D&B Announces Strong Third Quarter 2005 Results and Confirms Guidance

D&B, the leading provider of global business information, tools and business insight, today reported results for the third quarter ended September 30, 2005.

“Our third quarter marks another in a string of consecutive quarters of strong top and bottom line growth,” said Steve Alesio, chairman and CEO of D&B. “We feel very good about the continued strength of our U.S. business, especially Risk Management, our largest customer solution set. We are making progress in International and continue to believe the actions we are taking will improve our results. In summary, we have a strategy that works, and we remain confident in our ability to deliver strong revenue growth and increase shareholder value over time.”

Third Quarter 2005 Results
Diluted earnings per share before non-core gains and charges for the quarter ended September 30, 2005, were $0.75, up 15 percent from $0.65 in the prior year quarter. On a GAAP basis, diluted earnings per share were $0.46, down 29 percent from $0.65 in the prior year quarter.

Core revenue for the quarter was $341.6 million, up 7 percent (both before and after the effect of foreign exchange) compared with the prior year quarter.

Core revenue results for the third quarter of 2005 reflect the following:

• Risk Management Solutions revenue of $229.6 million, up 7 percent (up 6 percent before the effect of foreign exchange);
• Sales & Marketing Solutions revenue of $84.1 million, up 2 percent (both before and after the effect of foreign exchange);
• E-Business Solutions revenue of $17.9 million, up 39 percent (both before and after the effect of foreign exchange); and
• Supply Management Solutions revenue of $10.0 million, up 21 percent (both before and after the effect of foreign exchange).

Total revenue for the quarter was $341.6 million, up 3 percent compared with the prior year quarter (up 2 percent before the effect of foreign exchange).

Operating income for the quarter was $83.5 million, up 10 percent from the year-ago period, before non-core gains and charges in both years. On a GAAP basis, operating income was $79.2 million, up 9 percent from the year-ago period. During the quarter, the Company also incurred transition costs of $4.2 million as compared to $4.0 million in the prior year quarter.

Net income before non-core gains and charges was $52.1 million for the quarter, up 11 percent from $47.1 million in the prior year period. On a GAAP basis, net income was $31.7 million, down 33 percent compared with $47.5 million in the prior year period.

Free cash flow for the first nine months of 2005, excluding the impact of legacy tax payments, was $191.5 million, up 24 percent from the first nine months of 2004. The Company paid $15.8 million in the first quarter and $34.5 million in the third quarter 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 $209.4 million for the first nine months of 2005, up 20 percent from the prior year period. On a GAAP basis, net cash provided by operating activities was $159.1 million, down 9 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 $50.7 million, with $150.6 million repurchased since inception.

The Company ended the quarter with $264.6 million of cash and cash equivalents.

Third Quarter 2005 Segment Results
As outlined in the Company’s Annual Report on Form 10-K for the year ending December 31, 2004, filed with the Securities and Exchange Commission (SEC) on March 14, 2005, D&B began reporting the results of its business in Canada as part of its International segment in the first quarter of 2005. Prior to 2005, the Canadian results were reported as part of the North America segment.

All references to financial results in this release reflect this change.

United States
Total and core revenue for the quarter was $259.0 million, up 8 percent from $240.2 million in the prior year period.

U.S. total and core revenue results for the 2005 third quarter reflect the following:

• Risk Management Solutions revenue of $160.7 million, up 8 percent;
• Sales & Marketing Solutions revenue of $72.1 million, up 2 percent;
• E-Business Solutions revenue of $17.0 million, up 32 percent; and
• Supply Management Solutions revenue of $9.2 million, up 26 percent.

Operating income for the quarter was $87.3 million, up 8 percent from the prior year quarter. This increase was due to improved revenue in the U.S. segment and benefits from the Company’s Financial Flexibility program, partially offset by investments in the DUNSRight™ quality process and dilution from the LiveCapital, Inc. acquisition announced in July 2005.

International
Core revenue for the quarter was $82.6 million, up 5 percent (up 4 percent before the effect of foreign exchange) from $78.7 million in the prior year quarter. During the third quarter, the Italian real estate business contributed 4 percentage points of core revenue growth with the majority of the growth due to a price increase and the acquisition of a controlling interest in RIBES S.p.A in 2004.

International core revenue results for the third quarter of 2005 reflect the following:

• Risk Management Solutions revenue of $68.9 million, up 5 percent (up 4 percent before the effect of foreign exchange);
• Sales & Marketing Solutions revenue of $12.0 million, flat compared to the prior year period (both before and after the effect of foreign exchange);
• E-Business Solutions revenue of $0.9 million; and
• Supply Management Solutions revenue of $0.8 million, down 18 percent (down 19 percent before the effect of foreign exchange).