10-K


 
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, 2015
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   o    No  x 
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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
ý
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
o
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, 2015, 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, 2015) was approximately $4.4 billion.
As of January 31, 2016, 36,171,313 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 4, 2016, 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 9B.
Other Information
 
 
 
 
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
 
 
 
 
 
 
Item 15.
 
 

2


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, 2015 contained more than 250 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, and Sales & Marketing Solutions™ to better use data to grow sales and 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
In February 2014, the Company announced a new strategy designed to drive long term sustainable growth in the years ahead. Dun & Bradstreet is committed to increasing Total Shareholder Return (“TSR”) through revenue growth, and our strategy is to become one global company delivering indispensable content through modern channels to serve new customer needs with our forward-leaning culture. We remain focused on the commercial marketplace and continuing to be the world’s largest and best provider of insight about businesses.
Our strategy has five key components:
•
First, we are investing in content, which includes our data and analytics, that is indispensable to our customers’ growth. We are 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;
•
Second, we are modernizing content delivery by transitioning from older, traditional platforms to more agile Data-as-a-Service (or “DaaS”) and customer-friendly approaches leveraging Application Programming Interface (“API”) connectors, and focusing on alliance and third party distribution in addition to our own products;
•
Third, we are globalizing the business, moving from a regional structure to an integrated global organization. As part of this transformation we intend to expand upon our relationships with our large, strategic customers, many of which also have global operations. This globalization of our business will be closely integrated with our Worldwide Network® partners;
•
Fourth, we are modernizing the brand, making sure that it is understood for what Dun & Bradstreet is becoming, not just for what it has been; and
•
Fifth, we are creating 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.
The new 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

3


For the reasons described below, we believe that these core competitive advantages will enable successful execution of our strategy going forward.
Well Recognized Brand
On March 9, 2015, Dun & Bradstreet revealed a significant milestone for our company - the creation and release of our modernized brand and brand purpose: Dun & Bradstreet grows the most valuable relationships in business by uncovering truth and meaning from data. Our modernized purpose is about helping our customers grow the most valuable relationships with their prospects, customers, suppliers or partners. Our brand promise is grounded in the understanding that growing strong relationships through data empowers our customers’ success. In fact, we believe that by forming the best possible relationships between data points, between businesses and humans, the right people win for the right reasons. We have modernized our logo, including making the ampersand even more prominent. Not only has the ampersand been a part of our logo since 1959, it also holds special meaning as a universal symbol of connection and relationships. It symbolizes our ambition to be our customers’ most essential business partner in growing their most valuable business relationships. Nearly ninety percent of the Fortune 500, and companies of every size around the world, rely on our global data, insights and analytics.
Superior Content and Solutions
Risk Management Solutions
Risk Management Solutions is our largest customer solution set, accounting for 60%, 61% and 61% of our total revenue, exclusive of businesses we no longer operate, for each of the years ended December 31, 2015, 2014 and 2013.
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?
Our principal Risk Management Solutions are:
•
DNBi® and D&B Credit™, 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;
•
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 DNB.com;
•
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 Enterprise Resource Planning (“ERP”), and enables master data management and Toolkit;
•
Our credit building and credibility solutions for emerging businesses, which provide, among other solutions, a credit monitoring solution to companies looking to monitor and impact their own business credit profile, offered through our Emerging Businesses division as a result of our acquisition of Dun & Bradstreet Credibility Corp.;
•
Supplier Risk Manager, an online application that helps businesses mitigate supply chain risk by certifying and onboarding suppliers, monitoring including alerts and portfolio analysis; and
•
Our Compliance product suite which includes Onboard and Compliance Check, online applications that help customers comply with Anti-Money Laundering and Know Your Customer requirements and global anti-bribery and corruption regulations through advanced screening and monitoring of customers and third party vendors.

4


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 40%, 39% and 39% of our total revenue, exclusive of businesses we no longer operate, for each of the years ended December 31, 2015, 2014 and 2013, 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 allocate sales force resources to revenue growth potential?
•
How can I ensure my data on customers is accurate, up to date and robust?
•
Who are the best contacts at a business for my services?
•
How can I target the right audience with online advertising?
Our principal Sales & Marketing Solutions are:
•
Our customer data integration solutions, which are solutions that cleanse, identify, link and enrich customer information. Our D&B Optimizer™ solution, for example, transforms our customers’ prospects and data into up-to-date, accurate and actionable commercial insight, facilitating a single customer view across multiple systems and touchpoints, such as marketing and billing databases, and better enables a customer to make sales and marketing decisions;
•
Hoover’s®, which is primarily a traditional prospecting solution, provides information on public and private companies, and on industries and executives, sales, marketing and research professionals worldwide to help customers convert prospects to clients faster by providing a workflow solution;
•
Various other marketing solutions including our education business, our electronic licensing products, and our Integration Manager product which is an onsite match tool that leverages Dun & Bradstreet match technology to enable customers to perform onsite matching on Dun & Bradstreet data, customer data and third party data;
•
Products leveraging API connectors introduced as part of our DaaS strategy. Customer Relationship Management (“CRM”) was our first area of focus, with D&B360®, which helps CRM customers manage their data, increase sales and improve customer engagement. In addition, we have strategic alliances with leading third party application providers, including Salesforce.com® and Oracle®, whereby our content is natively integrated into the solution. The vision for DaaS is to make Dun & Bradstreet’s content available wherever and whenever our customers need it, thereby powering more effective business processes;
•
Our Market Insight tool, which provides robust marketing analytics that help customers segment and understand existing customers, in order to more effectively create campaigns to cross-sell new business; and
•
Our professional contact tools, including Optimizer for Contacts and audience solutions, which offer multiple ways to reach active domestic contacts, complete with intelligence about the companies they work for, enabled by our acquisition of NetProspex®.
Loyal Customers
In the fourth quarter of 2015, we established a dedicated Global Customer Experience function to bring together the entirety of our customer facing go to market areas. This creates strong alignment between product and solutions and how we go to market through a multi-channel approach including the following:
•
Analytics - A continuum of analytics solutions and services including analytics infused data, simple scalable prescriptive analytics, standardized predictive scores, and advanced custom analytics;

5


•
Compliance - Solutions that help businesses to comply with regulations while controlling costs, to avoid reputational risk with customers and third parties, and to scale compliance globally;
•
Emerging Businesses - Focused on the unique needs of emerging business customers in the small to medium business marketplace, including credit-on-self and credit-on-others;
•
Sales and Marketing - Range of solutions to help businesses optimize and build digital relationships with customers through audience optimization, strategic profiling, and intelligent targeting;
•
Supply Chain - Supplier onboarding, management, compliance and monitoring help supply and procurement managers understand their downstream risk in their supply chain; and
•
Trade Credit - Risk and capital management, proactive portfolio management and global shared services for Finance and Credit organizations.
In addition, we continue to serve our customers in a multi-faceted approach through both direct and indirect methods. Direct includes the emerging businesses, which serves the emerging business marketplace, and through three major regions: Americas, Europe, and Asia. Indirect includes our worldwide network and alliance relationships.
This structure creates better alignment with product and solutions, and how they work more closely with our go to market channels. This more aligned, integrated approach will enable us to be more agile and effective in the marketplace and help us to serve our customers more efficiently and effectively.
Our principal customers include manufacturers, wholesalers and retailers in fields as diverse as banking, technology, telecommunications, government and insurance, as well as sales, marketing and business development professionals. None of our customers accounted for more than 10% of our 2015 total revenue. Accordingly, we are not dependent on a single customer, such that the loss of any one customer would have a material adverse effect on our consolidated annual results of operations.
Segments
On January 1, 2015, we began managing and reporting our business through two segments:
•
Americas (which consists of our operations in the United States (“U.S.”), Canada and Latin America); and
•
Non-Americas (which consists of our operations in the United Kingdom (“U.K.”), the Netherlands, Belgium, Australia (which we divested in June 2015), Greater China, India and our Worldwide Network).
Prior to January 1, 2015, we managed and reported our business through the following three segments:
•
North America (which consisted of our operations in the U.S. and Canada);
•
Asia Pacific (which primarily consisted of our operations in Australia (which we divested in June 2015), Greater China, India and Asia Pacific Worldwide Network); and
•
Europe and other International Markets (which primarily consisted of our operations in the U.K., the Netherlands, Belgium, Latin America and our European Worldwide Network).
The following table presents the contribution by segment to total revenue and core 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,
 
2015
 
2014
 
2013
Total Revenue:
 
 
 
 
 
Americas
81
%
 
80
%
 
80
%
Non-Americas
19
%
 
20
%
 
20
%
Core Revenue:
 
 
 
 
 
Americas
81
%
 
80
%
 
80
%
Non-Americas
19
%
 
20
%
 
20
%

6


We may also acquire, divest, or shut down businesses from time to time. For example, in 2015, we:
•
Acquired NetProspex, Inc. and Dun & Bradstreet Credibility Corp. (“DBCC”); and
•
Completed the sale of our business in Australia and New Zealand (“ANZ”).
Segment data and other information for the years ended December 31, 2015, 2014 and 2013 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.
2015 Reporting
In addition to the changes in our segment reporting that became effective January 1, 2015, we began reporting and monitoring the performance of our Risk Management Solutions as Trade Credit and Other Enterprise Risk Management, and the results of our Sales & Marketing Solutions as Traditional Prospecting Solutions and Advanced Marketing Solutions. Trade Credit represents our traditional commercial credit products such as DNBi and all other products that help customers assess payment risk. 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. Traditional Prospecting Solutions includes Hoover’s, our educational marketing business Market Data Retrieval (“MDR”) and marketing list solutions. Advanced Marketing Solutions includes all of our remaining Sales & Marketing Solutions products including Optimizer, NetProspex and DaaS (e.g., CRM and D&B Direct sales and marketing solutions).
Our Sales Force
Our sales force consists of approximately 1,800 team members worldwide, of whom approximately 1,300 were in our Americas and 500 were in our Non-Americas business as of December 31, 2015. Our sales force includes sales executives and customer solution specialists who sell to our strategic and 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.
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 190 countries. In those countries, we have determined it is 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 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 which 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, 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.

7


In Europe, our direct competition is primarily local, such as Experian in the U.K., Graydon in Belgium and the Netherlands and Bureau van Dijk® across Europe. We believe that we offer superior solutions when compared to these competitors. In addition, the Sales & Marketing Solutions landscape is both localized and fragmented throughout Europe, 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, which is owned by Experian. In addition, as in Europe, 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. For example, in certain global markets, such as Europe, some credit insurers have identified the provision of credit information as an additional revenue stream. In addition, business information solutions and services are becoming more readily available, principally due to the expansion of the Internet, greater availability of public data 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 and sources of data not publicly available;
•
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;
•
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. 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 protection thereof 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 trademarks, service marks 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 which we have determined are proprietary and warrant patent protection. We believe that the protection of our innovative technology, 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 assets for which we have expended substantial capital. 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.

8


Employees
As of December 31, 2015, we employed approximately 5,000 employees worldwide, of whom approximately 3,500 were in our Americas segment and Corporate, and approximately 1,500 were in our Non-Americas segments.
We know we must have a passionate, forward-leaning culture to support our growth strategy and brand. Toward that end, we have developed and are making significant progress on implementing our long-term plan to modernize our culture, focusing especially on the growth and development and leadership capabilities of our people. In 2015, we launched a number of key people initiatives:
•
As a result of our investment in leadership development, we conducted live and virtual development classes for senior leaders across 13 countries;
•
We anchored our performance model around fluid priorities, coaching conversations, sustainable high performance and our values; and
•
To reinforce our inherently generous company value, we expanded benefits under our global parental leave policy and launched a new employee stock purchase plan in the U.S., Canada and the U.K., with plans to expand it globally in 2016 and 2017.
Our Board of Directors is committed to helping our cultural transformation and we actively engage with them around our cultural initiatives which we expect to roll out continuously in future years, commensurate with our growth as a company.
Our workforce also engages third party consultants from time to time. There are no unions in our U.S. or Canada operations. Works Councils and Trade Unions represent a small portion of our employees outside of the U.S. and Canada.
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 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, on our Hoover’s Internet site or on 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


9


•
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 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, 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 or operational 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.
We cannot be certain that we could replace our large third-party vendors in a timely manner or on terms commercially reasonable to us. If we change a significant outsource provider, an existing provider makes significant changes to the way it conducts its operations, 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, the operations of our critical outsourcers, or the operations of our partners on whom we rely for data and 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 we may experience, can include malware, computer viruses, hacking, or other significant disruption of our Information Technology (“IT”) networks and related systems. Government agencies and security experts have warned about the growing risks of hackers, cyber-criminals and other potential attacks targeting every type of IT system, and in 2013 we learned that we were one of several victims of a sophisticated cyber attack. 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.
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 sensitive information 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. 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 to design, build, and maintain critical components of our IT environment 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, which could have a material adverse effect on our business and financial results.

