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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 001-35042

 

Nielsen Holdings plc

(Exact name of registrant as specified in its charter)

 

 

England and Wales

 

98-1225347

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

85 Broad Street

New York, New York 10004

(646) 654-5000

 

Nielsen House

John Smith Drive

Oxford

Oxfordshire, OX4 2WB

United Kingdom

+1 (646) 654-5000

(Address of principal executive offices) (Zip Code) (Registrant’s telephone numbers including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Ordinary shares, par value €0.07 per share

NLSN

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

There were 355,810,261 shares of the registrant’s Common Stock outstanding as of September 30, 2019.

 

 

 


Table of Contents

Contents

 

 

 

 

  

PAGE

 

PART I.

 

FINANCIAL INFORMATION

- 3 -

Item 1.

 

Condensed Consolidated Financial Statements

- 3 -

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

- 38 -

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

- 56 -

Item 4.

 

Controls and Procedures

- 57 -

PART II.

 

OTHER INFORMATION

- 58 -

Item 1.

 

Legal Proceedings

- 58 -

Item 1A.

 

Risk Factors

- 58 -

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

- 59 -

Item 3.

 

Defaults Upon Senior Securities

- 59 -

Item 4.

 

Mine Safety Disclosures

- 59 -

Item 5.

 

Other Information

- 59 -

Item 6.

 

Exhibits

- 59 -

 

 

Signatures

- 61 -

 

 

 

 

 

 

 

 

 


PART I. FINANCIAL INFORMATION

 

Item  1.Condensed Consolidated Financial Statements

Nielsen Holdings plc

Condensed Consolidated Statements of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues

 

$

1,616

 

 

$

1,600

 

 

$

4,807

 

 

$

4,857

 

Cost of revenues, exclusive of depreciation and

   amortization shown separately below

 

 

694

 

 

 

681

 

 

 

2,088

 

 

 

2,098

 

Selling, general and administrative expenses, exclusive

   of depreciation and amortization shown separately

   below

 

 

467

 

 

 

464

 

 

 

1,430

 

 

 

1,451

 

Depreciation and amortization

 

 

186

 

 

 

175

 

 

 

550

 

 

 

504

 

Impairment of goodwill and other long-lived assets

 

 

1,004

 

 

 

 

 

 

1,004

 

 

 

 

Restructuring charges

 

 

5

 

 

 

19

 

 

 

52

 

 

 

108

 

Operating income/(loss)

 

 

(740

)

 

 

261

 

 

 

(317

)

 

 

696

 

Interest income

 

 

1

 

 

 

2

 

 

 

4

 

 

 

6

 

Interest expense

 

 

(100

)

 

 

(99

)

 

 

(299

)

 

 

(295

)

Foreign currency exchange transaction gains/(losses), net

 

 

(6

)

 

 

(8

)

 

 

(10

)

 

 

(12

)

Other income/(expense), net

 

 

(3

)

 

 

1

 

 

 

2

 

 

 

(3

)

Income/(loss) from continuing operations before income

   taxes and equity in net income/(loss) of affiliates

 

 

(848

)

 

 

157

 

 

 

(620

)

 

392

 

Benefit/(provision) for income taxes

 

 

380

 

 

 

(59

)

 

 

325

 

 

 

(142

)

Equity in net income/(loss) of affiliates

 

 

 

 

 

 

 

 

 

 

 

(1

)

Net income/(loss)

 

 

(468

)

 

 

98

 

 

 

(295

)

 

 

249

 

Net income/(loss) attributable to noncontrolling interests

 

 

4

 

 

 

2

 

 

 

11

 

 

 

9

 

Net income/(loss) attributable to Nielsen shareholders

 

$

(472

)

 

$

96

 

 

$

(306

)

 

$

240

 

Net income/(loss) per share of common stock, basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to Nielsen shareholders

 

$

(1.33

)

 

$

0.27

 

 

$

(0.86

)

 

$

0.67

 

Net income/(loss) per share of common stock, diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to Nielsen shareholders

 

$

(1.33

)

 

$

0.27

 

 

$

(0.86

)

 

$

0.67

 

Weighted-average shares of common stock outstanding,

   basic

 

 

355,779,274

 

 

 

354,993,315

 

 

 

355,620,821

 

 

 

355,737,081

 

Dilutive shares of common stock

 

 

 

 

 

568,389

 

 

 

 

 

 

661,438

 

Weighted-average shares of common stock outstanding,

   diluted

 

 

355,779,274

 

 

 

355,561,704

 

 

 

355,620,821

 

 

 

356,398,519

 

Dividends declared per common share

 

$

0.35

 

 

$

0.35

 

 

$

1.05

 

 

$

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

- 3 -


Nielsen Holdings plc

Condensed Consolidated Statements of Comprehensive Income/(Loss) (Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(IN MILLIONS)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income/(loss)

 

$

(468

)

 

$

98

 

 

$

(295

)

 

$

249

 

Other comprehensive income/(loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments (1)

 

 

(50

)

 

 

3

 

 

 

(30

)

 

 

(97

)

Changes in the fair value of cash flow hedges (2)

 

 

(6

)

 

 

2

 

 

 

(35

)

 

 

16

 

Defined benefit pension plan adjustments (3)

 

 

4

 

 

 

3

 

 

 

10

 

 

 

12

 

Total other comprehensive income/(loss)

 

 

(52

)

 

 

8

 

 

 

(55

)

 

 

(69

)

Total comprehensive income/(loss)

 

 

(520

)

 

 

106

 

 

 

(350

)

 

 

180

 

Less: comprehensive income/(loss) attributable to noncontrolling interests

 

 

3

 

 

 

5

 

 

 

12

 

 

 

10

 

Total comprehensive income/(loss) attributable to Nielsen shareholders

 

$

(523

)

 

$

101

 

 

$

(362

)

 

$

170

 

 

(1)

Net of tax of $(7) million and $(1) million for the three months ended September 30, 2019 and 2018, respectively, and $(8) million and $(4) million for the nine months ended September 30, 2019 and 2018, respectively.

(2)

Net of tax of $2 million and $(1) million for the three months ended September 30, 2019 and 2018, respectively, and $13 million and $(6) million for the nine months ended September 30, 2019 and 2018, respectively.

(3)

Net of tax of $(1) million and zero for the three months ended September 30, 2019 and 2018, respectively, and $(2) million for each of the nine months ended September 30, 2019 and 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

- 4 -


Nielsen Holdings plc

Condensed Consolidated Balance Sheets

 

 

 

September 30,

 

 

December 31,

 

(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)

 

2019

 

 

2018

 

 

 

(Unaudited)

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

389

 

 

$

524

 

Trade and other receivables, net of allowances for doubtful accounts and sales

   returns of $27 and $31 as of September 30, 2019 and December 31, 2018, respectively

 

 

1,146

 

 

 

1,118

 

Prepaid expenses and other current assets

 

 

412

 

 

 

361

 

Total current assets

 

 

1,947

 

 

 

2,003

 

Non-current assets

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

423

 

 

 

468

 

Operating lease right-of-use asset

 

 

425

 

 

 

 

Goodwill

 

 

5,973

 

 

 

6,987

 

Other intangible assets, net

 

 

4,911

 

 

 

5,024

 

Deferred tax assets

 

 

322

 

 

 

333

 

Other non-current assets

 

 

342

 

 

 

364

 

Total assets

 

$

14,343

 

 

$

15,179

 

Liabilities and equity:

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and other current liabilities

 

$

1,087

 

 

$

1,119

 

Deferred revenues

 

 

316

 

 

 

355

 

Income tax liabilities

 

 

74

 

 

 

76

 

Current portion of long-term debt, finance lease obligations and short-term borrowings

 

 

298

 

 

 

107

 

Total current liabilities

 

 

1,775

 

 

 

1,657

 

Non-current liabilities

 

 

 

 

 

 

 

 

Long-term debt and finance lease obligations

 

 

8,189

 

 

 

8,280

 

Deferred tax liabilities

 

 

1,068

 

 

 

1,108

 

Operating lease liabilities

 

 

393

 

 

 

 

Other non-current liabilities

 

 

565

 

 

 

1,091

 

Total liabilities

 

 

11,990

 

 

 

12,136

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Nielsen shareholders’ equity

 

 

 

 

 

 

 

 

Common stock, €0.07 par value, 1,185,800,000 and 1,185,800,000 shares

   authorized, 355,819,078 and 355,323,822 shares issued and 355,810,261

   and 355,271,737 shares outstanding at September 30, 2019 and

   December 31, 2018, respectively

 

 

32

 

 

 

32

 

Additional paid-in capital

 

 

4,390

 

 

 

4,720

 

Retained earnings/(accumulated deficit)

 

 

(1,101

)

 

 

(795

)

Accumulated other comprehensive loss, net of income taxes

 

 

(1,166

)

 

 

(1,110

)

Total Nielsen shareholders’ equity

 

 

2,155

 

 

 

2,847

 

Noncontrolling interests

 

 

198

 

 

 

196

 

Total equity

 

 

2,353

 

 

 

3,043

 

Total liabilities and equity

 

$

14,343

 

 

$

15,179

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

- 5 -


Nielsen Holdings plc

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

(IN MILLIONS)

 

2019

 

 

2018

 

Operating Activities

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

(295

)

 

$

249

 

Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

39

 

 

 

21

 

Currency exchange rate differences on financial transactions and other (gains)/losses

 

 

7

 

 

 

11

 

Equity in net loss of affiliates, net of dividends received

 

 

1

 

 

 

2

 

Depreciation and amortization

 

 

550

 

 

 

504

 

Impairment of goodwill and other long-lived assets

 

 

1,004

 

 

 

 

Changes in operating assets and liabilities, net of effect of businesses acquired

   and divested:

 

 

 

 

 

 

 

 

Trade and other receivables, net

 

 

(57

)

 

 

(48

)

Prepaid expenses and other assets

 

 

9

 

 

 

(70

)

Accounts payable and other current liabilities and deferred revenues

 

 

(157

)

 

 

(190

)

Other non-current liabilities

 

 

(48

)

 

 

(6

)

Interest payable

 

 

49

 

 

 

53

 

Income taxes

 

 

(506

)

 

 

(14

)

Net cash provided by/(used in) operating activities

 

 

596

 

 

 

512

 

Investing Activities

 

 

 

 

 

 

 

 

Acquisition of subsidiaries and affiliates, net of cash acquired

 

 

(62

)

 

 

(39

)

Additions to property, plant and equipment and other assets

 

 

(58

)

 

 

(66

)

Additions to intangible assets

 

 

(284

)

 

 

(305

)

Proceeds from the sale of property, plant and equipment and other assets

 

 

 

 

 

4

 

Other investing activities

 

 

(18

)

 

 

3

 

Net cash provided by/(used in) investing activities

 

 

(422

)

 

 

(403

)

Financing Activities

 

 

 

 

 

 

 

 

Net borrowings under revolving credit facility

 

 

190

 

 

 

204

 

Proceeds from issuances of debt, net of issuance costs

 

 

 

 

 

781

 

Repayment of debt

 

 

(43

)

 

 

(805

)

Increase/(decrease) in other short-term borrowings

 

 

(1

)

 

 

1

 

Cash dividends paid to shareholders

 

 

(373

)

 

 

(370

)

Repurchase of common stock

 

 

 

 

 

(70

)

Activity from share-based compensation plans

 

 

(5

)

 

 

17

 

Proceeds from employee stock purchase plan

 

 

3

 

 

 

4

 

Finance leases

 

 

(44

)

 

 

(60

)

Other financing activities

 

 

(17

)

 

 

(15

)

Net cash provided by/(used in) financing activities

 

 

(290

)

 

 

(313

)

Effect of exchange-rate changes on cash and cash equivalents

 

 

(19

)

 

 

(6

)

Net increase/(decrease) in cash and cash equivalents

 

 

(135

)

 

 

(210

)

Cash and cash equivalents at beginning of period

 

 

524

 

 

 

656

 

Cash and cash equivalents at end of period

 

$

389

 

 

$

446

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

(181

)

 

$

(156

)

Cash paid for interest, net of amounts capitalized

 

$

(250

)

 

$

(242

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

- 6 -


Nielsen Holdings plc

Condensed Consolidated Statements of Changes in Equity

 

Condensed Consolidated Statements of Changes in Equity for the Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Income

(Loss), Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Earnings

 

 

Currency

 

 

Cash

 

 

Post

 

 

Total Nielsen

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Paid-in

 

 

(Accumulated)

 

 

Translation

 

 

Flow

 

 

Employment

 

 

Shareholders’

 

 

Noncontrolling

 

 

Total

 

(IN MILLIONS)

 

Stock

 

 

Capital

 

 

(Deficit)

 

 

Adjustments

 

 

Hedges

 

 

Benefits

 

 

Equity

 

 

Interests

 

 

Equity

 

Balance, June 30, 2019

 

$

32

 

 

$

4,501

 

 

$

(629

)

 

$

(761

)

 

$

(18

)

 

$

(336

)

 

$

2,789

 

 

$

199

 

 

$

2,988

 

Net income/(loss)

 

 

 

 

 

 

 

 

(472

)

 

 

 

 

 

 

 

 

 

 

 

(472

)

 

 

4

 

 

 

(468

)

Currency translation adjustments, net of

   tax of $(7)

 

 

 

 

 

 

 

 

 

 

 

(49

)

 

 

 

 

 

 

 

 

(49

)

 

 

(1

)

 

 

(50

)

Cash flow hedges, net of tax of $2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

 

 

(6

)

 

 

 

 

 

(6

)

Unrealized gain on pension liability, net of

   tax of (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

 

 

 

 

 

4

 

Employee stock purchase plan

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Dividends to shareholders

 

 

 

 

 

(124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(124

)

 

 

(4

)

 

 

(128

)

Common stock activity from share-based

   compensation plans

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Share-based compensation expense

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

13

 

Balance, September 30, 2019

 

$

32

 

 

$

4,390

 

 

$

(1,101

)

 

$

(810

)

 

$

(24

)

 

$

(332

)

 

$

2,155

 

 

$

198

 

 

$

2,353

 

 

- 7 -


Condensed Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Income

(Loss), Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Earnings

 

 

Currency

 

 

Cash

 

 

Post

 

 

Total Nielsen

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Paid-in

 

 

(Accumulated)

 

 

Translation

 

 

Flow

 

 

Employment

 

 

Shareholders’

 

 

Noncontrolling

 

 

Total

 

(IN MILLIONS)

 

Stock

 

 

Capital

 

 

(Deficit)

 

 

Adjustments

 

 

Hedges

 

 

Benefits

 

 

Equity

 

 

Interests

 

 

Equity

 

Balance, December 31, 2018

 

$

32

 

 

$

4,720

 

 

$

(795

)

 

$

(779

)

 

$

11

 

 

$

(342

)

 

$

2,847

 

 

$

196

 

 

$

3,043

 

Net income/(loss)

 

 

 

 

