The Nielsen Company Reports Third Quarter 2008 Results

The Nielsen Company Reports Third Quarter 2008 Results

NEW YORK, Nov. 14 /PRNewswire/ -- The Nielsen Company B.V., a leading global information and media company, today announced its financial results for the third quarter and the nine months ended September 30, 2008.

Reported revenues for the third quarter of 2008 were $1,260 million, an increase of 6% over reported revenues for the third quarter of 2007 of $1,188 million. Excluding the impact of currency fluctuations*, revenues for the quarter increased 3%. Reported revenues for the nine months ended September 30, 2008 were $3,778 million, an increase of 10% over reported revenues for the nine months ended September 30, 2007 of $3,429 million. Excluding the impact of currency fluctuations*, revenues for the nine months ended September 30, 2008 increased 6%.

Reported operating income for the third quarter of 2008 was $124 million compared to $77 million for the third quarter of 2007. These results were negatively impacted by $46 million and $81 million, respectively, of charges relating to certain items such as restructuring costs, deal related costs and compensation agreements. Adjusting for these items, operating income, on a constant currency basis*, increased 4%.

For the nine months ended September 30, 2008, reported operating income was $408 million compared to $233 million for the nine months ended September 30, 2007. These results were negatively impacted by $62 million and $156 million, respectively, of charges relating to certain items such as restructuring costs, deal related costs and compensation agreements. Adjusting for these items, operating income, on a constant currency basis*, increased 16%.

Covenant earnings before interest, taxes, depreciation and amortization and other adjustments permitted under our senior secured credit facilities ("Covenant EBITDA") was $1,356 million for the twelve month period ended September 30, 2008. Covenant EBITDA is a non - GAAP measure. See "Covenant EBITDA" below for a reconciliation of Loss from continuing operations of $67 million for the twelve months ended September 30, 2008 to Covenant EBITDA.

As of September 30, 2008, total debt was $8,467 million, and cash balances were $325 million. Capital expenditures were $253 million for the nine months ended September 30, 2008, compared with $185 million for the nine months ended September 30, 2007.

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 Standard Time (EST) on Friday, November 14, 2008. 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, a link to the company's quarterly financial report on Form 10-Q has been posted 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

The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in more than 100 countries, with headquarters in New York, USA. For more information, please visit, www.nielsen.com.

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

Results of Operations - Three Months Ended September 30, 2008 and 2007

The following table sets forth the amounts included in our Condensed Consolidated Statements of Operations for the three months ended September 30, 2008 and 2007:

Three Months
Ended
September 30
(unaudited)

(IN MILLIONS) 2008 2007

Revenues $1,260 $1,188

Cost of revenues, exclusive of depreciation and
amortization shown separately below 548 536
Selling, general and administrative expenses
Exclusive of depreciation and amortization
shown separately below 414 385
Depreciation and amortization 128 111
Restructuring costs 46 79

Operating income 124 77

Interest income 4 7
Interest expense (163) (164)
(Loss)/gain on derivative instruments (38) 19
Foreign currency exchange transaction gains/
(losses), net 124 (47)
Other income, net 1 -

Income/(loss) from continuing operations, before
income taxes, minority interests and equity in net
income of affiliates 52 (108)
(Provision)/benefit for income taxes (10) 12
Minority interests 1 -
Equity in net (loss) of affiliates (1) (5)
Income/(loss) from continuing operations $42 $(101)

Results of Operations - Nine Months Ended September 30, 2008 and 2007

The following table sets forth the amounts included in our Condensed Consolidated Statements of Operations for the nine months ended September 30, 2008 and 2007:

Nine Months Ended
September 30,
(unaudited)

(IN MILLIONS) 2008 2007

Revenues $3,778 $3,429

Cost of revenues, exclusive of depreciation
and amortization shown separately below 1,671 1,558
Selling, general and administrative expenses
exclusive of depreciation and amortization
shown separately below 1,267 1,170
Depreciation and amortization 370 334
Restructuring costs 62 134

Operating income 408 233

Interest income 14 23
Interest expense (485) (477)
(Loss)/gain on derivative instruments (5) 32
Foreign currency exchange transaction losses, net 43 (81)
Other expense, net (2) (2)

Loss from continuing operations, before income
taxes, minority interests and equity in net
income of affiliates (27) (272)

Benefit for income taxes 5 32
Minority interests - 2
Equity in net income of affiliates - 1

Loss from continuing operations $(22) $(237)

Covenant EBITDA

The following is a reconciliation of our loss from continuing operations, for the twelve months ended September 30, 2008, to Covenant EBITDA as defined below per our senior secured credit facilities:

Covenant
EBITDA

Twelve months
ended
(IN MILLIONS) September 30,
2008
(unaudited)

Loss from continuing operations $(67)
Interest expense, net 635
Provision for income taxes 45
Depreciation and amortization 493
---

EBITDA 1,106
Non-cash charges 33
Unusual or non-recurring items 45
Restructuring charges and business optimization costs 77
Cost savings 75
Sponsor monitoring fees 11
Other 9
---

Covenant EBITDA $1,356
======

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 above. 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 a substitute 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 financing covenants.

Source: The Nielsen Company B.V.

CONTACT: Investor Relations: David Berger, +1-203-563-3194, or Media
Relations: Gary Holmes, +1-646-654-8975, both of The Nielsen Company

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

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