10


Violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), and similar laws, and the investigation of such matters, including the current investigations regarding violations of consumer data privacy laws in China, or, 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 may 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, debarment, loss of supplier, vendor or other third-party relationships, 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-party vendors may result in criminal or civil sanctions, which could disrupt our business and result in a material adverse effect on our reputation, business, results of operations or financial condition.
Since 2012, we have been reviewing certain allegations that we may have violated the FCPA and certain other laws in our China operations. As previously reported, we have voluntarily contacted the SEC and the DOJ to advise both agencies of our investigation. As our investigation and our discussions with both the SEC and DOJ are ongoing, we cannot yet predict the ultimate outcome of the matter or its impact on our business, financial condition or results of operations. Based on our discussions with the SEC and DOJ, including an indication from the SEC in February 2015 of its initial estimate of the amount of net benefit potentially earned by the Company as a result of the challenged activities, we continue to believe that it is probable that the Company will incur a loss related to the government's investigation. The DOJ also advised the Company in February 2015 that they will be proposing terms of a potential settlement, but we are unable to predict the terms of any such proposal. We had follow-up meetings with the SEC and DOJ in December of 2015 and January 2016, respectively, but the parties are still discussing the evidence. We are unable at this time to reasonably estimate the amount or range of such loss, although it is possible that the amount of such loss could be material. In addition, the SEC and the DOJ have a broad range of civil and criminal sanctions available to them under the FCPA and other laws and regulations 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 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;

•
Credit insurers; and

•
Analytics providers.
Business information solutions and services are becoming more readily available, principally due to the expansion of available insight on the Internet, 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 search 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. Such companies, 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.

11


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;

•
Operate within any 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.
The failure to continue to invest in our business in order to remain competitive could result in a material adverse effect on our future business and financial results.

12


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.
In February 2014, we announced a new strategy designed to drive long term sustainable growth as one global company delivering indispensable content through modern channels to serve new customer needs. We may not be able to implement our strategic initiatives in accordance with our expectations, which may result in an adverse impact on our business and financial results. These strategic initiatives, which are designed to create long term shareholder value, include:

•
Investing in content indispensable to our customers’ growth. We are 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, and cultivating new proprietary data sources and acquiring companies and other third party sources of data to combine with our existing data;

•
Modernizing content delivery by transitioning from older, traditional platforms to more agile and customer-friendly approaches leveraging API connectors, mobile, social and cloud technologies and focusing on alliance and third party distribution in addition to our own products;

•
Globalizing the business, moving from a regional “market” structure to an integrated global organization.  As part of this transformation we intend to expand upon our relationships with our large, strategic customers, many of which also have global operations.  This globalization of our business will be supported by our Worldwide Network partners;

•
Modernizing our brand, making sure that it is understood for what Dun & Bradstreet is becoming, not just for what it has been; and

•
Creating 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.
The success of our strategy is dependent upon the successful achievement of each of these initiatives.  As an organization, we may not have the capacity or ability to successfully accomplish all of these initiatives in the timeframe we desire, or at all.  Each of these initiatives is complex and will require a continued commitment to investment.  We cannot be certain that even upon accomplishing these initiatives, we will continue to meet our customers’ changing needs, which could significantly harm our business and financial results.
In addition, we 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 core revenue and operating income, and to achieve desired tax rates and to generate free cash flow. In addition, we evaluate sales, which represents the value of committed contracts, as a measure of how we are performing against our strategic initiatives.  We believe that our financial guidance and these metrics provide our investors and analysts with a better understanding of our view of our near-term financial performance. 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, such as sales, the market value of our common stock or other securities could be materially adversely affected.
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 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

13


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. 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 money damages. 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 plan to continue to invest in our core systems to improve and maintain the quality, timeliness and coverage of the data contained therein and their ongoing operation in order to maintain our competitive positioning in the marketplace. We have 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 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. 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. 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, and contract provisions in our government contracts 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.

14


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. As a result of the macro-economic challenges currently affecting the economy of the U.S., Europe, and other parts of the world, 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. Tepid economic growth is also intensifying the competitive pressures in our business categories including increasing price pressure. In addition, 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 a greater number of 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 further or do not show improvement, 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 and/or publish data and could impact our financial results.
Certain types of information we collect, compile, store, use and publish are subject to regulation by governmental authorities in various jurisdictions in which we operate, particularly in our global markets. There is increasing awareness and concern among the general public, governmental bodies, and others regarding marketing and privacy matters, particularly as they relate to individual privacy interests and the ubiquity of the Internet. These concerns may result in new or amended laws and regulations that could adversely impact our business. Future laws and regulations, such as any potential legislation regarding commercial credit agencies, or any court actions, laws and regulations in the European Union, its Member States or other jurisdictions, with respect to the collection, compilation, storage, use, cross-border transfer and/or publication of information, and adverse publicity or litigation concerning the commercial use 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.
Our business relies on the availability of the Internet as it is currently configured and operated both to obtain data and services and to provide data and services to our customers. If the rules governing the operation of the Internet and/or transfer of information over the Internet were to change, such as, for example, by permitting broadband suppliers to discriminate in providing access to their networks, this could have a material adverse impact on our business and financial results.
Governmental agencies and commercial entities from whom we acquire data may seek to increase the costs we must pay to acquire, use and/or redistribute such data. 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 price 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 having to incur such additional costs further increases.  Any such price increases or 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. In addition, governmental agencies may seek to limit or restrict access to data and information that are currently publicly available, which could have a material adverse impact on our business and financial results.
Acquisitions, joint ventures or similar strategic relationships, or dispositions of any 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;

15



•
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 either control or hold a minority interest in, and third-party members who conduct business under the Dun & Bradstreet brand name 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 and from certain third parties to be included in the data solutions that they sell to their customers and that we sell to our customers, respectively, 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, 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. As a result, actions or inactions taken by these third parties or their failure to renew their contractual relationship with us may have a material adverse impact 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 may have an impact on customer confidence in the Dun & Bradstreet brand globally, which could 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, 2015, 2014 and 2013, our businesses outside of the U.S. accounted for 22%, 24% and 24% 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 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;

•
Although our services have not usually been regulated, we have recently become subject to certain regulation in the United Kingdom as it pertains to certain activities that Dun & Bradstreet conducts in the United Kingdom related

16


to sole proprietorships and unincorporated entities, and other governments may adopt legislation or regulations, or we may learn that our current methods of operation violate existing legislation or regulations, governing the collection, compilation, storage, use, cross-border transfer and/or publication of the kinds of information we collect, compile, store, use, transfer cross-border and/or publish, 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 policies and procedures will always protect us from acts committed by our employees or third party vendors. 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 the 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, but we may not be able to retain our key people, or attract, assimilate or retain other highly-qualified individuals in the future. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees who have appropriate qualifications.
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 adversely impact our results of operations and cash flows.

17


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 February 28, 2023, with two five-year renewal options.
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, 2015, 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, finance, fulfillment and data operations groups;
•
A 79,060 square-foot leased space in Marlow, England, housing our U.K. business, International technology and certain other International groups;
•
A 75,735 square-foot leased office building in Austin, Texas, housing technology development, certain product development and sales operations; 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.

18


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 1,655 shareholders of record as of December 31, 2015.
The following table summarizes the high and low sales prices for our common stock, as reported in the periods shown:
 
2015
 
2014
 
High
 
Low
 
High
 
Low
First Quarter
$
135.92

 
$
114.95

 
$
123.85

 
$
94.87

Second Quarter
$
134.74

 
$
122.00

 
$
110.76

 
$
98.21

Third Quarter
$
126.00

 
$
101.18

 
$
120.16

 
$
110.00

Fourth Quarter
$
115.00

 
$
100.97

 
$
127.37

 
$
110.67

We paid quarterly dividends to our shareholders totaling $66.7 million, $64.0 million and $62.5 million during the years ended December 31, 2015, 2014 and 2013, respectively. In February 2016, we declared a dividend of $0.4825 per share for the first quarter of 2016. This cash dividend will be payable on March 11, 2016 to shareholders of record at the close of business on February 25, 2016.
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, 2015 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, 2015
—

 
$
—

 
—

 
$
—

November 1 - 30, 2015
—

 
$
—

 
—

 
$
—

December 1 - 31, 2015
—

 
$
—

 
—

 
$
—

 
—

 
$
—

 
—

 
$
100.0


(a)
In August 2014, our Board of Directors approved a new $100 million share repurchase program to mitigate the dilutive effect of shares issued under our stock incentive plans and Employee Stock Purchase Program (“ESPP”), and to be used for discretionary share repurchases from time to time. Use of the new $100 million share repurchase program for anti-dilutive share repurchases was authorized to commence upon the completion or expiration of our four-year, five million share anti-dilutive share repurchase program which expired in October 2014. Any use for discretionary share repurchases was authorized to commence upon the completion of our previous $1 billion discretionary share repurchase program which was completed in August 2014. The new $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, 2015, we had not yet commenced share repurchases under this program.


19


FINANCIAL PERFORMANCE COMPARISON GRAPH*
SINCE DECEMBER 31, 2010
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 500 Index and a published industry index starting on December 31, 2010. Our past performance may not be indicative of future performance.

As an industry index, the Company chose the S&P 500 Commercial & Professional Services Index, a subset of the S&P 500 Index that includes companies that provide business-to-business services.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG DUN & BRADSTREET, S&P 500 INDEX AND THE S&P 500 COMMERCIAL &
PROFESSIONAL SERVICES INDEX
*
Assumes $100 invested on December 31, 2010, and reinvestment of dividends.

