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows and their corresponding spot rates on the yield curve. This change did not affect the measurement of our plan obligations and it was accounted for as a change in accounting estimate which was applied prospectively. This change in estimate reduced our 2016 pension and postretirement benefit cost by approximately $14 million.
Changes in the above key assumptions for our U.S. plans would have the following effects:
 
 
Long-Term Rate of Return
 
Discount Rate
 
 
25 Basis Point
 
25 Basis Point
 
 
Increase
 
Decrease
 
Increase
 
Decrease
Increase (Decrease) in Pension Cost
 
$
(3.0
)
 
$
3.0

 
$
1.0

 
$
(1.0
)
Increase (Decrease) in Pension Obligation
 
N/A

 
N/A

 
$
(45.0
)
 
$
47.0

Differences between the assumptions stated above and actual experience could affect our pension and postretirement benefit costs. When actual plan experience differs from the assumptions used, we experience actuarial gains or losses. These gains and losses are aggregated and amortized generally over the average future service periods or life expectancy of plan participants to the extent that such gains or losses exceed a “corridor.” The purpose of the corridor is to reduce the volatility caused by the difference between actual experience and the pension-related assumptions noted above, on a plan-by-plan basis. For all of our pension plans, total actuarial losses that have not been recognized in our pension costs as of December 31, 2017

28



and 2016 were $1,080.8 million and $1,132.5 million, respectively, of which $850.9 million and $894.9 million, respectively, were attributable to the U.S. Qualified Plan, $131.0 million and $122.8 million, respectively, were attributable to the U.S. Non-Qualified Plans, and the remainder was attributable to the non-U.S. pension plans. See discussion in Note 10 to our consolidated financial statements included in Item 8. of this Annual Report on Form 10-K. In our 2018 net periodic pension cost, we expect to recognize a portion of such losses amounting to $31.7 million, $7.7 million and $3.1 million for the U.S. Qualified Plan, U.S. Non-Qualified Plans and non-U.S. plans, respectively, compared to $29.7 million, $7.0 million and $3.5 million, respectively, in 2017.
The mortality assumption is one of the key components in determining projected pension obligations as well as the pension and postretirement benefit cost. For our U.S. plans we used the RP-2014 aggregate mortality table together with mortality improvement projection scale MP-2017 and MP-2016 at December 31, 2017 and 2016, respectively. The adoption of the updated mortality improvement projection scales resulted in a reduction of the projected benefit obligations for the U.S. plans of approximately $10 million and $11 million at December 31, 2017 and 2016, respectively.
Differences between the expected long-term rate of return assumption and actual experience could affect our net periodic pension cost. For our pension plans, we recorded net periodic pension cost of $6.8 million, $5.2 million and $18.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. A major component of the net periodic pension cost is the expected return on plan assets, which was $94.3 million, $96.5 million and $102.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. The expected return on plan assets is determined by multiplying the expected long-term rate of return assumption by the market-related value of plan assets. The market-related value of plan assets recognizes asset gains and losses over five years to reduce the effects of short-term market fluctuations on net periodic cost. For our pension plans we recorded: (i) for the year ended December 31, 2017, a total investment gain of $199.9 million which was comprised of a gain of $175.4 million in our U.S. Qualified Plan and a gain of $24.5 million in our non-U.S. plans and (ii) for the year ended December 31, 2016, a total investment gain of $112.5 million which was comprised of a gain of $68.1 million in our U.S. Qualified Plan and a gain of $44.4 million in our non-U.S. plans. At January 1, 2018, the market-related value of plan assets of our U.S. Qualified Plan and the non-U.S. plans was $1,221.9 million and $287.0 million, respectively, compared with the fair value of the plan assets of $1,252.9 million and $319.1 million, respectively.
Changes in the funded status of our pension plans could result in fluctuations in our Shareholders’ Equity (Deficit). We are required to recognize the funded status of our benefit plans as a liability or an asset, on a plan-by-plan basis with an offsetting adjustment to Accumulated Other Comprehensive Income (“AOCI”), in our Shareholders’ Equity (Deficit), net of tax. Accordingly, the amounts recognized in equity represent unrecognized gains (losses) and prior service costs (credits). These unrecognized gains (losses) and prior service costs (credits) are amortized out of equity (deficit) based on an actuarial calculation each period. Gains (losses) and prior service costs (credits) that arise during the year are recognized as a component of Other Comprehensive Income (“OCI”) which is then reflected in AOCI. During the years ended December 31, 2017 and 2016, we recorded in OCI, net of applicable tax, net income of $35.2 million and a net loss of $9.6 million, respectively. The income in 2017 was primarily driven by the improvement of the net funded status for our global plans at December 31, 2017. Total net funded status for our global plans improved by $74.3 million to a deficit of $463.6 million at December 31, 2017, compared to a deficit of $537.9 million at December 31, 2016, primarily due to better asset performance during 2017.
For information on pension and postretirement benefit plan contribution requirements, please see “Future Liquidity-Sources and Uses of Funds-Pension Plan and Postretirement Benefit Plan Contribution Requirements.” See Note 10 to our consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for more information regarding costs of, and assumptions for, our pension and postretirement benefit obligations and costs.
Revenue Recognition
Application of the various accounting principles in GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates. Specifically, complex arrangements with non-standard terms and conditions may require significant contract interpretation to determine the appropriate accounting, including whether the deliverables specified in a multiple-element arrangement should be treated as separate units of accounting. Other significant judgments include determining whether we are acting as the principal in a transaction, primarily as it relates to transactions with alliances and partners, and whether separate contracts are considered part of one arrangement. We also use judgment to assess whether collectability is reasonably assured before we recognize any revenue. We base our judgment on the creditworthiness of the customer, their historical payment experience and the market and economic conditions affecting the customer.
Total consideration in multiple-element arrangements is allocated to each deliverable based on the relative selling price at the inception of the arrangements and does not change. We determine the estimated selling price for each deliverable using the selling price hierarchy (vendor-specific objective evidence of selling price, third-party evidence of selling price, and best estimated selling price). We review estimated selling prices used in this hierarchy on a quarterly basis and update as required.

29



As a result, the allocation of total consideration in future new multiple-element arrangements with the same deliverables can change.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase consideration over the fair value of assets and liabilities of businesses acquired. Goodwill is not subject to regular periodic amortization. Instead, the carrying amount of goodwill is tested for impairment at least annually at December 31, and between annual tests if events or circumstances warrant such a test.
We assess recoverability of goodwill at the reporting unit level. A reporting unit is an operating segment or a component of an operating segment which is a business and for which discrete financial information is available and reviewed by a segment manager. Our reporting units are North America and Latin America Partnership within the Americas segment, and United Kingdom, European Partnerships, Greater China, India and Asia Pacific Partnerships within the Non-Americas segment.
For the goodwill impairment test at December 31, 2017 we have early adopted ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment.” In accordance with this newly adopted guidance we compare the estimated fair value of each reporting unit to its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded for the difference between the fair value of the reporting unit and its carrying value (“Step 1 Test”). An impairment charge, if any, is recorded as an operating expense in the period that the impairment is identified. Previously we performed a two-step goodwill impairment test. Under the two-step approach, in the event that a potential impairment was identified as the result of the Step 1 Test, we performed an additional step to determine the magnitude of the potential impairment, which was the implied fair value of the reporting units goodwill compared to its carrying value. The implied fair value of goodwill was the difference between the fair value of the reporting unit and the fair value of its identifiable net assets. An impairment charge, if any, was recognized for the excess of the carrying value of goodwill over the implied fair value of goodwill.
We determine the fair value of our reporting units based on the market approach and also in certain instances using the income approach to further validate our results. Under the market approach, we estimate the fair value based on market multiples of current year Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) for each individual reporting unit. We use judgment in identifying the relevant comparable company market multiples (i.e., recent divestitures/acquisitions, facts and circumstances surrounding the market, dominance, growth rate, etc.). For our most recent impairment analysis at December 31, 2017, the EBITDA multiples used to determine the individual reporting units fair value range from 10 to 12. For the income approach, we use the discounted cash flow method (“DCF”) to estimate the fair value of a reporting unit. The projected cash flows are based on managements most recent view of the long-term outlook for each reporting unit. Factors specific to each reporting unit could include revenue growth, profit margins, terminal value, capital expenditures projections, assumed tax rates, discount rates and other assumptions deemed reasonable by management. For our 2017 year-end impairment analysis, we applied both the market approach and the DCF approach to estimate the fair value for the U.K. reporting unit and derived the reporting unit fair value using an equal weighting of the two valuation approaches (see below discussion for further detail).
Our determination of current year EBITDA multiples and projected cash flows are sensitive to the risk of future variances due to market conditions as well as business unit execution risks. Management assesses the relevance and reliability of the multiples and projected cash flows by considering factors unique to its reporting units, including recent operating results, business plans, economic projections, anticipated future cash flows, recent market transactions involving comparable businesses and other data. EBITDA multiples and projected cash flows can also be significantly impacted by the future growth opportunities for the reporting unit as well as for the Company itself, general market and geographic sentiment and pending or recently completed merger transactions.
Consequently, if future results fall below our forward-looking projections for an extended period of time, the results of future impairment tests could indicate that impairment exists. Although we believe the multiples of current year EBITDA in our market approach and the projected cash flows in our income approach make reasonable assumptions about our business, a significant increase in competition or reduction in our competitive capabilities could have a significant adverse impact on our ability to retain market share and thus on the projected values for our reporting units.
As a reasonableness check, we reconcile the estimated fair values derived in the valuations for the total Company based on the individual reporting units to our total enterprise value (calculated by multiplying the closing price of our common stock on December 31, 2017 by the number of shares outstanding at that time, adjusted for the value of the Companys debt).
At December 31, 2017, the estimated fair values of our reporting units exceeded the respective carrying values by amounts ranging from over 50% to well over 100%. Our U.K. and India reporting units were at the low end of the range and our largest reporting unit, North America, was at the high end of the range at December 31, 2017. We also further estimated the

