D&B Reports Strong 2005 Results

D&B, the leading provider of global business information, tools and insight, today reported strong results for the fourth quarter and full year 2005.

“We are pleased with our 2005 financial performance, which reflects strong revenue, operating income, EPS, and free cash flow growth. We met or exceeded each of our guidance elements and delivered our fifth consecutive year of strong earnings growth,” said Steve Alesio, chairman and CEO of D&B.

“Looking ahead, we are well-positioned to continue to deliver strong financial results – we have a large marketplace opportunity in front of us, we have a team that has a track record for winning, and we are well-organized to drive growth globally. Our confidence in the future is expressed in our guidance, and we expect 2006 to be another successful year for D&B.”

Fourth Quarter 2005 Results
Diluted earnings per share before non-core gains and charges for the quarter ended December 31, 2005, were $1.29, up 15 percent from $1.12 in the prior year period. On a GAAP basis, diluted earnings per share were $1.32, up 27 percent from $1.04 in the prior year period.

See attached Schedule 3 for a reconciliation of earnings per share before non-core gains and charges to earnings per share on a GAAP basis.

Core revenue for the fourth quarter was $409.0 million, up 7 percent (up 8 percent before the effect of foreign exchange) compared with the prior year period.

Core revenue results for the fourth quarter of 2005 reflect the following by solution set:

• Risk Management Solutions revenue of $243.5 million, up 7 percent (up 8 percent before the effect of foreign exchange);
• Sales & Marketing Solutions revenue of $131.6 million, up 4 percent (both before and after the effect of foreign exchange);
• E-Business Solutions revenue of $19.8 million, up 42 percent (both before and after the effect of foreign exchange); and
• Supply Management Solutions revenue of $14.1 million, up 14 percent (both before and after the effect of foreign exchange).

Total revenue for the fourth quarter was $409.0 million, up 6 percent (both before and after the effect of foreign exchange) compared with the prior year period revenue of $387.5 million. The difference between core revenue and total revenue growth was due to the impact of the divested international businesses that had revenue of $5.8 million in the fourth quarter of 2004.

Operating income for the quarter was $145.7 million, up 15 percent from the prior year period, before non-core gains and charges in both years. On a GAAP basis, operating income was $136.6 million, up 18 percent from the prior year period. During the quarter, the Company also incurred transition costs of $3.4 million as compared to $6.5 million in the prior year period.

Net income for the quarter was $88.3 million, up 10 percent from $80.5 million in the prior year period, before non-core gains and charges in both years. On a GAAP basis, net income for the quarter was $90.3 million, up 20 percent from $75.0 million in the prior year period.

Full Year Results
Diluted earnings per share before non-core gains and charges for 2005 were $3.49, up 17 percent from the year ago period. On a GAAP basis, the Company reported 2005 diluted earnings per share of $3.19, up 10 percent from the year ago period.

Core revenue for the year was $1.444 billion, up 8 percent (both before and after the effect of foreign exchange) over the same period last year.

Core revenue results for the full year 2005 reflect the following by solution set:

• Risk Management Solutions revenue of $953.2 million, up 8 percent (up 7 percent before the effect of foreign exchange);
• Sales & Marketing Solutions revenue of $382.8 million, up 4 percent (both before and after the effect of foreign exchange);
• E-Business Solutions revenue of $70.0 million, up 40 percent (both before and after the effect of foreign exchange); and
• Supply Management Solutions revenue of $37.6 million, up 10 percent (up 9 percent before the effect of foreign exchange).

Total revenue for 2005 was $1.444 billion, up 2 percent (up 1 percent before the effect of foreign exchange) compared with prior year revenue of $1.414 billion. The difference between core and total revenue growth was due to the loss of revenue from divested international businesses that had revenue of $79.5 million in 2004.

Operating income was $395.1 million for 2005, up 13 percent from 2004, before non-core charges in both periods, with contributions from both the U.S. and International segments. On a GAAP basis, operating income for 2005 was $364.0 million, up 14 percent from the year ago period. GAAP results include $31.1 million of non-core charges in 2005 and $32.0 million of non-core charges in 2004. During the year, the Company also incurred transition costs of $21.5 million as compared to $20.6 million in the prior year period.

Net income for the year was $242.0 million, up 11 percent from the prior year period, before non-core gains and charges in both years. On a GAAP basis, net income was $221.2 million, up 4 percent from the prior year period.

Free cash flow for full-year 2005, excluding the impact of legacy tax payments, was $283.2 million, up 19 percent from the prior year period. The Company paid $50.3 million in 2005 in connection with its legacy tax matters.

The Company defines free cash flow as net cash provided by operating activities less capital expenditures and additions to computer software and other intangibles. Net cash provided by operating activities excluding $50.3 million of legacy tax payments was $311.8 million for full-year 2005, up 17 percent from the prior year period. On a GAAP basis, net cash provided by operating activities was $261.5 million, down 2 percent from the prior year period.

Share repurchases during the quarter, under the Company’s $400 million two-year program commenced in the first quarter of 2005, totaled $50 million, with $200 million repurchased since inception.

The Company ended the year with $304.7 million of cash and cash equivalents.