20


 Item 6.      Selected Financial Data
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
 
2012
 
2011
 
(Amounts in millions, except per share data)
Results of Operations:
 
 
 
 
 
 
 
 
 
Revenue
$
1,637.1

 
$
1,584.5

 
$
1,558.4

 
$
1,563.9

 
$
1,665.2

Costs and Expenses
1,300.1

 
1,173.1

 
1,132.3

 
1,147.3

 
1,253.8

Operating Income (1)
337.0

 
411.4

 
426.1

 
416.6

 
411.4

Non-Operating Income (Expense) - Net (2)
(57.0
)
 
(71.2
)
 
(39.8
)
 
(53.6
)
 
(57.3
)
Income Before Provision for Income Taxes and Equity in Net Income of Affiliates
280.0

 
340.2

 
386.3

 
363.0

 
354.1

Provision for Income Taxes (3)
74.2

 
54.3

 
135.6

 
82.2

 
109.0

Equity in Net Income of Affiliates
2.7

 
1.9

 
1.6

 
1.3

 
1.3

Net Income (Loss) from Continuing Operations
208.5

 
287.8

 
252.3

 
282.1

 
246.4

Less: Net (Income) Loss Attributable to the Noncontrolling Interest
(4.3
)
 
(3.5
)
 
(3.6
)
 
(1.0
)
 
0.1

Net Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet
$
204.2

 
$
284.3

 
$
248.7

 
$
281.1

 
$
246.5

Income from Discontinued Operations, Net of Income Taxes (4)
2.1

 
10.1

 
9.8

 
14.4

 
13.8

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

 
—

 
—

 
—

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

 
9.8

 
14.4

 
13.8

Net Income (Loss) Attributable to Dun & Bradstreet
$
168.8

 
$
294.4

 
$
258.5

 
$
295.5

 
$
260.3

Basic Earnings (Loss) Per Share of Common Stock:
 
 
 
 
 
 
 
 
 
Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet Common Shareholders
$
5.66

 
$
7.79

 
$
6.36

 
$
6.16

 
$
5.03

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

 
0.25

 
0.31

 
0.28

Net Income (Loss) Attributable to Dun & Bradstreet Common Shareholders
$
4.68

 
$
8.06

 
$
6.61

 
$
6.47

 
$
5.31

Diluted Earnings (Loss) Per Share of Common Stock:
 
 
 
 
 
 
 
 
 
Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet Common Shareholders
$
5.61

 
$
7.71

 
$
6.29

 
$
6.12

 
$
4.99

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

 
0.25

 
0.31

 
0.29

Net Income (Loss) Attributable to Dun & Bradstreet Common Shareholders
$
4.64

 
$
7.99

 
$
6.54

 
$
6.43

 
$
5.28

 
 
 
 
 
 
 
 
 
 
Other Data:
 
 
 
 
 
 
 
 
 
Weighted Average Number of Shares Outstanding - Basic
36.1

 
36.5

 
39.1

 
45.6

 
48.9

Weighted Average Number of Shares - Diluted
36.4

 
36.9

 
39.5

 
46.0

 
49.3

 
 
 
 
 
 
 
 
 
 
Cash Dividends Paid per Common Share
$
1.85

 
$
1.76

 
$
1.60

 
$
1.52

 
$
1.44

Cash Dividends Declared per Common Share
$
1.85

 
$
1.76

 
$
1.60

 
$
1.52

 
$
1.44

Other Comprehensive Income, Net of Tax:
 
 
 
 
 
 
 
 
 
Net Income (Loss) from Continuing Operations
$
208.5

 
$
287.8

 
$
252.3

 
$
282.1

 
$
246.4

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

 
9.8

 
14.4

 
13.8

Net Income (Loss)
$
173.1

 
$
297.9

 
$
262.1

 
$
296.5

 
$
260.2

Foreign Currency Translation Adjustments, no Tax Impact
(59.0
)
 
(46.9
)
 
(35.6
)
 
17.1

 
(7.5
)
Defined Benefit Pension Plans:
 
 
 
 
 
 
 
 
 
Prior Service Costs, Net of Tax Income (Expense) (6)
(0.9
)
 
1.8

 
(5.6
)
 
(6.4
)
 
(5.8
)
Net Actuarial Gain (Loss), Net of Tax Income (Expense) (7)
15.8

 
(138.3
)
 
154.4

 
(56.2
)
 
(116.6
)
Derivative Financial Instruments, Net of Tax Income (Expense) (8)
—

 
(0.1
)
 
—

 
0.1

 
3.0

Total Other Comprehensive Income (Loss), Net of Tax
(44.1
)
 
(183.5
)
 
113.2

 
(45.4
)
 
(126.9
)
Comprehensive Income (Loss), Net of Income Taxes
129.0

 
114.4

 
375.3

 
251.1

 
133.3

Less: Comprehensive Income (Loss) Attributable to the Noncontrolling Interest
(3.6
)
 
(3.3
)
 
(3.5
)
 
(1.0
)
 
1.4

Comprehensive Income (Loss) Attributable to Dun & Bradstreet
$
125.4

 
$
111.1

 
$
371.8

 
$
250.1

 
$
134.7

 
 
 
 
 
 
 
 
 
 
Balance Sheet:
 
 
 
 
 
 
 
 
 
Total Assets (9)
$
2,273.6

 
$
1,986.2

 
$
1,890.3

 
$
1,991.8

 
$
1,977.1

Long-Term Debt
$
1,804.1

 
$
1,352.2

 
$
1,516.0

 
$
1,290.7

 
$
963.9

Total Dun & Bradstreet Shareholders’ Equity (Deficit)
$
(1,116.8
)
 
$
(1,203.3
)
 
$
(1,048.4
)
 
$
(1,017.4
)
 
$
(743.9
)
Noncontrolling Interest
$
11.5

 
$
8.7

 
$
6.1

 
$
3.1

 
$
3.7

Total Equity (Deficit)
$
(1,105.3
)
 
$
(1,194.6
)
 
$
(1,042.3
)
 
$
(1,014.3
)
 
$
(740.2
)

21



(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):
2015
 
2014
 
2013
 
2012
 
2011
Restructuring Charges
$
(32.3
)
 
$
(14.9
)
 
$
(13.9
)
 
$
(29.4
)
 
$
(22.1
)
Legal and Other Professional Fees and Shut-Down Costs Related to Matters in China
$
(1.6
)
 
$
(3.7
)
 
$
(7.4
)
 
$
(15.6
)
 
$
—

Acquisition/Divestiture Related Costs
$
(21.9
)
 
$
—

 
$
—

 
$
—

 
$
—

Amortization of Acquisition Related Intangibles
$
(17.8
)
 
$
—

 
$
—

 
$
—

 
$
—

Impairments Related to Matters in China
$
—

 
$
—

 
$
—

 
$
(12.9
)
 
$
—

Impairment of Assets
$
(6.8
)
 
$
(7.3
)
 
$
(33.3
)
 
$
—

 
$
(3.3
)
Strategic Technology Investment or MaxCV
$
—

 
$
—

 
$
—

 
$
(30.3
)
 
$
(44.8
)
Settlement of Legacy Pension Obligation
$
—

 
$
—

 
$
—

 
$
—

 
$
(5.1
)
(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):
2015
 
2014
 
2013
 
2012
 
2011
Effect of Legacy Tax Matters (b)
$
(6.9
)
 
$
(28.6
)
 
$
0.8

 
$
(14.8
)
 
$
(7.1
)
Gain (Loss) on Investment
$
(1.2
)
 
$
—

 
$
—

 
$
—

 
$
—

Acquisition/Divestiture Related Costs
$
(0.3
)
 
$
—

 
$
—

 
$
—

 
$
—

Gain (Loss) on Sale of Businesses
$
—

 
$
—

 
$
—

 
$
6.1

 
$
—

Gain (Loss) on Sale of Investment
$
—

 
$
—

 
$
—

 
$
—

 
$
(11.4
)
(a)
See Item 7. included in this Annual Report on Form 10-K for further detail.
(b) 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.
During the year ended December 31, 2012, we recognized the reduction of a contractual receipt under a tax allocation agreement between Moody’s Corporation and Dun & Bradstreet a result of the expiration of the statute of limitations for the 2005 and 2006 tax years.
During the year ended December 31, 2011, 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 the statute of limitations for the 2004 tax year.
(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 (Cost):
2015
 
2014
 
2013
 
2012
 
2011
Restructuring Charges
$
11.7

 
$
4.1

 
$
3.6

 
$
10.7

 
$
7.9

Legal and Other Professional Fees and Shut-Down Costs Related to Matters in China
$
0.8

 
$
1.3

 
$
2.8

 
$
5.2

 
$
—

Gain (Loss) on Sale of Businesses
$
—

 
$
—

 
$
—

 
$
5.1

 
$
—

Acquisition/Divestiture Related Costs
$
3.8

 
$
—

 
$
—

 
$
—

 
$
—

Amortization of Acquisition Related Intangibles
$
6.8

 
$
—

 
$
—

 
$
—

 
$
—

Cash Repatriation Tax Benefit
$
2.9

 
$
—

 
$
—

 
$
—

 
$
—

Impairment of Assets
$
2.1

 
$
2.8

 
$
6.2

 
$
—

 
$
1.2

Strategic Technology Investment or MaxCV
$
—

 
$
—

 
$
—

 
$
9.5

 
$
10.5

Settlement of Legacy Pension Obligation
$
—

 
$
—

 
$
—

 
$
—

 
$
1.9

Gain (Loss) on Investment
$
0.3

 
$
—

 
$
—

 
$
—

 
$
3.5

Tax Benefit on a Loss on the Tax Basis of a Legal Entity
$
—

 
$
—

 
$
—

 
$
15.4

 
$
8.5

Effect of Legacy and Other Tax Matters
$
14.3

 
$
65.8

 
$
(0.8
)
 
$
27.8

 
$
12.0


22


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

(4) Tax Benefit (Expense) of $2.2 million, $1.7 million, $0.1 million, $(0.9) million and $(0.2) million during the years ended December 31, 2015, 2014, 2013, 2012 and 2011, respectively.
(5) In June 2015, we divested our business 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 $37.5 million (both pre-tax and after tax) for the year ended December 31, 2015 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 $0.5 million, $(1.1) million, $3.3 million, $3.1 million and $3.8 million during the years ended December 31, 2015, 2014, 2013, 2012 and 2011, 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 $(9.6) million, $84.9 million, $(91.7) million, $27.2 million and $76.6 million during the years ended December 31, 2015, 2014, 2013, 2012 and 2011, 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) No tax impact for the years ended December 31, 2015, 2013 or 2011. Tax Benefit (Expense) of $(0.1) million and $(1.9) million for the years ended December 31, 2014 and 2012, respectively.
(9) 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.


23


Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
How We Manage Our Business
For internal management purposes, we refer to “core revenue,” which we calculate as total operating revenue less the revenue of divested and other businesses. Core revenue is used to manage and evaluate the performance of our segments and to allocate resources because this measure provides an indication of the underlying changes in revenue in a single performance measure. Core revenue does not include reported revenue of divested and other businesses since they are not included in future revenue.
Effective January 1, 2015, 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 (such as gains and losses on sales of businesses, impairment charges and tax settlements); acquisition and divestiture-related fees (such as costs for bankers, legal fees, diligence costs and retention payments); and acquisition-related intangible amortization expense. A recurring component of our “As Adjusted” basis 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 Company’s 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 core and “As Adjusted” revenue growth both after and before the effects of foreign exchange.
We also analyze “As Adjusted” revenue growth before the effects of foreign exchange among two components, “organic revenue growth” and “revenue growth with acquisitions.” We analyze “organic revenue growth” and “revenue growth with acquisitions” because management believes this information provides important insight into the underlying health of our business. Organic revenue excludes revenue from acquired businesses for one year from the date of the acquisition in order to understand the growth of our existing business. When acquired businesses are merged with our existing businesses, we may need to approximate organic growth.
We may from time to time use the term “sales”, which we define as the value of committed customer contracts. This term is often referred to as “bookings” or “commitments” by other companies.
In June 2015, we divested our business 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 $37.5 million (both pre-tax and after tax) for the year ended December 31, 2015 in the consolidated statement of operations and comprehensive income (loss). See Note 17 to the consolidated financial statements included in this Annual Report on Form 10-K for further detail.
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, stock 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.

