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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO ________.
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COMMISSION FILE NUMBER 001-12275.
COGNIZANT CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1450569
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(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
200 NYALA FARMS, WESTPORT, CONNECTICUT 06880
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (203) 222-4200.
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value $.01 per share ................ New York Stock Exchange
Preferred Stock Purchase Rights ....................... New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required 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 | |
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|
As of February 28, 1998, 162,514,227 shares of Common Stock of Cognizant
Corporation were outstanding and the aggregate market value of such Common Stock
held by nonaffiliates (based upon its closing transaction price on the Composite
Tape on such date) was approximately $8,116 million.
(Continued)
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DOCUMENTS INCORPORATED BY REFERENCE
PART I
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ITEM 1 --Business Cognizant Business Segments, 1997, Pages 24 and 25, Note 19.
Operations by Business Segments, of the 1997 Annual Report
to Shareholders.
ITEM 3 --Legal Proceedings Pages 22 and 23, Note 17. Litigation, of the 1997 Annual
Report to Shareholders.
PART II
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ITEM 5 --Market for the Registrant's Pages 6 and 7, Financial Review, of the 1997 Annual Report
Common Equity and Related to Shareholders.
Stockholders Matters
ITEM 6 --Selected Financial Data Page 27, Five-Year Selected Financial Data, of the 1997
Annual Report to Shareholders.
ITEM 7 --Management's Discussion and Pages 1 to 7, Financial Review, of the 1997 Annual Report to
Analysis of Financial Shareholders.
Condition and Results of
Operations
ITEM 8 --Financial Statements and Pages 9 to 27 of the 1997 Annual Report to Shareholders;
Supplementary Data Pages 13 to 37 of the Gartner Group, Inc. 1997 Annual Report
to Shareholders.
PART III
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ITEM 10 --Directors and Executive Section entitled "Election of Directors" of the Company's Proxy
Officers of the Registrant Statement dated March 13, 1998.
ITEM 11 --Executive Compensation Section entitled "Compensation of Executive Officers and
Directors" of the Company's Proxy Statement dated March 13,
1998.
ITEM 12 --Security Ownership of Section entitled "Security Ownership of Management and
Certain Beneficial Others" of the Company's Proxy Statement dated March 13, 1998.
Owners and Management
ITEM 13 --Certain Relationships and Not applicable.
Related Transactions
The Index to Exhibits is located on Pages 18-19
PART I
As used in this report, except where the context indicates otherwise, the
term "Company" means Cognizant Corporation and all subsidiaries consolidated in
the financial statements contained or incorporated by reference herein.
ITEM 1. BUSINESS
Cognizant Corporation was incorporated under the laws of the State of
Delaware on January 2, 1996. The Company began operating as an independent
publicly held company on November 1, 1996 (the "Distribution Date") as a result
of its spin-off (the "D&B Spin-off") from The Dun & Bradstreet Corporation ("Dun
& Bradstreet"). Prior to the D&B Spin-off, the Company was owned by Dun &
Bradstreet.
On January 15, 1998, the Company announced a plan to separate into two
independent, publicly traded companies--IMS Health Incorporated ("IMS Health")
and Nielsen Media Research, Inc. The transaction, which has been structured as a
tax-free dividend of one share of IMS Health common stock for each share of
Cognizant Corporation common stock, is targeted for completion by the middle of
1998. Concurrent with the transaction, Cognizant Corporation will change its
name to Nielsen Media Research, Inc. The separation would create IMS Health as
the premier global provider of information solutions to the pharmaceutical and
healthcare industries, and establish an independent Nielsen Media Research,
Inc., the leader in electronic measurement services. The distribution is subject
to final approval by the Company's board of directors and obtaining a ruling
from the Internal Revenue Service with respect to the tax-free treatment of the
transaction. IMS Health consists of IMS International, Inc., Erisco, Inc.,
Cognizant Enterprises, Inc., Cognizant Technology Solutions Corporation, SSJ
K.K., and an equity investment in Gartner Group, Inc.
Cognizant Corporation integrates information and technology to create
business insight. Its principal operating units are I.M.S. International, Inc.,
which offers global information solutions to the pharmaceutical and healthcare
industries, and Nielsen Media Research, Inc., the leader in audience measurement
information for electronic media. The Company also is the largest shareholder of
Gartner Group, Inc., the premier provider of research and advisory services to
the information technology industry. The Company operates in approximately 80
countries. The number of full-time equivalent employees at December 31, 1997 was
approximately 10,500.
The Company's operations are grouped into the following business segments:
IMS, Nielsen Media Research and Emerging Markets.
IMS
I.M.S. INTERNATIONAL, INC.
I.M.S. International, Inc. ("IMS"), the largest operating unit of IMS
Health, provides information and decision-support services to the worldwide
pharmaceutical and healthcare industries. These services broadly include market
research services, sales management services, and other related professional,
software, marketing and research and development services. IMS provides
information services covering 94 countries and maintains offices in 74 countries
on six continents, with significant revenue generated outside the United States
in 1997. In 1997, IMS continued its expansion in developing markets in Eastern
Europe, Asia and Sub-Saharan Africa.
Market research services represented approximately 41% of IMS's worldwide
revenue in 1997. The principal market research services are syndicated
pharmaceutical, medical, hospital, promotional and self-medication audits.
Market research services are utilized by clients for various strategic and
tactical purposes, including analyzing market shares, therapeutic prescribing
trends and price movements. The information reported in these services is
generated or derived from data collected primarily from pharmaceutical
wholesalers, pharmacies, hospitals and doctors. Market research services are
delivered to clients through hardcopy reports, workstations, CD-ROMs and
computer on-line services.
* Pharmaceutical audits measure the sales of pharmaceutical products through
pharmacies, supplemented in some countries by data collected from
prescribing physicians, retail chains and discount stores. The reports
contain data projected to national estimates, showing product sales by
therapeutic class broken down by package size and dosage form.
Pharmaceutical audits are available in over 84 countries.
* Medical audits are based on information collected from panels of practicing
physicians. The reports contain projected national estimates of the number
of consultations for each diagnosed disease with details of the therapy
prescribed, and analyze the use physicians make of individual drugs by
listing the diseases for which they are prescribed, the potential
1
therapeutic action the physician is expecting, other drugs prescribed at
the same time and estimates of the total number of drugs used for each
disease. Medical audits are available in over 47 countries.
* Hospital audits contain data projected to national estimates and show the
sales of pharmaceutical products to hospitals by therapeutic class. IMS
publishes hospital audits for 37 countries.
