The Nielsen Company Reports First Quarter 2007 Results

The Nielsen Company Reports First Quarter 2007 Results

NEW YORK and HAARLEM, Netherlands, May 30 /PRNewswire/ -- The Nielsen Company bv, a leading global information and media company, today announced its financial results for the first quarter 2007.

Reported revenues for the first quarter Successor period (January 1, 2007 to March 31, 2007) were $1,072 million, an increase of 5% in constant currency* over the reported revenues for first quarter Predecessor period (January 1, 2006 to March 31, 2006) of $1,003 million.

Reported operating income for the first quarter Successor period 2007 of $56 million compared to pro forma** operating income of $62 million in the first quarter 2006. The first quarter 2007 results were negatively impacted by $19 million in restructuring costs and $8 million of costs associated with recruiting and other acquisition related compensation.

Covenant earnings before interest, taxes, depreciation and amortization and other adjustments permitted under our senior credit facility ("Covenant EBITDA") was $1,121 million for the twelve month period ended March 31, 2007. Covenant EBITDA is a non - GAAP measure. Refer to page 4 for a reconciliation of loss from continuing operations for the twelve months ended March 31, 2007, (combined operations from April 1, 2006 to May 23, 2006 for the Predecessor period and May 24, 2006 to March 31, 2007 for the Successor period) to Covenant EBITDA.

Finances

As of March 31, 2007, total debt was $7.75 billion, and cash balances were $617 million. Capital expenditures were $49 million in first quarter of 2007 compared with $33 million in first quarter of 2006.

Conference Call and Webcast

The Nielsen Company will hold an earnings conference call, hosted by The Nielsen Company's Chairman and Chief Executive Officer David L. Calhoun and Chief Financial Officer Brian J. West at 9:00 a.m. U.S. Eastern Daylight Time (EDT) on Wednesday, May 30, 2007. The call will be audio-webcast live at www.Nielsen.com, and an archive will be available on the website after the call. In addition, the company has posted its financial report at www.Nielsen.com.

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 '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. This list of factors is not intended to be exhaustive. 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 The Nielsen Company

Nielsen is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media information (Nielsen Media Research), business publications (Billboard and The Hollywood Reporter) and trade shows. The privately held company is active in more than 100 countries, with headquarters in New York, USA, and Haarlem, the Netherlands. For more information, visit www.Nielsen.com.

*Constant currency growth rates eliminate the impact of year-over-year foreign currency fluctuations.

**Pro forma represents the results for the Predecessor period, from January 1, 2006 through March 31, 2006, preceding the acquisition of The Nielsen Company which occurred on May 23, 2006. The 2006 pro forma results are adjusted to reflect the pro forma effect of the acquisition and related financing as if it had occurred on January 1, 2006. Management believes this is the most meaningful way to comment on the results of its operations. The pro forma financial information is not necessarily indicative of the results of operations had the acquisition occurred on January 1, 2006 or the results of operations that may be obtained in the future.

Results of Operations - Successor (three months ended March 31, 2007), Pro forma (three months ended March 31, 2006), and Predecessor (three months ended March 31, 2006) periods

Successor Pro Forma Predecessor
Three months Three months Three months
ended March ended March ended March
(IN MILLIONS) 31, 31, 2006(1) 31, 2006
2007 (Unaudited) (Unaudited)
(Unaudited)

Revenues $1,072 $1,003 $1,003

Costs of revenues, exclusive of
depreciation and amortization 500 480 480
Selling, general and
administrative expenses,
exclusive of depreciation and
amortization 386 354 357
Depreciation and amortization 111 105 79
Transaction costs - - 52
Restructuring costs 19 2 2
Operating income 56 62 33

Interest income 8 3 5
Interest expense (156) (162) (30)
(Loss)/gain on derivative
instruments 9 (7) (7)
Foreign currency exchange
transaction (loss)/gain, net (4) (1) (1)
Equity in net income of affiliates 2 2 2
Other (expense)/income, net (2) 10 10