24


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.
We report and monitor the performance of our Risk Management Solutions as Trade Credit and Other Enterprise Risk Management, and the results of our Sales & Marketing Solutions as Traditional Prospecting Solutions and Advanced Marketing Solutions. Trade Credit represents our traditional commercial credit products such as DNBi and all other products that help customers assess payment risk. 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. Traditional Prospecting Solutions includes Hoover’s, our educational marketing business Market Data Retrieval (“MDR”) and marketing list solutions. Advanced Marketing Solutions includes all of our remaining Sales & Marketing Solutions products including Optimizer, NetProspex and Data-as-a-Service (“DaaS”) (e.g., Customer Relationship Management (“CRM”) and D&B Direct sales and marketing solutions).
We evaluate our business based on the following supplemental revenue metrics: (1) for Trade Credit we further evaluate it by “DNBi®”, which includes D&B Credit, and “Other Trade Credit” and (2) for total revenue we further evaluate it by “Direct” and “Alliance & Partners”. We define “DNBi” as our interactive, online application that offers customers a subscription based real time access to our most complete and up-to-date global information, comprehensive monitoring and portfolio. We define “Other Trade Credit”as products and services used to manage credit risk and to support our customers’ internal credit risk decisioning processes. We define “Direct” as when we hold the relationship with the end customer. We define “Alliance & Partners” as where we do not maintain the end relationship with the customer of our content (e.g., Alliances, Worldwide Network Partners, Third Party or Broker type relationships). Management believes these measures provide further insight into our revenue performance.
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 measures of other companies.
See “Results of Operations” below for a discussion of our results reported on a GAAP basis.
Overview
On January 1, 2015, we began managing and reporting our business through two segments:
•
Americas (which consists of our operations in the United States (“U.S.”), Canada and Latin America); and
•
Non-Americas (which consists of our operations in the United Kingdom (“U.K.”), the Netherlands, Belgium, Australia (which we divested in June 2015), Greater China, India and our Worldwide Network).
Prior to January 1, 2015, we managed and reported our business through the following three segments:
•
North America (which consisted of our operations in the U.S. and Canada);
•
Asia Pacific (which primarily consisted of our operations in Australia (which we divested in June 2015), Greater China, India and Asia Pacific Worldwide Network); and
•
Europe and other International Markets (which primarily consisted of our operations in the U.K., the Netherlands, Belgium, Latin America and our European Worldwide Network).
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.

25


The following table presents the contribution by segment to total revenue and core revenue:
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
Total Revenue:
 
 
 
 
 
Americas
81
%
 
80
%
 
80
%
Non-Americas
19
%
 
20
%
 
20
%
Core Revenue:
 
 
 
 
 
Americas
81
%
 
80
%
 
80
%
Non-Americas
19
%
 
20
%
 
20
%
The following table presents contributions by customer solution set to total revenue and core revenue:
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
Total Revenue by Customer Solution Set (1):
 
 
 
 
 
Risk Management Solutions
60
%
 
61
%
 
61
%
Sales & Marketing Solutions
40
%
 
39
%
 
39
%
Core Revenue by Customer Solution Set:
 
 
 
 
 
Risk Management Solutions
60
%
 
61
%
 
61
%
Sales & Marketing Solutions
40
%
 
39
%
 
39
%
(1)
Our Divested and Other Businesses contributed less than 1% to our total consolidated revenue for each of the years ended December 31, 2014 and 2013. See Note 14 to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K for further detail.
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”). The U.S. Qualified Plan covered active and retired employees. The benefits to be paid upon retirement are 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 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, 2015.

26


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. 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. During the first quarter of 2010, we eliminated company-paid life insurance benefits for retirees and modified our sharing of the Retiree Drug Subsidy that retirees were projected to receive. Effective July 1, 2010, we elected to convert the then current prescription drug program for retirees over 65 to a group-based company sponsored Medicare Part D program, or Employer Group Waiver Plan (“EGWP”). Under this change, we started, in 2013, to use the Part D subsidies delivered through the EGWP each year to reduce net company retiree medical costs until net company costs were completely eliminated. The Part D subsidies would be shared with retirees going forward to reduce retiree contributions. In July 2014, we amended our post-65 retiree health plan to eliminate our group-based retiree medical 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.
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;
•
Rates of compensation increase and cash balance accumulation/conversion rates, which are based on an evaluation of internal plans and external market indicators;
•
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
•
Health care cost trends, which are based on historical cost data, the near-term outlook and an assessment of likely long-term trends. This assumption is no longer applicable to our benefit plans after we eliminated our group-based retiree medical and prescription plans effective December 31, 2014.
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 consolidated financial statements is a change in the expected long-term rate of return on pension plan assets for the U.S. Qualified Plan. This assumption was 7.75% in each of the years 2015, 2014 and 2013. For 2016, we will use a long-term rate of return of 7.25%. The 7.25% 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, 2015, the U.S. Qualified Plan was 51% invested in publicly traded equity securities, 46% invested in debt securities and 3% invested in real estate investments. One-quarter-percentage-point increase or decrease in the long-term rate of return increases or reduces our annual operating income by approximately $3 million by increasing or reducing our net periodic pension income.
Based on the factors discussed above, the discount rate is adjusted at each remeasurement date while other assumptions are reviewed annually. Changes in the discount rate, rate of compensation increase and cash balance accumulation/conversion rates do not have a significant effect on our annual operating income primarily as a result of freezing the pension benefits related to our U.S. Qualified Plan as discussed above. However, changes in the discount rate could have a significant impact on our financial position. The discount rate used to determine the pension cost for our U.S. pension plans was 3.60%, 4.44% and 3.54% for 2015, 2014 and 2013, respectively. For 2016, we increased the discount rate to 3.89% from 3.60% for all of our U.S. pension plans.
Differences between the assumptions stated above and actual experience could affect our pension and other postretirement benefit costs. When actual plan experience differs from the assumptions used, actuarial gains or losses arise. 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-

27


plan basis. For all of our pension plans, total actuarial losses that have not been recognized in our pension costs as of December 31, 2015 and 2014 were $1,120.7 million and $1,141.3 million, respectively, of which $885.2 million and $893.6 million, respectively, were attributable to the U.S. Qualified Plan, $124.0 million and $135.5 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 2016 net periodic pension cost, we expect to recognize a portion of such losses amounting to $28.6 million, $7.1 million and $3.3 million for the U.S. Qualified Plan, U.S. Non-Qualified Plans and non-U.S. plans, respectively, compared to $31.1 million, $7.9 million and $3.5 million, respectively, in 2015. The lower amortization of actuarial loss included in our 2016 pension cost for the U.S. Qualified and Non-Qualified Plans, is due to a lower unrecognized actuarial loss subject to amortization in 2016. The lower unrecognized actuarial loss results from a higher discount rate at December 31, 2015, and the adoption of the updated projected mortality improvement assumption at December 31, 2015 (discussed below).
The mortality assumption is one of the key components in determining projected pension obligations as well as the pension and postretirement benefit costs. At December 31, 2014, we adopted a new mortality assumption for our U.S. pension plans and the U.S. postretirement benefit plan. The new mortality assumption was issued by the Society of Actuaries in October 2014. This fully generational RP-2014 aggregate mortality table and MP-2014 projection scale replaced the RP-2000 table that had been in use since 2000. The new table projects longer life expectancies and reflects a more rapid improvement in expected mortality in future years. As a result of this change, the projected benefit obligations for our U.S. Qualified Plan and U.S. Non-Qualified Plan increased by approximately $105.5 million and $10.8 million, respectively, at December 31, 2014. At December 31, 2015, we adopted a recently released updated mortality improvement projection scale MP-2015, resulting in a reduction of the projected benefit obligations of approximately $21 million. This new mortality improvement projection scale, used in conjunction with the RP-2014 mortality assumption, modifies the projected mortality improvement rates beginning at December 31, 2015.
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 $18.1 million, $18.7 million and $24.9 million for the years ended December 31, 2015, 2014 and 2013, respectively. A major component of the net periodic pension cost is the expected return on plan assets, which was $102.6 million, $100.2 million and $94.1 million for the years ended December 31, 2015, 2014 and 2013, 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. For our pension plans we recorded: (i) for the year ended December 31, 2015, a total investment gain of $13.5 million which was comprised of a loss of $2.7 million in our U.S. Qualified Plan and a gain of $16.2 million in our non-U.S. plans, (ii) for the year ended December 31, 2014, a total investment gain of $139.2 million which was comprised of a gain of $94.3 million in our U.S. Qualified Plan and a gain of $44.9 million in our non-U.S. plans, and (iii) for the year ended December 31, 2013, a total investment gain of $178.1 million which was comprised of a gain of $156.3 million in our U.S. Qualified Plan and a gain of $21.8 million in our non-U.S. plans. At January 1, 2016, the market-related value of plan assets of our U.S. Qualified Plan and the non-U.S. plans was $1,189.6 million and $261.8 million, respectively, compared with the fair value of the plan assets of $1,156.2 million and $282.7 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. These unrecognized gains/losses and prior service costs are amortized out of equity (deficit) based on an actuarial calculation each period. Gains/losses and prior service costs that arise during the year are recognized as a component of Other Comprehensive Income (“OCI”) which is then reflected in AOCI. As a result, we recorded a net income of $14.9 million and a net loss of $136.5 million in OCI, net of applicable tax, in the years ended December 31, 2015 and 2014, respectively. The income in 2015 was primarily due to an improved funded status, driven by a higher discount rate and the adoption of the updated projected mortality improvement assumptions (discussed above) at December 31, 2015 for our U.S. pension plans. Net funded status for our global pension plans was a deficit of $550.2 million at December 31, 2015 compared to a deficit of $576.5 million at December 31, 2014. The funded status for our U.S. Qualified Plan was a deficit of $248.3 million at December 31, 2015 compared to a deficit of $262.1 million at December 31, 2014.
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.


28


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 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. As a result, the allocation of total consideration in future new multiple-element arrangements with the same deliverables can change.
Goodwill and Other Indefinite-Lived Intangible Assets
Goodwill represents the excess of costs over fair value of assets and liabilities of businesses acquired. Goodwill and intangibles with an indefinite life are not subject to regular periodic amortization. Instead, the carrying amount of the goodwill and indefinite-lived intangibles is tested for impairment at least annually, and between annual tests if events or circumstances warrant such a test. An impairment loss would be recognized if the carrying amount exceeded the fair value.
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. At December 31, 2015, our reporting units are North America, United Kingdom, Benelux (the Netherlands and Belgium), Europe Partnerships, Latin America, Greater China, Asia Partnerships and India.
We perform a two-step goodwill impairment test. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets, including goodwill assigned to that reporting unit, goodwill is not impaired and no further test is performed. However, if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, the second step of the impairment test is performed to determine the magnitude of the impairment, which is the implied fair value of the reporting unit’s goodwill compared to the carrying value. The implied fair value of goodwill is the difference between the fair value of the reporting unit and the fair value of its identifiable net assets. If the carrying value of goodwill exceeds the implied fair value of goodwill, the goodwill is written down to its implied fair value and an impairment loss equal to this difference is recorded in the period that the impairment is identified as an operating expense.
We determine the fair value of our reporting units based on the market approach and also in certain instances use 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.). As of our most recent impairment analysis at December 31, 2015, the current year EBITDA multiples used to determine the individual reporting unit’s fair value range from 8 to 11. 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 management’s 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 2015 year-end impairment analysis, we applied the DCF approach to determine fair value for certain reporting units. The discount rates used to determine the individual reporting unit’s fair value ranged from 11% to 18%.
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.

29


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, 2015 by the number of shares outstanding at that time, adjusted for the value of the Company’s debt).
At December 31, 2015, the estimated fair values of our reporting units exceeded the respective carrying values by amounts ranging from 40% to well over 100%. Our India reporting unit was 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, 2015.
The allocated goodwill by reportable segment is as follows:
(in millions)
 
Number of Reporting Units
 
As of December 31, 2015
 
As of December 31, 2014
Americas
 
2
 
$
562.6

 
$
275.1

Non-Americas
 
6
 
141.4

 
153.0

 
 
 
 
$
704.0

 
$
428.1

For indefinite-lived intangibles, other than goodwill, 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.
For intangible assets with indefinite lives, we perform an impairment test annually in the fourth quarter of each year, or, under certain circumstances which indicate there may be an impairment. 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 fiscal years ended December 31, 2015, 2014 and 2013.
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.