 

 

 

 

(306

)

 

 

 

 

 

 

 

 

 

 

 

(306

)

 

 

11

 

 

 

(295

)

Currency translation adjustments, net of

   tax of $(8)

 

 

 

 

 

 

 

 

 

 

 

(31

)

 

 

 

 

 

 

 

 

(31

)

 

 

1

 

 

 

(30

)

Cash flow hedges, net of tax of $13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35

)

 

 

 

 

 

(35

)

 

 

 

 

 

(35

)

Unrealized gain on pension liability, net of

   tax of $(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

10

 

 

 

 

 

 

10

 

Employee stock purchase plan

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Capital contribution by non-controlling partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

Divestiture of a non-controlling interest in a

   consolidated subsidiary, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Dividends to shareholders

 

 

 

 

 

(373

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(373

)

 

 

(10

)

 

 

(383

)

Common stock activity from share-based

   compensation plans

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Share-based compensation expense

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

45

 

Balance, September 30, 2019

 

$

32

 

 

$

4,390

 

 

$

(1,101

)

 

$

(810

)

 

$

(24

)

 

$

(332

)

 

$

2,155

 

 

$

198

 

 

$

2,353

 

 

- 8 -


Condensed Consolidated Statements of Changes in Equity for the Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss), Net

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Currency

 

 

Cash

 

 

Post

 

 

Nielsen

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Paid-in

 

 

Retained

 

 

Translation

 

 

Flow

 

 

Employment

 

 

Shareholders’

 

 

Noncontrolling

 

 

Total

 

(IN MILLIONS)

 

Stock

 

 

Capital

 

 

Earnings

 

 

Adjustments

 

 

Hedges

 

 

Benefits

 

 

Equity

 

 

Interests

 

 

Equity

 

Balance, June 30, 2018

 

$

32

 

 

$

4,723

 

 

$

309

 

 

$

(708

)

 

$

24

 

 

$

(331

)

 

$

4,049

 

 

$

196

 

 

$

4,245

 

Net income/(loss)

 

 

 

 

 

 

 

 

96

 

 

 

 

 

 

 

 

 

 

 

 

96

 

 

 

2

 

 

 

98

 

Currency translation adjustments, net of tax of $(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

Cash flow hedges, net of tax of $(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Unrealized gain on pension liability, net of

   tax of zero

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

 

 

 

 

 

3

 

Employee stock purchase plan

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Dividends to shareholders

 

 

 

 

 

 

 

 

(124

)

 

 

 

 

 

 

 

 

 

 

 

(124

)

 

 

(3

)

 

 

(127

)

Common stock activity from share-based

   compensation plans

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Repurchase of common stock

 

 

 

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

 

 

 

 

(10

)

Share-based compensation expense

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Balance, September 30, 2018

 

$

32

 

 

$

4,714

 

 

$

281

 

 

$

(708

)

 

$

26

 

 

$

(328

)

 

$

4,017

 

 

$

198

 

 

$

4,215

 

 

- 9 -


Condensed Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss), Net

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Currency

 

 

Cash

 

 

Post

 

 

Nielsen

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Paid-in

 

 

Retained

 

 

Translation

 

 

Flow

 

 

Employment

 

 

Shareholders’

 

 

Noncontrolling

 

 

Total

 

(IN MILLIONS)

 

Stock

 

 

Capital

 

 

Earnings

 

 

Adjustments

 

 

Hedges

 

 

Benefits

 

 

Equity

 

 

Interests

 

 

Equity

 

Balance, December 31, 2017

 

$

32

 

 

$

4,742

 

 

$

411

 

 

$

(610

)

 

$

10

 

 

$

(340

)

 

$

4,245

 

 

$

198

 

 

$

4,443

 

Net income/(loss)

 

 

 

 

 

 

 

 

240

 

 

 

 

 

 

 

 

 

 

 

 

240

 

 

 

9

 

 

 

249

 

Currency translation adjustments, net of tax of $(4)

 

 

 

 

 

 

 

 

 

 

 

(98

)

 

 

 

 

 

 

 

 

(98

)

 

 

1

 

 

 

(97

)

Cash flow hedges, net of tax of $(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Unrealized gain on pension liability, net of

   tax of $(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

12

 

 

 

 

 

 

12

 

Employee stock purchase plan

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Dividends to shareholders

 

 

 

 

 

 

 

 

(370

)

 

 

 

 

 

 

 

 

 

 

 

(370

)

 

 

(10

)

 

 

(380

)

Common stock activity from share-based

   compensation plans

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

17

 

Repurchase of common stock

 

 

 

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(70

)

 

 

 

 

 

(70

)

Share-based compensation expense

 

 

 

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

 

 

 

 

 

21

 

Balance, September 30, 2018

 

$

32

 

 

$

4,714

 

 

$

281

 

 

$

(708

)

 

$

26

 

 

$

(328

)

 

$

4,017

 

 

$

198

 

 

$

4,215

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

- 10 -


Nielsen Holdings plc

Notes to Condensed Consolidated Financial Statements

 

1. Background and Basis of Presentation

Background

Nielsen Holdings plc (“Nielsen” or the “Company”), together with its subsidiaries, is a leading global information and measurement company that provides clients with a comprehensive understanding of consumers and consumer behavior. Nielsen’s approach marries the Company’s proprietary data with other data sources to help clients around the world understand what's happening now, what's happening next, and how to best act on this knowledge. For more than 90 years Nielsen has provided data and analytics based on scientific rigor and innovation, continually developing new ways to answer the most important questions facing the media, advertising, retail and fast-moving consumer goods industries.

 

Prior to February 2019, Nielsen was aligned into two reporting segments: what consumers buy (“Buy”) and what consumers read, watch and listen to (“Watch”). In February 2019, Nielsen realigned its business segments from Buy and Watch to Nielsen Global Connect (“Connect”) and Nielsen Global Media (“Media”). Each segment operates as a complete unit—from the conception of a product, through the collection of the data, into the technology and operations, all the way to the data being sold and delivered to the client. These changes better align Nielsen’s external view to the Company’s go-forward internal view. The Company’s reportable segments are stated on the new basis and such changes were retrospectively applied. The impact of these changes had an insignificant impact on Nielsen’s condensed consolidated financial statements or segment results.

Nielsen has a presence in more than 100 countries, with its registered office located in Oxford, the United Kingdom and headquarters located in New York, United States.

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited but, in the opinion of management, contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the Company’s financial position and the results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to interim periods. For a more complete discussion of significant accounting policies, commitments and contingencies and certain other information, refer to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. All amounts are presented in U.S. Dollars (“$”), except for share data or where expressly stated as being in other currencies, e.g., Euros (“€”). The condensed consolidated financial statements include the accounts of Nielsen and all subsidiaries and other controlled entities. The Company has evaluated events occurring subsequent to September 30, 2019 for potential recognition or disclosure in the condensed consolidated financial statements and concluded there were no subsequent events that required recognition or disclosure other than those provided.

Earnings per Share

Basic net income per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed using the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common stock primarily consist of employee stock options and restricted stock units.

The effect of 7,102,196 and 4,110,836 shares of common stock underlying outstanding equity awards under Nielsen’s stock compensation plans were excluded from the calculation of diluted earnings per share for the three months ended September 30, 2019 and 2018, respectively, as such shares would have been anti-dilutive.

The effect of 7,102,196 and 4,105,322 shares of common stock underlying outstanding equity awards under Nielsen’s stock compensation plans were excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2019 and 2018, respectively, as such shares would have been anti-dilutive.

 

Accounts Receivable

The Company extends non-interest bearing trade credit to its customers in the ordinary course of business. To minimize credit risk, ongoing credit evaluations of client’s financial condition are performed. An estimate of the allowance for doubtful accounts is made when collection of the full amount is no longer probable or returns are expected.

During the nine months ended September 30, 2019, Nielsen sold $234 million of accounts receivable to third parties and recorded an immaterial loss on the sale to interest expense, net in the condensed consolidated statement of operations. As of September 30, 2019 and December 31, 2018, $69 million and $105 million of previously sold receivables, respectively, remained outstanding. The sales were accounted for as true sales, without recourse. Nielsen maintains servicing responsibilities of the majority of receivables sold during the year, for which the related costs are not significant. The proceeds of $234 million from the sales were reported as a component of the changes in trade and other receivables, net within operating activities in the condensed consolidated statement of cash flows.

 

- 11 -


2. Summary of Recent Accounting Pronouncements

Leases

Effective January 1, 2019, the Company adopted the new lease accounting standard using the transition method approved by the FASB on July 30, 2018, which allows companies to apply the provisions of the new leasing standard as of January 1, 2019, without adjusting the comparative periods presented. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of this standard resulted in the recording of net operating lease right-of-use (“ROU”) assets of $0.5 billion (amount is net of lease incentives and ASC 420 cease-use liabilities) and corresponding operating lease liabilities of $0.6 billion. Financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. See Note 5 (“Leases”) for further discussion.

Income Taxes

In February 2018, the FASB issued an ASU, “Reclassification of Certain Tax Effects From Accumulated Comprehensive Income”. The new standard gives companies the option to reclassify stranded tax effects caused by the newly-enacted US Tax Cuts and Jobs Act (“TCJA”) from accumulated other comprehensive income (“AOCI”) to retained earnings. The new standard became effective for Nielsen on January 1, 2019. Nielsen is electing to not reclassify stranded income tax effects of the TCJA from AOCI to retained earnings.

Financial Instruments – Credit Losses

In June 2016, the FASB issued an ASU, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. Nielsen is currently assessing the impact the adoption of this ASU will have on the Company’s condensed consolidated financial statements.

 

 

3. Revenue Recognition

Revenue is measured based on the consideration specified in a contract with a customer.  The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product or service to a customer, which generally occurs over time. Substantially all of the Company’s customer contracts are non-cancelable and non-refundable.

The following is a description of principal activities, by reportable segment, from which the Company generates its revenues.

Revenue from the Connect segment consists primarily of measurement services, which include our core tracking and scan data (primarily transactional measurement data and consumer behavior information) to businesses in the consumer packaged goods industry. Nielsen’s data is used by its clients to measure their market share, tracking billions of sales transactions per month in retail outlets around the world. Revenues for these services are recognized over the period during which the performance obligations are satisfied as the customer receives and consumes the benefits provided by the Company and control of the services are transferred to the customer.

The Company also provides consumer intelligence and analytical services that help clients make smarter business decisions throughout their product development and marketing cycles. The Company’s performance under these arrangements do not create an asset with an alternative use to the company and generally include an enforceable right to payment for performance completed to date, as such, revenue for these services is typically recognized over time. Revenue for contracts that do not include an enforceable right to payment for performance completed to date is recognized at a point in time when the performance obligation is satisfied, generally upon delivery of the services, and when control of the service is transferred to the customer.

Revenue from our Media segment is primarily generated from television, radio, digital and mobile audience measurement services and analytics which are used by the Company’s media clients to establish the value of airtime and more effectively schedule and promote their programming and the Company’s advertising clients to plan and optimize their spending. As the customer simultaneously receives and consumes the benefits provided by the Company’s performance, revenues for these services are recognized over the period during which the performance obligations are satisfied and control of the service is transferred to the customer.

- 12 -


The Company enters into cooperation arrangements with certain customers, under which the customer provides Nielsen with its data in exchange for Nielsen’s services. Nielsen records these transactions at fair value, which is determined based on the fair value of goods or services received, if reasonably estimable. If not reasonably estimable, the Company considers the fair value of the goods or services surrendered.

The table below sets forth the Company’s revenue disaggregated within each segment by major product offerings and timing of revenue recognition.

 

(IN MILLIONS)   (UNAUDITED)

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

 

2018

 

Connect Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

Measure

$

530

 

$

545

 

$

1,615

 

 

$

1,668

 

Predict/Activate

 

216

 

 

218

 

 

640

 

 

 

681

 

Connect

$

746

 

$

763

 

$

2,255

 

 

$

2,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

Audience Measurement

$

621

 

$

596

 

$

1,848

 

 

$

1,793

 

Plan/Optimize

 

249

 

 

241

 

 

704

 

 

 

715

 

      Media

$

870

 

$

837

 

$

2,552

 

 

$

2,508

 

Total

$

1,616

 

$

1,600

 

$

4,807

 

 

$

4,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition

 

 

 

 

 

 

 

 

 

 

 

 

 

Products transferred at a point in time

$

138

 

$

140

 

$

409

 

 

$

420

 

Products and services transferred over time

 

1,478

 

 

1,460

 

 

4,398

 

 

 

4,437

 

Total

$

1,616

 

$

1,600

 

$

4,807

 

 

$

4,857

 

 

Contract Assets and Liabilities

Contract assets represent the Company’s rights to consideration in exchange for services transferred to a customer that have not been billed as of the reporting date. While the Company’s rights to consideration are generally unconditional at the time its performance obligations are satisfied, under certain circumstances the related billing occurs in arrears, generally within one month of the services being rendered.

 

At the inception of a contract, the Company generally expects the period between when it transfers its services to its customers and when the customer pays for such services will be one year or less.

Contract liabilities relate to advance consideration received or the right to consideration that is unconditional from customers for which revenue is recognized when the performance obligation is satisfied and control transferred to the customer.

The table below sets forth the Company’s contract assets and contract liabilities from contracts with customers.

 

(IN MILLIONS)

 

September 30,

2019

 

 

December 31,

2018

 

 

Contract assets

 

$

260

 

 

$

210

 

 

 

Contract liabilities

 

$

317

 

 

$

359

 

 

 

 

The increase in the contract assets balance during the period was primarily due to $242 million of revenue recognized that was not billed, in accordance with the terms of the contracts, as of September 30, 2019, offset by $186 million of contract assets included in the December 31, 2018 balance that were invoiced to our clients and therefore transferred to trade receivables.

The decrease in the contract liability balance during the period was primarily due to $276 million of advance consideration received or the right to consideration that is unconditional from customers for which revenue was not recognized during the period, offset by $315 million of revenue recognized that was included in the December 31, 2018 contract liability balance.

- 13 -


Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2019, approximately $6.4 billion of revenue was expected to be recognized from remaining performance obligations that were unsatisfied (or partially unsatisfied) for our services. This amount excludes variable consideration allocated to performance obligations related to sales and usage based royalties on licenses of intellectual property.

The Company expects to recognize revenue on approximately 63% of these remaining performance obligations through December 31, 2020, with the balance recognized thereafter.

Deferred Costs

Incremental direct costs incurred to build the infrastructure to service new contracts are capitalized as a contract cost. As of September 30, 2019 and December 31, 2018, the balances of such capitalized costs were $12 million and $18 million, respectively. These costs are typically amortized through cost of revenues over the original contract period beginning when the infrastructure to service new clients is ready for its intended use. The amortization of these costs for the three and nine months ended September 30, 2019 was $2 million and $6 million, respectively. The amortization of these costs for the three and nine months ended September 30, 2018 was $8 million and $15 million, respectively. There was no impairment loss recorded in any of the periods presented.