30



fair value for the U.K. reporting unit by applying the DCF method to validate the fair value derived from the market approach. We applied a discount rate of 7.5% and a terminal growth rate of 3% to the most recent projected cash flows generated from the reporting unit. The total carrying value of goodwill was approximately $78 million for the U.K. and approximately $5 million for India at December 31, 2017.
The allocated goodwill by reportable segment is as follows:
 
 
As of December 31, 2017
 
As of December 31, 2016
(in millions)
 
Number of Reporting Units
 
Goodwill
 
Number of Reporting Units
 
Goodwill
Americas
 
2
 
$
635.7

 
2
 
$
550.5

Non-Americas
 
5
 
143.9

 
5
 
101.4

Consolidated Total
 
 
 
$
779.6

 
 
 
$
651.9

Indefinite-lived intangibles other than goodwill, are also assessed annually for impairment at December 31, or, under certain circumstances which indicate there may be an impairment. An impairment loss is recognized if the carrying value exceeds the fair value. The estimated fair value is determined by utilizing the expected present value of the future cash flows of the assets. We perform both qualitative and quantitative impairment tests to compare the fair value of the indefinite-lived intangible asset with its carrying value. For the recently acquired indefinite-lived intangible assets from acquisitions, we perform a qualitative impairment test based on macroeconomic and market conditions, industry considerations, overall performance and other relevant factors. For other indefinite-lived intangible assets, we may also perform a quantitative impairment test primarily using an income approach based on projected cash flows.
No impairment charges related to goodwill and indefinite-lived intangibles have been recognized for the years ended December 31, 2017, 2016 and 2015.
Income Taxes and Tax Contingencies
We are subject to income taxes in the U.S. and many foreign jurisdictions. In determining our consolidated provision for income taxes for financial statement purposes, we must make certain estimates and judgments. These estimates and judgments affect the determination of the recoverability of certain of the deferred tax assets and the calculation of certain tax liabilities, which arise from temporary differences between the tax and financial statement recognition of revenue and expense and net operating losses.
In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. In estimating future taxable income, we develop assumptions, including the amount of future pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses.
We currently have recorded valuation allowances in certain jurisdictions that we will maintain until it is more likely than not the deferred tax assets will be realized. Our income tax expense recorded in the future may be reduced to the extent of decreases in our valuation allowances. The realization of our remaining deferred tax assets is primarily dependent on future taxable income in the appropriate jurisdiction. Any reduction in future taxable income may require that we record an additional valuation allowance against our deferred tax assets. An increase in the valuation allowance could result in additional income tax expense in such period and could have a significant impact on our future earnings.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management records the effect of a tax rate or law change on our deferred tax assets and liabilities in the period of enactment. Future tax rate or law changes could have a material adverse effect on our financial condition, results of operations or cash flows.
In connection with the enactment of the Tax Cuts and Jobs Act (“2017 Act”), we have estimated the associated tax effects in accordance with ASC 740, “Income Taxes” and Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 118 (“SAB No. 118”). During the fourth quarter of 2017, we recorded a provisional tax charge of $80.7 million in our consolidated financial statements. We will continue to gather and analyze information related to certain aspects of the tax effects resulting from the 2017 Act, such as the undistributed earnings from our non-U.S. subsidiaries for the year ended December 31, 2017, which is treated as deemed dividends under the 2017 Act. We will record adjustments, if any, to the initial estimate within the one-year measurement period in accordance with SAB No. 118. See Note 5 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail. In addition, we have adopted ASU No.

31



2018-02 at December 31, 2017. See Note 2 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K. Accordingly, we have elected to reclassify $150.5 million related to the income tax effect of the 2017 Act on our U.S. pension and retirement plans from AOCI to retained earnings.
Recently Issued Accounting Standards
See Note 2 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for disclosure of the impact that recent accounting standards may have on our audited consolidated financial statements.
Results of Operations
The following discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements and should be read in conjunction with the consolidated financial statements and related notes set forth in Item 8. of this Annual Report on Form 10-K, which have been prepared in accordance with GAAP.
Consolidated Revenue
The following table presents our revenue by segment:

 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
(Amounts in millions)
Revenue:
 
 
 
 
 
Americas
$
1,448.2

 
$
1,416.1

 
$
1,329.1

Non-Americas
294.3

 
287.6

 
308.0

Total Revenue
$
1,742.5

 
$
1,703.7

 
$
1,637.1

The following table presents our total revenue by customer solution set:
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
(Amounts in millions)
Revenue:
 
 
 
 
 
Risk Management Solutions
$
1,009.8

 
$
1,011.8

 
$
978.3

Sales & Marketing Solutions
732.7

 
691.9

 
658.8

Total Revenue
$
1,742.5

 
$
1,703.7

 
$
1,637.1

Year Ended December 31, 2017 vs. Year Ended December 31, 2016
Total revenue increased $38.8 million, or 2% (both after and before the effect of foreign exchange), for the year ended December 31, 2017 as compared to the year ended December 31, 2016. The increase in total revenue was driven by an increase in Americas total revenue of $32.1 million, or 2% (both after and before the effect of foreign exchange) and an increase in Non-Americas total revenue of $6.7 million, or 2% (3% increase before the effect of foreign exchange).
We acquired a 100% equity interest in Avention during the first quarter of 2017. The impact of the deferred revenue fair value adjustment was a reduction to revenue of $8.0 million for the year ended December 31, 2017. See Note 18 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further details on the Avention acquisition.
We divested our operations in Benelux in November 2016 and our operations in Latin America in September 2016. Prior to the divestitures, Benelux and Latin America contributed $48.2 million and $8.7 million of revenue, respectively, during the year ended December 31, 2016. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further details.
Customer Solution Sets
On a customer solution set basis, total revenue reflects:
A $2.0 million, or less than 1% decrease (both after and before the effect of foreign exchange), in Risk Management Solutions. The decrease was driven by a decrease in revenue in Non-Americas of $2.5 million, or

32



1%, (both after and before the effect of foreign exchange), partially offset by an increase in revenue in Americas of $0.5 million, or less than 1% (both after and before the effect of foreign exchange); and
A $40.8 million, or 6% increase (both after and before the effect of foreign exchange), in Sales & Marketing Solutions. The increase was driven by an increase in revenue in Americas of $31.6 million, or 5% (both after and before the effect of foreign exchange) and an increase in revenue in Non-Americas of $9.2 million, or 18% (20% increase before the effect of foreign exchange).
Year Ended December 31, 2016 vs. Year Ended December 31, 2015
Total revenue increased $66.6 million, or 4% (5% increase before the effect of foreign exchange), for the year ended December 31, 2016 as compared to the year ended December 31, 2015. The increase in total revenue was primarily driven by an increase in Americas total revenue of $87.0 million, or 7% (both after and before the effect of foreign exchange), partially offset by a decrease in Non-Americas total revenue of $20.4 million, or 7% (1% decrease before the effect of foreign exchange).
Total revenue was impacted by the divestiture of our operations in Benelux (which we divested in November 2016) and Latin America (which we divested in September 2016). Prior to the divestiture, Benelux contributed $48.2 million and $58.7 million of revenue during the years ended December 31, 2016 and 2015, respectively. Prior to the divestiture, Latin America contributed $8.7 million and $10.0 million of revenue during the years ended December 31, 2016 and 2015, respectively.
We acquired a 100% equity interest in DBCC during the second quarter of 2015 and a 100% equity interest in NetProspex during the first quarter of 2015. In accordance with ASC 805, “Business Combinations,” deferred revenue at the acquisition date was recorded at fair value based on the estimated cost to provide the related services plus a reasonable profit margin on such costs. The impact of the deferred revenue fair value adjustment was a reduction of $3.1 million and $19.9 million for the years ended December 31, 2016 and 2015, respectively.