30


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 core and total revenue by segment:

 
For the Years Ended December 31,
 
2015
 
2014
 
2013
 
(Amounts in millions)
Revenue:
 
 
 
 
 
Americas
$
1,329.1

 
$
1,260.3

 
$
1,245.4

Non-Americas
308.0

 
324.1

 
311.4

Core Revenue
1,637.1

 
1,584.4

 
1,556.8

Divested and Other Businesses
—

 
0.1

 
1.6

Total Revenue
$
1,637.1

 
$
1,584.5

 
$
1,558.4

The following table presents our core and total revenue by customer solution set:
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
 
(Amounts in millions)
Revenue:
 
 
 
 
 
Risk Management Solutions
$
978.3

 
$
962.0

 
$
954.0

Sales & Marketing Solutions
658.8

 
622.4

 
602.8

Core Revenue
1,637.1

 
1,584.4

 
1,556.8

Divested and Other Businesses
—

 
0.1

 
1.6

Total Revenue
$
1,637.1

 
$
1,584.5

 
$
1,558.4

Year Ended December 31, 2015 vs. Year Ended December 31, 2014
Total revenue increased $52.6 million, or 3% (5% increase before the effect of foreign exchange), for the year ended December 31, 2015 as compared to the year ended December 31, 2014. The increase in total revenue was driven by an increase in Americas total revenue of $68.8 million, or 5% (6% increase before the effect of foreign exchange), partially offset by a decrease in Non-Americas total revenue of $16.2 million, or 5% (3% increase before the effect of foreign exchange).
Non-Americas total revenue was impacted by the ceasing of operations of our Ireland Small Corporate Registry Business, during the year ended December 31, 2014, which we reclassified as “Divested and Other Businesses.”
Core revenue, which reflects total revenue less revenue from Divested and Other Businesses, increased $52.7 million, or 3% (5% increase before the effect of foreign exchange), for the year ended December 31, 2015 as compared to the year ended December 31, 2014. The increase in core revenue is primarily attributed to:
•
Increased revenue associated with our acquisitions of Dun & Bradstreet Credibility Corp. (“DBCC”), which was completed during the second quarter of 2015, and NetProspex, which was completed during the first quarter of 2015. Core revenue includes revenue from DBCC and NetProspex since their respective acquisition dates of $71.2 million and $17.6 million, respectively, for the year ended December 31, 2015, net of the impact of the deferred revenue fair value adjustment of $18.2 million and $1.7 million, respectively;
•
Growth in our DaaS offerings (e.g., DaaS CRM alliances and D&B Direct); and
•
An increase in purchases by our Worldwide Network primarily for fulfillment services and product usage;

31


partially offset by:
•
The negative impact of foreign exchange;
•
More of our revenue is being deferred out as we shift more of our sales to newer, embedded products where revenue is recognized over time; and
•
Decreased revenue of our subscription plans (e.g., Hoover's and DNBi) primarily due to a decline in sales in prior quarters.
Customer Solution Sets
On a customer solution set basis, core revenue reflects:
•
A $16.3 million, or 2% 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 $32.0 million, or 5% (both before and after the effect of foreign exchange), partially offset by a decrease in revenue in Non-Americas of $15.7 million, or 6%, (2% increase before the effect of foreign exchange); and
•
A $36.4 million, or 6% increase (7% increase before the effect of foreign exchange), in Sales & Marketing Solutions. The increase was driven by an increase in revenue in Americas of $36.8 million, or 7% (both before and after the effect of foreign exchange), partially offset by a decrease in revenue in Non-Americas of $0.4 million, or 1% (7% increase before the effect of foreign exchange).
Year Ended December 31, 2014 vs. Year Ended December 31, 2013
Total revenue increased $26.1 million, or 2% (1% increase before the effect of foreign exchange), for the year ended December 31, 2014 as compared to the year ended December 31, 2013. The increase in total revenue was primarily driven by an increase in Americas total revenue of $14.9 million, or 1% (2% increase before the effect of foreign exchange), and an increase in Non-Americas total revenue of $11.2 million, or 4% (1% increase before the effect of foreign exchange).
Non-Americas total revenue was impacted by the ceasing of operations of our Ireland Small Corporate Registry Business, during the year ended December 31, 2014 and our India Event Planning and Rural Marketing Businesses, during the year ended December 31, 2013, all of which we reclassified as “Divested and Other Businesses.”
Core revenue, which reflects total revenue less revenue from Divested and Other Businesses, increased $27.6 million, or 2% (both before and after the effect of foreign exchange), for the year ended December 31, 2014 as compared to the year ended December 31, 2013. The increase in core revenue is primarily attributed to:
•
Growth in our alliance product with Salesforce.com, our D&B Optimizer product and our Integration Manager product; and
•
Increased transactional usage of various risk products, across most markets, by new and existing customers (e.g., D&B Direct and Compliance solutions);
partially offset by:

•
Decreased revenue of our subscription plans primarily due to a decline in sales in prior quarters.

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

•
A $8.0 million, or 1% increase (less than 1% increase before the effect of foreign exchange), in Risk Management Solutions. The increase was driven by an increase in revenue in Non-Americas of $10.6 million, or 4% (2% increase before the effect of foreign exchange), partially offset by a decrease in revenue in Americas of $2.6 million, or less than 1% (flat before the effect of foreign exchange); and

•
A $19.6 million, or 3% increase (both before and after the effect of foreign exchange), in Sales & Marketing Solutions. The increase was driven by an increase in revenue in Americas of $17.5 million, or 3% (both before and after the effect of foreign exchange) and an increase in revenue in Non-Americas of $2.1 million, or 3% (less than 1% increase before the effect of foreign exchange).


32


Recent Developments
European Union Safe Harbor Ruling
In October 2015, the European Court of Justice issued a ruling which impacts the ability of companies to rely on an existing “safe harbor” framework as a means to transfer personally identifiable information from the European Union (“EU”) to the United States. We have historically been certified as Safe Harbor compliant for specified categories of personally identifiable information. Given the alternative ways in which we may be able to comply with EU to U.S. data transfer requirements, we do not believe that this ruling will have a material adverse impact on our business, financial condition or results of operations. We will continue to monitor the impact that this Court’s ruling may have on us, or on companies generally.
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 have voluntarily contacted the Securities and Exchange Commission (“SEC”) and the United States Department of Justice (“DOJ”) to advise both agencies of our investigation, and we are continuing to meet with representatives of both the SEC and DOJ in connection therewith. Our investigation remains ongoing and is being conducted at the direction of the Audit Committee.
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.
For the years ended December 31, 2015, 2014 and 2013, we incurred $1.6 million, $3.7 million and $7.4 million, respectively, of legal and other professional fees related to matters in China.
As our investigation and our discussions with both the SEC and DOJ are ongoing, we cannot yet predict the ultimate outcome of the matter or its impact on our business, financial condition or results of operations. Based on our discussions with the SEC and DOJ, including an indication from the SEC in February and March 2015 of its initial estimate of the amount of net benefit potentially earned by the Company as a result of the challenged activities, we continue to believe that it is probable that the Company will incur a loss related to the government’s investigation. The DOJ also advised the Company in February 2015 that they will be proposing terms of a potential settlement, but we are unable to predict the timing or terms of any such proposal. We had follow-up meetings with the SEC and DOJ in December 2015 and January 2016, respectively, but the parties are still discussing the evidence. Accordingly, we are unable at this time to reasonably estimate the amount or range of any loss, although it is possible that the amount of such loss could be material. In accordance with ASC 450, “Contingencies,” or “ASC 450,” no amount in respect of any potential liability in this matter, including for penalties, fines or other sanctions, has been accrued in the consolidated financial statements.
Consolidated Operating Costs
The following table presents our consolidated operating costs and operating income:
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
 
(Amounts in millions)
Operating Expenses
$
544.7

 
$
530.1

 
$
524.4

Selling and Administrative Expenses
664.4

 
575.6

 
533.6

Depreciation and Amortization
58.7

 
52.5

 
60.4

Restructuring Charge
32.3

 
14.9

 
13.9

Operating Costs
$
1,300.1

 
$
1,173.1

 
$
1,132.3

Operating Income
$
337.0

 
$
411.4

 
$
426.1


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Operating Expenses
Year Ended December 31, 2015 vs. Year Ended December 31, 2014
Operating expenses increased $14.6 million, or 3%, for the year ended December 31, 2015, compared to the year ended December 31, 2014. The increase was primarily due to the following:
•
Increased costs associated with our acquisition of DBCC during the second quarter of 2015 and NetProspex during the first quarter of 2015;
•
Increased costs in technology for product development and data as a result of our strategic investments; and
•
Increased compensation costs;
partially offset by:
•
The positive impact of foreign exchange.
Year Ended December 31, 2014 vs. Year Ended December 31, 2013
Operating expenses increased $5.7 million, or 1%, for the year ended December 31, 2014, compared to the year ended December 31, 2013. The increase was primarily due to the following:
•
Increased costs in data and technology as a result of our strategic investments; and
•
The impairment of the Parsippany, New Jersey building in our Americas segment;
partially offset by:
•
Non-recurring costs that occurred in the prior year period associated with our technology and software assets that were primarily related to our data management infrastructure (data supply chain) in our Americas segment, which was impaired and written off in the fourth quarter of 2013.
Selling and Administrative Expenses
Year Ended December 31, 2015 vs. Year Ended December 31, 2014
Selling and administrative expenses increased $88.8 million, or 15%, for the year ended December 31, 2015, compared to the year ended December 31, 2014. The increase was primarily due to the following:
•
Increased costs associated with our acquisition of DBCC during the second quarter of 2015 and NetProspex during the first quarter of 2015;
•
Increased compensation costs primarily related to our investments in Alliances and the sales organization; and
•
Increased costs associated with our brand modernization effort;
partially offset by:
•
The positive impact of foreign exchange.
Year Ended December 31, 2014 vs. Year Ended December 31, 2013
Selling and administrative expenses increased $42.0 million, or 8%, for the year ended December 31, 2014, compared to the year ended December 31, 2013. The increase was primarily due to investments in our strategy which included increased compensation costs and consulting costs.
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 $18.1 million, $18.7 million and $24.9 million for the years ended December 31, 2015, 2014 and 2013, respectively. The fluctuation in the pension cost was due to the following:
•
Expected return on plan assets is a major component of the net periodic pension cost. Expected return on plan assets included in annual pension expense for all global plans was $102.6 million, $100.2 million and $94.1

34


million for the years ended December 31, 2015, 2014 and 2013, 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 increase of the expected return on plan assets for each year ended December 31, 2015 and 2014 as compared to the respective prior year period was due to the higher market-related value of plan assets at January 1, 2015 and 2014, primarily as result of asset performance and a Company contribution of $10 million and $20 million to our U.S. Qualified Plan in December 2014 and 2013, respectively.
•
The actuarial loss amortization included in annual pension expense was also a major factor in driving the pension costs to fluctuate from year to year. Actuarial loss amortization was largely impacted by the discount rate, amortization period and plan experience (for example, the lower the discount rate, the higher the loss amortization). Actuarial loss amortization included in annual pension expense for all global plans was $42.5 million, $36.1 million and $43.7 million for the years ended December 31, 2015, 2014 and 2013, respectively, of which $39.0 million, $32.7 million and $39.9 million were attributable to our U.S. plans for the years ended December 31, 2015, 2014 and 2013, respectively. Higher actuarial loss amortization in the U.S. plans for the year ended December 31, 2015 was as a result of the adoption of new mortality tables assuming longer life expectancy of plan participants and a lower discount rate at January 1, 2015. Lower actuarial loss amortization in the U.S. plans for the year ended December 31, 2014 compared to the year ended December 31, 2013, was primarily due to the higher discount rate applied to our plans at January 1, 2014. The discount rate used to measure the pension costs for our U.S. plans for the years ended December 31, 2015, 2014 and 2013 was 3.60%, 4.44% and 3.54% , respectively.
•
The increase or decrease in actuarial loss amortization was substantially offset by the decrease or increase in interest cost, a component of net periodic pension costs. Interest cost included in the net periodic pension costs was $73.9 million, $78.9 million and $70.2 million, respectively, for the years ended December 31, 2015, 2014 and 2013, of which $62.7 million, $66.5 million and $58.5 million were attributable to our U.S. plans for the years ended December 31, 2015, 2014 and 2013, respectively. The change in interest cost for our U.S. plans was driven by a change in discount rates (for example, the higher the discount rate, the higher the interest cost).
We expect that the net pension cost in 2016 will be approximately $19 million for all of our global pension plans, of which approximately $17 million and $2 million will be attributable to the U.S. plans and non-U.S. plans, respectively. This compares to a net pension cost of $18.1 million in 2015, of which $13.6 million and $4.5 million were attributable to the U.S. plans and non-U.S. plans, respectively. For our U.S. plans, the pension cost in 2016 is primarily impacted by a lower expected return on plan assets driven by a lower long-term rate of return assumption at January 1, 2016. For 2016, we will use a long-term rate of return of 7.25%, compared to 7.75% for 2015. This decrease in income is partially offset by a lower amortization of actuarial losses driven by a higher discount rate at January 1, 2016 and the adoption of the updated projected mortality improvement assumption at December 31, 2015. The discount rate applied to our U.S. plans at January 1, 2016 is 3.89%, a 29 basis points increase from the 3.60% discount rate used for 2015.
We had postretirement benefit income of $1.6 million, $2.0 million and $9.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. The decrease in the postretirement benefit income was primarily due to the lower amortization of prior service credits. Amortization of prior service credits included in the annual postretirement benefit income was $1.6 million, $2.4 million and $9.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. The amortization of prior service credits decreased in each of 2015 and 2014 compared to the respective prior year period primarily due to prior service credits being fully amortized at various points of time (discussed below). These prior service credits were established as a result of plan amendments.