(Loss)/income from continuing
operations before income taxes
and minority interests (87) (93) 12

Benefit/(provision) for income
taxes 13 25 (13)
Minority interests - - -
Loss from continuing operations $(74) $(68) $(1)

(1) The unaudited pro forma presentation for three months ended March 31,
2006 reflects the Predecessor period from January 1, 2006 to March 31,
2006 preceding the acquisition of The Nielsen Company which occurred
on May 23, 2006, adjusted to reflect the pro forma effect of the
acquisition and its related financing as if it had occurred on January
1, 2006. The pro forma adjustments include: increased interest
expense/lower interest income on net debt ($134 million), reversal of
transaction costs directly related to the acquisition ($52 million),
increased amortization related to purchase price allocation ($26
million), decreased selling, general and administrative expenses ($3
million) consisting of decreased pension costs related to the
acquisition ($5 million) and increased sponsor fees ($2 million), and
the related income tax effects.

The pro forma basis amounts for the three months ended March 31, 2006
are compared to the three months ended March 31, 2007 on a reported
basis.

Covenant EBITDA

The following is a reconciliation of our loss from continuing operations, for the twelve months ended March 31, 2007, (combined operations from April 1, 2006 to May 23, 2006 in the Predecessor period and May 24, 2006 to March 31, 2007, Successor period), to Covenant EBITDA as defined per our senior secured credit facility:

Unaudited
Covenant
EBITDA
for the
Twelve Months
Ended
(IN MILLIONS) March 31,
2007
Loss from continuing operations $(366)
Interest expense, net 524
Benefit for taxes (92)
Depreciation and amortization 415
EBITDA 481
Non-cash charges 41
Unusual or non-recurring items 321
Restructuring charges and business optimization costs 110
Transaction costs 43
Cost savings 125
Sponsor monitoring fees 8
Other (11)
EBITDA of non-covenant parties 3
Covenant EBITDA $1,121

Note: Covenant EBITDA is a non-GAAP measure used to determine our compliance with certain covenants contained in our senior secured credit facilities. Covenant EBITDA is defined in our senior secured credit facility as net income (loss) from continuing operations, as adjusted for the items summarized in the table below. Covenant EBITDA is not a presentation made in accordance with GAAP, and our use of the term Covenant EBITDA varies from others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Covenant EBITDA should not be considered as an alternative to net earnings (loss), operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. Covenant EBITDA has important limitations as an analytical tool and you should not consider it in isolation or as substitutes for analysis of our results as reported under GAAP. For example, Covenant EBITDA:

-- excludes income tax payments;
-- does not reflect any cash capital expenditure requirements;
-- does not reflect changes in, or cash requirements for, our working
capital needs;
-- does not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments, on
our debt;
-- includes estimated cost savings and operating synergies;
-- does not include one-time transition expenditures that we anticipate we
will need to incur to realize cost savings;
-- does not reflect management fees that are payable to the Sponsors;
-- does not reflect the impact of earnings or charges resulting from
matters that we and the lenders under our new senior secured credit
facility may consider not to be indicative of our ongoing operations.
In particular, the definition of Covenant EBITDA allows us to add back
certain non-cash and non-recurring charges that are deducted in
determining net income. However, these are expenses that may recur,
vary greatly and are difficult to predict. They can represent the
effect of long-term strategies as opposed to short-term results. In
addition, certain of these expenses can represent a reduction of cash
that could be used for other corporate purposes.

Because of these limitations we rely primarily on our GAAP results. However, we believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Covenant EBITDA is appropriate to provide additional information to investors to demonstrate compliance with our future financing covenants.

Contacts:
Investor Relations: David Berger, +1 646 654 5057
Media Relations: Jack Loftus, +1 646 654 8360

First Call Analyst:
FCMN Contact: meredith.cosgrove@nielsen.com

Source: The Nielsen Company

CONTACT: Investor Relations, David Berger, +1-646-654-5057, Media
Relations, Jack Loftus, +1-646-654-8360, both of The Nielsen Company

Web site: http://www.nielsen.com/

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