 

 

4. Business Acquisitions

Acquisitions

For the nine months ended September 30, 2019, Nielsen paid cash consideration of $62 million associated with current period acquisitions, net of cash acquired. Had these 2019 acquisitions occurred as of January 1, 2019, the impact on Nielsen’s consolidated results of operations would not have been material.

For the nine months ended September 30, 2018, Nielsen paid cash consideration of $39 million associated with both current period and previously executed acquisitions, net of cash acquired. Had these 2018 acquisitions occurred as of January 1, 2018, the impact on Nielsen’s consolidated results of operations would not have been material.

 

5. Leases

All significant lease arrangements are generally recognized at lease commencement. Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized at commencement. An ROU asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (short term leases) and Nielsen recognizes lease expense for these leases as incurred over the lease term. ROU assets represent the Company’s right to use an underlying asset during the reasonably certain lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Nielsen’s lease terms may include options to extend or terminate the lease when it is reasonably certain that Nielsen will exercise that option. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Nielsen uses the rate implicit in the lease for the discount rate when determining the present value of lease payments whenever that rate is readily determinable. If the rate is not readily determinable, Nielsen uses its incremental borrowing rate, which is updated periodically, based on the information available at commencement date. The operating lease ROU asset also includes any lease payments related to initial direct cost and prepayments and excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. Nielsen has lease agreements with lease and non-lease components, which are generally accounted for together.

Nielsen has operating and finance leases for real estate facilities, servers, computer hardware, and other equipment. Nielsen’s leases have remaining lease terms of 1 year to 30 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

- 14 -


The components of lease expense were as follows:

 

(in millions)

 

 

Three Months Ended

September 30, 2019

 

 

Nine Months Ended

September 30, 2019

Lease cost

 

 

 

 

 

 

 

 

Finance lease cost:

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

$

15

 

 

$

52

 

Interest on lease liabilities

 

 

2

 

 

 

7

 

Total finance lease cost

 

 

17

 

 

 

59

 

Operating lease cost

 

 

33

 

 

 

91

 

Sublease income

 

 

 

 

 

(2

)

Total lease cost

 

$

50

 

 

$

148

 

 

Supplemental balance sheet information related to leases was as follows:

 

(in millions, except lease term and discount rate)

 

September 30, 2019

 

Operating leases

 

 

 

 

Operating lease right-of-use assets

 

$

425

 

 

 

 

 

 

Other current liabilities

 

 

110

 

Operating lease liabilities

 

 

393

 

Total operating lease liabilities

 

$

503

 

 

 

 

 

 

Finance leases

 

 

 

 

Property, plant and equipment, gross

 

$

372

 

Accumulated depreciation

 

 

(203

)

Property, plant and equipment, net

 

 

169

 

 

 

 

 

 

Other intangible assets, gross

 

 

23

 

Accumulated amortization

 

 

(12

)

Other intangible assets, net

 

 

11

 

 

 

 

 

 

Accounts payable and other current liabilities

 

 

53

 

Long-term debt and finance lease obligations

 

 

85

 

Total finance lease liabilities

 

$

138

 

 

 

 

 

 

Other information

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

Operating cash flows used in finance leases

 

 

(7

)

Operating cash flows used in operating leases

 

 

(106

)

Financing cash flows used in finance leases

 

 

(44

)

Right-of-use assets obtained in exchange for new finance lease liabilities

 

 

17

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

 

41

 

Weighted-average remaining lease term--finance leases

 

4 years

 

Weighted-average remaining lease term--operating leases

 

8 years

 

Weighted-average discount rate--finance leases

 

 

6.30

%

Weighted-average discount rate--operating leases

 

 

4.50

%

 

- 15 -


Annual maturities of Nielsen’s lease liabilities are as follows:

 

(in millions)

 

Operating Leases

 

 

Finance Leases

 

For October 1, 2019 to December 31, 2019

 

$

36

 

 

$

19

 

2020

 

 

127

 

 

 

55

 

2021

 

 

95

 

 

 

35

 

2022

 

 

73

 

 

 

21

 

2023

 

 

55

 

 

 

11

 

2024

 

 

36

 

 

 

4

 

Thereafter

 

 

181

 

 

 

9

 

Total lease payments

 

 

603

 

 

 

154

 

Less imputed interest

 

 

(100

)

 

 

(16

)

Total

 

$

503

 

 

$

138

 

 

 

6. Goodwill and Other Intangible Assets

Goodwill

In connection with Nielsen’s ongoing strategic review, Nielsen considered various alternatives for the Company including the potential sale of the Connect business. During this process, there were indications that the fair value of the Connect reporting unit was lower than the carrying value.  Nielsen considered this as well as other factors to be interim indicators of impairment and determined that it was more likely than not that the Connect reporting unit was impaired.  Management performed an updated impairment analysis of Connect as of September 30, 2019.  As a result of this analysis, Nielsen concluded that the fair value was less than the carrying value and recorded a non-cash goodwill impairment charge of $1,004 million for the Connect reporting unit. The primary inputs for determining the estimated fair value were inputs from the strategic review process, market values for comparable entities and updated intrinsic values.

During the first quarter of 2019, Nielsen updated its reporting structure in a manner that changed the composition of the Company’s reporting units. The result of this change was combining two of our reporting units into one. Both of these reporting units were in the former Watch reportable segment.  The current reporting units are Media and Connect (formerly Watch and Buy), which is the same as Nielsen’s reportable segments. As a result of this change in reporting units, Nielsen performed an interim goodwill impairment analysis during the first quarter immediately prior to the change and after the change, and determined that the estimated fair values of the reporting units exceeded their carrying values (including goodwill). As such, there was no impairment as a result of this change.

The table below summarizes the changes in the carrying amount of goodwill by reportable segment for the nine months ended September 30, 2019.

 

(IN MILLIONS)

 

Connect

 

 

Media

 

 

Total

 

Balance, December 31, 2018

 

$

1,337

 

 

$

5,650

 

 

$

6,987

 

Acquisitions, divestitures and other adjustments

 

 

6

 

 

 

12

 

 

 

18

 

Impairment

 

 

(1,004

)

 

 

 

 

 

(1,004

)

Effect of foreign currency translation

 

 

(15

)

 

 

(13

)

 

 

(28

)

Balance, September 30, 2019

 

$

324

 

 

$

5,649

 

 

$

5,973

 

Cumulative impairments

 

$

2,415

 

 

$

376

 

 

$

2,791

 

 

At September 30, 2019, $47 million of the goodwill is expected to be deductible for income tax purposes.

 

- 16 -


Other Intangible Assets

 

 

 

Gross Amounts

 

 

Accumulated Amortization

 

 

 

September 30,

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

(IN MILLIONS)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Indefinite-lived intangibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names and trademarks

 

$

1,921

 

 

$

1,921

 

 

$

 

 

$

 

Amortized intangibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names and trademarks

 

 

144

 

 

 

140

 

 

 

(108

)

 

 

(102

)

Customer-related intangibles

 

 

3,147

 

 

 

3,145

 

 

 

(1,725

)

 

 

(1,604

)

Covenants-not-to-compete

 

 

39

 

 

 

39

 

 

 

(38

)

 

 

(38

)

Content databases

 

 

168

 

 

 

167

 

 

 

(37

)

 

 

(26

)

Computer software

 

 

3,083

 

 

 

3,029

 

 

 

(1,726

)

 

 

(1,694

)

Patents and other

 

 

180

 

 

 

173

 

 

 

(137

)

 

 

(126

)

Total

 

$

6,761

 

 

$

6,693

 

 

$

(3,771

)

 

$

(3,590

)

 

 

Amortization expense associated with the above intangible assets was $141 million and $125 million for the three months ended September 30, 2019 and 2018, respectively. These amounts included amortization expense associated with computer software of $94 million and $73 million for the three months ended September 30, 2019 and 2018, respectively.

Amortization expense associated with the above intangible assets was $415 million and $362 million for the nine months ended September 30, 2019 and 2018, respectively. These amounts included amortization expense associated with computer software of $267 million and $206 million for the nine months ended September 30, 2019 and 2018, respectively.

 

7. Changes in and Reclassification out of Accumulated Other Comprehensive Income/(Loss) by Component

The table below summarizes the changes in accumulated other comprehensive income/(loss), net of tax, by component for the nine months ended September 30, 2019 and 2018.

 

 

 

Foreign Currency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Translation

 

 

 

 

 

 

Post Employment

 

 

 

 

 

 

 

Adjustments

 

 

Cash Flow Hedges

 

 

Benefits

 

 

Total

 

(IN MILLIONS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2018

 

$

(779

)

 

$

11

 

 

$

(342

)

 

$

(1,110

)

Other comprehensive income/(loss) before

   reclassifications

 

 

(30

)

 

 

(28

)

 

 

2

 

 

 

(56

)

Amounts reclassified from accumulated other

   comprehensive (income)/loss

 

 

 

 

 

(7

)

 

 

8

 

 

 

1

 

Net current period other comprehensive income/(loss)

 

 

(30

)

 

 

(35

)

 

 

10

 

 

 

(55

)

Net current period other comprehensive income/(loss) attributable to noncontrolling interest

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Net current period other comprehensive income/(loss) attributable to Nielsen shareholders

 

 

(31

)

 

 

(35

)

 

 

10

 

 

 

(56

)

Balance September 30, 2019

 

$

(810

)

 

$

(24

)

 

$

(332

)

 

$

(1,166

)

- 17 -


 

 

 

Foreign Currency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Translation

 

 

 

 

 

 

Post Employment

 

 

 

 

 

 

 

Adjustments

 

 

Cash Flow Hedges

 

 

Benefits

 

 

Total

 

(IN MILLIONS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2017

 

$

(610

)

 

$

10

 

 

$

(340

)

 

$

(940

)

Other comprehensive income/(loss) before

   reclassifications

 

 

(97

)

 

 

18

 

 

 

 

 

 

(79

)

Amounts reclassified from accumulated other

   comprehensive (income)/loss

 

 

 

 

 

(2

)

 

 

12

 

 

 

10

 

Net current period other comprehensive income/(loss)

 

 

(97

)

 

 

16

 

 

 

12

 

 

 

(69

)

Net current period other comprehensive income/(loss) attributable to noncontrolling interest

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Net current period other comprehensive income/(loss) attributable to Nielsen shareholders

 

 

(98

)

 

 

16

 

 

 

12

 

 

 

(70

)

Balance September 30, 2018

 

$

(708

)

 

$

26

 

 

$

(328

)

 

$

(1,010

)

 

The table below summarizes the reclassification of accumulated other comprehensive loss by component for the three months ended September 30, 2019 and 2018, respectively.

 

 

 

Amount Reclassified from

 

 

 

 

 

Accumulated Other

 

 

 

(IN MILLIONS)

 

Comprehensive (Income)/Loss

 

 

 

Details about Accumulated

 

 

 

 

 

 

 

 

 

Affected Line Item in the

Other Comprehensive

 

Three Months Ended

 

 

Three Months Ended

 

 

Condensed Consolidated

Income components

 

September 30, 2019

 

 

September 30, 2018

 

 

Statement of Operations

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

(2

)

 

$

(2

)

 

Interest (income)/expense

 

 

 

 

 

 

1

 

 

(Benefit)/provision for income taxes

 

 

$

(2

)

 

$

(1

)

 

Total, net of tax

Amortization of Post-Employment

   Benefits

 

 

 

 

 

 

 

 

 

 

Actuarial loss

 

$

3

 

 

$

5

 

 

(a)

 

 

 

(1

)

 

 

(1

)

 

(Benefit)/provision for income taxes

 

 

$

2

 

 

$

4

 

 

Total, net of tax

Total reclassification for the period

 

$

 

 

$

3

 

 

Net of tax

 

 

(a)

This accumulated other comprehensive loss component is included in the computation of net periodic pension cost.

- 18 -


The table below summarizes the reclassification of accumulated other comprehensive loss by component for the nine months ended September 30, 2019 and 2018, respectively.

 

 

 

Amount Reclassified from

 

 

 

 

 

Accumulated Other

 

 

 

(IN MILLIONS)

 

Comprehensive (Income)/Loss

 

 

 

Details about Accumulated

 

 

 

 

 

 

 

 

 

Affected Line Item in the

Other Comprehensive

 

Nine Months Ended

 

 

Nine Months Ended

 

 

Condensed Consolidated

Income components

 

September 30, 2019

 

 

September 30, 2018

 

 

Statement of Operations

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

(9

)

 

$

(3

)

 

Interest (income)/expense

 

 

 

2

 

 

 

1

 

 

(Benefit)/provision for income taxes

 

 

$

(7

)

 

$

(2

)

 

Total, net of tax

Amortization of Post-Employment

   Benefits

 

 

 

 

 

 

 

 

 

 

Actuarial loss

 

$

10

 

 

$

14

 

 

(a)

 

 

 

(2

)

 

 

(2

)

 

(Benefit)/provision for income taxes

 

 

$

8

 

 

$

12

 

 

Total, net of tax

Total reclassification for the period

 

$

1

 

 

$

10

 

 

Net of tax

 

 

(a)

This accumulated other comprehensive loss component is included in the computation of net periodic pension cost.

8. Restructuring Activities

Productivity Initiatives

Restructuring charges are primarily related to programs associated with Nielsen’s plans to reduce selling, general and administrative expenses as well as automation initiatives. These charges primarily relate to employee separation packages. The amounts are calculated based on salary levels and past service periods. Severance costs are generally charged to earnings when planned employee terminations are approved.

A summary of the changes in the liabilities for restructuring activities is provided below:

 

 

 

Total

 

(IN MILLIONS)

 

Initiatives

 

Balance at December 31, 2018

 

$

68

 

Reclassification of ASC 420 real estate restructuring to right-of -use asset (1)

 

 

(22

)

Charges (2)

 

 

45

 

Payments

 

 

(61

)

Effect of foreign currency translation and other adjustments

 

 

(1

)

Balance at September 30, 2019

 

$

29

 

 

 

(1)

Upon adoption of ASC 842, the real estate operating lease ASC 420 liabilities were reclassified and presented as a reduction of the related operating lease right-of-use asset.

(2)

Excludes charges related to operating lease right-of-use assets of $7 million. Includes $6 million of adjustments related to changes in previous productivity initiatives.

 

Nielsen recorded $3 million and $19 million in restructuring charges primarily relating to the productivity initiatives referenced above for the three months ended September 30, 2019 and 2018, respectively.

Nielsen recorded $45 million and $108 million in restructuring charges primarily relating to the productivity initiatives referenced above for the nine months ended September 30, 2019 and 2018, respectively.

Of the $29 million in remaining liabilities for restructuring actions, $26 million is expected to be paid within one year and is classified as a current liability within the condensed consolidated balance sheet as of September 30, 2019.

 

- 19 -


9. Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance.