•
In July 2014, we amended our post-65 retiree health plan to eliminate our group-based retiree medical and prescription plans effective December 31, 2014. Effective January 1, 2015, we began providing eligible retirees and dependents age 65 or older access to coverage in the individual Medicare market. Dun & Bradstreet also provides an annual contribution towards retirees’ premiums and other out-of-pocket costs. As a result of this change, we reduced our accumulated postretirement obligation by $4.9 million in the third quarter of 2014, which will be amortized over approximately three years.

•
The credit which was fully amortized in the fourth quarter of 2014 was established in July 1, 2010 in connection with the Health Care and Education Reconciliation Act of 2010. In connection with the adoption of this health care law, we converted the then-current prescription drug program for retirees over 65 to a group-based company sponsored Medicare Part D program, or EGWP. Beginning in 2013, we used the Part D subsidies delivered through the EGWP each year to reduce net company retiree

35


medical costs until net company costs were completely eliminated. As a result, we reduced our accumulated postretirement obligation by $21 million in the third quarter of 2010, which was amortized over approximately four years.

•
The credit which was fully amortized in 2013 was established in late 2009 as a result of the elimination of the company-paid retiree life insurance benefits and a change in the sharing methodology, where Dun & Bradstreet only shared the minimum amount of subsidy required to maintain actuarial equivalence for as long as possible. This plan change was approved in December 2009 and reduced our accumulated postretirement obligation by approximately $20 million at December 31, 2009, which was amortized over four years.
We expect postretirement benefit income will be approximately $2 million in 2016. The increase in postretirement benefit income in 2016 is primarily due to higher amortization of actuarial gains resulting from better actual plan experience in 2015 as well as a change in assumptions at December 31, 2015.
Plan changes were accounted for as plan amendments under ASC 715-60-35, “Compensation-Retirement Benefits.”
We had expense associated with our 401(k) Plan of $10.5 million, $8.5 million and $8.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. Higher expense in 2015 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. See the discussion of “Our 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, 2015, 2014 and 2013, we recognized total stock-based compensation expense (e.g., restricted stock, stock options, etc.) of $14.7 million, $11.2 million and $8.5 million, respectively.
For the years ended December 31, 2015, 2014 and 2013, we recognized expense associated with our restricted stock unit programs of $13.3 million, $9.5 million and $6.1 million, respectively. The increase for the year ended December 31, 2015 as compared to the year ended December 31, 2014 was primarily due to changes in our executive compensation program beginning in 2013 where more emphasis was placed on grants of longer-term performance based restricted stock units, as well as higher grant date fair values related to the 2015 performance-based restricted stock unit awards, partially offset by the impact of higher forfeitures. The increase for the year ended December 31, 2014 as compared to the year ended December 31, 2013 was primarily due to changes in our executive compensation program beginning in 2013 where more emphasis was placed on grants of longer-term performance based restricted stock units, partially offset by the impact of higher forfeitures.
For the years ended December 31, 2015, 2014 and 2013, we recognized expense associated with our stock option programs of $0.5 million, $0.9 million, and $1.7 million, respectively. The decrease in expense in 2015 and 2014 as compared to the respective prior 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.
For the years ended December 31, 2015, 2014 and 2013, we recognized expense associated with our Employee Stock Purchase Plan (“ESPP”) of $0.9 million, $0.8 million and $0.7 million, respectively.
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 $6.2 million, or 12%, for the year ended December 31, 2015 as compared to the year ended December 31, 2014. This increase was primarily due to our acquisitions of DBCC during the second quarter of 2015 and NetProspex during the first quarter of 2015, partially offset by the completion of the depreciable lives of certain assets.
Depreciation and amortization decreased $7.9 million, or 13%, for the year ended December 31, 2014 as compared to the year ended December 31, 2013. This decrease was primarily driven by costs that occurred in the prior year period associated with our technology and software assets that were related to our data management infrastructure (data supply chain) in our

36


Americas segment and our Portal asset in our Non-Americas segment, both of which were impaired and written off in the fourth quarter of 2013.
Restructuring Charge
Restructuring charges have been recorded in accordance with Accounting Standards Codification (“ASC”) 712-10, “Nonretirement Postemployment Benefits,” or “ASC 712-10” and/or ASC 420-10, “Exit or Disposal Cost Obligations,” or “ASC 420-10,” as appropriate.
We record severance costs provided under an ongoing benefit arrangement once they are both probable and estimable in accordance with the provisions of ASC 712-10.
We account for one-time termination benefits, contract terminations and/or costs to terminate lease obligations less assumed sublease income in accordance with ASC 420-10, which addresses financial accounting and reporting for costs associated with restructuring activities. Under ASC 420-10, we establish a liability for costs associated with an exit or disposal activity, including severance and lease termination obligations, and other related costs, when the liability is incurred, rather than at the date that we commit to an exit plan. We reassess the expected cost to complete the exit or disposal activities at the end of each reporting period and adjust our remaining estimated liabilities, if necessary.
The determination of when we accrue for severance costs and which standard applies depends on whether the termination benefits are provided under an ongoing arrangement as described in ASC 712-10 or under a one-time benefit arrangement as defined by ASC 420-10. Inherent in the estimation of the costs related to the restructurings are assessments related to the most likely expected outcome of the significant actions to accomplish the exit activities. In determining the charges related to the restructurings, we have to make estimates related to the expenses associated with the restructurings. These estimates may vary significantly from actual costs depending, in part, upon factors that may be beyond our control. We will continue to review the status of our restructuring obligations on a quarterly basis and, if appropriate, record changes to these obligations in current operations based on management’s most current estimates.
During the year ended December 31, 2015, we recorded a $32.3 million restructuring charge. The significant components of these charges included:

•
Severance and termination costs of $30.9 million in accordance with the provisions of ASC 712-10 were recorded. Approximately 380 employees were impacted. Of these 380 employees, 375 employees exited the Company in 2015 and 5 employees will exit the Company in 2016. The cash payments for these employees will be substantially completed by the third quarter of 2016; and

•
Contract termination, lease termination obligations and other exit costs including those to consolidate or close facilities of $1.4 million.
During the year ended December 31, 2014, we recorded a $14.9 million restructuring charge. The significant components of these charges included:

•
Severance and termination costs of $13.0 million in accordance with the provisions of ASC 712-10 were recorded. Approximately 155 employees were impacted. Of these 155 employees, 145 employees exited the Company in 2014 and 10 employees exited the Company in 2015. The cash payments for these employees were substantially completed by the second quarter of 2015; and

•
Contract termination, lease termination obligations and other exit costs including those to consolidate or close facilities and impairments of $1.9 million.
During the year ended December 31, 2013, we recorded a $13.9 million restructuring charge. The significant components of these charges included:

•
Severance and termination costs of $8.2 million in accordance with the provisions of ASC 712-10 were recorded. Approximately 160 employees were impacted. Of these 160 employees, 140 employees exited the Company in 2013 and 20 employees exited the Company in 2014. The cash payments for these employees were substantially completed by the second quarter of 2014; and

•
Contract termination, lease termination obligations and other exit costs including those to consolidate or close facilities of $5.7 million.

37


Interest Income (Expense) – Net
The following table presents our “Interest Income (Expense) – Net:”
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
 
(Amounts in millions)
Interest Income
$
1.6

 
$
1.6

 
$
1.2

Interest Expense
(51.0
)
 
(43.3
)
 
(40.7
)
Interest Income (Expense) - Net
$
(49.4
)
 
$
(41.7
)
 
$
(39.5
)
Interest income remained flat for the year ended December 31, 2015 as compared to the year ended December 31, 2014. Interest income increased $0.4 million, or 38%, for the year ended December 31, 2014 as compared to the year ended December 31, 2013. The increase in interest income was primarily attributable to higher average amounts of invested cash.
Interest expense increased $7.7 million, or 18%, for the year ended December 31, 2015 as compared to the year ended December 31, 2014. The increase in interest expense was primarily attributable to higher amounts of average outstanding debt. Interest expense increased $2.6 million, or 7%, for the year ended December 31, 2014 as compared to the year ended December 31, 2013. The increase in interest expense was primarily attributable to higher average amounts of outstanding debt.

Other Income (Expense) – Net
The following table presents our “Other Income (Expense) – Net:”
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
 
(Amounts in millions)
Effect of Legacy Tax Matters (a)
$
(6.9
)
 
$
(28.6
)
 
$
0.8

Miscellaneous Other Income (Expense) - Net
(0.7
)
 
(0.9
)
 
(1.1
)
Other Income (Expense) - Net
$
(7.6
)
 
$
(29.5
)
 
$
(0.3
)
(a)
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.

38


Provision for Income Taxes
Effective Tax Rate for the Year Ended December 31, 2013
35.1
 %
Impact of Legacy Tax Matters (1)
(15.3
)
Impact of Release of Uncertain Tax Positions
(7.3
)
Impact of Income Earned in Jurisdictions with Low Tax Rates
(2.2
)
Impact of Nondeductible Charges
3.3

Impact of Tax Credits and Deductions
0.1

Impact of Change in State Tax
1.6

Other
0.7

Effective Tax Rate for the Year Ended December 31, 2014
16.0
 %
Impact of Legacy Tax Matters (2)
10.7

Impact of Release of Uncertain Tax Positions
3.9

Impact of Income Earned in Jurisdictions with Low Tax Rates
(6.2
)
Impact of Nondeductible Charges
0.7

Impact of Tax Credits and Deductions
4.9

Impact of Earnings Repatriation (3)
(1.1
)
Impact of Change in State Tax
(1.1
)
Other
(1.3
)
Effective Tax Rate for the Year Ended December 31, 2015
26.5
 %
(1) The impact was due to the release of uncertain positions in 2014 as a result of the effective settlement of audits for the 2007 - 2009 tax years and the expiration of the statute of limitations for the 2010 tax year.
(2) The impact was due to the release of uncertain positions in 2015 as a result of the expiration of the statute of limitations for the 2011 tax year. The impact is unfavorable as a result of a lower release of uncertain tax positions in 2015 as compared to 2014.
(3) The impact was due to the recognition of a U.S. tax benefit on the repatriation of the current year and prior year earnings, in the amount of $132.5 million, from the Company’s subsidiaries in Canada and Japan. Of the $132.5 million, $123.0 million was distributed in the fourth quarter of 2015 and $9.5 million will be distributed during 2016. The tax benefit is due to the recognition of foreign tax credits in excess of the U.S. taxes due on the repatriation.
Discontinued Operations
In June 2015, we divested our business in 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 as set forth in this Annual Report and recorded a total loss on the disposal of the business of $37.5 million (both pre-tax and after tax) during the year ended December 31, 2015, in the consolidated statement of operations and comprehensive income (loss). As of December 31, 2015, we received proceeds of $159.7 million, inclusive of a working capital adjustment of $0.7 million, in our Non-Americas segment. 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
We assess if any of our share-based payment transactions are deemed participating securities prior to vesting and therefore need to be included in the earnings allocation when computing EPS under the two-class method. The two-class method requires earnings to be allocated between common shareholders and holders of participating securities. All outstanding unvested share-based payment awards that contain non-forfeitable rights to dividends are considered to be a separate class of common stock and should be included in the calculation of basic and diluted EPS. Based on a review of our stock-based awards, we have determined that for the years ended December 31, 2015, 2014 and 2013, none of our stock-based awards are deemed to be participating securities.
We are required to include in our computation of diluted Earnings Per Share (“EPS”) any contingently issuable shares that would have satisfied all the necessary conditions by the end of the reporting period as if it were the end of the performance period. Contingently issuable shares are shares that have an issuance contingent upon the satisfaction of certain conditions other than just services. Beginning in 2013, we granted certain employees target awards of performance-based restricted stock