* Promotional audits measure pharmaceutical promotion for a particular
market, including sales force promotion and journal and mail advertising,
based on information received from panels of physicians and from monitoring
medical journals and direct mail. IMS publishes promotional reports for 27
countries.
* Self-medication services provide detailed product movement, market share
and pricing information for over-the-counter, personal care, and patient
care products. These services are currently available in 22 European
countries.
* IMS is developing in certain countries databases which contain data (with
patient identification deleted in order to protect privacy) about the
treatment of specific diseases over the life of a patient. This type of
information will give many of the participants in the healthcare industry
new insights into the development and treatment of diseases.
Sales management services revenue totaled approximately 45% of IMS's
worldwide revenue in 1997. Sales management products include sales territory
reports, prescription tracking reports, call reporting services and doctor
profiling services. Sales management services are used principally by
pharmaceutical manufacturers to measure the effectiveness and efficiency of
sales forces and to target market products and services. Sales management
services are delivered to clients primarily through work stations and customized
data warehouse and database software tools.
The remaining 14% of IMS's 1997 revenue was derived primarily through
professional consulting, software, direct marketing, and research and
development services. Professional consulting services are provided to assist
clients in analysis and evaluation of market trends, strategies and tactics, and
to assist in the development and implementation of customized software
applications and data warehouse tools. Software services include the
development, licensing and implementation of healthcare information systems,
including electronic territory management systems provided by IMS's Sales
Technologies business unit primarily in North America; pharmacy dispensing and
point-of-sale systems by IMS's Amfac/Chemdata business unit in Australia; and
various direct marketing businesses located throughout the world. Research and
development services provide clients with information and workstation tools
intended to improve the effectiveness and speed of clinical research and
subsequent regulatory approvals.
The raw data for IMS's services are derived either from statistically
selected panels of pharmacies, hospitals, physicians and other sources, or from
activities such as warehouse shipments or wholesalers' sales data. To protect
privacy, no individual patient is identified in any IMS medical database. IMS
generally has well-established relationships with the sources required to create
its databases and in many cases has historical connections with the trade
associations and professional associations involved.
All major pharmaceutical companies are customers of IMS, and many of the
companies subscribe to reports and services in several countries. The scope of
IMS's customer base enables it to avoid dependence on any single customer,
although it is somewhat dependent on the pharmaceutical industry.
While no competitor provides the geographical reach or breadth of IMS's
services, IMS does have competition in many of the countries in which it
operates from other information services companies, as well as the in-house
capabilities of its customers. Generally, competition has arisen on a
country-by-country basis. In the United States, certain of IMS's sales
management services, including its sales territory reports, representing
approximately 60% of the annual revenue of the IMS America unit, compete with
the services of National Data Corp. Quality, completeness and speed of delivery
of information services and products are the principal methods of competition in
IMS's market.
NIELSEN MEDIA RESEARCH
NIELSEN MEDIA RESEARCH, INC.
Nielsen Media Research, Inc. ("Nielsen Media Research") currently conducts
media measurement and related business in the United States and, through a
wholly owned subsidiary, Nielsen Media Research, Ltd., in Canada.
Nielsen Media Research estimates television audiences and reports this and
related information to advertisers, advertising agencies, syndicators, broadcast
networks, cable networks, cable operators, television stations, station
representatives and others in order to increase the effectiveness of television
advertising and programming. This syndicated information is offered on a
subscription basis. Custom or ad-hoc analyses of the data are also offered. The
information is then used by subscribers to buy, sell, plan and price television
time and to make programming and scheduling decisions.
2
In 1997, advertisers spent approximately $42 billion in the United States
on national and local television advertising, according to McCann-Erickson
Worldwide, to bring a variety of programs and advertising messages to
approximately 98 million U.S. television households. These data underscore the
need for television stations, networks, advertisers, advertising agencies and
others to understand how many households and types of people are reached by such
programming.
Nielsen Media Research estimates television audiences and reports data in
the United States through seven services: Nielsen Television Index, Nielsen
Syndication Services, Nielsen Homevideo Index, Nielsen Station Index, Nielsen
Hispanic Television Index, Nielsen Hispanic Station Index and Nielsen Sports
Marketing Service. In Canada, Nielsen Media Research measures television
audiences and reports data through two services: Nielsen Television Index and
Local Market People Meter Service. In the U.S., Nielsen Television Index
provides daily audience total and demographic estimates for all national
broadcast network television programs through the use of the Nielsen People
Meter. Nielsen Syndication Services provides reports and services on both the
local and national levels to the program syndication segment of the television
industry. Nielsen Homevideo Index provides viewing estimates of cable, pay cable
and other newer television technologies. Nielsen Station Index provides
television audience estimate information in over 200 local markets and daily
information in 38 metered markets. In these 38 local metered markets, which
represent about 59% of television households in the U.S., household audience
estimates are obtained daily through the use of television set meters. Written
diaries are used, during designated measurement periods, to collect audience
demographic estimates for integration with the metered tuning data. Diaries are
used in the balance of local markets to collect both tuning and persons-viewing
information during survey periods. Nielsen Media Research has announced plans to
meter six additional markets during 1998 bringing the total number of local
metered markets to 44. Nielsen Hispanic Television Index provides viewing
estimates of national Hispanic audiences, while Nielsen Hispanic Station Index
provides viewing estimates of local Hispanic audiences. Nielsen Sports Marketing
Service provides viewing estimates of national and local sports programs. In
Canada, Nielsen Media Research provides a national people meter service, as well
as regional and local people meter services. In January 1998, the Canadian
operation launched its most recent people meter service in Vancouver, British
Columbia.
During 1997, Nielsen Media Research again expanded its local market
television services and continued to invest to enhance product value, technical
competencies and data quality. Significant investments are being made as Nielsen
Media Research continues to transition from its present mainframe-based systems
to a new flexible client/server architecture for data collection, processing and
delivery. In addition, Nielsen Media Research is developing a new metering
system to enable measurement of program viewing in the emerging digital
television environment. This new system will use codes, which are imperceptible
to the viewer, inserted in the audio and/or video portions of programs and
commercials that can be detected by metering equipment installed in the sample
households. The system also will have a passive back-up capability. There can be
no assurance that the coding used by this system will be adopted by the
television industry, be approved by the Federal Communications Commission, or be
compatible with signal compression techniques implemented by the industry in the
future.
In March 1996, Nielsen Media Research announced plans to implement the
largest increase in diary samples in the history of television audience
measurement. Beginning in May 1996, diary samples were increased by 10%, and by
an additional 5% in October 1996. During 1997, Nielsen Media Research increased
diary samples by an additional 35% in 88 markets where stations financially
supported the increase.