There are three levels of inputs that may be used to measure fair value:

 

Level 1:

  

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

  

 

Level 2:

  

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

  

 

Level 3:

  

Pricing inputs that are generally unobservable and may not be corroborated by market data.

Financial Assets and Liabilities Measured on a Recurring Basis

The Company’s financial assets and liabilities are measured and recorded at fair value, except for equity method investments and long-term debt. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. In addition, the Company records changes in the fair value of equity investments with readily determinable fair values in net income rather than in accumulated other comprehensive income/(loss). Investments that do not have readily determinable fair values are recognized at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The adjustments related to the observable price changes will also be recognized in net income.

The following table summarizes the valuation of the Company’s material financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018:

 

 

 

September 30,

 

 

 

 

 

 

 

 

 

 

 

(IN MILLIONS)

 

2019

 

 

Level 1

 

 

Level 2

 

 

Level 3

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plan assets for deferred compensation (1)

 

 

26

 

 

 

26

 

 

 

 

Investment in mutual funds (2)

 

 

2

 

 

 

2

 

 

 

 

Interest rate swap arrangements (3)

 

 

 

 

 

 

 

 

 

Total

 

$

28

 

 

$

28

 

 

$

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap arrangements (3)

 

$

30

 

 

 

 

$

30

 

 

Deferred compensation liabilities (4)

 

 

26

 

 

 

26

 

 

 

 

Total

 

$

56

 

 

$

26

 

 

$

30

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

Level 1

 

 

Level 2

 

 

Level 3

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plan assets for deferred compensation (1)

 

 

25

 

 

 

25

 

 

 

 

Investment in mutual funds (2)

 

 

2

 

 

 

2

 

 

 

 

Interest rate swap arrangements (3)

 

 

23

 

 

 

 

 

23

 

 

Total

 

$

50

 

 

$

27

 

 

23

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap arrangements (3)

 

$

3

 

 

 

 

$

3

 

 

Deferred compensation liabilities (4)

 

 

27

 

 

 

27

 

 

 

 

Total

 

$

30

 

 

$

27

 

 

$

3

 

 

   

(1)

Plan assets are comprised of investments in mutual funds, which are intended to fund liabilities arising from deferred compensation plans. These investments are carried at fair value, which is based on quoted market prices at period end in active markets. These investments are classified as equity securities with any gains or losses resulting from changes in fair value recorded in other income/(expense), net in the condensed consolidated statement of operations.

(2)

Investments in mutual funds are money-market accounts held with the intention of funding certain specific retirement plans.

- 20 -


(3)

Derivative financial instruments include interest rate swap arrangements recorded at fair value based on externally-developed valuation models that use readily observable market parameters and the consideration of counterparty risk.

(4)

The Company offers certain employees the opportunity to participate in a deferred compensation plan. A participant’s deferrals are invested in a variety of participant directed stock and bond mutual funds and are classified as equity securities. Changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the equity securities is also reflected in the changes in fair value of the deferred compensation obligation.

Derivative Financial Instruments

Nielsen primarily uses interest rate swap derivative instruments to manage the risk that changes in interest rates will affect the cash flows of its underlying debt obligations.

To qualify for hedge accounting, the hedging relationship must meet several conditions with respect to documentation, probability of occurrence, hedge effectiveness and reliability of measurement. Nielsen documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions as well as the hedge effectiveness assessment, both at the hedge inception and on an ongoing basis. Nielsen recognizes all derivatives at fair value either as assets or liabilities in the consolidated balance sheets and changes in the fair values of such instruments are recognized currently in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, Nielsen recognizes the changes in fair value of these instruments in accumulated other comprehensive income/(loss).

Nielsen manages exposure to possible defaults on derivative financial instruments by monitoring the concentration of risk that Nielsen has with any individual bank and through the use of minimum credit quality standards for all counterparties. Nielsen does not require collateral or other security in relation to derivative financial instruments. A derivative contract entered into between Nielsen or certain of its subsidiaries and a counterparty that was also a lender under Nielsen’s senior secured credit facilities at the time the derivative contract was entered into is guaranteed under the senior secured credit facilities by Nielsen and certain of its subsidiaries (see Note 10 – (“Long-term Debt and Other Financing Arrangements”) for more information). Since it is Nielsen’s policy to only enter into derivative contracts with banks of internationally acknowledged standing, Nielsen considers the counterparty risk to be remote.

It is Nielsen’s policy to have an International Swaps and Derivatives Association (“ISDA”) Master Agreement established with every bank with which it has entered into any derivative contract. Under each of these ISDA Master Agreements, Nielsen agrees to settle only the net amount of the combined market values of all derivative contracts outstanding with any one counterparty should that counterparty default. Certain of the ISDA Master Agreements contain cross-default provisions where if the Company either defaults in payment obligations under its credit facility or if such obligations are accelerated by the lenders, then the Company could also be declared in default on its derivative obligations. At September 30, 2019, Nielsen had no material exposure to potential economic losses due to counterparty credit default risk or cross-default risk on its derivative financial instruments.

Foreign Currency Exchange Risk

During the nine months ended September 30, 2019 and 2018, Nielsen recorded a net loss of zero and $1 million, respectively, associated with foreign currency derivative financial instruments within foreign currency exchange transactions losses, net in its condensed consolidated statements of operations.  As of September 30, 2019 and December 31, 2018 the notional amount of the outstanding foreign currency derivative financial instruments were $122 million and $76 million, respectively.  

Interest Rate Risk

Nielsen is exposed to cash flow interest rate risk on the floating-rate U.S. Dollar and Euro Term Loans, and uses floating-to-fixed interest rate swaps to hedge this exposure. For these derivatives, Nielsen reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive income/(loss) and reclassifies it into earnings in the same period or periods in which the hedged transaction affects earnings, and within the same income statement line item as the impact of the hedged transaction.

- 21 -


 

In May 2019, the Company entered into a $150 million aggregate notional amount four-year forward interest rate swap agreement with a starting date of July 9, 2019. This agreement fixes the LIBOR-related portion of interest rates of a corresponding amount of the Company’s variable-rate-debt at an average rate of 1.82%. This derivative has been designated as an interest rate cash flow hedge.

 

In March 2019, the Company entered into a $150 million aggregate notional amount four-year forward interest rate swap agreement with a starting date of April 9, 2019. This agreement fixes the LIBOR-related portion of interest rates of a corresponding amount of the Company’s variable-rate-debt at an average rate of 2.26%. This derivative has been designated as an interest rate cash flow hedge.

In March 2019, the Company entered into a $250 million aggregate notional amount four-year forward interest rate swap agreement with a starting date of June 9, 2019. This agreement fixes the LIBOR-related portion of interest rates of a corresponding amount of the Company’s variable-rate-debt at an average rate of 2.07%. This derivative has been designated as an interest rate cash flow hedge.

 

As of September 30, 2019, the Company had the following outstanding interest rate swaps utilized in the management of its interest rate risk:

 

 

Notional Amount

 

 

Maturity Date

 

Currency

Interest rate swaps designated as hedging instruments

 

 

 

 

 

 

 

US Dollar term loan floating-to-fixed rate swaps

$

250,000,000

 

 

July 2020

 

US Dollar

US Dollar term loan floating-to-fixed rate swaps

$

250,000,000

 

 

July 2020

 

US Dollar

US Dollar term loan floating-to-fixed rate swaps

$

250,000,000

 

 

October 2020

 

US Dollar

US Dollar term loan floating-to-fixed rate swaps

$

250,000,000

 

 

October 2021

 

US Dollar

US Dollar term loan floating-to-fixed rate swaps

$

250,000,000

 

 

July 2022

 

US Dollar

US Dollar term loan floating-to-fixed rate swaps

$

150,000,000

 

 

April 2023

 

US Dollar

US Dollar term loan floating-to-fixed rate swaps

$

250,000,000

 

 

May 2023

 

US Dollar

US Dollar term loan floating-to-fixed rate swaps

$

250,000,000

 

 

June 2023

 

US Dollar

US Dollar term loan floating-to-fixed rate swaps

$

150,000,000

 

 

July 2023

 

US Dollar

 

The effect of cash flow hedge accounting on the condensed consolidated statement of operations for the three and nine months ended September 30, 2019 and 2018 respectively:

 

 

 

Interest Expense

 

Interest Expense

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

(IN MILLIONS)

 

2019

 

 

2018

 

2019

 

 

2018

 

Interest expense (Location in the consolidated statement of

   operations in which the effects of cash flow hedges are

   recorded)

 

$

100

 

 

$

99

 

$

299

 

 

$

295

 

Amount of gain/(loss) reclassified from accumulated other

   comprehensive income into income, net of tax

 

$

2

 

 

$

1

 

$

7

 

 

$

2

 

Amount of loss reclassified from accumulated other         comprehensive income into income as a result that a forecasted     transaction is no longer probable of occurring, net of tax

 

$

 

 

$

 

$

 

 

$

 

 

 

 

Nielsen expects to recognize approximately $6 million of net pre-tax losses from accumulated other comprehensive loss to interest expense in the next 12 months associated with its interest-related derivative financial instruments.

- 22 -


Fair Values of Derivative Instruments in the Consolidated Balance Sheets

The fair values of the Company’s derivative instruments as of September 30, 2019 and December 31, 2018 were as follows:  

 

 

 

 

September 30, 2019

 

December 31, 2018

 

Derivatives Designated as

Hedging Instruments

 

Prepaid Expense

 

 

 

 

 

 

Prepaid Expense

 

 

 

 

Other

 

 

 

and Other Current

 

 

 Other Non-Current

 

Other Non-Current

 

 

Other Current

 

Other Non-Current

 

 

 Non-Current

 

(IN MILLIONS)

 

Assets

 

 

Assets

 

Liabilities

 

 

Assets

 

Assets

 

 

Liabilities

 

Interest rate swaps

 

$

 

 

$

 

$

30

 

$

3

 

$

20

 

 

$

3

 

 

Derivatives in Cash Flow Hedging Relationships

The pre-tax effect of derivative instruments in cash flow hedging relationships for the three months ended September 30, 2019 and 2018 was as follows:

 

 

 

 

 

 

 

 

Amount of (Gain)/Loss

 

 

 

Amount of (Gain)/Loss

 

 

 

 

Reclassified from AOCI

 

 

 

Recognized in OCI

 

 

Location of Loss

 

into Income

 

 

 

(Effective Portion)

 

 

Reclassified from AOCI

 

(Effective Portion)

 

Derivatives in Cash Flow

 

Three Months Ended

 

 

into Income  (Effective

 

Three Months Ended

 

Hedging Relationships

 

September 30,

 

 

Portion)

 

September 30,

 

(IN MILLIONS)

 

2019

 

 

2018

 

 

 

 

2019

 

 

2018

 

Interest rate swaps

 

$

6

 

 

$

(5

)

 

Interest expense

 

$

(2

)

 

$

(2

)

 

The pre-tax effect of derivative instruments in cash flow hedging relationships for the nine months ended September 30, 2019 and 2018 was as follows:

 

 

 

 

 

 

 

 

Amount of (Gain)/Loss

 

 

 

Amount of (Gain)/Loss

 

 

 

 

Reclassified from AOCI

 

 

 

Recognized in OCI

 

 

Location of Loss

 

into Income

 

 

 

(Effective Portion)

 

 

Reclassified from AOCI

 

(Effective Portion)

 

Derivatives in Cash Flow

 

Nine Months Ended

 

 

into Income

 

Nine Months Ended

 

Hedging Relationships

 

September 30,

 

 

(Effective Portion)

 

September 30,

 

(IN MILLIONS)

 

2019

 

 

2018

 

 

 

 

2019

 

 

2018

 

Interest rate swaps

 

$

39

 

 

$

(26

)

 

Interest expense

 

$

(9

)

 

$

(3

)

 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company is required, on a nonrecurring basis, to adjust the carrying value for certain assets using fair value measurements. The Company’s equity method investments, and non-financial assets, such as goodwill, intangible assets, and property, plant and equipment, are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.

The Company did not measure any material non-financial assets or liabilities at fair value during the nine months ended September 30, 2019.

- 23 -


10. Long-term Debt and Other Financing Arrangements

Unless otherwise stated, interest rates are as of September 30, 2019.

 

 

 

September 30, 2019

 

 

December 31, 2018

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

Carrying

 

 

Fair

 

 

Interest

 

 

Carrying

 

 

Fair

 

(IN MILLIONS)

 

Rate

 

 

Amount

 

 

Value

 

 

Rate

 

 

Amount

 

 

Value

 

$1,125 million Senior secured term loan (LIBOR based variable rate of

   3.79%) due 2023

 

 

 

 

 

$

1,092

 

 

 

1,085

 

 

 

 

 

 

$

1,112

 

 

 

1,100

 

$2,303 million Senior secured term loan (LIBOR based variable rate of

   4.04%) due 2023

 

 

 

 

 

 

2,269

 

 

 

2,271

 

 

 

 

 

 

 

2,285

 

 

 

2,215

 

545 million Senior secured term loan (Euro LIBOR based variable rate

   of 2.50%) due 2023 

 

 

 

 

 

 

588

 

 

 

589

 

 

 

 

 

 

 

623

 

 

 

619

 

$850 million senior secured revolving credit facility (Euro LIBOR or

   LIBOR based variable rate) due 2023

 

 

 

 

 

 

190

 

 

 

187

 

 

 

 

 

 

 

 

 

Total senior secured credit facilities (with weighted-average interest

   rate)

 

 

3.80

%

 

 

4,139

 

 

 

4,132

 

 

 

4.09

%

 

 

4,020

 

 

 

3,934

 

$800 million 4.50% senior debenture loan due 2020

 

 

 

 

 

 

798

 

 

 

801

 

 

 

 

 

 

 

797

 

 

 

792

 

$625 million 5.50% senior debenture loan due 2021

 

 

 

 

 

 

622

 

 

 

627

 

 

 

 

 

 

 

621

 

 

 

621

 

$2,300 million 5.00% senior debenture loan due 2022

 

 

 

 

 

 

2,293

 

 

 

2,313

 

 

 

 

 

 

 

2,290

 

 

 

2,179

 

$500 million 5.00% senior debenture loan due 2025

 

 

 

 

 

 

497

 

 

 

494

 

 

 

 

 

 

 

496

 

 

 

472

 

Total debenture loans (with weighted-average interest rate)

 

 

5.22

%

 

 

4,210

 

 

 

4,235

 

 

 

5.22

%

 

 

4,204

 

 

 

4,064

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

Total long-term debt

 

 

4.52

%

 

 

8,349

 

 

 

8,367

 

 

 

4.67

%

 

 

8,225

 

 

 

7,999

 

Finance lease and other financing obligations

 

 

 

 

 

 

138

 

 

 

 

 

 

 

 

 

 

 

161

 

 

 

 

 

Bank overdrafts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

Total debt and other financing arrangements

 

 

 

 

 

 

8,487

 

 

 

 

 

 

 

 

 

 

 

8,387

 

 

 

 

 

Less: Current portion of long-term debt, finance lease and other

   financing obligations and other short-term borrowings

 

 

 

 

 

 

298

 

 

 

 

 

 

 

 

 

 

 

107

 

 

 

 

 

Non-current portion of long-term debt and finance lease and other

   financing obligations

 

 

 

 

 

$

8,189

 

 

 

 

 

 

 

 

 

 

$

8,280

 

 

 

 

 

 

 

The fair value of the Company’s long-term debt instruments was based on the yield on public debt where available or current borrowing rates available for financings with similar terms and maturities and such fair value measurements are considered Level 1 or Level 2 in nature, respectively.

Annual maturities of Nielsen’s long-term debt are as follows:

 

(IN MILLIONS)

 

 

 

 

For October 1, 2019 to December 31, 2019

 

$

202

 

2020

 

 

854

 

2021

 

 

702

 

2022

 

 

2,399

 

2023

 

 

3,693

 

2024

 

 

 

Thereafter

 

 

499

 

 

 

$

8,349

 

 

 

- 24 -


11. Shareholders’ Equity

Common stock activity is as follows:

 

 

 

Nine Months Ended

 

 

 

September 30, 2019

 

Actual number of shares of common stock outstanding

 

 

 

 

Beginning of period

 

 

355,271,737

 

Shares of common stock issued through compensation plans

 

 

495,256

 

Employee benefit trust activity

 

 

43,268

 

End of period

 

 

355,810,261

 

 

On January 31, 2013, the Company’s Board of Directors (the “Board”) adopted a cash dividend policy to pay quarterly cash dividends on its outstanding common stock. The following table represents the cash dividends declared by the Board and paid for the years ended December 31, 2018 and the nine months ended September 30, 2019, respectively.

 

Declaration Date

 

Record Date

 

Payment Date

 

Dividend Per Share

 

February 21, 2018

 

March 7, 2018

 

March 21, 2018

 

$

0.34

 

April 19, 2018

 

June 6, 2018

 

June 20, 2018

 

$

0.35

 

July 19, 2018

 

August 22, 2018

 

September 5, 2018

 

$

0.35

 

October 18, 2018

 

November 21, 2018

 

December 5, 2018

 

$

0.35

 

February 21, 2019

 

March 7, 2019

 

March 21, 2019

 

$

0.35

 

April 18, 2019

 

June 5, 2019

 

June 19, 2019

 

$

0.35

 

July 18, 2019

 

August 22, 2019

 

September 5, 2019

 

$

0.35

 

 

On November 3, 2019 the Board approved a plan to reduce the quarterly cash dividend, with the goal of strengthening Nielsen’s balance sheet and providing added flexibility to invest for growth.  On November 3, 2019, the Board declared a cash dividend of $0.06 per share on Nielsen’s common stock. The dividend is payable on December 5, 2019 to shareholders of record at the close of business on November 21, 2019.

The dividend policy and the payment of future cash dividends are subject to the discretion of the Board.

Nielsen’s Board approved a share repurchase program, as included in the below table, for up to $2 billion in the aggregate of our outstanding common stock. The primary purpose of the program is to return value to shareholders and to mitigate dilution associated with Nielsen’s equity compensation plans.

 

Board Approval

 

Share

Repurchase

Authorization

($ in millions)

July 25, 2013

 

$

500

October 23, 2014

 

$

1,000

December 11, 2015

  

$

500

Total Share Repurchase Authorization

  

$

2,000

 

Repurchases under this program will be made in accordance with applicable securities laws from time to time in the open market or otherwise depending on Nielsen’s evaluation of market conditions and other factors. This program has been executed within the limitations of the authority granted by Nielsen’s shareholders.

As of September 30, 2019, there were 39,426,521 shares of the Company’s common stock purchased at an average price of $44.95 per share (total consideration of approximately $1,772 million) under this program. There were no share repurchases for the nine months ended September 30, 2019.

 

- 25 -


12. Income Taxes

The effective tax rates for the three months ended September 30, 2019 and 2018 were a benefit of 45% and an expense of 38%, respectively. The tax rate for the three months ended September 30, 2019 was lower than the statutory rate as a result of the release of certain tax contingencies and the favorable impact of certain financing activities, partially offset by the unfavorable impact of goodwill impairment and the impact of tax rate differences in other jurisdictions where the Company files tax returns. The tax rate for the three months ended September 30, 2018 was higher than the statutory rate as a result of the impact of tax rate differences in other jurisdictions where the Company files tax returns, partially offset by the favorable impact of certain financing activities. The principal reason for the decrease in the third quarter effective tax rate in 2019 when compared to 2018 was due to the release of certain tax contingencies.

The effective tax rates for the nine months ended September 30, 2019 and 2018 were a benefit of 52% and an expense of 36%, respectively. The tax rate for the nine months ended September 30, 2019 was lower than the statutory rate as a result of the release of certain tax contingencies and the favorable impact of certain financing activities, partially offset by the unfavorable impact of goodwill impairment, the impact of tax rate differences in other jurisdictions where Nielsen files tax returns, and audit settlements. The tax rate for the nine months ended September 30, 2018 was higher than the statutory rate primarily as a result of the impact of tax rate differences in other jurisdictions where Nielsen files tax returns, partially offset by the favorable impact of certain financing activities. The principal reason for the decrease in the effective tax rate in the nine months ended September 30, 2019 when compared to 2018 was due to the release of certain tax contingencies.

The estimated liability for unrecognized tax benefits as of December 31, 2018 was $572 million. The Company has concluded a number of audits in multiple jurisdictions throughout the year. Various statutes of limitation have also expired. This has resulted in a decrease of $421 million in these liabilities in the third quarter of 2019 for a total decrease of $476 million in these liabilities throughout 2019 with a corresponding reduction in the Company’s effective tax rate for the respective periods.

The Company files numerous consolidated and separate income tax returns in the U.S. and in many state and foreign jurisdictions. With few exceptions the Company is no longer subject to U.S. Federal income tax examination for 2015 and prior periods. In addition, the Company has subsidiaries in various states, provinces and countries that are currently under audit for years ranging from 2004 through 2017. During the third quarter of 2019, ongoing audits were effectively settled in certain tax jurisdictions and the impact was recorded accordingly in the third quarter financial statements.

To date, the Company is not aware of any material adjustments not already accrued related to any of the current Federal, state or foreign audits under examination.

13. Commitments and Contingencies

Legal Proceedings and Contingencies

In August 2018, a putative shareholder class action lawsuit was filed in the Southern District of New York, naming as defendants Nielsen, former Chief Executive Officer Dwight Mitchell Barns, and former Chief Financial Officer Jamere Jackson. Another lawsuit, which alleged similar facts but also named other defendants, including former Chief Operating Officer Stephen Hasker, was filed in the Northern District of Illinois in September 2018 and transferred to the Southern District of New York in December 2018. The actions were consolidated on April 22, 2019, and the Public Employees’ Retirement System of Mississippi was appointed lead plaintiff for the putative class. An amended complaint was filed on June 21, 2019, asserting violations of certain provisions of the Securities Exchange Act of 1934, as amended, based on allegedly false and materially misleading statements relating to the outlook of Nielsen’s Buy (now “Connect”) segment, the Company’s preparedness for changes in global data privacy laws and Nielsen’s reliance on third-party data. The Company moved to dismiss the amended complaint on September 6, 2019. A second amended complaint was filed on September 27, 2019. The Company anticipates filing a renewed motion to dismiss in the coming months. In addition, in January 2019, a shareholder derivative lawsuit was filed in New York Supreme Court against a number of Nielsen’s current and former officers and directors. The derivative lawsuit alleges that the named officers and directors breached their fiduciary duties to Nielsen in connection with factual assertions substantially similar to those in the putative class action complaints. The derivative lawsuit further alleges that certain officers and directors engaged in trading Nielsen stock based on material, nonpublic information. By agreement dated June 26, 2019, the derivative lawsuit has been stayed pending resolution of the Company’s motion to dismiss the aforementioned securities litigation. Nielsen intends to defend these lawsuits vigorously. Based on currently available information, Nielsen believes that the Company has meritorious defenses to these actions and that their resolution is not likely to have a material adverse effect on Nielsen’s business, financial position, or results of operations.

- 26 -


Nielsen is subject to litigation and other claims in the ordinary course of business, some of which include claims for substantial sums. Accruals have been recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be determined, the Company does expect that the ultimate disposition of these matters will not have a material adverse effect on its operations or financial condition. However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect the Company’s future results of operations or cash flows in a particular period.

Other Contractual Arrangements

In July 2019, the Company amended its Second Amended and Restated Master Services Agreement (the “MSA”), dated as of October 1, 2017 and effective as of January 1, 2017 (the “Effective Date”), with Tata America International Corporation and Tata Consultancy Services Limited (jointly, “TCS”) by executing Amendment Number One (the “Amendment”) with TCS, dated as of July 1, 2019 and effective as of January 1, 2019 (the “Amendment Effective Date”). The Amendment reduces the amount of services Nielsen has committed to purchase from TCS from the Amendment Effective Date through the remaining term of the MSA (the “Minimum Commitment”) to $1.413 billion, including a commitment to purchase at least $275 million in services during 2019, at least $250 million in services during 2020, $184.3 million in services per year from 2021 through 2024, and $137.8 million in services in 2025 (in each of the foregoing cases, the “Annual Commitment”). TCS’s charges under existing and future statements of work (“SOW”) pursuant to the MSA will continue to be credited against the Minimum Commitment and the Annual Commitment and the occurrence of certain events, some of which also provide Nielsen with the right to terminate the Agreement or SOWs, as applicable, will continue to be available to reduce the Minimum and Annual Commitment Amounts as they occur. The parties also agreed to certain other commercial terms. However, the other material terms of the MSA as reflected in the MSA and as previously disclosed remain unchanged.

 

14. Segments

The Company aligns its operating segments in order to conform to management’s internal reporting structure, which is reflective of service offerings by industry. Prior to February 2019, Management aggregated such operating segments into two reporting segments: what consumers buy (“Buy”), consisting principally of market research information and analytical services; and what consumers read, watch and listen to (“Watch”), consisting principally of television, radio, online and mobile audience and advertising measurement and corresponding analytics.

In February 2019, Nielsen realigned its business segments from Buy and Watch to Nielsen Global Connect (“Connect”) and Nielsen Global Media (“Media”). Each segment operates as a complete unit—from the conception of a product, through the collection of the data, into the technology and operations, all the way to the data being sold and delivered to the client. These changes better align Nielsen’s external view to its go-forward internal view. The Company’s reportable segments are stated on the new basis and such changes were retrospectively applied. The impact of these changes did not have a material impact on Nielsen’s condensed consolidated financial statements or segment results.

 

Corporate consists principally of unallocated items such as certain facilities and infrastructure costs as well as intersegment eliminations. Certain corporate costs, other than those described above, including those related to selling, finance, legal, human resources, and information technology systems, are considered operating costs and are allocated to the Company’s segments based on either the actual amount of costs incurred or on a basis consistent with the operations of the underlying segment. Information with respect to the operations of each of Nielsen’s business segments is set forth below based on the nature of the services offered and geographic areas of operations.

- 27 -


Business Segment Information

 

(IN MILLIONS)

 

Connect

 

 

Media

 

 

Corporate

 

 

Total

 

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

746

 

 

$

870

 

 

$

 

 

$

1,616

 

Depreciation and amortization

 

$

57

 

 

$

127

 

 

$

2

 

 

$

186

 

Restructuring charges

 

$

8

 

 

$

1

 

 

$

(4

)

 

$

5

 

Impairment of goodwill and other long-lived assets

 

$

1,004

 

 

$

 

 

$

 

 

$

1,004

 

Share-based compensation expense

 

$

4

 

 

$

3

 

 

$

6

 

 

$

13

 

Other items(1)

 

$

 

 

$

 

 

$

8

 

 

$

8

 

Operating income/(loss)

 

$

(964

)

 

$

250

 

 

$

(26

)

 

$

(740

)

Business segment income/(loss)(2)

 

$

109

 

 

$

381

 

 

$

(14

)

 

$

476

 

Total assets as of September 30, 2019

 

$

4,422

 

 

$

9,735

 

 

$

186

 

 

$

14,343

 

 

(IN MILLIONS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

763

 

 

$

837

 

 

$

 

 

$

1,600

 

Depreciation and amortization

 

$

57

 

 

$

115

 

 

$

3

 

 

$

175

 

Restructuring charges

 

$

15

 

 

$

5

 

 

$

(1

)

 

$

19

 

Share-based compensation expense

 

$

3

 

 

$

2

 

 

$

(4

)

 

$

1

 

Other items(1)

 

$

 

 

$

 

 

$

15

 

 

$

15

 

Operating income/(loss)

 

$

36

 

 

$

253

 

 

$

(28

)

 

$

261

 

Business segment income/(loss)(2)

 

$

111

 

 

$

375

 

 

$

(15

)

 

$

471

 

Total assets as of December 31, 2018

 

$

5,416

 

 

$

9,647

 

 

$

116

 

 

$

15,179

 

 

(IN MILLIONS)

 

Connect

 

 

Media

 

 

Corporate

 

 

Total

 

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,255

 

 

$

2,552

 

 

$

 

 

$

4,807

 

Depreciation and amortization

 

$

167

 

 

$

378

 

 

$

5

 

 

$

550

 

Restructuring charges

 

$

34

 

 

$

11

 

 

$

7

 

 

$

52

 

Impairment of goodwill and other long-lived assets

 

$

1,004

 

 

$

 

 

$

 

 

$

1,004

 

Share-based compensation expense

 

$

12

 

 

$

9

 

 

$

18

 

 

$

39

 

Other items (1)

 

$

 

 

$

 

 

$

33

 

 

$

33

 

Operating income/(loss)

 

$

(920

)

 

$

701

 

 

$

(98

)

 

$

(317

)

Business segment income/(loss) (2)

 

$

297

 

 

$

1,099

 

 

$

(35

)

 

$

1,361

 

 

(IN MILLIONS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,349

 

 

$

2,508

 

 

$

 

 

$

4,857

 

Depreciation and amortization

 

$

165

 

 

$

333

 

 

$

6

 

 

$

504

 

Restructuring charges

 

$

85

 

 

$

19

 

 

$

4

 

 

$

108

 

Share-based compensation expense

 

$

10

 

 

$

7

 

 

$

4

 

 

$

21

 

Other items (1)

 

$

 

 

$

 

 

$

33

 

 

$

33

 

Operating income/(loss)

 

$

51

 

 

$

728

 

 

$

(83

)

 

$

696

 

Business segment income/(loss) (2)

 

$

311

 

 

$

1,087

 

 

$

(36

)

 

$

1,362

 

 

(1)

Other items primarily consists of business optimization costs, including strategic review costs, for the three months ended September 30, 2019, and business optimization costs, including strategic review costs, and transaction related costs for the nine months ended September 30, 2019.  Other items primarily consists of business optimization costs and transaction related costs for the three and nine months ended September 30, 2018.

(2)

The Company’s chief operating decision maker uses business segment income/(loss) to measure performance from period to period both at the consolidated level as well as within its operating segments.

 

- 28 -


 

15. Guarantor Financial Information

The following supplemental financial information is being provided for purposes of compliance with reporting covenants contained in certain debt obligations of Nielsen and its subsidiaries. The financial information sets forth for Nielsen, its subsidiaries that have issued certain debt securities (the “Issuers”) and its guarantor and non-guarantor subsidiaries, the consolidating balance sheet as of September 30, 2019 and December 31, 2018, and consolidating statements of operations and cash flows for the periods ended September 30, 2019 and 2018.

The issued debt securities are jointly and severally guaranteed on a full and unconditional basis by Nielsen and subject to certain exceptions, each of the direct and indirect 100% owned subsidiaries of Nielsen, in each case to the extent that such entities provide a guarantee under the senior secured credit facilities. The issuers are also 100% owned indirect subsidiaries of Nielsen: Nielsen Finance LLC and Nielsen Finance Co. for certain series of debt obligations, and The Nielsen Company (Luxembourg) S.ar.l., for the other series of debt obligations. Each issuer is a guarantor of the debt obligations not issued by it.

Nielsen is a holding company and does not have any material assets or operations other than ownership of the capital stock of its direct and indirect subsidiaries. All of Nielsen’s operations are conducted through its subsidiaries, and, therefore, Nielsen is expected to continue to be dependent upon the cash flows of its subsidiaries to meet its obligations. The senior secured credit facilities contain certain limitations on the ability of Nielsen to receive the cash flows of its subsidiaries.

While all subsidiary guarantees of the issued debt securities are full and unconditional, these guarantees contain customary release provisions including when (i) the subsidiary is sold or sells all of its assets, (ii) the subsidiary is declared “unrestricted” for covenant purposes, (iii) the subsidiary’s guarantee under the senior secured credit facilities is released and (iv) the requirements for discharge of the indenture have been satisfied.

- 29 -


Nielsen Holdings plc

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the three months ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

 

 

 

 

 

(IN MILLIONS)

 

Parent

 

 

Issuers

 

 

Guarantor

 

 

Guarantor

 

 

Elimination

 

 

Consolidated

 

 

 

 

Revenues

 

$

 

 

$

 

 

$

902

 

 

$

714

 

 

$

 

 

$

1,616

 

 

 

 

Cost of revenues, exclusive of depreciation and

   amortization shown separately below

 

 

 

 

 

 

 

 

374

 

 

 

320

 

 

 

 

 

 

694

 

 

 

 

Selling, general and administrative expenses, exclusive

   of depreciation and amortization shown

   separately below

 

 

1

 

 

 

 

 

 

224

 

 

 

242

 

 

 

 

 

 

467

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

152

 

 

 

34

 

 

 

 

 

 

186

 

 

 

 

Impairment of goodwill and other long-lived assets

 

 

 

 

 

 

 

 

 

 

419

 

 

 

585

 

 

 

 

 

 

 

1,004

 

 

 

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

 

 

 

Operating income/(loss)

 

 

(1

)

 

 

 

 

 

(267

)

 

 

(472

)

 

 

 

 

 

(740

)

 

 

 

Interest income

 

 

 

 

 

180

 

 

 

28

 

 

 

1

 

 

 

(208

)

 

 

1

 

 

 

 

Interest expense

 

 

 

 

 

(93

)

 

 

(188

)

 

 

(27

)

 

 

208

 

 

 

(100

)

 

 

 

Foreign currency exchange transaction

   gains/(losses), net

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

 

 

(6

)

 

 

 

Other income/(expense), net

 

 

 

 

 

 

 

 

(14

)

 

 

11

 

 

 

 

 

 

(3

)

 

 

 

Income/(loss) from continuing operations before

   income taxes and equity in net income/(loss)

   of subsidiaries

 

 

(1

)

 

 

87

 

 

 

(441

)

 

 

(493

)

 

 

 

 

 

(848

)

 

 

 

Benefit/(provision) for income taxes

 

 

 

 

 

(23

)

 

 

497

 

 

 

(94

)

 

 

 

 

 

380

 

 

 

 

Equity in net income/(loss) of subsidiaries

 

 

(471

)

 

 

57

 

 

 

(527

)

 

 

 

 

 

941

 

 

 

 

 

 

 

Net income/(loss)

 

 

(472

)

 

 

121

 

 

 

(471

)

 

 

(587

)

 

 

941

 

 

 

(468

)

 

 

 

Less net income/(loss) attributable to noncontrolling

   interests

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

 

 

 

Net income/(loss) attributable to controlling interest

 

 

(472

)

 

 

121

 

 

 

(471

)

 

 

(591

)

 

 

941

 

 

 

(472

)

 

 

 

Total other comprehensive income/(loss)

 

 

(51

)

 

 

12

 

 

 

(51

)

 

 

(14

)

 

 

52

 

 

 

(52

)

 

 

 

Total other comprehensive income/(loss) attributable

   to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

 

 

 

Total other comprehensive income/(loss) attributable

   to controlling interests

 

 

(51

)

 

 

12

 

 

 

(51

)

 

 

(13

)

 

 

52

 

 

 

(51

)

 

 

 

Total comprehensive income/(loss)

 

 

(523

)

 

 

133

 

 

 

(522

)

 

 

(601

)

 

 

993

 

 

 

(520

)

 

 

 

Comprehensive income/(loss) attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

 

 

 

Total comprehensive income/(loss) attributable to

   controlling interest

 

$

(523

)

 

$

133

 

 

$

(522

)

 

$

(604

)

 

$

993

 

 

$

(523

)

 

 

 

- 30 -


Nielsen Holdings plc

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the three months ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

 

 

(IN MILLIONS)

 

Parent

 

 

Issuers

 

 

Guarantor

 

 

Guarantor

 

 

Elimination

 

 

Consolidated

 

Revenues

 

$

 

 

$

 

 

$

885

 

 

$

715

 

 

$

 

 

$

1,600

 

Cost of revenues, exclusive of depreciation and

   amortization shown separately below

 

 

 

 

 

 

 

 

355

 

 

 

326

 

 

 

 

 

 

681

 

Selling, general and administrative expenses, exclusive

   of depreciation and amortization shown separately

   below

 

 

1

 

 

 

 

 

 

221

 

 

 

242

 

 

 

 

 

 

464

 

Depreciation and amortization

 

 

 

 

 

 

 

 

142

 

 

 

33

 

 

 

 

 

 

175

 

Restructuring charges

 

 

 

 

 

 

 

 

4

 

 

 

15

 

 

 

 

 

 

19

 

Operating income/(loss)

 

 

(1

)

 

 

 

 

 

163

 

 

 

99

 

 

 

 

 

 

261

 

Interest income

 

 

 

 

 

170

 

 

 

10

 

 

 

1

 

 

 

(179

)

 

 

2

 

Interest expense

 

 

 

 

 

(93

)

 

 

(176

)

 

 

(9

)

 

 

179

 

 

 

(99

)

Foreign currency exchange transaction gains/(losses),

   net

 

 

 

 

 

 

 

 

1

 

 

 

(9

)

 

 

 

 

 

(8

)

Other income/(expense), net

 

 

 

 

 

 

 

 

(17

)

 

 

18

 

 

 

 

 

 

1

 

Income/(loss) from continuing operations before

   income taxes and equity in net income/(loss) of subsidiaries

 

 

(1

)

 

 

77

 

 

 

(19

)

 

 

100

 

 

 

 

 

 

157

 

Benefit/(provision) for income taxes

 

 

 

 

 

(17

)

 

 

(9

)

 

 

(33

)

 

 

 

 

 

(59

)

Equity in net income/(loss) of subsidiaries

 

 

97

 

 

 

47

 

 

 

125

 

 

 

 

 

 

(269

)

 

 

 

Net income/(loss)

 

 

96

 

 

 

107

 

 

 

97

 

 

 

67

 

 

 

(269

)

 

 

98

 

Less net income/(loss) attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Net income/(loss) attributable to controlling interest

 

 

96

 

 

 

107

 

 

 

97

 

 

 

65

 

 

 

(269

)

 

 

96

 

Total other comprehensive income/(loss)

 

 

5

 

 

 

4

 

 

 

5

 

 

 

(6

)

 

 

 

 

 

8

 

Total other comprehensive income/(loss) attributable to

   noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Total other comprehensive income/(loss) attributable

   to controlling interests

 

 

5

 

 

 

4

 

 

 

5

 

 

 

(9

)

 

 

 

 

 

5

 

Total comprehensive income/(loss)

 

 

101

 

 

 

111

 

 

 

102

 

 

 

61

 

 

 

(269

)

 

 

106

 

Comprehensive income/(loss) attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Total comprehensive income/(loss) attributable to controlling interest

 

$

101

 

 

$

111

 

 

$

102

 

 

$

56

 

 

$

(269

)

 

$

101

 

 

- 31 -


Nielsen Holdings plc

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the nine months ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

 

 

 

 

(IN MILLIONS)

 

Parent

 

 

Issuers

 

Guarantor

 

Guarantor

 

Elimination

 

 

Consolidated

 

 

 

 

Revenues

 

$

 

 

$

 

$

2,659

 

$

2,148

 

$

 

 

$

4,807

 

 

 

 

Cost of revenues, exclusive of depreciation and

   amortization shown separately below

 

 

 

 

 

 

 

1,119

 

 

969

 

 

 

 

 

2,088

 

 

 

 

Selling, general and administrative expenses, exclusive

   of depreciation and amortization shown

   separately below

 

 

3

 

 

 

 

 

698

 

 

729

 

 

 

 

 

1,430

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

446

 

 

104

 

 

 

 

 

550

 

 

 

 

Impairment of goodwill and other long-lived assets

 

 

 

 

 

 

 

419

 

 

585

 

 

 

 

 

1,004

 

 

 

 

Restructuring charges

 

 

 

 

 

 

 

23

 

 

29

 

 

 

 

 

52

 

 

 

 

Operating income/(loss)

 

 

(3

)

 

 

 

 

(46

)

 

(268

)

 

 

 

 

(317

)

 

 

 

Interest income

 

 

1

 

 

 

565

 

 

30

 

 

4

 

 

(596

)

 

 

4

 

 

 

 

Interest expense

 

 

 

 

 

(279

)

 

(586

)

 

(30

)

 

596

 

 

 

(299

)

 

 

 

Foreign currency exchange transaction gains/(losses),

   net

 

 

 

 

 

 

 

 

 

(10

)

 

 

 

 

(10

)

 

 

 

Other income/(expense), net

 

 

 

 

 

 

 

26

 

 

(24

)

 

 

 

 

2

 

 

 

 

Income/(loss) from continuing operations before

   income taxes and equity in net income/(loss) of

   subsidiaries

 

 

(2

)

 

 

286

 

 

(576

)

 

(328

)

 

 

 

 

(620

)

 

 

 

Benefit/(provision) for income taxes

 

 

 

 

 

(77

)

 

607

 

 

(205

)

 

 

 

 

325

 

 

 

 

Equity in net income/(loss) of subsidiaries

 

 

(304

)

 

 

146

 

 

(335

)

 

 

 

493

 

 

 

 

 

 

 

Net income/(loss)

 

 

(306

)

 

 

355

 

 

(304

)

 

(533

)

 

493

 

 

 

(295

)

 

 

 

Less net income/(loss) attributable to noncontrolling

   interests

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

11

 

 

 

 

Net income/(loss) attributable to controlling interest

 

 

(306

)

 

 

355

 

 

(304

)

 

(544

)

 

493

 

 

 

(306

)

 

 

 

Total other comprehensive income/(loss)

 

 

(56

)

 

 

(13

)

 

(56

)

 

16

 

 

54

 

 

 

(55

)

 

 

 

Total other comprehensive income/(loss) attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

1

 

 

 

 

Total other comprehensive income/(loss) attributable to controlling interests

 

 

(56

)

 

 

(13

)

 

(56

)

 

15

 

 

54

 

 

 

(56

)

 

 

 

Total comprehensive income/(loss)

 

 

(362

)

 

 

342

 

 

(360

)

 

(517

)

 

547

 

 

 

(350

)

 

 

 

Comprehensive income/(loss) attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

12

 

 

 

 

Total comprehensive income/(loss) attributable to

   controlling interest

 

$

(362

)

 

$

342

 

$

(360

)

$

(529

)

$

547

 

 

$

(362

)

 

 

 

- 32 -


Nielsen Holdings plc

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the nine months ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

 

 

(IN MILLIONS)

 

Parent

 

 

Issuers

 

 

Guarantor

 

 

Guarantor

 

 

Elimination

 

 

Consolidated

 

Revenues

 

$

 

 

$

 

 

$

2,654

 

 

$

2,203

 

 

$

 

 

$

4,857

 

Cost of revenues, exclusive of depreciation and

   amortization shown separately below

 

 

 

 

 

 

 

 

1,089

 

 

 

1,009

 

 

 

 

 

 

2,098

 

Selling, general and administrative expenses, exclusive

   of depreciation and amortization shown

   separately below

 

 

3

 

 

 

 

 

 

690

 

 

 

758

 

 

 

 

 

 

1,451

 

Depreciation and amortization

 

 

 

 

 

 

 

 

403

 

 

 

101

 

 

 

 

 

 

504

 

Restructuring charges

 

 

 

 

 

 

 

 

36

 

 

 

72

 

 

 

 

 

 

108

 

Operating income/(loss)

 

 

(3

)

 

 

 

 

 

436

 

 

 

263

 

 

 

 

 

 

696

 

Interest income

 

 

1

 

 

 

486

 

 

 

28

 

 

 

5

 

 

 

(514

)

 

 

6

 

Interest expense

 

 

 

 

 

(276

)

 

 

(504

)

 

 

(29

)

 

 

514

 

 

 

(295

)

Foreign currency exchange transaction gains/(losses),

   net

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

(12

)

Other income/(expense), net

 

 

 

 

 

(7

)

 

 

103

 

 

 

(99

)

 

 

 

 

 

(3

)

Income/(loss) from continuing operations before

   income taxes and equity in net income/(loss) of

   subsidiaries and affiliates

 

 

(2

)

 

 

203

 

 

 

63

 

 

 

128

 

 

 

 

 

 

392

 

Benefit/(provision) for income taxes

 

 

 

 

 

(43

)

 

 

(29

)

 

 

(70

)

 

 

 

 

 

(142

)

Equity in net income/(loss) of subsidiaries

 

 

242

 

 

 

132

 

 

 

208

 

 

 

 

 

 

(582

)

 

 

 

Equity in net income/(loss) of affiliates

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Net income/(loss)

 

 

240

 

 

 

292

 

 

 

242

 

 

 