39


units, in the form of leveraged restricted stock units or performance units. As the actual number of Dun & Bradstreet common shares ultimately received by the employee can range from zero to 200% of the target award depending on the Company’s actual performance against pre-establisheded market conditions or performance conditions, these awards are considered contingently issuable shares.
The following table sets forth our EPS:
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
Basic Earnings (Loss) Per Share of Common Stock:
 
 
 
 
 
Income (Loss) from Continuing Operations Attributable to Dun & Bradstreet Common Shareholders
$
5.66

 
$
7.79

 
$
6.36

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

 
0.25

Net Income (Loss) Attributable to Dun & Bradstreet Common Shareholders
$
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
$
5.61

 
$
7.71

 
$
6.29

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

 
0.25

Net Income (Loss) Attributable to Dun & Bradstreet Common Shareholders
$
4.64

 
$
7.99

 
$
6.54

For the year ended December 31, 2015, both basic EPS attributable to Dun & Bradstreet common shareholders and diluted EPS attributable to Dun & Bradstreet common shareholders decreased 42% compared with the year ended December 31, 2014. The decrease was primarily due to a decrease of 43% in Net Income Attributable to Dun & Bradstreet common shareholders which was primarily due to: (i) lower net income from continuing operations mainly related to the effective settlement of audits for the 2007 - 2009 tax years resulting in higher income in 2014; and (ii) the loss on the disposal of the business in ANZ in 2015, partially offset by a 1% reduction in the weighted average number of basic and diluted shares outstanding resulting from our total share repurchases in the prior year.
For the year ended December 31, 2014, both basic EPS attributable to Dun & Bradstreet common shareholders and diluted EPS attributable to Dun & Bradstreet common shareholders increased 22%, compared with the year ended December 31, 2013. The increase was primarily due to an increase of 14% in Net Income Attributable to Dun & Bradstreet common shareholders and a 7% reduction in the weighted average number of basic and diluted shares outstanding resulting from our total share repurchases.
Segment Results
On January 1, 2015, we began managing and reporting our business through two segments:
•
Americas (which consists of our operations in the U.S., Canada and Latin America); and
•
Non-Americas (which consists of our operations in the U.K. the Netherlands, Belgium, Australia (which we divested in June 2015), Greater China, India and our Worldwide Network).
Prior to January 1, 2015, we managed and reported our business through the following three segments:
•
North America (which consisted of our operations in the U.S. and Canada);
•
Asia Pacific (which primarily consisted of our operations in Australia (which we divested in June 2015), Greater China, India and Asia Pacific Worldwide Network); and
•
Europe and other International Markets (which primarily consisted of our operations in the U.K., the Netherlands, Belgium, Latin America and our European Worldwide Network).
Americas
Americas is our largest segment representing 81%, 80%, and 80% of our total and core revenue for the years ended December 31, 2015, 2014 and 2013, respectively.

40


The following table presents our Americas revenue by customer solution set and Americas operating income:
 
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
 
(Amounts in millions)
Revenue:
 
 
 
 
 
Risk Management Solutions
$
733.4

 
$
701.4

 
$
704.0

Sales & Marketing Solutions
595.7

 
558.9

 
541.4

Americas Total and Core Revenue
$
1,329.1

 
$
1,260.3

 
$
1,245.4

Operating Income
$
369.3

 
$
404.8

 
$
413.1

Year Ended December 31, 2015 vs. Year Ended December 31, 2014
Americas Overview
Americas total and core revenue increased $68.8 million, or 5% (6% increase before the effect of foreign exchange), for the year ended December 31, 2015 as compared to the year ended December 31, 2014.
Americas Customer Solution Sets
On a customer solution set basis, the $68.8 million increase in total and core revenue for the year ended December 31, 2015, as compared to the year ended December 31, 2014, reflects:
Risk Management Solutions
An increase in Risk Management Solutions of $32.0 million, or 5% (both before and after the effect of foreign exchange), attributable to:
Trade Credit, which accounted for 72% of total Americas Risk Management Solutions, decreased 3% (2% decrease before the effect of foreign exchange) primarily attributable to:
•
Declining sales performance in prior quarters of DNBi. Due to the ratable nature of DNBi revenue, DNBi revenue was down 2% (1% decrease before the effect of foreign exchange) during the year ended December 31, 2015 compared to a 4% decline (both before and after the effect of foreign exchange) during the year ended December 31, 2014. 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 are not generating enough new customers to offset normal attrition;
•
The negative impact of foreign exchange; and
•
Decreased revenue due to certain customers shifting from subscription-based plans to usage-based plans;
partially offset by:
•
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 of $1.9 million for the year ended December 31, 2015.

Other Enterprise Risk Management, which accounted for 28% of total Americas Risk Management Solutions, increased 31% (both before and after 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 of $12.9 million for the year ended December 31, 2015; and
•
Growth and higher usage of our D&B Direct product;

partially offset by:
•
Decreased customer spend for certain supply chain products.

41


Sales & Marketing Solutions
An increase in Sales & Marketing Solutions of $36.8 million, or 7% (both before and after the effect of foreign exchange) primarily due to:
Traditional Prospecting Solutions, which accounted for 25% of total Americas Sales & Marketing Solutions, increased 2% (3% increase 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 of $3.4 million for the year ended December 31, 2015;
partially offset by:
•
Decreased revenue in Hoover’s, primarily due to declining sales performance in prior quarters, driven by reduced customer spend and competitive pressures.
Advanced Marketing Solutions, which accounted for 75% of total Americas Sales & Marketing Solutions, increased 8% (both before and after the effect of foreign exchange). The increase was primarily due to:
•
Increased revenue associated with our acquisition of NetProspex, which was completed during the first quarter of 2015, net of the impact of the deferred revenue fair value adjustment of $1.7 million for the year ended December 31, 2015;
•
Growth in our DaaS offerings (e.g., CRM alliances and D&B Direct); and
•
Growth in our D&B Optimizer product;
partially offset by:
•
Decreased commitment spend within our third-party alliances primarily due to a loss of a certain customer account, competition and a shift in customer needs, which lowered our revenue from these alliances.
Americas Operating Income
Americas operating income for the year ended December 31, 2015 was $369.3 million, compared to $404.8 million for the year ended December 31, 2014, a decrease of $35.5 million, or 9%. The decrease in operating income was primarily attributable to:
•
Increased costs (e.g., amortization of intangibles) as a result of the acquisitions of DBCC during the second quarter of 2015 and NetProspex during the first quarter of 2015; and
•
Increased compensation costs as a result of our strategic investments;
partially offset by:
•
Increased revenue primarily as a result of the acquisitions of DBCC during the second quarter of 2015 and NetProspex during the first quarter of 2015.
Year Ended December 31, 2014 vs. Year Ended December 31, 2013
Americas Overview
Americas total and core revenue increased $14.9 million, or 1% (2% increase before the effect of foreign exchange), for the year ended December 31, 2014 as compared to the year ended December 31, 2013.

42


Americas Customer Solution Sets
On a customer solution set basis, the $14.9 million increase in total and core revenue for the year ended December 31, 2014, as compared to the year ended December 31, 2013, reflects:
Risk Management Solutions
A decrease in Risk Management Solutions of $2.6 million, or less than 1% (flat before the effect of foreign exchange) primarily attributable to:
Trade Credit, which accounted for 78% of total Americas Risk Management Solutions, decreased 4% (3% decrease before the effect of foreign exchange) primarily attributable to:
•
Declining sales performance in prior quarters of DNBi due to the ratable nature of DNBi revenue as well as competition. While DNBi retention continued to be in the low 90% range, and pricing was in the low single digits, we were not generating enough new customers to offset normal attrition; and
•
A shift in product mix from certain of our Trade Credit Solutions to our Other Enterprise Risk Management Solutions as well as declining sales performance in prior quarters. Our strategy is focused more on other products (e.g., Compliance and D&B Direct) that fall under Risk Management Solutions and Advanced Marketing Solutions in Sales & Marketing Solutions projects. As a result, customers of these products were either exiting Dun & Bradstreet or migrating to our other more modern solutions and ways to consume our content;
partially offset by:
•
The timing of a renewal of a large government contract due to the timing of government funding.
Other Enterprise Risk Management, which accounted for 22% of total Americas Risk Management Solutions, increased 13% (both before and after the effect of foreign exchange), primarily due to:
•
Increased spending and usage by customers of existing products (e.g., Compliance and our DaaS Solution D&B Direct); and
•
A shift in product mix to our Other Enterprise Risk Management Solutions from our other Trade Credit Solutions;

partially offset by:
•
The expiration of a government contract with a temporary government agency.
Sales & Marketing Solutions
An increase in Sales & Marketing Solutions of $17.5 million, or 3% (both before and after the effect of foreign exchange) primarily due to:
Traditional Prospecting Solutions, which accounted for 26% of total Americas Sales & Marketing Solutions, decreased 5% (both before and after the effect of foreign exchange). The decrease was primarily due to:
•
Decreased revenue in Hoover’s, primarily due to declining sales performance in prior quarters, driven by reduced customer spend and competitive pressures; and
•
Loss of certain customers during the year primarily due to competition.
Advanced Marketing Solutions, which accounted for 74% of total Americas Sales & Marketing Solutions, increased 6% (7% increase before the effect of foreign exchange). The increase was primarily due to:
•
Growth in our alliance product with Salesforce.com, our Optimizer product and our Integration Manager product; and
•
The consolidation of separate agreements that were signed at different times in the prior year;
partially offset by:
•
Loss of certain customers during the year primarily due to competition.

43


Americas Operating Income

Americas operating income for the year ended December 31, 2014 was $404.8 million, compared to $413.1 million for the year ended December 31, 2013, a decrease of $8.3 million or 2%. The decrease in operating income was primarily attributable to:
•
Increased costs in data and technology as a result of our strategic investments;
•
An increase in compensation costs (e.g., bonus); and
•
An impairment charge related to our Parsippany, New Jersey building;
partially offset by:
•
Non-recurring costs that occurred in the prior year period related to technology and software assets that were primarily related to our data management infrastructure (data supply chain) in our Americas segment, which were impaired and written-off in the fourth quarter of 2013; and
•
An increase in total revenue.
Non-Americas
Non-Americas represented 19%, 20% and 20% of our total and core revenue for the years ended December 31, 2015, 2014 and 2013, respectively.
During the year ended December 31, 2015, we divested our business in ANZ and reclassified the historical financial results of our business in ANZ as discontinued operations for all periods presented as set forth in this Annual Report on Form 10-K.
During the years ended December 31, 2014 and 2013, we ceased the operations of our Ireland Small Corporate Registry Business and the operations of our India Event Planning and Rural Marketing Businesses, respectively. These businesses have been classified as “Divested and Other Businesses.”
The Divested and Other Businesses contributed approximately 1% to our Non-Americas total revenue for each of the years ended December 31, 2014 and 2013.
The following table presents our Non-Americas revenue by customer solution set and Non-Americas operating income. Additionally, this table reconciles the non-GAAP measure of core revenue to the GAAP measure of total revenue:
 
 
For the Years Ended December 31,
 
2015
 
2014
 
2013
 
(Amounts in millions)
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Risk Management Solutions
$
244.9

 
$
260.6

 
$
250.0

Sales & Marketing Solutions
63.1

 
63.5

 
61.4

Non-Americas Core Revenue
308.0

 
324.1

 
311.4

Divested and Other Businesses
—

 
0.1

 
1.6

Non-Americas Total Revenue
$
308.0

 
$
324.2

 
$
313.0

Operating Income (Loss)
$
83.1

 
$
87.0

 
$
75.2

Year Ended December 31, 2015 vs. Year Ended December 31, 2014
Non-Americas Overview
Non-Americas total revenue decreased $16.2 million, or 5% (3% increase before the effect of foreign exchange), for the year ended December 31, 2015 as compared to the year ended December 31, 2014.
Non-Americas total revenue was impacted by the ceasing of operations of our Ireland Small Corporate Registry Business, during the year ended December 31, 2014, which we reclassified as “Divested and Other Businesses.”