Nielsen Media Research's Monitor-Plus Service links television ratings to
commercial occurrence data and tracks share of spending and share of voice by
company, by brand, and by product category across fifteen monitored media. These
include print, outdoor, radio and free-standing inserts, as well as television,
for which it also reports at the creative execution and campaign level.
Customers use the data to determine competitive advertising trends within
markets of interest. Effective January 1997, Monitor-Plus expanded service to 75
markets from 50, thereby matching the coverage of its principal competitor and
market leader Competitive Media Reports ("CMR"). Monitor-Plus plans to deploy
new digital data collection and processing technology in 1998.
During 1995, Nielsen Media Research entered into a strategic relationship
with Internet Profiles Corporation ("I/PRO") to measure Internet usage. Under
the terms of the agreement, Nielsen Media Research and I/PRO jointly market and
brand two I/PRO products: NetLine, formerly I/COUNT (monitors Web site usage);
and I/AUDIT (audits and verifies audience usage and characteristics). Additional
products may also be jointly developed and marketed under the agreement. In
November 1997, Nielsen Media Research and I/PRO announced the introduction of a
new system to measure content or advertising each time it is exposed on a PC
screen, ensuring accurate counting of impressions and" click throughs". This new
technology will enable the Web site to report all content viewed, regardless of
whether it was retrieved from the Web site, proxy server, local PC browser cache
or PC RAM. In December 1997, Nielsen Media Research purchased approximately 5%
of the outstanding shares in I/PRO.
In addition, separate from its agreement with I/PRO, Nielsen Media Research
plans to establish a panel to monitor computer usage and activity in households.
The panel will provide high quality research to computer and Internet industry
participants (media, advertisers, agencies, hardware manufactures, software
developers, etc.). Roll-out of the service is expected in 1998.
3
In January 1998, Nielsen Media Research announced the development of a new
metering system to track television viewing within Microsoft Corporation's
Windows 98(TM). This new technology, developed jointly by Nielsen Media Research
and Microsoft engineers, will be used to capture audience for those sample
households where television programming is viewed using this Microsoft operating
system.
Nielsen Media Research has maintained a strong leadership position in
relation to its competitors. Arbitron, a former competitor, discontinued its
syndicated broadcast and cable television ratings service as of December31,
1993. A television ratings project funded by the Committee on Nationwide
Television Audience Measurement ("CONTAM") and designed and operated by
Statistical Research, Inc. ("SRI"), is operating a national television ratings
laboratory in Philadelphia as a test market for a national ratings service. SRI
has recently announced plans to produce program level data during 1998. This
data will be derived from a subset of its current 500 installed test households.
Funding for the entire effort has been contributed primarily by the three major
broadcast networks, ABC, CBS, and NBC. The NBC and CBS broadcast television
networks have asked SRI for a business plan for the creation of a national
measurement system that could provide an alternative to the Nielsen Television
Index service. This effort could give rise to a national competitor in the next
few years.
On the local level, ADCOM offers individual cable system measurement. It is
currently collecting and issuing local cable measurement data in Jacksonville,
Florida. Arbitron continues to develop its passive people meter technology and
could use this to re-enter the television audience measurement business.
Indirectly, on both a national and local basis, competition stems from other
marketing research services offering product movement and television audience
data and services.
EMERGING MARKETS
ERISCO, INC.
Erisco, Inc. ("Erisco") develops and markets proprietary software
applications and services used primarily in the administration of healthcare
benefits and the support of managed care services. Its primary markets include
managed care organizations, insurance carriers, third-party administrators and
self-administered corporations. Erisco has successfully completed the
development of the core applications for its newest product, Facets, which is a
managed care information system built using client/server technology. The target
market for Facets is managed care companies such as health maintenance or
preferred provider organizations. This highly advanced, state-of-the-art system
is unique in the marketplace as it combines the latest technology with advanced
managed care business functionality. Erisco faces competition from a variety of
software vendors in both the traditional indemnity market, as well as the new
managed care market. Erisco will benefit from the continuing growth in managed
care membership and the acceptance of enterprise-wide client/server system
architecture.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
Cognizant Technology Solutions Corporation ("CTS") delivers high-quality,
cost-effective, full life-cycle software solutions to complex IT problems
through integrated project teams located in its four development centers in
India and on-site at customer locations in North America and Europe. These
solutions include application development and mainframe services, Year 2000 and
Eurocurrency compliance services, testing and quality assurance services, and
re-hosting and reengineering services.
COGNIZANT ENTERPRISES, INC.
Cognizant Enterprises, Inc., invests in emerging and established
businesses, primarily in the healthcare information industry. It invests as a
limited partner in Information Partners Capital Fund, Information Associates,
L.P. and Information Associates II, L.P., venture capital limited partnerships,
as well as through direct investments.
The Emerging Markets segment also consists of Pilot Software, Inc., which
was sold on July 31, 1997, and SSJ K.K. ("SSJ"). SSJ, based in Japan, which
markets financial application software products and services tailored for the
Japanese market.
RESOURCE GROUP
COGNIZANT SHARED SERVICES
Cognizant Shared Services began operations in 1994 as an internal services
business in the functions of accounting, procurement, payroll, and financial
systems. The shared services center in Allentown, Pennsylvania provides
centralized services formerly supplied within each Cognizant division, in the
U.S. and Canada, but at lower cost with higher levels of service.
4
RELATIONSHIP AMONG THE COMPANY, DUN & BRADSTREET AND ACNIELSEN
Prior to the D&B Spin-off, the Company, Dun & Bradstreet and ACNielsen
Corporation ("ACNielsen") entered into certain agreements governing their
relationship subsequent to the D&B Spin-off and providing for the allocation of
certain liabilities and obligations arising from periods prior to the D&B
Spin-off. The following description summarizes certain terms of such agreements,
but is qualified by reference to the texts of such agreements, which are
incorporated by reference to the Exhibits to this Form 10-K.
DISTRIBUTION AGREEMENT
The Company, Dun & Bradstreet and ACNielsen entered into the Distribution
Agreement providing for, among other things, certain corporate transactions
required to effect the D&B Spin-off and other arrangements subsequent to the D&B
Spin-off. In particular, the Distribution Agreement defines the assets and
liabilities of Dun & Bradstreet which were allocated to and assumed by the
Company and those which were allocated to and assumed by ACNielsen. All assets
were transferred without any representation or warranty, "as is-where is", and
the relevant transferee bears the risk that any necessary consent to transfer is
not obtained.
The Distribution Agreement provides for, among other things, assumptions of
liabilities and cross-indemnities designed to allocate, effective as of the
Distribution Date, financial responsibility for the liabilities arising out of
or in connection with (i) the businesses conducted by various businesses
including IMS and Nielsen Media Research to the Company, (ii) the businesses
conducted by A.C. Nielsen Company, other than those conducted by Nielsen Media
Research, to ACNielsen and (iii) all other liabilities to Dun & Bradstreet.
The Distribution Agreement provides that neither the Company, Dun &
Bradstreet nor ACNielsen will take any action that would jeopardize the intended
tax consequences of the D&B Spin-off. Specifically, each company agrees to
maintain its status as a company engaged in the active conduct of a trade or
business, as defined in Section 355(b) of the Internal Revenue Code, until the
second anniversary of the Distribution Date. As part of the request for a ruling
that the Distribution will be tax free for Federal income tax purposes, each
company represented to the Internal Revenue Service that, subject to certain
exceptions, it has no plan or intent to liquidate, merge or sell all or
substantially all of its assets. As a result, the Company may not initiate any
action leading to a change of control, and in the case of a change in control,
the foregoing representations, and the ruling based thereon, could be called
into question. As a result, the acquisition of control of the Company prior to
November 1, 1998 may be more difficult or less likely to occur because of the
potential substantial contractual damages associated with a breach of such
provisions of the Distribution Agreement.
The Distribution Agreement further requires that if any of the parties
spins off any part of its business to its shareholders, the spun-off entity must
remain jointly and severally liable to the other two parties for all liabilities
of its former parent under the Distribution Agreement.
TAX ALLOCATION AGREEMENT
The Company, Dun & Bradstreet and ACNielsen entered into a Tax Allocation
Agreement to the effect that Dun & Bradstreet will pay its entire consolidated
tax liability for the tax years that the Company and ACNielsen were included in
Dun & Bradstreet's consolidated Federal income tax return. For periods prior to
the Distribution Date, Dun & Bradstreet will generally be liable for state and
local taxes measured by income or imposed in lieu of income taxes. The Tax
Allocation Agreement allocates liability to each company for its respective
share of state, local and foreign taxes attributable to periods prior to the
Distribution Date, as well as certain other matters.
EMPLOYEES BENEFITS AGREEMENT
The Company, Dun & Bradstreet and ACNielsen entered into an Employee
Benefits Agreement, which allocates responsibility for certain employee benefits
matters on and after the Distribution Date. Among other things the Employee
Benefits Agreement provides that Dun & Bradstreet will be required to retain the
liability for all benefits under Dun & Bradstreet's nonqualified supplemental
pension plans that were vested prior to the Distribution Date, but the Company
and ACNielsen will guarantee payment of these benefits to their respective
employees in the event that Dun & Bradstreet is unable to satisfy its
obligations. In addition, the Company and ACNielsen will provide retiree welfare
benefits to their continuing employees who would have been eligible to receive
these benefits from Dun & Bradstreet had they retired on or prior to the
Distribution Date. If Cognizant or ACNielsen fails to provide any retiree
welfare benefits, Dun & Bradstreet will provide such continuing employees with
the same level of retiree welfare benefits that it provides to its retirees
generally.
5
INDEMNITY AND JOINT DEFENSE AGREEMENT
The Company, Dun & Bradstreet and ACNielsen entered into an Indemnity and
Joint Defense Agreement pursuant to which they agreed to certain arrangements
allocating potential liabilities (the "IRI Liabilities") under, and to conduct a
joint defense of, the action filed by Information Resources, Inc. described in
Note 17 of Notes to Consolidated Financial Statements in the 1997 Annual Report
to Shareholders, referred to in Item 3. Legal Proceedings (the "IRI Action").
In particular, the Indemnity and Joint Defense Agreement provides that
ACNielsen will assume exclusive liability for IRI Liabilities up to the ACN
Maximum Amount, which is to be calculated at the time such liabilities, if any,
become payable, and that the Company and Dun & Bradstreet will share liability
equally for any amounts in excess of the ACN Maximum Amount. The ACN Maximum
Amount will be determined by an investment banking firm as the maximum amount
which ACNielsen is able to pay after giving effect to (i) any plan submitted by
such investment bank which is designed to maximize the claims-paying ability of
ACNielsen without impairing the investment banking firm's ability to deliver a
viability opinion (but which will not require any action requiring stockholder
approval), and (ii) payment of related fees and expenses. For these purposes,
financial viability means the ability of ACNielsen, after giving effect to such
plan, the payment of related fees and expenses and the payment of the ACN
Maximum Amount, to pay its debts as they become due and to finance the current
and anticipated operating and capital requirements of its business, as
reconstituted by such plan, for two years from the date any such plan is
expected to be implemented.
In addition, ACNielsen has agreed to certain restrictions on payments of
dividends and share repurchases above specified levels. ACNielsen also agreed
not to engage in mergers, acquisitions or dispositions, including joint venture
investments, if, after giving effect to any such transaction, ACNielsen would be
unable to meet a specified fixed charge coverage ratio, and, if any such
transaction involves aggregate consideration in excess of $50 million, then
ACNielsen will also be required to receive and to cause to be delivered to the
Company and Dun & Bradstreet an investment banker's fairness opinion.
The Indemnity and Joint Defense Agreement also sets forth certain
provisions governing the defense of the IRI Action pursuant to which the parties
agreed to be represented by the same counsel. Legal expenses are to be shared
equally by the three parties.
Both the Company and Dun & Bradstreet have announced that they will spin
off certain businesses to their shareholders later in 1998. Pursuant to the
Distribution Agreement, each spun-off company will remain jointly and severally
liable with its former parent for its share of the IRI Liabilities and related
expenses.
TAM MASTER AGREEMENT
The Company and ACNielsen entered into the TAM Master Agreement relating to
the conduct of the television audience measurement business (the "TAM
Business").
The TAM Master Agreement, together with certain ancillary trademark and
technology licensing agreements, provides that the Company or a newly
established entity will license to ACNielsen a nonexclusive right to use certain
trademarks in connection with the TAM Business outside the United States and
Canada for five years. The Company will also license to ACNielsen a nonexclusive
right to use specified technology in Australia, Ireland and India in connection
with the TAM Business for five years or such longer period as is required to
fulfill contractual obligations existing on the Distribution Date.
In the event that on or prior to the third anniversary of the Distribution
Date, ACNielsen determines to sell all or substantially all of (i) its assets or
the assets of the TAM Business (as defined in the TAM Master Agreement), or (ii)
its assets that generate more than 50% of the TAM business, or ACNielsen takes
action to be acquired or is acquired by a third party, the Company will have the
right to require ACNielsen to sell all of ACNielsen's TAM Business to the
Company at book value (as calculated in accordance with the TAM Master
Agreement) plus certain transfer costs. In addition, in the event that prior to
the third anniversary of the Distribution Date, ACNielsen determines to sell all
or substantially all of its TAM Business in a particular country, the Company
will have the right to require ACNielsen to sell such business to the Company at
book value (as calculated in accordance with the TAM Master Agreement) plus
certain transfer costs.
INTELLECTUAL PROPERTY AGREEMENT
The Company, Dun & Bradstreet and ACNielsen entered into an Intellectual
Property Agreement which provides for the allocation and recognition by and
among these companies of rights under patents, copyrights, software, technology,
trade secrets and certain other intellectual property owned by them and their
respective subsidiaries as of the Distribution Date. The Intellectual Property
Agreement also contains various provisions governing the future use of certain
trademarks owned by ACNielsen prior to the Distribution Date, including
limitations upon both the Company's and ACNielsen's use of the "Nielsen" name,
standing alone or as part of a name describing any new product or service to be
offered.
6
FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information and statements provided by the Company may
contain "forward-looking statements" as defined by the Private Securities
Litigation Reform Act of 1995. The Company cautions shareholders and investors
that actual results may differ materially from those projected or suggested in
any forward-looking statement as the result of a wide variety of factors,
including but not limited to the factors set forth below:
* The Company operates globally, deriving a significant portion of its
operating income from non-U.S. operations. As a result, fluctuations in the
value of foreign currencies relative to the U.S. dollar may increase the
volatility of U.S. dollar-denominated operating results. The Company's
geographic expansion in emerging markets such as Eastern Europe, Africa and
Asia Pacific is expected to continue. Emerging markets tend to be
considerably less stable than established markets which may further
contribute to volatility in operating results. In addition, the Company is
subject to the usual risks inherent in carrying on business in certain
countries outside the U.S., including possible nationalization,
expropriation, price controls or other restrictive government actions.
Management believes that the risk of nationalization or expropriation is
reduced because its basic service is the delivery of information, rather
than the production of products which require manufacturing facilities or
use of natural resources.
* To the extent the Company seeks growth through acquisitions, there can be
no assurance that management of the Company will be able to identify and
consummate acquisitions on satisfactory terms. Furthermore, every
acquisition will entail some degree of uncertainty and risk, and even if
consummated, may not produce the operating results or increases in value
over time which were expected at the time of acquisition.
* The Company competes in businesses which demand or sell sophisticated
information systems, software and other technology. The types of systems
which the Company's businesses require or sell can be expected to be
subject to refinements as such systems and underlying technologies are
upgraded and advanced, and there can be no guarantee that as various
systems and technologies become outdated, the Company will be able to
replace them, to replace them as quickly as the Company's competition or to
develop and market new and better products and services in the future on a
cost-effective basis.
* Many existing computer systems and software applications use two digits,
rather than four, to record years. Unless modified, such systems will not
properly record or interpret years after 1999, which could lead to business
disruptions (the "Year 2000 issue"). The Company depends on systems and
software both for its internal operations as well as for the receipt of
data used in its information products and the transmission of those
products to its customers. The Company began to address the Year 2000 issue
in 1996. It expects to complete upgrading or replacing affected programs
during 1998, with testing to be done during 1999. The Company's expected
costs of upgrading or replacing affected programs and the date on which the
Company expects to complete Year 2000 compliance are based on management's
best estimates, which were derived utilizing numerous assumptions of future
events.
* In the third quarter of 1997, the Company's voting interest in Gartner
Group fell below 50% to 49.5% based upon the exercise of Gartner Group
employee stock options and employee stock purchases. Accordingly, as of
September 30, 1997 the Company has deconsolidated Gartner Group and is
accounting for its ownership interest on the equity basis. Gartner Group's
common stock has historically traded at higher multiples than market
averages and has generally experienced greater price volatility than the
market as a whole. It can be expected that variations in the market value
of the Gartner Group shares held by the Company will have an impact on the
trading prices of the Company's Common Stock. Gartner Group's results and
operations may also be subject to the various factors described in Gartner
Group's reports filed from time to time with the Securities and Exchange
Commission.
* Each of the Company's businesses is subject to significant or potential
competition which is likely to intensify in the future. In particular, a
television rating project being funded by the Committee on Nationwide
Television Audience Measurement and designed and operated by Statistical
Research Inc., which is currently in a testing phase in Philadelphia, has
received support from the three major broadcast networks and a number of
large advertising agencies and advertisers. This could give rise to a
national competitor to Nielsen Media Research in the next few years.
* A number of countries in the which the Company operates have enacted
regulations limiting the prices pharmaceutical companies may charge for
drugs. The Company believes that such cost containment measures will cause
pharmaceutical companies to seek more effective means of marketing their
products (which will benefit IMS in the medium and long term). However,
such governmental regulation may cause pharmaceutical companies to revise
or reduce their marketing programs in the near term.
* Certain of the data services provided by IMS relate to the diagnosis and
treatment of disease. The use of patient-specific information is
anticipated to be an increasingly important tool in the design, development
and marketing of
7
pharmaceuticals. To protect privacy, no individual patient is identified in
any IMS database. Recently, there have been a number of regulatory and
legislative initiatives in the area of medical privacy at the Federal,
state and foreign government levels. There can be no assurance that such
initiatives will not adversely affect IMS's ability to generate or assemble
data or to develop or market current or future products and services.
* Results could be affected by the costs and other effects of litigation
involving the Company. In particular, management of the Company is unable
to predict at this time the final outcome of the IRI Action described in
"Note 17. Litigation" of the Notes to Consolidated Financial Statements in
the 1997 Annual Report to Shareholders, or whether the resolution of this
matter could materially affect the Company's results of operations, cash
flows or financial position.
* The Company's results could be adversely affected by general or specific
weakening of economic conditions, including weak economic conditions in the
pharmaceutical, healthcare, media, information technology or other
industries in which the Company's customers operate.
------------------
The names of the Company's products used in this report are trademarks or
registered trademarks of Cognizant Corporation or one of its subsidiaries.
Additional information is incorporated by reference to Note 19. Operations
by Business Segment on Pages 24-25 of the 1997 Annual Report to Shareholders.
8
ITEM 2. PROPERTIES
The principal properties of the Company are set forth below.
The executive offices of Cognizant Corporation are located at 200 Nyala
Farms, Westport, Connecticut in a leased property. Property of the Company
is geographically distributed to meet sales and operating requirements
worldwide. The properties of the Company are generally considered to be
both suitable and adequate to meet current operating requirements and
virtually all space is being utilized.
IMS
Owned properties located within the U.S. include three facilities. The
properties are located in Totowa, New Jersey; and Plymouth Meeting and West
Norriton, Pennsylvania.
Owned properties located outside the U.S. include nine facilities: one
property each in Buenos Aires, Argentina; Crows Nest, Australia; Innsbruck,
Austria; Brussels, Belgium; Santiago, Chile; Lisbon, Portugal; London and
Pinner, England; and Caracas, Venezuela.
The operations of this business unit are also conducted from eighteen
leased offices located throughout the U.S. and sixty-eight non-U.S.
locations.
NIELSEN MEDIA RESEARCH
Owned properties located within the U.S. include one facility. The property
is located in Dunedin, Florida.
Operations are conducted from thirty-three leased office locations
throughout the U.S. and three non-U.S. locations.
EMERGING MARKETS
Operations are conducted from four leased office locations throughout the
U.S. and six non-U.S. locations.
RESOURCE GROUP/CORPORATE
Operations are conducted from two leased office locations in Allentown,
Pennsylvania and Westport, Connecticut.
ITEM 3. LEGAL PROCEEDINGS
Reference is made to Note 17. of Notes to Consolidated Financial Statements
on Pages 22 and 23 of the 1997 Annual Report to Shareholders which is
incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
9
EXECUTIVE OFFICERS OF THE REGISTRANT*
Officers are elected by the Board of Directors to hold office until their
respective successors are chosen and qualified.
Listed below are the executive officers of the registrant at March 1, 1998
and brief summaries of their business experience during the past five
years.
NAME TITLE AGE
---- ----- ---
Robert E. Weissman Chairman and Chief Executive Officer** 57
Victoria R. Fash Executive Vice President and Chief Financial Officer 46
Alan J. Klutch Senior Vice President-Finance 53
James C. Malone Senior Vice President-Finance and Controller 49
Kenneth S. Siegel Senior Vice President, General Counsel and Secretary 42
Leslye G. Katz Vice President and Treasurer 43
Craig S. Kussman Vice President-Corporate Development 39
*Set forth as a separate item pursuant to Items 401(b) and (e) of Regulation
S-K.
**Member of the Board of Directors.
Mr. Weissman was elected Chairman and Chief Executive Officer of Cognizant
Corporation in September 1996. He was previously Chairman and Chief Executive
Officer of Dun & Bradstreet (April 1995), after serving as President and Chief
Executive Officer (January 1994). He was named Dun & Bradstreet's President and
Chief Operating Officer in January 1985.
Ms. Fash was appointed Executive Vice President and Chief Financial Officer
of Cognizant Corporation in September 1996 and Chairman and Chief Executive
Officer of IMS in December 1997. Ms. Fash was elected Senior Vice
President-Business Strategy of Dun & Bradstreet in April 1995 and elected Vice
President-Business Operations Planning of Dun & Bradstreet, effective May 1994.
Previously, she had served as Assistant to the President of Dun & Bradstreet
(September 1991).
Mr. Klutch was appointed Senior Vice President-Finance of Cognizant
Corporation in September 1996. Mr. Klutch previously was Vice
President-Financial Planning of Dun & Bradstreet (October 1984).
Mr. Malone was appointed Senior Vice President-Finance and Controller of
Cognizant Corporation in December 1996. He had been appointed Vice
President-Finance and Controller, effective September 1996. Previously, he had
served as Assistant Vice President and Leader-North American Shared Transaction
Services Center (February 1995) and as Vice President and Controller of Reuben
H. Donnelley Corporation, subsidiaries of Dun & Bradstreet (1990).
Mr. Siegel was appointed Senior Vice President and General Counsel of
Cognizant Corporation in February 1997 and Secretary of Cognizant Corporation in
July 1997. Mr. Siegel was a partner with the law firm of Baker & Botts, L.L.P.
from September 1994 to February 1997. Previously, he was a partner at the law
firm of O'Sullivan Graev & Karabell (July 1987).
Ms. Katz was appointed Vice President and Treasurer of Cognizant
Corporation in September 1996. Ms. Katz was appointed Senior Vice President and
Chief Financial Officer for Reuben H. Donnelley, a subsidiary of Dun &
Bradstreet, in September 1992. Previously, she was appointed Vice
President-Strategic and Financial Planning (August 1991) and Vice
President-Finance and Planning (February 1991) for Reuben H. Donnelley.
Mr. Kussman was appointed Vice President--Corporate Development of
Cognizant Corporation in October 1997. He had been appointed Vice
President--Mergers and Acquisitions, effective November 1996. Previously, he had
served as Assistant Vice President-Financial Planning of Dun & Bradstreet (May
1991).
10
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information in response to this Item is set forth under Dividends and
Common Stock Information in the "Financial Review" on Page 7 of the 1997 Annual
Report to Shareholders, which information is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data required by this Item is incorporated herein by
reference to the information relating to the years 1993 through 1997 set forth
in the "Five-Year Selected Financial Data" on Page 27 of the 1997 Annual Report
to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information in response to this Item is set forth in the "Financial Review"
on Pages 1 to 7 of the 1997 Annual Report to Shareholders, which information is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Schedules under Item 14 on Page 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information in response to this Item is incorporated herein by reference to
the section entitled "Election of Directors" in the Company's proxy statement to
be filed on or about March 13, 1998 with the Securities and Exchange Commission,
except that "Executive Officers of the Registrant" on Page 10 of this report
responds to Items 401(b) and (e) of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
Information in response to this Item is incorporated herein by reference to
the section entitled "Compensation of Executive Officers and Directors" in the
Company's proxy statement dated March 13, 1998 with the Securities and Exchange
Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information in response to this Item is incorporated herein by reference to
the section entitled "Security Ownership of Management and Others" in the
Company's proxy statement dated March 13, 1998 with the Securities and Exchange
Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this Item is incorporated herein by reference to
the section entitled "Security Ownership of Management and Others" in the
Company's proxy statement dated March 13, 1998 with the Securities and Exchange
Commission.
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report.
(1) Financial Statements.
See Index to Financial Statements and Schedule on Page 15.
(2) Financial Statement Schedule.
See Index to Financial Statements and Schedule on Page 15.
(3) Other Financial Information.
Business Segments, 1997. See Index to Financial Statements and
Schedule on Page 15.
Five-year Selected Financial Data. See Index to Financial
Statements and Schedule on Page 15.
(4) Exhibits.
See Index to Exhibits on Pages 18-19, which indicates which
Exhibits are management contracts or compensatory plans required
to be filed as Exhibits. Only responsive information appearing on
pages 1 to 27 to Exhibit 13 is incorporated herein by reference,
and no other information appearing in Exhibit 13 is or shall be
deemed to be filed as part of this Form 10-K.
(b) Reports on Form 8-K.
None.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
COGNIZANT CORPORATION
(REGISTRANT)
By: ROBERT E. WEISSMAN
---------------------------------
(ROBERT E. WEISSMAN,
CHAIRMAN & CHIEF EXECTIVE OFFICER
AND DIRECTOR)
By: VICTORIA R. FASH
---------------------------------
(VICTORIA R. FASH,
EXECUTIVE VICE PRESIDENT
& CHIEF FINANCIAL OFFICER)
By: JAMES C. MALONE
---------------------------------
(JAMES C. MALONE,
SENIOR VICE PRESIDENT-FINANCE
& CONTROLLER)
Date: February 17, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
CLIFFORD L. ALEXANDER, JR. H. EUGENE LOCKHART
- - ------------------------------- -------------------------------
(CLIFFORD L. ALEXANDER, JR., (H. EUGENE LOCKHART, DIRECTOR)
DIRECTOR)
JAMES R. PETERSON
JOHN P. IMLAY, JR. -------------------------------
- - ------------------------------- (JAMES R. PETERSON, DIRECTOR)
(JOHN P. IMLAY, JR., DIRECTOR)
M. BERNARD PUCKETT
ROBERT KAMERSCHEN -------------------------------
- - ------------------------------- (M. BERNARD PUCKETT, DIRECTOR)
(ROBERT KAMERSCHEN, DIRECTOR)
ROBERT J. LANIGAN
- - -------------------------------
(ROBERT J. LANIGAN, DIRECTOR)
Date: February 17, 1998
14
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS:
The Company's consolidated financial statements, the notes thereto and the
related report thereon of Coopers & Lybrand L.L.P., independent accountants, for
the years ended December 31, 1997, 1996, and 1995, appearing on pages 6 to 25 of
the accompanying 1997 Annual Report to Shareholders, are incorporated by
reference into this Annual Report on Form 10-K (see below). The additional
financial data indicated below should be read in conjunction with such
consolidated financial statements.
PAGE
-------------------------------------
1997 ANNUAL REPORT
10-K TO SHAREHOLDERS
--------------- ------------------
Report of Independent Accountants .................................................... Exhibit 13 Pg 8 8
Statement of Managements Responsibility for Financial Statements ..................... Exhibit 13 Pg 8 8
As of December 31, 1997 and 1996:
Consolidated Statements of Financial Position ....................................... Exhibit 13 Pg 10 10
For the years ended December 31, 1997, 1996 and 1995:
Consolidated Statements of Income ................................................... Exhibit 13 Pg 9 9
Consolidated Statements of Cash Flows ............................................... Exhibit 13 Pg 11 11
Consolidated Statements of Shareholders' Equity ..................................... Exhibit 13 Pg 12 12
Notes to Consolidated Financial Statements ........................................... Exhibit 13
Pgs 13-26 13 - 26
Quarterly Financial Data (Unaudited) for the years ended
December 31, 1997 and 1996 .......................................................... Exhibit 13 Pg 26 26
Managements Discussion and Analysis of Financial ..................................... Exhibit 13
Condition and Results of Operations ................................................. Pgs 1- 4 1 - 4
Other Financial Information:
Business Segments, 1997, 1996 and 1995 .............................................. Exhibit 13 Pg 24-25 24 - 25
Five-Year Selected Financial Data ................................................... Exhibit 13 Pg 27 27
SCHEDULE:
Report of Independent Accountants .................................................... 16 --
Cognizant Corporation and Subsidiaries ............................................... Exhibit 21 --
II. Valuation and Qualifying Accounts for the years ended
December 31, 1997, 1996, and 1995 ................................................. 17 --
Schedules other than the one listed above are omitted as not required or
inapplicable or because the required information is provided in the consolidated
financial statements, including the notes thereto.
The consolidated financial statements of Gartner Group, Inc. and the notes
thereto for the years ended September 30, 1997, 1996, and 1995, and the related
report thereon for the years ended September 30, 1997 and 1996 appearing on
Pages 13 to 37 of the Gartner Group, Inc. Annual Report to Shareholders filed
hereunder as Exhibit 99.3, are incorporated by reference into this Annual Report
on Form 10-K.
The report of Price Waterhouse LLP, previous independent accountants for
Gartner Group, Inc., on the consolidated financial statements of Gartner Group,
Inc., for the year ended September 30, 1995, appearing as Exhibit 23.3 to the
Gartner Group, Inc. Annual Report on Form 10-K for the year ended September 30,
1997 and filed hereunder as Exhibit 99.4, is incorporated by reference into this
Annual Report on Form 10-K.
15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and the Board of Directors of Cognizant Corporation:
Our report on the consolidated financial statements of Cognizant
Corporation as of December 31, 1997 and 1996, and for each of the three years in
the period ended December 31, 1997, has been incorporated by reference in this
Form 10-K from page 8 of the 1997 Annual Report to Shareholders of Cognizant
Corporation. In connection with our audits of such financial statements, we have
also audited the related financial statement schedule listed in the index on
page 15 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
New York, New York
February 17, 1998
16
COGNIZANT CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
- - ------------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- - ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS(A) OF PERIOD
----------- --------- ---------- ------------- ---------
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
For the Year Ended December 31, 1997 .................... $15,470 $ 790 $9,061 $ 7,199
======= ====== ====== =======
For the Year Ended December 31, 1996 .................... $11,446 $4,993 $ 969 $15,470
======= ====== ====== =======
For the Year Ended December 31, 1995 .................... $10,839 $3,310 $2,703 $11,446
======= ====== ====== =======
NOTE:
(a) Primarily represents the deconsolidation of Gartner Group and the recovery
of accounts in 1997; and the charge-off of uncollectible accounts for which
a reserve was provided in 1996 and 1995.
17
INDEX TO EXHIBITS
REGULATION S-K
EXHIBIT NUMBER DESCRIPTION
- - -------------- -----------
3 Articles of Incorporation and By-laws:
.1 Restated Certificate of Incorporation of Cognizant Corporation dated
October 7, 1996 (incorporated by reference to Exhibit 3.1 to
Registrant's Registration Statement on Form 10 filed October 7, 1996,
file number 001-12275).
.2 Amended and Restated By-laws of Registrant (incorporated by reference
to Exhibit 3.2 to Registrant's Registration Statement on Form 10 filed
October 7, 1996, file number 001-12275).
10 Material Contracts:
.1 Distribution Agreement among Cognizant Corporation, The Dun &
Bradstreet Corporation and ACNielsen Corporation dated as of October
28, 1996 (incorporated by reference to Exhibit 10.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, filed
March 27, 1997, file number 001-12275).
.2 Tax Allocation Agreement among Cognizant Corporation, The Dun &
Bradstreet Corporation and ACNielsen Corporation dated as of October
28, 1996 (incorporated by reference to Exhibit 10.2 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, filed
March 27, 1997, file number 001-12275).
.3 Employee Benefits Agreement among Cognizant Corporation, The Dun &
Bradstreet Corporation and ACNielsen Corporation dated as of October
28, 1996 (incorporated by reference to Exhibit 10.3 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, filed
March 27, 1997, file number 001-12275).
.4 Indemnity and Joint Defense Agreement among Cognizant Corporation, The
Dun & Bradstreet Corporation and ACNielsen Corporation dated as of
October 28, 1996 (incorporated by reference to Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1996, filed March 27, 1997, file number 001-12275).
.5 TAM Master Agreement between Cognizant Corporation and ACNielsen
Corporation dated as of October 28, 1996 (incorporated by reference to
Exhibit 10.5 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, filed March 27, 1997, file number 001-12275).
.6 Intellectual Property Agreement among Cognizant Corporation, The Dun &
Bradstreet Corporation and ACNielsen Corporation dated as of October
28, 1996 (incorporated by reference to Exhibit 10.6 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, filed
March 27, 1997, file number 001-12275).
.7 1996 Cognizant Corporation Non-Employee Directors Stock Incentive
Plan, as adopted effective November 1, 1996 (incorporated by reference
to Exhibit 10.7 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996, filed March 27, 1997, file number
001-12275)*.
.8 1996 Cognizant Corporation Non-Employee Directors' Deferred
Compensation Plan, as adopted effective October 15, 1996 (incorporated
by reference to Exhibit 10.8 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, filed March 27, 1997, file
number 001-12275)*.
.9 1996 Cognizant Corporation Key Employees' Stock Incentive Plan, as
amended December 16, 1997*.
.10 1996 Cognizant Corporation Replacement Plan for Certain Employees
Holding the Dun & Bradstreet Corporation Equity-Based Awards, as
adopted effective November 1, 1996 (incorporated by reference to
Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, filed March 27, 1997, file number
001-12275)*.
.11 1996 Cognizant Corporation Replacement Plan for Certain Employees
Holding I.M.S. International, Inc. Stock Options, as adopted November
1, 1996 (incorporated by reference to Exhibit 10.11 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, filed
March 27, 1997, file number 001-12275)*.
.12 Form of Non-Employee Directors' Stock Option Agreement (incorporated
by reference to Exhibit 10.12 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, filed March 27, 1997, file
number 001-12275)*.
.13 Form of Non-Employee Directors' Restricted Stock Agreement
(incorporated by reference to Exhibit 10.13 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996, filed March
27, 1997, file number 001-12275)*.
.14 Forms of Stock Option Agreement (incorporated by reference to Exhibit
10.14 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, filed March 27, 1997, file number 001-12275)*.
.15 Forms of Purchased Option Agreement (incorporated by reference to
Exhibit 10.15 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, filed March 27, 1997, file number
001-12275)*.
.16 Forms of Limited Stock Appreciation Right Agreement (incorporated by
reference to Exhibit 10.16 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996, filed March 27, 1997, file
number 001-12275)*.
18
INDEX TO EXHIBITS--(CONTINUED)
REGULATION S-K
EXHIBIT NUMBER DESCRIPTION
.17 Forms of Change-in-Control Agreement for Certain Executives of
Cognizant Corporation, as adopted October 15, 1996 (incorporated by
reference to Exhibit 10.17 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996, filed March 27, 1997, file
number 001-12275)*.
.18 Cognizant Corporation Executive Transition Plan, as adopted effective
November 1, 1996 (incorporated by reference to Exhibit 10.18 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1996, filed March 27, 1997, file number 001-12275)*.
.19 Cognizant Corporation Executive Annual Incentive Plan, as adopted
effective January 1, 1997 (incorporated by reference to Exhibit 10.19
to Registrant's Annual Report on Form 10-K for the year ended December
31, 1996, filed March 27, 1997, file number 001-12275)*.
.20 Cognizant Corporation Supplemental Executive Retirement Plan, as
adopted effective November 1, 1996 (incorporated by reference to
Exhibit 10.20 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, filed March 27, 1997, file number
001-12275)*.
.21 Rights Agreement dated as of October 15, 1996 between Cognizant
Corporation and First Chicago Trust Company of New York (incorporated
by reference to Exhibit 1 to Registrant's Current Report on Form 8-K
filed October 15, 1996, file number 001-12275)
.22 Cognizant Corporation Retirement Excess Plan, as adopted effective
January 1, 1997 (incorporated by reference to Exhibit 10.22 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997, filed May 13, 1997, file number 001-12275).*
.23 Cognizant Corporation Savings Equalization Plan, as adopted effective
November 1, 1996 (incorporated by reference to Exhibit 10.22 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997, filed May 13, 1997, file number 001-12275).*
.24 Severance Agreement and Release between Cognizant Corporation and
Dennis G. Sisco dated as of February 28, 1997 (incorporated by
reference to Exhibit 10.24 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, filed November 14,
1997, file number 001-12275).
13 1997 Annual Report to Shareholders.
21 List of Active Subsidiaries as of January 31, 1997.
23 Consent of Independent Accountants.
27 Financial Data Schedules.
99 Additional Exhibits
.1 Consent of KPMG Peat Marwick LLP, independent accountants for Gartner
Group, Inc.
.2 Consent of Price Waterhouse LLP, previous independent accountants for
Gartner Group, Inc.
.3 Pages 13 to 37 of the Gartner Group, Inc. 1997 Annual Report to
Shareholders
.4 Report of Price Waterhouse LLP on consolidated financial statements of
Gartner Group, Inc. for the year ended September 30, 1995.
- - --------------------------------------------------------------------------------
* Management contract or compensatory plan or arrangement
19