Customer Solution Sets
On a customer solution set basis, total revenue reflects:

A $33.5 million, or 3% increase (5% increase before the effect of foreign exchange), in Risk Management Solutions. The increase was driven by an increase in revenue in Americas of $42.0 million, or 6% (both after and before the effect of foreign exchange), partially offset by a decrease in revenue in Non-Americas of $8.5 million, or 3% (2% increase before the effect of foreign exchange); and

A $33.1 million, or 5% increase (6% increase before the effect of foreign exchange), in Sales & Marketing Solutions. The increase was driven by an increase in revenue in Americas of $45.0 million, or 8% (both after and before the effect of foreign exchange), partially offset by a decrease in revenue in Non-Americas of $11.9 million, or 19% (13% decrease before the effect of foreign exchange).

Recent Developments
Shanghai Roadway D&B Marketing Services Co. Ltd.
On March 18, 2012, we announced we had temporarily suspended our Shanghai Roadway D&B Marketing Services Co. Ltd. (“Roadway”) operations in China, pending an investigation into allegations that its data collection practices may have violated local Chinese consumer data privacy laws. Thereafter, the Company decided to permanently cease the operations of Roadway. In addition, we have been reviewing certain allegations that we may have violated the Foreign Corrupt Practices Act and certain other laws in our China operations. As previously reported, we voluntarily contacted the SEC and the United States Department of Justice (“DOJ”) to advise both agencies of our investigation, which has now ended.
On September 28, 2012, Roadway was charged in a Bill of Prosecution, along with five former employees, by the Shanghai District Prosecutor with illegally obtaining private information of Chinese citizens. On December 28, 2012, the Chinese court imposed a monetary fine on Roadway and fines and imprisonment on four former Roadway employees. A fifth former Roadway employee was separated from the case.
Our discussions with both the SEC and DOJ have concluded, and the ultimate outcome is not material to our business, financial condition or results of operations. The parties have agreed in principle on the potential resolution of this matter, and are finalizing the related documentation. In accordance with ASC 450, at December 31, 2017 a reserve in respect of this matter has been accrued in the consolidated financial statements.

33



Consolidated Operating Costs
The following table presents our consolidated operating costs and operating income:
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
(Amounts in millions)
Operating Expenses
$
574.7

 
$
542.6

 
$
544.7

Selling and Administrative Expenses
673.1

 
711.2

 
664.4

Depreciation and Amortization
79.7

 
68.6

 
58.7

Restructuring Charge
32.1

 
22.1

 
32.3

Operating Costs
$
1,359.6

 
$
1,344.5

 
$
1,300.1

Operating Income
$
382.9

 
$
359.2

 
$
337.0

Operating Expenses
Year Ended December 31, 2017 vs. Year Ended December 31, 2016
Operating expenses increased $32.1 million, or 6%, for the year ended December 31, 2017, compared to the year ended December 31, 2016. The increase was primarily due to the following:
Increased compensation and data costs as a result of investments in our strategy; and
Increased costs as a result of the acquisition of Avention during the first quarter of 2017;
partially offset by:
Decreased costs as a result of our cost reduction efforts; and
Lower costs as a result of the divestiture of our Benelux operations during the fourth quarter of 2016.
Year Ended December 31, 2016 vs. Year Ended December 31, 2015
Operating expenses decreased $2.1 million, or less than 1%, for the year ended December 31, 2016, compared to the year ended December 31, 2015. The decrease was primarily due to the following:
Lower costs as a result of management restructuring initiatives taken in the fourth quarter of 2015 and January 2016; and
The positive impact of foreign exchange;
partially offset by:
Increased costs in data and technology as a result of our strategic investments; and
Increased costs associated with our acquisition of DBCC during the second quarter of 2015.
Selling and Administrative Expenses
Year Ended December 31, 2017 vs. Year Ended December 31, 2016
Selling and administrative expenses decreased $38.1 million, or 5%, for the year ended December 31, 2017, compared to the year ended December 31, 2016. The decrease was primarily due to the following:
Lower costs resulting from accrued expenses for legal matters recorded in the second quarter of 2016 and a decrease of accrued expenses for legal matters, in the second quarter of 2017, related to the SEC and DOJ investigation of our China operations. See Note 13 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K; and
Lower costs as a result of the divestiture of our Benelux operations during the fourth quarter of 2016;
partially offset by:
Increased costs as a result of the acquisition of Avention during the first quarter of 2017.

34



Year Ended December 31, 2016 vs. Year Ended December 31, 2015
Selling and administrative expenses increased $46.8 million, or 7%, for the year ended December 31, 2016, compared to the year ended December 31, 2015. The increase was primarily due to the following:

Increased costs associated with our acquisition of DBCC during the second quarter of 2015;
Increased costs associated with the accrual for legal matters recorded in the second quarter of 2016. See Note 13 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail; and
Increased costs resulting from our strategic investments;

partially offset by:
Lower costs as a result of management restructuring initiatives taken in the fourth quarter of 2015 and January 2016; and

The positive impact of foreign exchange.
Matters Impacting Both Operating Expenses and Selling and Administrative Expenses
Pension, Postretirement and 401(k) Plan
For our pension plans globally, we had a net periodic pension cost of $6.8 million, $5.2 million and $18.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. The fluctuations in the pension cost were due to the following:

Expected return on plan assets included in annual pension expense for all global plans was $94.3 million, $96.5 million and $102.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. The expected return on plan assets was determined by multiplying the expected long-term rate of return assumption by the market-related value of plan assets. The market-related value of plan assets recognizes asset gains and losses over five years to reduce the effects of short-term market fluctuations on net periodic cost. The decrease of the expected return on plan assets for each of 2017 and 2016 compared to the respective prior year was primarily driven by a lower long-term rate of return assumption for 2017 and 2016. We used a long-term rate of return assumption of 7.00%, 7.25% and 7.75% for 2017, 2016 and 2015, respectively.

Actuarial loss amortization included in annual pension expense for all global plans was $40.2 million, $38.8 million and $42.5 million for the years ended December 31, 2017, 2016 and 2015, respectively, of which $36.7 million, $35.9 million and $39.0 million were attributable to our U.S. plans for the years ended December 31, 2017, 2016 and 2015, respectively. Actuarial loss amortization was largely impacted by the discount rate, amortization period and plan experience (e.g., the lower the discount rate, the higher the loss amortization). The weighted average discount rate applied to the projected benefit obligation for our pension plans globally at January 1, 2017, 2016 and 2015 was 3.62%, 3.84% and 3.62%, respectively. In addition, higher actuarial loss amortization in 2015 was also due to the adoption of new mortality tables for our U.S. plans which assume a longer life expectancy of plan participants at January 1, 2015.

Interest cost included in annual pension expense was also a major factor in driving the pension costs to fluctuate from year to year. Interest cost included in annual pension expense for all global plans was $57.9 million, $59.7 million and $73.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. Interest cost decreased in 2017 compared to 2016 primarily driven by a lower weighted average discount rate applied to our global plans. Interest cost decreased in 2016 compared to 2015 primarily due to the impact associated with the following change in accounting estimate. Effective January 1, 2016, we changed the approach used to measure service and interest cost components of net periodic benefit costs for our pension and postretirement benefit plans. Starting in 2016, we elected to measure service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows (“Spot Rate Approach”). We believe the new approach provides a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows and their corresponding spot rates on the yield curve. This change has resulted in a reduction of pension cost in 2016 of approximately $14 million. This change does not affect the measurement of our plan obligations and it was reflected as a change in accounting estimate which was applied prospectively. Previously we measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations (“Traditional Approach”). The weighted average discount rate in effect