57

 

 

 

(582

)

 

 

249

 

Less net income/(loss) attributable to noncontrolling

   interests

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Net income/(loss) attributable to controlling interest

 

 

240

 

 

 

292

 

 

 

242

 

 

 

48

 

 

 

(582

)

 

 

240

 

Total other comprehensive income/(loss)

 

 

(70

)

 

 

25

 

 

 

(70

)

 

 

(98

)

 

 

144

 

 

 

(69

)

Total other comprehensive income/(loss) attributable to

   noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Total other comprehensive income/(loss) attributable

   to controlling interests

 

 

(70

)

 

 

25

 

 

 

(70

)

 

 

(99

)

 

 

144

 

 

 

(70

)

Total comprehensive income/(loss)

 

 

170

 

 

 

317

 

 

 

172

 

 

 

(41

)

 

 

(438

)

 

 

180

 

Comprehensive income/(loss) attributable to

   noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

10

 

Total comprehensive income/(loss) attributable to

   controlling interest

 

$

170

 

 

$

317

 

 

$

172

 

 

$

(51

)

 

$

(438

)

 

$

170

 

 

 

- 33 -


Nielsen Holdings plc

Condensed Consolidated Balance Sheet (Unaudited)

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

 

 

(IN MILLIONS)

 

Parent

 

 

Issuers

 

 

Guarantor

 

 

Guarantor

 

 

Elimination

 

 

Consolidated

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2

 

 

$

 

 

$

19

 

 

$

368

 

 

$

 

 

$

389

 

Trade and other receivables, net

 

 

 

 

 

 

 

 

440

 

 

 

706

 

 

 

 

 

 

1,146

 

Prepaid expenses and other current assets

 

 

3

 

 

 

 

 

 

279

 

 

 

130

 

 

 

 

 

 

412

 

Intercompany receivables

 

 

4

 

 

 

1,632

 

 

 

283

 

 

 

57

 

 

 

(1,976

)

 

 

 

Total current assets

 

 

9

 

 

 

1,632

 

 

 

1,021

 

 

 

1,261

 

 

 

(1,976

)

 

 

1,947

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

 

 

 

 

 

 

266

 

 

 

157

 

 

 

 

 

 

423

 

Operating lease right-of-use asset

 

 

 

 

 

 

 

 

210

 

 

 

215

 

 

 

 

 

 

425

 

Goodwill

 

 

 

 

 

 

 

 

5,102

 

 

 

871

 

 

 

 

 

 

5,973

 

Other intangible assets, net

 

 

 

 

 

 

 

 

4,410

 

 

 

501

 

 

 

 

 

 

4,911

 

Deferred tax assets

 

 

1

 

 

 

 

 

 

 

 

 

321

 

 

 

 

 

 

322

 

Other non-current assets

 

 

 

 

 

 

 

 

272

 

 

 

70

 

 

 

 

 

 

342

 

Equity investment in subsidiaries

 

 

2,120

 

 

 

1,285

 

 

 

3,077

 

 

 

 

 

 

(6,482

)

 

 

 

Intercompany loans

 

 

25

 

 

 

8,838

 

 

 

873

 

 

 

102

 

 

 

(9,838

)

 

 

 

Total assets

 

$

2,155

 

 

$

11,755

 

 

$

15,231

 

 

$

3,498

 

 

$

(18,296

)

 

$

14,343

 

Liabilities and equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and other current liabilities

 

$

 

 

$

102

 

 

$

455

 

 

$

530

 

 

$

 

 

$

1,087

 

Deferred revenues

 

 

 

 

 

 

 

 

190

 

 

$

126

 

 

 

 

 

 

316

 

Income tax liabilities

 

 

 

 

 

 

 

 

28

 

 

$

46

 

 

 

 

 

 

74

 

Current portion of long-term debt, finance lease

   obligations and short-term borrowings

 

 

 

 

 

55

 

 

 

236

 

 

$

7

 

 

 

 

 

 

298

 

Intercompany payables

 

 

 

 

 

5

 

 

 

1,693

 

 

 

278

 

 

 

(1,976

)

 

 

 

Total current liabilities

 

 

 

 

 

162

 

 

 

2,602

 

 

 

987

 

 

 

(1,976

)

 

 

1,775

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt and finance lease obligations

 

 

 

 

 

8,104

 

 

 

74

 

 

 

11

 

 

 

 

 

 

8,189

 

Operating lease liabilities

 

 

 

 

 

 

 

 

228

 

 

 

165

 

 

 

 

 

 

393

 

Deferred tax liabilities

 

 

 

 

 

71

 

 

 

927

 

 

 

70

 

 

 

 

 

 

1,068

 

Intercompany loans

 

 

 

 

 

 

 

 

8,965

 

 

 

873

 

 

 

(9,838

)

 

 

 

Other non-current liabilities

 

 

 

 

 

30

 

 

 

315

 

 

 

220

 

 

 

 

 

 

565

 

Total liabilities

 

 

 

 

 

8,367

 

 

 

13,111

 

 

 

2,326

 

 

 

(11,814

)

 

 

11,990

 

Total stockholders’ equity

 

 

2,155

 

 

 

3,388

 

 

 

2,120

 

 

 

974

 

 

 

(6,482

)

 

 

2,155

 

Noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

198

 

 

 

 

 

 

198

 

Total equity

 

 

2,155

 

 

 

3,388

 

 

 

    2,120

 

 

 

1,172

 

 

 

(6,482

)

 

 

2,353

 

Total liabilities and equity

 

$

2,155

 

 

$

11,755

 

 

$

15,231

 

 

$

3,498

 

 

$

(18,296

)

 

$

14,343

 

- 34 -


Nielsen Holdings plc

Condensed Consolidated Balance Sheet

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

(IN MILLIONS)

 

Parent

 

 

Issuers

 

 

Guarantor

 

 

Guarantor

 

 

Elimination

 

 

Consolidated

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3

 

 

$

 

 

$

79

 

 

$

442

 

 

$

 

 

$

524

 

Trade and other receivables, net

 

 

 

 

 

1

 

 

 

377

 

 

 

740

 

 

 

 

 

 

1,118

 

Prepaid expenses and other current assets

 

 

 

 

 

3

 

 

 

234

 

 

 

124

 

 

 

 

 

 

361

 

Intercompany receivables

 

 

3

 

 

 

1,310

 

 

 

399

 

 

 

94

 

 

 

(1,806

)

 

 

 

Total current assets

 

 

6

 

 

 

1,314

 

 

 

1,089

 

 

 

1,400

 

 

 

(1,806

)

 

 

2,003

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

 

 

 

 

 

 

303

 

 

 

165

 

 

 

 

 

 

468

 

Goodwill

 

 

 

 

 

 

 

 

5,531

 

 

 

1,456

 

 

 

 

 

 

6,987

 

Other intangible assets, net

 

 

 

 

 

 

 

 

4,545

 

 

 

479

 

 

 

 

 

 

5,024

 

Deferred tax assets

 

 

1

 

 

 

 

 

 

 

 

 

332

 

 

 

 

 

 

333

 

Other non-current assets

 

 

 

 

 

19

 

 

 

273

 

 

 

72

 

 

 

 

 

 

364

 

Equity investment in subsidiaries

 

 

2,815

 

 

 

1,232

 

 

 

1,936

 

 

 

 

 

 

(5,983

)

 

 

 

Intercompany loans

 

 

25

 

 

 

8,822

 

 

 

2,220

 

 

 

105

 

 

 

(11,172

)

 

 

 

Total assets

 

$

2,847

 

 

$

11,387

 

 

$

15,897

 

 

$

4,009

 

 

$

(18,961

)

 

$

15,179

 

Liabilities and equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and other current liabilities

 

$

 

 

$

62

 

 

$

541

 

 

$

516

 

 

$

 

 

$

1,119

 

Deferred revenues

 

 

 

 

 

 

 

 

225

 

 

 

130

 

 

 

 

 

 

355

 

Income tax liabilities

 

 

 

 

 

 

 

 

20

 

 

 

56

 

 

 

 

 

 

76

 

Current portion of long-term debt, finance lease obligations and short-term borrowings

 

 

 

 

 

54

 

 

 

46

 

 

 

7

 

 

 

 

 

 

107

 

Intercompany payables

 

 

 

 

 

 

 

 

1,408

 

 

 

398

 

 

 

(1,806

)

 

 

 

Total current liabilities

 

 

 

 

 

116

 

 

 

2,240

 

 

 

1,107

 

 

 

(1,806

)

 

 

1,657

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt and finance lease obligations

 

 

 

 

 

8,170

 

 

 

95

 

 

 

15

 

 

 

 

 

 

8,280

 

Deferred tax liabilities

 

 

 

 

 

71

 

 

 

956

 

 

 

81

 

 

 

 

 

 

1,108

 

Intercompany loans

 

 

 

 

 

 

 

 

8,952

 

 

 

2,220

 

 

 

(11,172

)

 

 

 

Other non-current liabilities

 

 

 

 

 

3

 

 

 

839

 

 

 

249

 

 

 

 

 

 

1,091

 

Total liabilities

 

 

 

 

 

8,360

 

 

 

13,082

 

 

 

3,672

 

 

 

(12,978

)

 

 

12,136

 

Total shareholders’ equity

 

 

2,847

 

 

 

3,027

 

 

 

2,815

 

 

 

141

 

 

 

(5,983

)

 

 

2,847

 

Noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

196

 

 

 

 

 

 

196

 

Total equity

 

 

2,847

 

 

 

3,027

 

 

 

2,815

 

 

 

337

 

 

 

(5,983

)

 

 

3,043

 

Total liabilities and equity

 

$

2,847

 

 

$

11,387

 

 

$

15,897

 

 

$

4,009

 

 

$

(18,961

)

 

$

15,179

 

 

 

- 35 -


Nielsen Holdings plc

Condensed Consolidated Statement of Cash Flows (Unaudited)

For the nine months ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

 

 

 

(IN MILLIONS)

 

Parent

 

 

Issuers

 

 

Guarantor

 

 

Guarantor

 

 

Consolidated

 

Net cash provided by/(used in) operating activities

 

$

(8

)

 

$

63

 

 

$

257

 

 

$

284

 

 

$

596

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of subsidiaries and affiliates, net of cash acquired

 

 

 

 

 

 

 

 

(11

)

 

 

(51

)

 

 

(62

)

Additions to property, plant and equipment and other assets

 

 

 

 

 

 

 

 

(26

)

 

 

(32

)

 

 

(58

)

Additions to intangible assets

 

 

 

 

 

 

 

 

(229

)

 

 

(55

)

 

 

(284

)

Other investing activities

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Net cash used in investing activities

 

 

 

 

 

 

 

 

(284

)

 

 

(138

)

 

 

(422

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowings under revolving credit facility

 

 

 

 

 

 

 

 

190

 

 

 

 

 

 

190

 

Repayments of debt

 

 

 

 

 

(43

)

 

 

 

 

 

 

 

 

(43

)

Increase/(decrease) in other short-term borrowings

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

(1

)

Cash dividends paid to shareholders

 

 

(373

)

 

 

 

 

 

 

 

 

 

 

 

(373

)

Activity from share-based compensation plans

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Proceeds from employee stock purchase plan

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Finance leases

 

 

 

 

 

 

 

 

(40

)

 

 

(4

)

 

 

(44

)

Settlement of intercompany and other financing activities

 

 

377

 

 

 

(20

)

 

 

(178

)

 

 

(196

)

 

 

(17

)

Net cash provided by/(used in) financing activities

 

 

7

 

 

 

(63

)

 

 

(33

)

 

 

(201

)

 

 

(290

)

Effect of exchange-rate changes on cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

(19

)

 

 

(19

)

Net increase/(decrease) in cash and cash equivalents

 

 

(1

)

 

 

 

 

 

(60

)

 

 

(74

)

 

 

(135

)

Cash and cash equivalents at beginning of period

 

 

3

 

 

 

 

 

 

79

 

 

 

442

 

 

 

524

 

Cash and cash equivalents at end of period

 

$

2

 

 

$

 

 

$

19

 

 

$

368

 

 

$

389

 

 

- 36 -


Nielsen Holdings plc

Condensed Consolidated Statement of Cash Flows (Unaudited)

For the nine months ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

 

 

 

(IN MILLIONS)

 

Parent

 

 

Issuers

 

 

Guarantor

 

 

Guarantor

 

 

Consolidated

 

Net cash provided by/(used in) operating activities

 

$

(2

)

 

$

15

 

 

$

257

 

 

$

242

 

 

$

512

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of subsidiaries and affiliates, net of cash acquired

 

 

 

 

 

 

 

 

(11

)

 

 

(28

)

 

 

(39

)

Additions to property, plant and equipment and other assets

 

 

 

 

 

 

 

 

(34

)

 

 

(32

)

 

 

(66

)

Additions to intangible assets

 

 

 

 

 

 

 

 

(262

)

 

 

(43

)

 

 

(305

)

Proceeds from the sale of property, plant and equipment and

   other assets

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

Other investing activities

 

 

 

 

 

 

 

 

8

 

 

 

(5

)

 

 

3

 

Net cash used in investing activities

 

 

 

 

 

 

 

 

(299

)

 

 

(104

)

 

 

(403

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowings under revolving credit facility

 

 

 

 

 

 

 

 

204

 

 

 

 

 

 

204

 

Repayments of debt

 

 

 

 

 

(804

)

 

 

 

 

 

(1

)

 

 

(805

)

Proceeds from the issuance of debt, net of issuance costs

 

 

 

 

 

781

 

 

 

 

 

 

 

 

 

781

 

Increase in other short-term borrowings

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

Cash dividends paid to stockholders

 

 

(370

)

 

 

 

 

 

 

 

 

 

 

 

(370

)

Repurchase of common stock

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

(70

)

Activity under stock plans

 

 

23

 

 

 

 

 

 

(6

)

 

 

 

 

 

17

 

Proceeds from employee stock purchase plan

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Finance leases

 

 

 

 

 

 

 

 

(55

)

 

 

(5

)

 

 

(60

)

Settlement of intercompany and other financing activities

 

 

416

 

 

 

8

 

 

 

(173

)

 

 

(266

)

 

 

(15

)

Net cash provided by/(used in) financing activities

 

 

3

 

 

 

(15

)

 

 

(30

)

 

 

(271

)

 

 

(313

)

Effect of exchange-rate changes on cash and cash equivalents

 

 

 

 

 

 

 

 

1

 

 

 

(7

)

 

 

(6

)

Net increase/(decrease) in cash and cash equivalents

 

 

1

 

 

 

 

 

 

(71

)

 

 

(140

)

 

 

(210

)

Cash and cash equivalents at beginning of period

 

 

2

 

 

 

1

 

 

 

69

 

 

 

584

 

 

 

656

 

Cash and cash equivalents at end of period

 

$

3

 

 

$

1

 

 

$

(2

)

 

$

444

 

 

$

446

 

 

 

16. Subsequent Events

On November 7, 2019, the Company announced the completion of its strategic review and its plan to spin-off the Company’s Global Connect business, creating two independent, publicly traded companies- the Global Media business and the Global Connect business. The proposed spin-off is subject to certain conditions, including, among others, the receipt of final Board of Directors approval, receipt of an opinion from counsel and/or ruling regarding the U.S. federal income tax treatment of the distribution, the effectiveness of a Form 10 registration statement to be filed with the Securities and Exchange Commission, the approval of the Company’s shareholders and works council consultations.