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Excluding the impact of the Divested and Other Businesses, Non-Americas core revenue decreased $16.1 million, or 5% (3% increase before the effect of foreign exchange) for the year ended December 31, 2015, as compared to the year ended December 31, 2014.
Non-Americas Customer Solution Sets
On a customer solution set basis, the $16.1 million decrease in Non-Americas core revenue for the year ended December 31, 2015, as compared to the year ended December 31, 2014, reflects:
Risk Management Solutions
A decrease in Risk Management Solutions of $15.7 million, or 6% (2% increase before the effect of foreign exchange) primarily due to:
Trade Credit, which accounted for 74% of total Non-Americas Risk Management Solutions, decreased 10% (2% decrease before the effect of foreign exchange) primarily attributable to:
•
The negative impact of foreign exchange;
•
Decreased transactional usage of various risk products in most markets; and
•
The conversion of certain customers from our subscription plans to a new Compliance offering within Other Enterprise Risk Management;
partially offset by:
•
Increased revenue from our Worldwide Network for fulfillment services and product usage.
Other Enterprise Risk Management, which accounted for 26% of total Non-Americas Risk Management Solutions, increased 9% (17% increase before the effect of foreign exchange) primarily attributable to:
•
Increased transactional usage of various risk products, across most markets, by new and existing customers;
•
An increase in purchases by our Worldwide Network primarily for fulfillment services and product usage; and
•
Increased revenue from a new Compliance offering in our European markets from customers converting from subscription plans as discussed in Trade Credit above;

partially offset by:
•
The negative impact of foreign exchange.

Sales & Marketing Solutions
A decrease in Sales & Marketing Solutions of $0.4 million, or 1% (7% increase before the effect of foreign exchange) primarily due to:
Traditional Prospecting Solutions, which accounted for 29% of total Non-Americas Sales & Marketing Solutions, decreased 6% (2% decrease before the effect of foreign exchange) primarily attributed to:
•
The negative impact of foreign exchange; and
•
Decreased project revenue in our marketing business in certain Asian markets.
Advanced Marketing Solutions, which accounted for 71% of total Non-Americas Sales & Marketing Solutions, increased 2% (11% increase before the effect of foreign exchange) primarily attributed to:
•
An increase in purchases by our Worldwide Network primarily for fulfillment services and product usage; and
•
Increased project revenue in our marketing business in certain markets;
partially offset by:
•
The negative impact of foreign exchange.


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Non-Americas Operating Income

Non-Americas operating income for the year ended December 31, 2015 was $83.1 million, compared to operating income of $87.0 million for the year ended December 31, 2014, a decrease of $3.9 million. The decrease was primarily due to:
•
The negative impact of foreign exchange; and
•
Increased compensation costs.
Year Ended December 31, 2014 vs. Year Ended December 31, 2013
Non-Americas Overview
Non-Americas total revenue increased $11.2 million, or 4% (1% increase before the effect of foreign exchange), for the year ended December 31, 2014 as compared to the year ended December 31, 2013.
Non-Americas total revenue was impacted by the ceasing of operations of our Ireland Small Corporate Registry Business during the year ended December 31, 2014 and our India Event Planning and Rural Marketing Business during the year ended December 31, 2013, which we reclassified as “Divested and Other Businesses.”
Excluding the impact of Divested and Other Businesses, Non-Americas core revenue increased $12.7 million, or 4% (1% increase before the effect of foreign exchange) for the year ended December 31, 2014, as compared to the year ended December 31, 2013.
Non-Americas Customer Solution Sets
On a customer solution set basis, the $12.7 million increase in Non-Americas core revenue for the year ended December 31, 2014, as compared to the year ended December 31, 2013, reflects:
Risk Management Solutions
An increase in Risk Management Solutions of $10.6 million, or 4% (2% increase before the effect of foreign exchange) primarily due to:
Trade Credit, which accounted for 78% of total Non-Americas Risk Management Solutions, increased 3% (less than 1% decrease before the effect of foreign exchange) primarily attributable to:
•
The positive impact of foreign exchange;
•
Increased transactional usage of various risk products, across our Asia markets; and
•
Growth from purchases by our Worldwide Network for fulfillment services and product usage;
partially offset by:
•
Reduced customer spend, economic pressures and decreased usage in our European markets.
Other Enterprise Risk Management, which accounted for 22% of total Non-Americas Risk Management Solutions, increased 10% (9% increase before the effect of foreign exchange) primarily attributable to:
•
Increased project spend primarily due to a customer’s compliance needs in our UK markets; and
•
The positive impact of foreign exchange.

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Sales & Marketing Solutions
An increase in Sales & Marketing Solutions of $2.1 million, or 3% (less than 1% increase before the effect of foreign exchange) primarily due to:
Traditional Prospecting Solutions, which accounted for 31% of total Non-Americas Sales & Marketing Solutions, decreased 6% (both before and after the effect of foreign exchange) primarily attributed to decreased project revenue in our marketing business in certain markets.
Advanced Marketing Solutions, which accounted for 69% of total Non-Americas Sales & Marketing Solutions, increased 8% (3% increase before the effect of foreign exchange) primarily attributed to:
•
The positive impact of foreign exchange; and
•
An increase in purchases by existing and new customers expanding their usage of data in our project-oriented business in our Advanced Marketing Solutions.

Non-Americas Operating Income

Non-Americas operating income for the year ended December 31, 2014 was $87.0 million, compared to operating income of $75.2 million for the year ended December 31, 2013, an increase of $11.8 million. The increase was primarily due to:
•
Increased revenue in certain markets;
•
The positive impact of foreign exchange;
•
Non-recurring costs that occurred in the prior year associated with our Portal asset, which was impaired and written off in the fourth quarter of 2013; and
•
Decreased data and fulfillment costs in certain markets;
partially offset by:
•
Increased compensation costs (e.g., bonus and commission) in certain markets.
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 contracts 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 currently in 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, 2015, we did not have any interest rate derivatives outstanding.

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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 $7.8 million and $2.8 million, respectively, at December 31, 2015.
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 22% and 24% of our total revenue for the years ended December 31, 2015 and 2014, respectively. Approximately 38% and 35% of our assets for the years ended December 31, 2015 and 2014, 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 and Canadian 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, 2015 and 2014, we did not have any foreign exchange option contracts outstanding. At December 31, 2015 and 2014, the notional amounts of our foreign exchange forward contracts were $326.8 million and $296.4 million, respectively.
Realized gains and losses associated with these contracts were $31.0 million and $46.9 million, respectively, at December 31, 2015; $15.1 million and $23.0 million, respectively, at December 31, 2014; and $17.5 million and $24.7 million, respectively, at December 31, 2013. Unrealized gains and losses associated with these contracts were $0.5 million and $0.3 million, respectively, at December 31, 2015; $0.4 million and $0.1 million, respectively, at December 31, 2014; and $0.4 million and $0.4 million, respectively, at December 31, 2013.
If exchange rates to which we are exposed under our outstanding foreign exchange forward contracts were to increase, on average, 10% from year-end 2015 levels, the unrealized loss on our foreign exchange forward contracts would be approximately $30 million, excluding the expected gain on the underlying hedged item. If exchange rates, on average, were to decrease 10% from year-end 2015 levels, the unrealized gain on our foreign exchange forward contracts would be approximately $30 million, excluding the expected loss on the underlying hedged item. However, the estimated potential gain and loss on these contracts would substantially be offset by changes in the dollar equivalent value of the underlying hedged items.
Liquidity and Financial Position
In connection with our commitment to delivering Total Shareholder Return, 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 and contingencies (see Note 13 to the consolidated financial statements included in Item 8. of this Annual Report on

48


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 requirements will depend on many factors that are difficult to predict, including the size, timing and structure of any future acquisitions, future capital investments, the ultimate resolution of issues arising from the investigations regarding potential FCPA violations in our China operations and future results of operations.
On July 23, 2014, we amended and extended our then-existing $800 million revolving credit facility, increasing the facility amount to $1 billion and extending the maturity to July 2019. The $1 billion revolving credit facility was amended with commercial terms substantially similar to the then-existing $800 million revolving credit facility, with the same financial covenants, and at borrowing rates that reflect the prevailing market for companies of similar credit quality. The $1 billion revolving credit facility requires the maintenance of interest coverage and total debt to Earnings Before Income Taxes, Depreciation and Amortization (“EBITDA”) ratios which are defined in the credit agreement. On May 14, 2015, we amended the $1 billion revolving credit facility to modify the total debt to EBITDA ratio from 4.0:1.0 to 4.5:1.0 for any fiscal quarter that ends before December 31, 2016. For fiscal quarters ending on or after December 31, 2016, the total debt to EBITDA ratio will return to 4.0:1.0. We were in compliance with the $1 billion revolving credit facility financial and non-financial covenants at December 31, 2015 and 2014. At December 31, 2015 and 2014, we had $382.2 million and $604.5 million, respectively, in borrowings outstanding under our $1 billion revolving credit facility.
As of December 31, 2015, $354.1 million of our $365.7 million cash and cash equivalents on the consolidated balance sheet were held by our foreign operations. We maintain the $354.1 million foreign cash and cash equivalents balance within our foreign operations since we have sufficient liquidity in the United States to satisfy our ongoing domestic funding requirements. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and future foreign investments. We have not provided for U.S. deferred income taxes or foreign withholding taxes on the remaining $598.0 million of undistributed earnings of our non-U.S. subsidiaries as of December 31, 2015, since we intend to reinvest these earnings indefinitely. If U.S. taxes and applicable withholding taxes have not already been previously provided (e.g., previously taxed earnings), we would be required to accrue and pay additional U.S. and applicable withholding taxes in order to repatriate these undistributed earnings. 
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 $9.5 million of dividends will be distributed in 2016. 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 $163.0 million remittance.
On March 21, 2014, Fitch Ratings lowered our issuer default rating from BBB+ to BBB and affirmed our short-term issuer default rating at F2. On March 24, 2014, Standard and Poor’s lowered our long-term credit rating from BBB to BBB- and affirmed our short-term credit rating at A-3. The ratings revisions have not materially impacted our liquidity position, access to the capital markets or funding costs.
Cash Provided by Operating Activities from Continuing Operations

Net cash provided by operating activities was $336.8 million, $297.4 million and $308.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Year ended December 31, 2015 vs. Year Ended December 31, 2014
Net cash provided by operating activities increased by $39.4 million for the year ended December 31, 2015 compared to the year ended December 31, 2014. This increase was primarily driven by:
•
Increased collections in 2015 as compared to the prior year; and
•
Lower tax payments as compared to the prior year;
partially offset by:
•
Increased strategic investments (e.g., compensation and data expenses) to drive long-term growth of our business; and

49


•
Increased acquisition-related costs as compared to the prior year.

Year ended December 31, 2014 vs. Year Ended December 31, 2013
Net cash provided by operating activities decreased by $11.2 million for the year ended December 31, 2014 compared to the year ended December 31, 2013. This decrease was primarily driven by:
•
Increased strategic investments in 2014 to drive long-term growth of our business;
partially offset by: