Nielsen Reports Third Quarter 2012 Results *Revenues for the quarter increased 1% to $1,423 million, up 5% in constant currency *Adjusted EBITDA for the quarter grew 4% to $424 million, up 7% in constant currency *Net income for the quarter increased to $106 million from $103 million in 2011 *Adjusted Net Income for the quarter increased to $200 million from $181 million in 2011 Business Wire NEW YORK -- October 22, 2012 Nielsen Holdings N.V. (NYSE: NLSN), a leading global provider of information and insights into what consumers buy and watch, today announced financial results for the third quarter and nine months ended September 30, 2012. "Nielsen had solid performance in the third quarter, with healthy growth in recurring revenue and margin expansion,” said David Calhoun, Chief Executive Officer of Nielsen. “Our resilience given today’s economic environment demonstrates the value we deliver to clients, and we will continue to invest to support their global business priorities.” Third Quarter 2012 Operating Results Revenues for the third quarter increased 1% to $1,423million, or 5% on a constant currency basis compared to the third quarter of 2011. Our revenue performance was driven by a 1% decrease within our Buy segment (4% increase on a constant currency basis), a 4% increase within our Watch segment (5% on a constant currency basis) and a 5% increase in our Expositions segment (5% on a constant currency basis). Global growth in Information services was driven by increased client investment in retail measurement, including the impact of additional coverage in the U.S. market. Our Insights services declined due to lower spending by clients globally. Adjusted EBITDA for the third quarter increased 4% to $424 million, or 7% on a constant currency basis compared to the third quarter of 2011. We continue to see the benefits of productivity efforts while strategically reinvesting in growth initiatives. Net income for the third quarter increased to $106 million compared to $103 million in the third quarter of 2011. Net income per share, on a diluted basis, was $0.29 compared to $0.28 in the third quarter of 2011. Adjusted Net Income for the third quarter increased to $200 million compared to $181 million in the third quarter of 2011. Adjusted Net Income per share was $0.53 compared to $0.48 in the third quarter of 2011. Nine Months Ended September 2012 Operating Results Revenues for the first nine months of 2012 increased 1% to $4,148 million, or 4% on a constant currency basis compared to the first nine months of 2011. Revenues within our Buy segment decreased 1% (4% increase on a constant currency basis), revenues within our Watch segment increased 3% (4% on a constant currency basis) and revenues within our Expositions segment increased 5% (5% on a constant currency basis). Adjusted EBITDA for the first nine months of 2012 increased 3% to $1,145 million, or 6% on a constant currency basis compared to the nine months of 2011. Net income for the first nine months of 2012 was $234 million compared to a net loss of $9 million for the first nine months of 2011. The 2011 results included charges of $206 million, net of tax, associated with the IPO. Net income per share, on a diluted basis, was $0.64 compared to a net loss per share of $0.03 in the first nine months of 2011. Adjusted Net Income for the first nine months of 2012 increased to $470 million compared to $400 million in the first nine months of 2011. Adjusted Net Income per share was $1.25 compared to $1.10 in the first nine months of 2011. Financial Position As of September 30, 2012, cash balances were $325 million and gross debt was $6,392 million, excluding the $288 million mandatory convertible subordinated bonds due 2013. Net debt (gross debt less cash and cash equivalents) was $6,067 million and our net debt leverage ratio was 3.8x at the end of the quarter. Capital expenditures were $225 million for the first nine months of 2012 as compared to $213 million for the first nine months of 2011. In October 2012, we issued $800 million in aggregate principal amount of 4.50% Senior Notes due 2020 at par with cash proceeds of approximately $788 million, net of fees and expenses. Further in October 2012, we redeemed all of our 11.50% Senior Notes due 2016 and prepaid our 8.50% Senior Secured Term Loan due 2017. The redemption and prepayment transactions will result in a pre-tax charge of approximately $115 million in the fourth quarter of 2012. Conference Call and Webcast Nielsen will hold a conference call to discuss third quarter results at 8:30 a.m. U.S. Eastern Time (ET) on October 22, 2012. The audio and slides for the call can be accessed live by webcast at http://ir.nielsen.com or by dialing 1-866-652-5200. Callers outside the U.S. and Canada can dial +1-412-317-6060. The passcode for the call is “Nielsen.” An archive will be available on the investor relations website after the call. Forward-looking Statements This news release includes information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as ‘will’, ‘expect’, ‘should’, ‘could’, ‘shall’ and similar expressions. These statements are subject to risks and uncertainties, and actual results and events could differ materially from what presently is expected. Factors leading thereto may include without limitations general economic conditions, conditions in the markets Nielsen is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting Nielsen’s business and specific risk factors discussed in other releases and public filings made by the Company (including the Company’s filings with the Securities and Exchange Commission). This list of factors is not intended to be exhaustive. Such forward-looking statements only speak as of the date of this press release, and we assume no obligation to update any written or oral forward-looking statement made by us or on our behalf as a result of new information, future events, or other factors. About Nielsen Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information,visit www.nielsen.com. Results of Operations—(Three and Nine Months Ended September 30, 2012 and 2011) The following table sets forth, for the periods indicated, the amounts included in our Condensed Consolidated Statements of Operations: Three Months Ended Nine Months Ended September 30, September 30, (Unaudited) (Unaudited) (IN MILLIONS EXCEPT SHARE AND PER SHARE 2012 2011 2012 2011 DATA) Revenues $ 1,423 $ 1,413 $ 4,148 $ 4,111 Cost of revenues 565 554 1,694 1,673 Selling, general and administrative 444 460 1,338 1,453 expenses Depreciation and 130 125 388 396 amortization Restructuring 3 9 56 55 charges Operating income 281 265 672 534 Interest income 1 2 3 5 Interest expense (106 ) (114 ) (319 ) (368 ) Loss on derivative — — — (1 ) instruments Foreign currency exchange 1 (4 ) (12 ) (7 ) transaction gains/(losses), net Other (expense)/income, (1 ) — 3 (221 ) net Income/(loss) from continuing operations before income taxes and 176 149 347 (58 ) equity in net income of affiliates (Provision)/benefit (69 ) (44 ) (114 ) 51 for income taxes Equity in net income of (1 ) (2 ) 1 (1 ) affiliates Income/(loss) from continuing 106 103 234 (8 ) operations Loss from discontinued — — — (1 ) operations, net of tax Net income/(loss) 106 103 234 (9 ) Net income attributable to 1 1 — 2 noncontrolling interests Net income/(loss) attributable to $ 105 $ 102 $ 234 $ (11 ) Nielsen stockholders Net income/(loss) per share of common stock, basic Income/(loss) from continuing $ 0.29 $ 0.28 $ 0.65 $ (0.03 ) operations Net income/(loss) attributable to $ 0.29 $ 0.28 $ 0.65 $ (0.03 ) Nielsen stockholders Net income/(loss) per share of common stock, diluted Income/(loss) from continuing $ 0.29 $ 0.28 $ 0.64 $ (0.03 ) operations Net income/(loss) attributable to $ 0.29 $ 0.28 $ 0.64 $ (0.03 ) Nielsen stockholders Weighted-average shares of common 362,016,373 359,381,233 361,477,554 349,910,371 stock outstanding, basic Dilutive shares of 4,205,147 5,090,571 4,511,519 — common stock Weighted-average shares of common 366,221,520 364,471,804 365,989,073 349,910,371 stock outstanding, diluted Certain Non-GAAP Measures We use the non-GAAP financial measures discussed below to evaluate the results of our operations. We believe that the presentation of these non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations and that when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. None of the non-GAAP measures presented should be considered as an alternative to net income or loss, operating income or loss, cash flows from operating activities, total indebtedness or any other performance measures of operating performance, liquidity or indebtedness derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Constant Currency Presentation We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period exchange rates and comparing these adjusted amounts to our current period reported results. Adjusted EBITDA and Adjusted Net Income We define Adjusted EBITDA as net income or loss from our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, goodwill and intangible asset impairment charges, stock compensation expense and other non-operating items from our consolidated statements of operations as well as certain other items considered unusual or non-recurring in nature. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. We define Adjusted Net Income as net income or loss from our consolidated statements of operations before income taxes, depreciation and amortization associated with acquired tangible and intangible assets, restructuring charges, goodwill and intangible asset impairment charges, other non-operating items from our consolidated statements of operations and certain other items considered unusual or non-recurring in nature, reduced by cash paid for income taxes. Also excluded from Adjusted Net Income is interest expense attributable to the mandatory convertible subordinated bonds due 2013. Adjusted Net Income per share of common stock presented on a diluted basis includes potential common shares associated with stock-based compensation plans that may have been considered anti-dilutive in accordance with GAAP. The amount also includes the weighted-average amount of shares of common stock convertible associated with the mandatory convertible bonds based upon the average price of our common stock during the period. Adjusted Net Income and Adjusted Net Income per share of common stock are not presentations made in accordance with GAAP. The below table presents a reconciliation from net income/(loss) to Adjusted EBITDA and Adjusted Net Income and a reconciliation from weighted-average shares outstanding on a GAAP basis to diluted shares outstanding for the three and nine months ended September 30, 2012 and 2011, respectively: Three Months Ended Nine Months Ended September 30, September 30, (Unaudited) (Unaudited) (IN MILLIONS EXCEPT SHARE AND PER SHARE 2012 2011 2012 2011 DATA) Net income/(loss) $ 106 $ 103 $ 234 $ (9 ) Loss from discontinued — — — 1 operations, net of tax Interest expense, 105 112 316 363 net Provision/(benefit) 69 44 114 (51 ) for income taxes Depreciation and 130 125 388 396 amortization EBITDA 410 384 1,052 700 Equity in net loss/(income) of 1 2 (1 ) 1 affiliates Other non-operating — 4 9 229 expense, net Restructuring 3 9 56 55 charges Stock-based compensation 10 8 24 18 expense Other items^(a) — 1 5 111 Adjusted EBITDA 424 408 1,145 1,114 Interest expense, (105 ) (112 ) (316 ) (363 ) net Depreciation and (130 ) (125 ) (388 ) (396 ) amortization Depreciation and amortization associated with 41 41 123 140 acquisition-related tangible and intangible assets Cash paid for (26 ) (29 ) (88 ) (92 ) income taxes Stock-based compensation (10 ) (8 ) (24 ) (18 ) expense Interest expense attributable to 6 6 18 15 mandatory convertible bonds Adjusted net income $ 200 $ 181 $ 470 $ 400 Adjusted net income per share of common $ 0.53 $ 0.48 $ 1.25 $ 1.10 stock, diluted Weighted-average shares of common 362,016,373 359,381,233 361,477,554 349,910,371 stock outstanding, basic Dilutive shares of common stock from 4,205,147 5,090,571 4,511,519 5,020,344 stock compensation plans Shares of common stock convertible associated with the 10,416,700 10,416,700 10,416,700 9,233,851 mandatory convertible bonds Weighted-average shares of common 376,638,220 374,888,504 376,405,773 364,164,566 stock outstanding, diluted Other items primarily consist of Sponsor Advisory Fees (including (a) termination payments of $102 million for the nine months ended September 30, 2011), costs related to public offerings and other transaction-related costs. Net Debt and Net Debt Leverage Ratio The net debt leverage ratio is defined as net debt (gross debt less cash and cash equivalents) as of the balance sheet date divided by Adjusted EBITDA for the twelve months then ended. Net debt and the net debt leverage ratio are commonly used metrics to evaluate and compare leverage between companies and are not presentations made in accordance with GAAP. The calculation of net debt and the net debt leverage ratio as of September 30, 2012 is as follows: (IN MILLIONS) Total indebtedness as of September 30, 2012 $ 6,680 Less: mandatory convertible subordinated bonds due 2013 288 Gross debt as of September 30, 2012 6,392 Less: cash and cash equivalents as of September 30, 2012 325 Net debt as of September 30, 2012 $ 6,067 Adjusted EBITDA for the year ended December 31, 2011 $ 1,546 Less: Adjusted EBITDA for the nine months ended September 30, 2011 1,114 Add: Adjusted EBITDA for the nine months ended September 30, 2012 1,145 Adjusted EBITDA for the twelve months ended September 30, 2012 $ 1,577 Net debt leverage ratio as of September 30, 2012 3.8x Contact: Nielsen Holdings N.V. Investor Relations: Liz Zale, +1-646-654-4593 or Media Relations: Kristie Bouryal, +1-646-654-5577
Nielsen Reports Third Quarter 2012 Results
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