35



using the Spot Rate Approach in 2017 and 2016 for the global plans was 3.00% and 3.06%, respectively. The weighted average discount rate for our global plans using the Traditional Approach was 3.62%, 3.84% and 3.62%, for the years ended December 31, 2017, 2016 and 2015, respectively.
We expect that the net pension cost in 2018 will be approximately $7 million for all of our global pension plans, most of which will be attributable to the U.S. plans. This compares to a net pension cost of $6.8 million in 2017, primarily attributable to the U.S. plans. For our U.S. plans, the pension cost in 2018 is primarily impacted by a lower discount rate resulting in higher actuarial loss amortization. The weighted average discount rate applied to the projected benefit obligation for our U.S. plans at January 1, 2018 is 3.34%, a 40 basis points decrease from the 3.74% discount rate used for 2017. This increase in expense is expected to be partially offset by higher expected returns on plan assets due to higher market-related value of plan assets at January 1, 2018.
We had postretirement benefit income of $1.5 million, $2.1 million and $1.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. Lower postretirement benefit income in 2017 compared to the prior year period was primarily attributable to lower amortization of prior service credits due to prior service credits being fully amortized in the second quarter of 2017. These prior service credits were established as a result of the plan amendment in July 2014 related to our post-65 retiree health plan. See Note 10 to our consolidated financial statements included in this Annual Report on Form 10-K for further detail. Higher postretirement benefit income in 2016 compared to 2015 was primarily due to better actual plan experience as well as a change in assumptions at January 1, 2016 (e.g. higher discount rate).
We expect postretirement benefit income will be approximately $0.4 million in 2018. The decrease in postretirement benefit income in 2018, as compared to 2017, is primarily due to lower amortization of the prior service credits as the remaining prior service credits were fully amortized in the second quarter of 2017.
We had expense associated with our 401(k) Plan of $11.6 million, $11.0 million and $10.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. Higher expense in each of 2017 and 2016 as compared to the respective prior year was primarily due to higher company matching contributions associated with higher compensation. We consider net pension cost and postretirement benefit income to be part of our compensation costs, and, therefore, they are included in operating expenses and in selling and administrative expenses, based upon the classifications of the underlying compensation costs.
As a result of the adoption of ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” effective January 1, 2018 we will include only the service cost component of the net pension and postretirement benefit cost in our compensation cost and report the other components of the net pension and postretirement benefit cost in Non-Operating Income (Expense) - Net. We will also reclassify all prior periods results accordingly. See further detail in Note 2 to the consolidated financial statements of this Annual Report on Form 10-K. The total service cost component for our pension and postretirement benefit plans is expected to be approximately $5 million in 2018, compared to $3.4 million and $3.7 million in 2017 and 2016, respectively.
See the discussion of “Critical Accounting Policies and Estimates - Pension and Postretirement Benefit Obligations,” above, and Note 10 to our consolidated financial statements included in Item 8. of this Annual Report on Form 10-K.
Stock-Based Compensation
For the years ended December 31, 2017, 2016 and 2015, we recognized total stock-based compensation expense (e.g., restricted stock, stock options, etc.) of $20.5 million, $21.2 million and $14.7 million, respectively.
For the years ended December 31, 2017, 2016 and 2015, we recognized expense associated with our restricted stock unit programs of $19.0 million, $19.9 million and $13.3 million, respectively. The decrease for the year ended December 31, 2017, as compared to the year ended December 31, 2016 was primarily due to higher forfeitures in 2017 as well as lower anticipated payouts on certain restricted stock units, partially offset by our increased use of performance-based restricted stock units. The increase for the year ended December 31, 2016, as compared to the year ended December 31, 2015 was primarily due to our increased use of performance-based restricted stock units, awards related to the 2015 acquisition of DBCC and NetProspex as well as higher forfeitures during 2015.
For the years ended December 31, 2017, 2016 and 2015, we recognized expense associated with our Employee Stock Purchase Plan (“ESPP”) of $1.5 million, $1.2 million and $0.9 million, respectively. The increase for the year ended December 31, 2017 as compared to the year ended December 31, 2016 was primarily due to higher levels of participation in 2017. The increase for the year ended December 31, 2016 as compared to the year ended December 31, 2015 was primarily due to the implementation in November 2015 of our new ESPP program, which includes a look-back provision.

36



For the year ended December 31, 2017 we had no expense associated with our stock option program. For the years ended December 31, 2016 and 2015, we recognized expense associated with our stock option programs of $0.1 million and $0.5 million, respectively. The decrease in expense in 2017 and 2016 as compared to the respective prior year period was primarily due to changes in our executive compensation program beginning in 2013 where the annual grants of stock options were replaced by grants of longer-term performance-based restricted stock units.
We consider these costs to be part of our compensation costs and, therefore, they are included in operating expenses and in selling and administrative expenses, based upon the classifications of the underlying compensation costs.
Depreciation and Amortization
Depreciation and amortization increased $11.1 million, or 16%, for the year ended December 31, 2017 as compared to the year ended December 31, 2016. The increase in depreciation and amortization was primarily due to the acquisition of Avention during the first quarter of 2017, partially offset by the effect of the completion of the depreciable lives of certain assets.
Depreciation and amortization increased $9.9 million, or 17%, for the year ended December 31, 2016 as compared to the year ended December 31, 2015. This increase was primarily due to our acquisition of DBCC during the second quarter of 2015 and an increase in our technology investments, partially offset by the effect of the completion of the depreciable lives of certain assets.
Restructuring Charge
We recorded restructuring charges of $32.1 million, $22.1 million, and $32.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. See Note 3 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
Interest Income (Expense) – Net
The following table presents our “Interest Income (Expense) – Net”:
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
(Amounts in millions)
Interest Income
$
1.6

 
$
1.8

 
$
1.6

Interest Expense
(59.7
)
 
(53.1
)
 
(51.0
)
Interest Income (Expense) - Net
$
(58.1
)
 
$
(51.3
)
 
$
(49.4
)
Interest income decreased $0.2 million, or 12% for the year ended December 31, 2017 as compared to the year ended December 31, 2016. The decrease in interest income was primarily attributable to lower average interest rates on invested cash. Interest income increased $0.2 million, or 15%, for the year ended December 31, 2016 as compared to the year ended December 31, 2015. The increase in interest income was primarily attributable to higher average amounts of invested cash.
Interest expense increased $6.6 million, or 12%, for the year ended December 31, 2017 as compared to the year ended December 31, 2016 and increased $2.1 million, or 4%, for the year ended December 31, 2016 as compared to the year ended December 31, 2015. These increases in interest expense were primarily attributable to higher average interest rates on our outstanding debt balances.


37



Other Income (Expense) – Net
The following table presents our “Other Income (Expense) – Net”:
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
(Amounts in millions)
Loss on Sale of Businesses (a)
$
(0.7
)
 
$
(95.1
)
 
$

Effect of Legacy Tax Matters (b)

 
(1.7
)
 
(6.9
)
Miscellaneous Other Income (Expense) - Net (c)
(1.4
)
 
(7.5
)
 
(0.7
)
Other Income (Expense) - Net
$
(2.1
)
 
$
(104.3
)
 
$
(7.6
)
(a)
During the year ended December 31, 2016, we recorded a loss due to the divestitures of our operations in Benelux and Latin America. During the year ended December 31, 2017, we recorded an additional pre-tax loss of $0.7 million for the divestiture of our operations in Benelux related to a working capital adjustment. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
(b)
During the years ended December 31, 2016 and 2015, we recognized the reduction of a contractual receipt under a tax allocation agreement between Moody's Corporation and Dun & Bradstreet as a result of the expiration of a statute of limitations for the 2012 and 2011 tax years, respectively.
(c)
Higher Miscellaneous Other Expense during the year ended December 31, 2016 as compared to the years ended December 31, 2017 and 2015 was primarily due to an impairment charge that was recorded in the fourth quarter of 2016 related to a change in our assessment of the recoverability of a non-operating asset as a result of a decline in the projected cash flows.

38



Provision for Income Taxes
Effective Tax Rate for the Year Ended December 31, 2015
26.5
 %
Impact of Legacy Tax Matters (1)
3.0

Impact of Release of Uncertain Tax Positions
0.6

Impact of Income Earned in Jurisdictions with Low Tax Rates
0.6

Impact of Nondeductible Charges (2)
5.6

Impact of Tax Credits and Deductions (3)
(4.3
)
Impact of Prior Year Earnings Repatriation
1.1

Impact of Change in State Tax
0.2

Impact of Sale of Benelux and Latin America (4)
15.1

Other
0.6

Effective Tax Rate for the Year Ended December 31, 2016
49.0
 %
Impact of Legacy Tax Matters (5)
1.6

Impact of Release of Uncertain Tax Positions
0.7

Impact of Income Earned in Jurisdictions with Low Tax Rates
(0.2
)
Impact of Nondeductible Charges and Non-Taxable Income (6)
(4.0
)
Impact of Tax Credits and Deductions
(2.1
)
Impact of One-Time Tax on Earnings Repatriation (7)
17.2

Impact of Net Deferred Tax Asset Write-Down Due to Federal Tax Rate Change (8)
7.8

Impact of Change in State Tax
(0.1
)
Impact of Prior Year Sale of Benelux and Latin America (9)
(15.1
)
Other
0.9

Effective Tax Rate for the Year Ended December 31, 2017
55.7
 %
(1) The impact was due to the release of uncertain tax positions in 2016 as a result of the expiration of the statute of limitations for the 2012 tax year. The impact is unfavorable as a result of a lower release of uncertain tax positions in 2016 as compared to 2015.
(2) The impact was primarily due to the legal reserve for the China matter recorded in the second quarter of 2016 which is not deductible.
(3) The impact was primarily due to incremental foreign tax credits available to reduce our U.S. tax liability.
(4) The impact was due to the non-deductible loss associated with the release of cumulative foreign currency translation as part of the divestitures of our operations in Benelux and Latin America in 2016.
(5) The impact was primarily due to the release of uncertain tax positions in 2016 as a result of the expiration of the statute of limitations for the 2012 tax year, with no comparable release in 2017.
(6) The impact was primarily due to a higher non-taxable income related to the reduction to the legal reserve for the China matter.
(7) The impact was related to the one-time tax liability imposed by the 2017 Act on the accumulated undistributed earnings from non-U.S. subsidiaries.
(8) The impact was related to the reduction in the statutory U.S. federal corporate income tax rate from 35% to 21% as a result of the 2017 Act.
(9) The impact was due to the non-deductible loss associated with the release of cumulative foreign currency translation as part of the divestitures of our operations in Benelux and Latin America in 2016 which did not reoccur in 2017.
Discontinued Operations
In June 2015, we divested our operations in ANZ for $169.8 million, which was part of our Non-Americas segment. Accordingly, the historical financial results of our operations in ANZ are classified as discontinued operations for all periods presented as set forth in this Annual Report. As of December 31, 2015, we received proceeds of $159.7 million, inclusive of a working capital adjustment of $0.7 million with no additional proceeds in 2016. For the year ended December 31, 2015, we

39



recorded a total loss of $37.5 million. For the year ended December 31, 2016, we recorded a total loss on disposal of business of $4.1 million, reflecting the increase of escrow reserve. In addition, during the first quarter of 2017 we recorded a loss on the disposal of business of $0.8 million, resulting from a settlement payment associated with a warranty claim. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
Earnings per Share (“EPS)
Basic earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding restricted stock unit awards, stock options, and contingently issuable shares using the treasury stock method. See Note 1 to our consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail on our accounting policies related to EPS.
The following table sets forth our EPS:
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
Basic Earnings (Loss) Per Share of Common Stock:
 
 
 
 
 
Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet Common Shareholders
$
3.84

 
$
2.78

 
$
5.66

Income (Loss) from Discontinued Operations Attributable to Dun & Bradstreet Common Shareholders
(0.02
)
 
(0.11
)
 
(0.98
)
Net Income (Loss) Attributable to Dun & Bradstreet Common Shareholders
$
3.82

 
$
2.67

 
$
4.68

Diluted Earnings (Loss) Per Share of Common Stock:
 
 
 
 
 
Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet Common Shareholders
$
3.81

 
$
2.76

 
$
5.61

Income (Loss) from Discontinued Operations Attributable to Dun & Bradstreet Common Shareholders
(0.02
)
 
(0.11
)
 
(0.97
)
Net Income (Loss) Attributable to Dun & Bradstreet Common Shareholders
$
3.79

 
$
2.65

 
$
4.64

For the year ended December 31, 2017, both basic and diluted EPS attributable to Dun & Bradstreet common shareholders increased 43% compared with the year ended December 31, 2016. The increases for basic and diluted EPS were primarily due to an increase of 45% in Net Income Attributable to Dun & Bradstreet common shareholders which was largely driven by the loss in the third quarter of 2016 on divestitures of our operations in Benelux and Latin America primarily resulting from the release of a cumulative foreign currency translation loss, as well as accrued expenses for legal matters recorded in the second quarter of 2016 and a decrease of accrued expenses for legal matters in the second quarter of 2017 related to the SEC and DOJ investigation of our China operations. The increases were partially offset by a provisional tax charge recorded in the fourth quarter of 2017 in connection with the 2017 Act.
For the year ended December 31, 2016, both basic and diluted EPS attributable to Dun & Bradstreet common shareholders decreased 43%, compared with the year ended December 31, 2015. The decreases for both basic and diluted EPS were primarily due to a decrease of 42% in Net Income Attributable to Dun & Bradstreet common shareholders which was primarily due to the loss on the divestiture of our operations in Benelux and Latin America primarily resulting from the recognition of a cumulative foreign currency translation loss, as well as the accrual for legal matters recorded in the second quarter of 2016.
See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail on the divestiture of our operations in Benelux and Latin America. See Note 13 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail on the accrual for legal matters. See Note 5 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail on the provisional tax charge.

40



Segment Results
We manage and report our business through the following two segments:
Americas, which consists of our operations in the United States (“U.S.”), Canada, and our Latin America Worldwide Network (we divested our Latin America operations in September 2016); and

Non-Americas, which consists of our operations in the United Kingdom (“U.K.”), Greater China, India and our European and Asia Pacific Worldwide Networks (we divested our operations in Benelux in November 2016 and in ANZ in June 2015).
Americas
Americas is our largest segment representing 83%, 83%, and 81% of our total revenue for the years ended December 31, 2017, 2016 and 2015, respectively.
During the year ended December 31, 2016, we divested our operations in Latin America. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
The following table presents our Americas revenue by customer solution set and Americas operating income:
 
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
(Amounts in millions)
Revenue:
 
 
 
 
 
Risk Management Solutions
$
775.9

 
$
775.4

 
$
733.4

Sales & Marketing Solutions
672.3

 
640.7

 
595.7

Americas Total Revenue
$
1,448.2

 
$
1,416.1

 
$
1,329.1

Operating Income
$
419.1

 
$
429.5

 
$
369.3

Year Ended December 31, 2017 vs. Year Ended December 31, 2016
Americas Overview
Americas total revenue increased $32.1 million, or 2% (both after and before the effect of foreign exchange), for the year ended December 31, 2017 as compared to the year ended December 31, 2016. We acquired a 100% equity interest in Avention during the first quarter of 2017. The impact of the deferred revenue fair value adjustment was a reduction to revenue of $8.0 million for the year ended December 31, 2017. See Note 18 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further details.
Americas total revenue was impacted by the divestiture of our Latin America operations during the fourth quarter of 2016. Prior to the divestiture, Latin America contributed $8.7 million of revenue during the year ended December 31, 2016.
Americas Customer Solution Sets
On a customer solution set basis, the $32.1 million increase in total revenue for the year ended December 31, 2017, as compared to the year ended December 31, 2016, reflects:
Risk Management Solutions
An increase in Risk Management Solutions of $0.5 million, or less than 1% (both after and before the effect of foreign exchange), attributable to:
Trade Credit, which accounted for 65% of total Americas Risk Management Solutions, decreased 3% (both after and before the effect of foreign exchange) primarily attributable to:
Decreased revenue associated with our Other Trade Credit products which was impacted by shifts into our other solutions; and
Decreased revenue associated with our D&B Credit Suite which was primarily a result of lower sales in prior quarters;


41



partially offset by:
Increased revenue from our Analytics product offerings.

Other Enterprise Risk Management, which accounted for 35% of total Americas Risk Management Solutions, increased 6% (both after and before the effect of foreign exchange), primarily due to:
Increased revenue from our Compliance and Supply products and our risk data offerings; and
Increased revenue from our D&B Direct offering.
Sales & Marketing Solutions
An increase in Sales & Marketing Solutions of $31.6 million, or 5% (both after and before the effect of foreign exchange) primarily due to:
Sales Acceleration Solutions, which accounted for 43% of total Americas Sales & Marketing Solutions, increased 10% (both after and before the effect of foreign exchange). The increase was primarily due to:
Increased revenue associated with the acquisition of Avention in the first quarter of 2017, net of the impact of the deferred revenue fair value adjustment; and
Increased revenue from our S&MS Analytics product offerings;

partially offset by:
Decreased revenue in legacy Hoover's due to declining sales performance in the prior year; and
Decreased revenue in our other Sales Acceleration products (e.g., MDR).
Advanced Marketing Solutions, which accounted for 57% of total Americas Sales & Marketing Solutions, increased 2% (both after and before the effect of foreign exchange). The increase was primarily due to:
Increased revenue from our master data products (e.g., D&B Direct); and
Increased revenue through our Audience Solutions offerings.
Americas Operating Income
Americas operating income for the year ended December 31, 2017 was $419.1 million, compared to $429.5 million for the year ended December 31, 2016, a decrease of $10.4 million, or 2%. The decrease in operating income was primarily attributable to:
Increased costs as a result of the acquisition of Avention during the first quarter of 2017; and
Increased compensation and data costs as a result of investments in our strategy;
partially offset by:
Increased revenue primarily associated with the acquisition of Avention during the first quarter of 2017; and
Decreased technology costs as a result of our cost reduction efforts.
Year Ended December 31, 2016 vs. Year Ended December 31, 2015
Americas Overview
Americas total revenue increased $87.0 million, or 7% (both after and before the effect of foreign exchange), for the year ended December 31, 2016 as compared to the year ended December 31, 2015. We acquired a 100% equity interest in DBCC during the second quarter of 2015 and a 100% equity interest in NetProspex during the first quarter of 2015. The impact of the deferred revenue fair value adjustment was a reduction of $3.1 million and $19.9 million for the years ended December 31, 2016 and 2015, respectively. See Note 18 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further details.

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Americas total revenue was impacted by the divestiture of our Latin America operations during the fourth quarter of 2016. Prior to the divestiture, Latin America contributed $8.7 million and $10.0 million of revenue during the years ended December 31, 2016 and 2015, respectively.
Americas Customer Solution Sets
On a customer solution set basis, the $87.0 million increase in total revenue for the year ended December 31, 2016, as compared to the year ended December 31, 2015, reflects:
Risk Management Solutions
An increase in Risk Management Solutions of $42.0 million, or 6% (both after and before the effect of foreign exchange) primarily attributable to:
Trade Credit, which accounted for 67% of total Americas Risk Management Solutions, decreased 2% (both after and before the effect of foreign exchange) primarily attributable to:
Decreased revenue associated with our other Trade Credit products;
Declining DNBi sales performance in prior periods resulting in lower revenue for the year due to the ratable nature of DNBi. While DNBi retention continued to be in the low 90% range, and the increase in pricing continued to be in the low single digits, we were not generating enough new customers to offset normal attrition;
partially offset by:
Increased revenue associated with certain of our other Risk Management Solutions driven by our emerging businesses channel; and
Increased revenue associated with our acquisition of DBCC, which was completed during the second quarter of 2015, net of the impact of the deferred revenue fair value adjustment.
Other Enterprise Risk Management, which accounted for 33% of total Americas Risk Management Solutions, increased 27% (both after and before the effect of foreign exchange), primarily due to:
Increased revenue associated with our acquisition of DBCC, which was completed during the second quarter of 2015, net of the impact of the deferred revenue fair value adjustment;
Increased revenue associated with Credit-on-Self products, driven by our emerging businesses channel;
Increased revenue associated with Supply Management and Compliance Solutions driven by new business; and
Increased revenue from other usage based solutions such as D&B Direct.
Sales & Marketing Solutions
An increase in Sales & Marketing Solutions of $45.0 million, or 8% (both after and before the effect of foreign exchange) primarily due to:
Sales Acceleration Solutions, which accounted for 41% of total Americas Sales & Marketing Solutions, increased 3% (both after and before the effect of foreign exchange). The increase was primarily due to:
Increased revenue associated with our acquisition of DBCC, which was completed during the second quarter of 2015, net of the impact of the deferred revenue fair value adjustment; and
Growth in our alliance product with Salesforce.com;
partially offset by:
Decreased revenue in Hoover's, primarily due to declining sales performance in prior periods. The product had not been a focus of investment; and
Decreased revenue in MDR due to lower customer spend.

43



Advanced Marketing Solutions, which accounted for 59% of total Americas Sales & Marketing Solutions, increased 11% (both after and before the effect of foreign exchange). The increase was primarily due to:
Growth in our Integration Manager and Optimizer products, driven primarily by increased spend by our larger strategic customers;
Increased revenue through our third-party alliances and our D&B Direct offering; and
Increased revenue from Audience Solutions, which was our new product offering in the digital marketing space.
Americas Operating Income

Americas operating income for the year ended December 31, 2016 was $429.5 million, compared to $369.3 million for the year ended December 31, 2015, an increase of $60.2 million or 16%. The increase in operating income was primarily attributable to:
The impact of the acquisition of DBCC during the second quarter of 2015, as well as revenue growth from our existing business; and
Lower costs as a result of management restructuring initiatives taken in the fourth quarter of 2015 and January 2016;
partially offset by:
Increased costs (e.g., amortization of intangibles) as a result of the acquisition of DBCC during the second quarter of 2015;
Increased data and compensation costs.
Non-Americas
Non-Americas represented 17%, 17% and 19% of our total revenue for the years ended December 31, 2017, 2016 and 2015, respectively.
The following table presents our Non-Americas revenue by customer solution set and Non-Americas operating income.
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
(Amounts in millions)
Revenue:
 
 
 
 
 
Risk Management Solutions
$
233.9

 
$
236.4

 
$
244.9

Sales & Marketing Solutions
60.4

 
51.2

 
63.1

Non-Americas Total Revenue
$
294.3

 
$
287.6

 
$
308.0

Operating Income
$
84.0

 
$
59.4

 
$
83.1

Year Ended December 31, 2017 vs. Year Ended December 31, 2016
Non-Americas Overview
Non-Americas total revenue increased $6.7 million, or 2% (3% increase before the effect of foreign exchange), for the year ended December 31, 2017 as compared to the year ended December 31, 2016. We acquired a 100% equity interest in Avention during the first quarter of 2017. See Note 18 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further details on the Avention acquisition.
Non-Americas total revenue was impacted by the divestiture of our Benelux operations during the fourth quarter of 2016. Prior to the divestiture, Benelux contributed $48.2 million of revenue during the year ended December 31, 2016. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further details.
Non-Americas Customer Solution Sets
On a customer solution set basis, the $6.7 million increase in Non-Americas revenue for the year ended December 31, 2017, as compared to the year ended December 31, 2016, reflects:

44



Risk Management Solutions
A decrease in Risk Management Solutions of $2.5 million, or 1% (both after and before the effect of foreign exchange) primarily attributable to:
Trade Credit, which accounted for 73% of total Non-Americas Risk Management Solutions, increased 1% (2% increase before the effect of foreign exchange) primarily due to:
Increased revenue from our Worldwide Network Partnerships resulting from the impact of the conversion of our Benelux operations to our Worldwide Network Partnerships;
partially offset by:
The negative impact of foreign exchange; and
Decreased use of various risk products primarily in our U.K. market.
Other Enterprise Risk Management, which accounted for 27% of total Non-Americas Risk Management Solutions, decreased 5% (9% decrease before the effect of foreign exchange) primarily due to:
Decreased revenue from our Worldwide Network Partnerships, including the impact of the conversion of our Benelux operations to our Worldwide Network Partnerships;
partially offset by:
Increased revenue primarily in our China market from new and existing customers.

Sales & Marketing Solutions
An increase in Sales & Marketing Solutions of $9.2 million, or 18% (20% increase before the effect of foreign exchange) primarily attributable to:
Sales Acceleration Solutions, which accounted for 46% of total Non-Americas Sales & Marketing Solutions, increased 39% (38% increase before the effect of foreign exchange) primarily due to:
The acquisition of Avention during the first quarter of 2017;
partially offset by:
Decreased project revenue in our marketing business in China; and
The divestiture of our Benelux operations during the fourth quarter of 2016.
Advanced Marketing Solutions, which accounted for 54% of total Non-Americas Sales & Marketing Solutions, increased 5% (8% increase before the effect of foreign exchange) primarily due to:
An increase in purchases by our Worldwide Network partners primarily for fulfillment services and product usage; and
Increased product revenue primarily in our China and U.K. markets from new and existing customers;
partially offset by:
The divestiture of our Benelux operations during the fourth quarter of 2016.

Non-Americas Operating Income

Non-Americas operating income for the year ended December 31, 2017 was $84.0 million, compared to operating income of $59.4 million for the year ended December 31, 2016, an increase of $24.6 million. The increase was primarily due to:
The impact of the conversion of our Benelux operations to a Partnership model;
The impact of the acquisition of Avention during the first quarter of 2017; and
Growth in our Asia markets;

45



partially offset by:
Increased data, compensation and technology expenses;
The negative impact of foreign exchange.
Year Ended December 31, 2016 vs. Year Ended December 31, 2015
Non-Americas Overview
Non-Americas total revenue decreased $20.4 million, or 7% (1% decrease before the effect of foreign exchange), for the year ended December 31, 2016 as compared to the year ended December 31, 2015. During the year ended December 31, 2015, we divested our business in ANZ. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further details.
Non-Americas total revenue was impacted by the divestiture of our Benelux operations during the fourth quarter of 2016. Prior to the divestiture, Benelux contributed $48.2 million and $58.7 million of revenue during the years ended December 31, 2016 and 2015, respectively.
Non-Americas Customer Solution Sets
On a customer solution set basis, the $20.4 million decrease in Non-Americas total revenue for the year ended December 31, 2016, as compared to the year ended December 31, 2015, reflects:
Risk Management Solutions
A decrease in Risk Management Solutions of $8.5 million, or 3% (2% increase before the effect of foreign exchange) primarily attributable to:
Trade Credit, which accounted for 72% of total Non-Americas Risk Management Solutions, decreased 7% (1% decrease before the effect of foreign exchange) primarily due to:
The negative impact of foreign exchange;
Decreased transactional usage and decreased project revenue of various risk products in most markets; and
The divestiture of our Benelux operations during the fourth quarter of 2016;
partially offset by:
An increase in purchases by our Worldwide Network partners primarily for technology and fulfillment services.
Other Enterprise Risk Management, which accounted for 28% of total Non-Americas Risk Management Solutions, increased 6% (11% increase before the effect of foreign exchange) primarily due to:
Increased usage of various risk products across most markets, by new and existing customers; and
An increase in purchases by our Worldwide Network partners primarily for technology and fulfillment services.
partially offset by:
The negative impact of foreign exchange; and
The divestiture of our Benelux operations during the fourth quarter of 2016.
Sales & Marketing Solutions
A decrease in Sales & Marketing Solutions of $11.9 million, or 19% (13% decrease before the effect of foreign exchange) primarily attributable to:
Sales Acceleration Solutions, which accounted for 39% of total Non-Americas Sales & Marketing Solutions, decreased 8% (2% decrease before the effect of foreign exchange) primarily attributed to decreased project revenue in certain markets and the negative impact of foreign exchange.
Advanced Marketing Solutions, which accounted for 61% of total Non-Americas Sales & Marketing Solutions, decreased 25% (18% decrease before the effect of foreign exchange) primarily due to:

46



Decreased project revenue primarily due to our decision to end the relationship with a competitor in Europe who was buying our data;
The negative impact of foreign exchange; and
The divestiture of our Benelux operations during the fourth quarter of 2016;
partially offset by:

An increase in purchases by our Worldwide Network partners primarily for fulfillment services and product usage.

Non-Americas Operating Income

Non-Americas operating income for the year ended December 31, 2016 was $59.4 million, compared to operating income of $83.1 million for the year ended December 31, 2015, a decrease of $23.7 million. The decrease was primarily due to:
Decreased revenue;
Increased compensation, technology and data costs;
The negative impact of foreign exchange; and
An impairment charge related to certain intangible assets in our Greater China operations, comprised of customer relationships, database and trademark;
partially offset by:
Decreased costs associated with the divestiture of our Benelux operations during the fourth quarter of 2016.
Market Risk
We employ established policies and procedures to manage our exposure to changes in interest rates and foreign currencies. We use foreign exchange forward and option contracts to hedge short-term foreign currency denominated loans and certain third-party and intercompany transactions. We may also use foreign exchange forward contracts to hedge our net investments in our foreign subsidiaries. In addition, we may use interest rate derivatives to hedge a portion of the interest rate exposure on our outstanding debt or in anticipation of a future debt issuance, as discussed under “Interest Rate Risk Management” below.
We do not use derivative financial instruments for trading or speculative purposes. If a hedging instrument ceases to qualify as a hedge in accordance with hedge accounting guidelines, any subsequent gains and losses are recognized in the appropriate period income. Collateral is generally not required for these types of instruments.
A discussion of our accounting policies for financial instruments is included in the summary of significant accounting policies in Note 1 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K, and further disclosure relating to financial instruments is included in Note 7 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K.
Interest Rate Risk Management
Our objective in managing our exposure to interest rates is to limit the impact of interest rate changes on our earnings, cash flows and financial position, and to lower our overall borrowing costs. To achieve these objectives, we maintain a policy that floating-rate debt be managed within a minimum and maximum range of our total debt exposure. To manage our exposure and limit volatility, we may use fixed-rate debt, floating-rate debt and/or interest rate swaps. We recognize all derivative instruments as either assets or liabilities at fair value in the consolidated balance sheets. As of December 31, 2017, we did not have any interest rate derivatives outstanding.
A 100 basis point increase/decrease in the weighted average interest rate on our outstanding debt subject to rate variability would result in an incremental increase/decrease in annual interest expense of approximately $11 million for the year ended December 31, 2017.

47



Foreign Exchange Risk Management
We have numerous offices in various countries outside of the U.S. and conduct operations in several countries through minority equity investments and strategic relationships with local providers. Our operations outside of the U.S. generated approximately 19% of our total revenue for each of the years ended December 31, 2017 and 2016. Approximately 32% and 28% of our assets for the years ended December 31, 2017 and 2016, respectively, were located outside of the U.S.
Our objective in managing our exposure to foreign currency fluctuations is to reduce the volatility caused by foreign exchange rate changes on the earnings, cash flows and financial position of our international operations. We follow a policy of hedging balance sheet positions denominated in currencies other than the functional currency applicable to each of our various subsidiaries. In addition, we are subject to foreign exchange risk associated with our international earnings and net investments in our foreign subsidiaries. We use short-term, foreign exchange forward and, from time to time, option contracts to execute our hedging strategies. Typically, these contracts have maturities of 12 months or less. These contracts are denominated primarily in the British pound sterling, the Euro, the Canadian dollar and the Hong Kong dollar. The gains and losses on the forward contracts associated with the balance sheet positions are recorded in “Other Income (Expense) – Net” in the consolidated statements of operations and comprehensive income and are essentially offset by the losses and gains on the underlying foreign currency transactions.
As in prior years, we have hedged substantially all balance sheet positions denominated in a currency other than the functional currency applicable to each of our various subsidiaries with short-term, foreign exchange forward contracts. In addition, we may use foreign exchange forward contracts to hedge certain net investment positions. The underlying transactions and the corresponding foreign exchange forward are marked to market at the end of each quarter and the fair value impacts are reflected within the consolidated financial statements.
At December 31, 2017 and 2016, we did not have any foreign exchange option contracts outstanding. At December 31, 2017 and 2016, the notional amounts of our foreign exchange forward contracts were $239.2 million and $280.1 million, respectively.
Realized gains and losses associated with these contracts were $22.1 million and $15.5 million, respectively, at December 31, 2017; $44.0 million and $55.6 million, respectively, at December 31, 2016; and $31.0 million and $46.9 million, respectively, at December 31, 2015. Unrealized gains and losses associated with these contracts were $1.5 million and $2.1 million, respectively, at December 31, 2017; $1.5 million and $1.4 million, respectively, at December 31, 2016; and $0.5 million and $0.3 million, respectively, at December 31, 2015.
If exchange rates to which we are exposed under our outstanding foreign exchange forward contracts were to increase, on average, 10% from year-end 2017 levels, the unrealized losses on our foreign exchange forward contracts would be approximately $17 million, excluding the expected gains on the underlying hedged items. If exchange rates, on average, were to decrease 10% from year-end 2017 levels, the unrealized gains on our foreign exchange forward contracts would be approximately $17 million, excluding the expected losses on the underlying hedged items. However, the estimated potential gains and losses on these contracts would substantially be offset by changes in the dollar equivalent value of the underlying hedged items.
Liquidity and Financial Position
We will remain disciplined in the use of our shareholders’ cash, maintaining three key priorities for the use of this cash:

First, making ongoing investments in the business to drive organic growth;

Second, investing in acquisitions that we believe will be value-accretive to enhance our capabilities and accelerate our growth; and

Third, continuing to return cash to shareholders.
We believe that cash provided by operating activities, supplemented as needed with available financing arrangements, is sufficient to meet our short-term needs (12 months or less), including restructuring charges, our capital investments, contractual obligations, tax liabilities related to our undistributed foreign earnings associated with the 2017 Act and contingencies (see Note 13 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K), excluding the legal matters identified in such note for which exposures cannot be estimated or are not probable. We have the ability to access the short-term borrowings market to supplement the seasonality in the timing of receipts in order to fund our working capital needs. Such borrowings would be supported by our $1 billion revolving credit facility, when needed. Our future capital

48



requirements will depend on many factors that are difficult to predict, including the size, timing and structure of any future acquisitions, future capital investments and future results of operations.
Our $1 billion revolving credit facility, which matures July 2019, requires the maintenance of interest coverage and total debt to Earnings Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”) ratios which are defined in the credit agreement. On May 14, 2015, we amended the facility to modify the total debt to EBITDA ratio from 4.0:1.0 to 4.5:1.0 for any fiscal quarter that ended before December 31, 2016. For fiscal quarters ending on or after December 31, 2016, the total debt to EBITDA ratio reverted to 4.0:1.0. We were in compliance with the $1 billion revolving credit facility financial and non-financial covenants at December 31, 2017 and at December 31, 2016. At December 31, 2017 and December 31, 2016, we had $731.1 million and $199.8 million, respectively, in borrowings outstanding under our $1 billion revolving credit facility.
The enactment of the 2017 Act on December 22, 2017 has resulted in a significant impact on our financial statements (see Note 5 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail). One of the key provisions in the 2017 Act is to impose a one-time mandatory U.S. tax on the accumulated undistributed foreign earnings as of December 31, 2017, and as a result we will be able to repatriate our accumulated undistributed earnings from our non-U.S. subsidiaries through December 31, 2017. The 2017 Act also allows us to remit our future earnings to the U.S. without incurring additional U.S. taxes. We have recorded a total tax liability of $55.4 million in the consolidated financial statements as of December 31, 2017, of which $5.0 million is related to the foreign withholding tax included in “Accrued Income Tax” and $50.4 million is related to the estimated one-time mandatory U.S. tax included in “Other Non-Current Liabilities.” The one-time U.S. tax liability will be paid over eight years starting April 15, 2019. As of December 31, 2017, $435.0 million of our $442.4 million cash and cash equivalents on the consolidated balance sheet was held by our foreign operations. We currently intend to repatriate approximately $265 million, subject to changes in foreign currency exchange rates, from our overseas operations during 2018. 
In December 2015, we remitted to the United States $163.0 million of cash that had been held by our foreign operations, comprising dividends of $123.0 million and borrowings from foreign subsidiaries of $40.0 million. An additional $2.5 million and $4.5 million was distributed in 2016 and 2017, respectively. This remittance was effected to partially offset the funding requirement associated with the acquisitions of DBCC and NetProspex in 2015, which had totaled $444.2 million. Given the timing, these acquisitions were funded initially through a combination of borrowings under the Company’s $1 billion revolving credit facility and cash on hand, and subsequently with more permanent financing in the form of senior notes with a face value of $300 million that mature on June 15, 2020. See Note 5 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for a discussion of the tax impacts related to the remittance.

On March 27, 2017, Standard & Poor’s Ratings Services downgraded our corporate credit rating to BB+ from BBB-. As a result, and in accordance with the provisions of their indentures, the interest rates on each of our senior notes were adjusted above their initial stated coupons by 25 basis points commencing with the interest period during which the downgrade occurred. As a result of the coupon adjustment, the incremental interest cost for the year ended December 31, 2017 was $2.7 million, which included a component that was retroactive to the commencement of the respective senior note interest periods in December 2016. The incremental interest cost per quarter for the senior notes outstanding at December 31, 2017 is $0.4 million, until either the maturity of any one of the senior notes or a change in our corporate credit rating that triggers an adjustment in our interest rate coupons, whichever is earlier. On May 22, 2017, Fitch Ratings downgraded our corporate credit rating to BBB- from BBB. The interest rates on each of our senior notes were not impacted as a result of the downgrade. Any further downgrade in our corporate credit rating by either rating agency would result in additional increases in the interest rates of our senior notes. In addition, further downgrades may increase our overall cost of borrowing and/or may negatively impact our ability to raise additional debt capital. See Note 6 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K.
Cash Provided by Operating Activities from Continuing Operations

Net cash provided by operating activities was $286.5 million, $322.7 million and $336.8 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Year ended December 31, 2017 vs. Year Ended December 31, 2016
Net cash provided by operating activities decreased by $36.2 million for the year ended December 31, 2017 compared to the year ended December 31, 2016. This decrease was primarily driven by:
Increased tax and interest payments in 2017 as compared to the prior year;
A payment to resolve a legal matter (Jeffrey A. Thomas vs DBCC) during the second quarter of 2017; and

49



A payment for a service-based award during the first quarter of 2017 related to the DBCC acquisition in 2015;
partially offset by:
Lower restructuring payments in 2017 compared to the prior year.
Year ended December 31, 2016 vs. Year Ended December 31, 2015
Net cash provided by operating activities decreased by $14.1 million for the year ended December 31, 2016 compared to the year ended December 31, 2015. This decrease was primarily driven by:
Increased restructuring payments in 2016 as compared to the prior year; and
Increased interest payments in 2016 as compared to the prior year;
partially offset by:
The net decrease in other working capital during the period.
Cash Used in Investing Activities from Continuing Operations
Net cash used in investing activities was $206.6 million, $58.1 million and $371.1 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Year ended December 31, 2017 vs. Year Ended December 31, 2016
Net cash used in investing activities increased by $148.5 million for the year ended December 31, 2017 compared to the year ended December 31, 2016. This increase was primarily driven by:
The acquisition of Avention during the first quarter of 2017. See Note 18 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K; and
Net proceeds of $13.0 million in the prior year period from the sale of our Benelux operations as compared to net proceeds of $1.0 million from the sale of our Latin America business during the current year period. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K.
partially offset by:
Cash settlements of our foreign currency contracts for our hedged transactions resulted in cash inflows of $6.5 million for the year ended December 31, 2017, as compared to cash outflows of $11.4 million for the year ended December 31, 2016.
Year ended December 31, 2016 vs. Year Ended December 31, 2015
Net cash used in investing activities decreased by $313.0 million for the year ended December 31, 2016 compared to the year ended December 31, 2015. This decrease was primarily driven by:
Payment of $444.2 million in the prior year period for the acquisition of DBCC for $320.0 million and NetProspex for $124.2 million. See Note 18 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K;
partially offset by:
Net proceeds of $13.0 million from the sale of our Benelux operations during the year ended December 31, 2016 as compared to net proceeds of $159.8 million from the sale of our ANZ businesses during the prior year period. See Note 17 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K.
Cash (Used in) Provided by Financing Activities from Continuing Operations
Net cash (used in) provided by financing activities was $(18.8) million, $(224.9) million and $110.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. As set forth below, these changes primarily relate to debt and our stock-based awards. Additionally, we paid dividends of $74.2 million, $70.5 million and $66.7 million for the years ended December 31, 2017, 2016 and 2015, respectively.

50



Contractual Obligations
Debt
In June 2015, we issued senior notes with a face value of $300 million that mature on June 15, 2020, bearing interest at a fixed annual rate of 4.00%, payable semi-annually. The proceeds were used in June 2015 to repay borrowings outstanding under our $1 billion revolving credit facility, a portion of which had earlier been drawn in connection with the acquisition of DBCC. In addition, in connection with the issuance, we incurred underwriting and other fees of $2.9 million. We did not issue senior notes during the years ended December 31, 2017 and 2016. On December 1, 2017, we repaid our 3.25% senior notes with a face value of $450 million at maturity utilizing our $1 billion revolving credit facility.

Revolving Credit Facility
We had $731.1 million, $199.8 million and $382.2 million of borrowings outstanding under the $1 billion revolving credit facility at December 31, 2017, 2016 and 2015, respectively. We borrowed under this facility from time to time during the years ended December 31, 2017, 2016 and 2015 to supplement the timing of receipts in order to fund our working capital needs. We also borrowed under this facility during the first quarter of 2017 to fund a portion of the consideration for our purchase of Avention and during the fourth quarter of 2017 to repay the 3.25% senior notes at maturity. During the year ended December 31, 2015, we also accessed the facility to fund our purchase of NetProspex and a portion of the consideration for our purchase of DBCC.
Term Loan Facility
On May 14, 2015, we entered into a delayed draw unsecured term loan facility which provided for borrowings in the form of up to two drawdowns in an aggregate principal amount of up to $400 million at any time up to and including November 15, 2015 (the “term loan facility”). The term loan facility matures five years from the date of the initial drawdown. Proceeds under the term loan facility were designated to be used for general corporate purposes including the refinancing of the 2.875% senior notes that matured in November 2015 and the repayment of borrowings outstanding under the $1 billion revolving credit facility. As of December 31, 2017, borrowings under the term loan facility bear interest at a rate of LIBOR plus a spread of 150.0 basis points. Our initial draw down under the term loan facility in the amount of $400 million was made in November 2015, establishing a facility maturity of November 2020. We also committed to repay the borrowings in prescribed installments over the five year period. We made scheduled repayments of $22.5 million, $20.0 million and $5.0 million during the years ended December 31, 2017, 2016 and 2015, respectively.
The following table summarizes borrowings outstanding under the term loan facility:
 
 
At December 31,
 
 
2017
 
2016
 
2015
Short-Term Debt
 
$
32.5

 
$
22.5

 
$
20.0

Long-Term Debt
 
320.0

 
352.5

 
375.0

Total Term Loan Outstanding
 
$
352.5

 
$
375.0

 
$
395.0

The weighted average interest rates were 2.91%, 2.03% and 1.73% for the years ended December 31, 2017, 2016 and 2015, respectively.
The term loan facility requires the maintenance of interest coverage and total debt to EBITDA ratios, which are defined in the term loan facility credit agreement and which are generally identical to those contained in the $1 billion revolving credit facility. We were in compliance with the term loan facility financial and non-financial covenants at December 31, 2017, 2016 and 2015.
Stock-based Programs

Net (payments) proceeds from stock-based awards during the years ended December 31, 2017, 2016 and 2015 were $(0.2) million, $44.0 million and $8.4 million, respectively. The net payments for the year ended December 31, 2017 were primarily driven by a decrease in the volume of stock options exercised as compared to the prior year period. The increase in net proceeds for the year ended December 31, 2016, as compared to the year ended December 31, 2015 was primarily driven by higher stock option exercise activity in 2016 as compared to 2015.

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Future Liquidity—Sources and Uses of Funds
Contractual Cash Obligations
Contractual Obligations(a)
Total
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
All Other
 
(Amounts in millions)
Current and Long-Term Debt(1)
$
1,843.2

 
$
89.8

 
$
823.5

 
$
602.1

 
$
13.9

 
$
313.9