 

 

 

 

- 37 -


Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion and analysis supplements management’s discussion and analysis of Nielsen Holdings plc (“the Company” or “Nielsen”) for the year ended December 31, 2018 as contained in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (“SEC”) on February 28, 2019, and presumes that readers have read or have access to such discussion and analysis. The following discussion and analysis should also be read together with the accompanying Condensed Consolidated Financial Statements and related notes thereto. Further, this report may contain material that includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, Nielsen’s current views with respect to current events and financial performance. Statements, other than those based on historical facts, which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements. Such forward-looking statements are subject to many risks, uncertainties and factors relating to Nielsen’s operations and business environment that may cause actual results to be materially different from any future results, express or implied, by such forward-looking statements, including but not limited to, those set forth in this Item 2 and Part II, Item 1A, if any, and those noted in our 2018 Annual Report on Form 10-K under “Risk Factors.” Forward-looking statements speak only as of the date of this report or as of the date they were made. We disclaim any intention to update the current expectations or forward-looking statements contained in this report. Unless required by context, references to “we,” “us,” and “our” refer to Nielsen Holdings plc and each of its consolidated subsidiaries unless otherwise stated or indicated by context.

From time to time, Nielsen may use its website and social media outlets as channels of distribution of material company information. Financial and other material information regarding the company is routinely posted and accessible on our website at http://www.nielsen.com/investors and our Twitter account at http://twitter.com/nielsen.

Background and Executive Summary

We are a leading global measurement and data analytics company that provides clients with a comprehensive understanding of consumers and consumer behavior. Our approach marries our proprietary data with other data sources to help clients around the world understand what's happening now, what's happening next, and how to best act on this knowledge. For more than 90 years we have provided data and analytics based on scientific rigor and innovation, continually developing new ways to answer the most important questions facing the media, advertising, retail and fast-moving consumer goods industries. We have a presence in more than 100 countries, including many emerging markets, and hold leading market positions in many of our services and geographies.

 

We believe that important measures of our results of operations include revenue, operating income/(loss) and Adjusted EBITDA (defined below). Our long-term financial objectives include consistent revenue growth and expanding operating margins. Accordingly, we are focused on geographic market and service offering expansion to drive revenue growth and improve operating efficiencies, including effective resource utilization, information technology leverage and overhead cost management.

Our business strategy is built upon a model that has traditionally yielded consistent revenue performance. Typically, before the start of each year, more than 70% of our annual revenue has been committed under contracts in our combined Nielsen Global Connect (“Connect”) and Nielsen Global Media (“Media”) segments, which provides us with a greater degree of stability for our revenue and allows us to more effectively manage our profitability and cash flows. See “Business Segment Overview” below for further discussion. We continue to look for growth opportunities through global expansion, specifically within emerging markets, as well as through the cross-platform expansion of our analytical services and measurement services.

On November 3, 2019, our Board of Directors completed its strategic review and approved a plan to spin-off our Global Connect business, creating two independent, publicly traded companies - the Global Media business and the Global Connect business - each of which will have sharper strategic focus and greater opportunity to leverage its unique competitive advantages. The strategic review was led by James Attwood, who had taken on the role of Executive Chairman of the Board. With the strategic review concluded, he will return to his role as Chairman of the Board.

Our restructuring and other productivity initiatives have been focused on a combination of improving operating leverage through targeted cost-reduction programs, business process improvements and portfolio restructuring actions, while at the same time investing in key programs to enhance future growth opportunities.

Achieving our business objectives requires us to manage a number of key risk areas. Our growth objective of geographic market and service expansion requires us to maintain the consistency and integrity of our information and underlying processes on a global scale, and to invest effectively our capital in technology and infrastructure to keep pace with our clients’ demands and our competitors. Core to managing these key risk areas is our commitment to data privacy and security as it drives our ability to deliver quality insights for our clients in line with evolving regulatory requirements and governing standards across all the geographies and industries in which we operate. Our operating footprint across more than 100 countries requires disciplined global and local resource

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management of internal and third party providers to ensure success. In addition, our high level of indebtedness requires active management of our debt profile, with a focus on underlying maturities, interest rate risk, liquidity and operating cash flows.

Business Segment Overview

Prior to February 2019, we were aligned into two reporting segments: what consumers buy (“Buy”) and what consumers read, watch and listen to (“Watch”). In February 2019, we realigned our business segments from Buy and Watch to Connect and Media. Each segment operates as a complete unit—from the conception of a product, through the collection of the data, into the technology and operations, all the way to the data being sold and delivered to the client. Our Connect and Media segments are built on a foundation of proprietary data assets that are designed to yield essential insights for our clients to successfully measure, analyze and grow their businesses. Our segments each consist of two categories: Measure and Predict / Activate in Connect and Audience Measurement and Plan / Optimize in Media.  These categories are based on our core measurement platforms in both Connect and Media, while Predict / Activate and Plan / Optimize are designed to build on our measurement capabilities to enhance client decision-making. These changes better align our external view to our go-forward internal view. Our reportable segments are stated on the new basis and such changes were retrospectively applied. The impact of these changes did not have a material impact on our condensed consolidated financial statements or segment results.

Our Connect segment provides measurement services, which include our core tracking and scan data (primarily transactional measurement data and consumer behavior information), and analytical services to businesses in the consumer packaged goods industry. Our services also enable our clients to better manage their brands, uncover new sources of demand, launch and grow new products, analyze their sales and establish more effective consumer relationships. Our data is used by our clients to measure their market share, tracking billions of sales transactions per month in retail outlets around the world. Our extensive database of retail and consumer information, combined with our advanced analytical capabilities, helps generate strategic insights that influence our clients’ key business decisions.

Our Media segment provides viewership and listening data and analytics primarily to the media and advertising industries for television, radio, digital and mobile viewing and listening platforms. Our Media data is used by our media clients to understand their audiences, establish the value of their advertising inventory and maximize the value of their content, and by our advertising clients to plan and optimize their spending.

Certain corporate costs, including those related to selling, finance, legal, human resources, and information technology systems, are considered operating costs and are allocated to our segments based on either the actual amount of costs incurred or on a basis consistent with the operations of the underlying segment.

Critical Accounting Policies

Our accounting policies are set forth in Note 1 to Consolidated Financial Statements contained in the Company’s 2018 Annual Report on Form 10-K. We include herein certain updates to those policies.

Leases

 

Effective January 1, 2019, we adopted the new lease accounting standard using the transition method approved by the FASB on July 30, 2018, which allows companies to apply the provisions of the new leasing standard as of January 1, 2019, without adjusting the comparative periods presented. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of this standard resulted in the recording of net operating lease right-of-use (“ROU”) assets of $0.5 billion (amount is net of lease incentives and ASC 420 cease-use liabilities) and corresponding operating lease liabilities of $0.6 billion. Financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance.

 

All significant lease arrangements are generally recognized at lease commencement. Operating lease ROU assets and lease liabilities are recognized at commencement. ROU assets represent our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments related to initial direct cost and prepayments and excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for together.

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Factors Affecting Our Financial Results

Acquisitions and Investments in Affiliates

 

Acquisitions

For the nine months ended September 30, 2019, we paid cash consideration of $62 million associated with current period acquisitions, net of cash acquired. Had these 2019 acquisitions occurred as of January 1, 2019, the impact on our consolidated results of operations would not have been material.

For the nine months ended September 30, 2018, we paid cash consideration of $39 million associated with both current period and previously executed acquisitions, net of cash acquired. Had these 2018 acquisitions occurred as of January 1, 2018, the impact on our consolidated results of operations would not have been material.

Foreign Currency

Our financial results are reported in U.S. dollars and are therefore subject to the impact of movements in exchange rates on the translation of the financial information of individual businesses whose functional currencies are other than U.S. dollars. Our principal foreign exchange revenue exposure is spread across several currencies, primarily the Euro. The table below sets forth the profile of our revenue by principal currency.

 

 

Nine Months Ended
September 30,

 

 

2019

 

 

2018

 

U.S. Dollar

 

58

%

 

 

57

Euro

 

10

%

 

 

11

Other Currencies

 

32

%

 

 

32

Total

 

100

%

 

 

100

 

Fluctuations in the value of foreign currencies relative to the U.S. dollar impact our operating results. Impacts associated with fluctuations in foreign currency are discussed in more detail under “Item 3.—Quantitative and Qualitative Disclosures about Market Risk.” In countries with currencies other than the U.S. dollar, assets and liabilities are translated into U.S. dollars using end-of-period exchange rates while; revenues, expenses and cash flows are translated using average rates of exchange. The average U.S. dollar to Euro exchange rate was $1.12 to €1.00 and $1.19 to €1.00 for the nine months ended September 30, 2019 and 2018, respectively. Constant currency growth rates used in the following discussion of results of operations eliminate the impact of year-over-year foreign currency fluctuations.

We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation is a non-GAAP financial measure, which excludes the impact of period-over-period fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates our performance. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period foreign currency exchange rates and comparing these adjusted amounts to our current period reported results. This calculation may differ from similarly-titled measures used by others.  In addition, the constant currency presentation is not meant to be a substitution for recorded amounts presented in conformity with GAAP nor should such amounts be considered in isolation.

Operations in Argentina

We have operations in both the Connect and Media segments in Argentina and the functional currency for those operations is the Argentine Peso. In accordance with U.S. GAAP, Argentina’s currency has been considered hyperinflationary since July 1, 2018, and, accordingly, local currency transactions have been denominated in U.S. dollars since July 1, 2018, and will continue to be denominated in U.S. dollars until Argentina’s currency is no longer deemed to be hyperinflationary. We will continue to assess the appropriate conversion rate based on events in Argentina and our Argentina operations. This event has had an immaterial impact on our condensed consolidated financial statements.

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Results of Operations – Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018

The following table sets forth, for the periods indicated, the amounts included in our Condensed Consolidated Statements of Operations:

 

 

  

Three Months Ended
September 30,

 

(IN MILLIONS)

  

2019

 

 

2018

 

Revenues

  

$

1,616

 

 

$

1,600

 

Cost of revenues, exclusive of depreciation and amortization shown separately below

  

 

694

 

 

 

681

 

Selling, general and administrative expenses, exclusive of depreciation and amortization shown separately below

  

 

467

 

 

 

464

 

Depreciation and amortization

  

 

186

 

 

 

175

 

Impairment of goodwill and other long-lived assets

 

 

1,004

 

 

 

 

Restructuring charges

  

 

5

 

 

 

19

 

Operating income/(loss)

  

 

(740

)

 

 

261

 

Interest income

  

 

1

 

 

 

2

 

Interest expense

  

 

(100

)

 

 

(99

)

Foreign currency exchange transaction gains/(losses), net

  

 

(6

)

 

 

(8

)

Other income/(expense), net

 

 

(3

)

 

 

1

 

Income/(loss) from continuing operations before income taxes

  

 

(848

)

 

 

157

 

Benefit/(provision) for income taxes

  

 

380

 

 

 

(59

)

Net income/(loss)

  

 

(468

)

 

 

98

 

Net income/(loss) attributable to noncontrolling interests

 

 

4

 

 

 

2

 

Net income/(loss) attributable to Nielsen shareholders

 

$

(472

)

 

$

96

 

 

Net Income/(Loss) to Adjusted EBITDA Reconciliation

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, share-based compensation expense and other non-operating items from our consolidated statements of operations as well as certain other items considered outside the normal course of our operations specifically described below.

Restructuring charges: We exclude restructuring expenses, which primarily include employee severance, office consolidation and contract termination charges, from our Adjusted EBITDA to allow more accurate comparisons of the financial results to historical operations and forward-looking guidance. By excluding these expenses from our non-GAAP measures, we are better able to evaluate our ability to utilize our existing assets and estimate the long-term value these assets will generate for us. Furthermore, we believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.

Impairment of goodwill and other long-lived assets: We exclude the impact of charges related to the impairment of goodwill and other long-lived assets. We believe that the exclusion of these impairments, which are non-cash, allows for meaningful comparisons of operating results to peer companies. We believe that this increases period-to-period comparability and is useful to evaluate the performance of the total company.

Share-based compensation expense: We exclude the impact of costs relating to share-based compensation. Due to the subjective assumptions and a variety of award types, we believe that the exclusion of share-based compensation expense, which is typically non-cash, allows for more meaningful comparisons of our operating results to peer companies. Share-based compensation expense can vary significantly based on the timing, size and nature of awards granted.

Other non-operating income/(expense), net: We exclude foreign currency exchange transaction gains and losses, primarily related to intercompany financing arrangements, as well as other non-operating income and expense items, such as gains and losses recorded on business combinations or dispositions, sales of investments, net income/(loss) attributable to noncontrolling interests and early redemption payments made in connection with debt refinancing. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.

Other items: To measure operating performance, we exclude certain expenses and gains that arise outside the ordinary course of our operations. Such costs primarily include legal settlements, acquisition related expenses, business optimization costs and other transactional costs. We believe that the exclusion of such amounts allows management and the users of the financial statements to better understand our financial results.

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Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA 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. Adjusted EBITDA margin is Adjusted EBITDA for a particular period expressed as a percentage of revenues for that period.

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. In addition to Adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance.

Adjusted EBITDA should not be considered as an alternative to net income or loss, operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. In addition, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies and may, therefore, have limitations as a comparative analytical tool.

The below table presents a reconciliation from net income to Adjusted EBITDA for the three months ended September 30, 2019 and 2018:

 

 

 

Three Months Ended
September 30,

 

(IN MILLIONS)

 

2019

 

 

2018

 

Net income/(loss) attributable to Nielsen shareholders

 

$

(472

)

 

$

96

 

Interest expense, net

 

 

99

 

 

 

97

 

(Benefit)/provision for income taxes

 

 

(380

)

 

 

59

 

Depreciation and amortization

 

 

186

 

 

 

175

 

EBITDA

 

 

(567

)

 

 

427

 

Other non-operating (income)/expense, net

 

 

13

 

 

 

9

 

Restructuring charges

 

 

5

 

 

 

19

 

Impairment of goodwill and other long-lived assets

 

 

1,004

 

 

 

 

Share-based compensation expense

 

 

13

 

 

 

1

 

Other items(a)

 

 

8

 

 

 

15

 

Adjusted EBITDA

 

$

476

 

 

$

471

 

 

(a)

Other items primarily consist of business optimization costs, including strategic review costs, for the three months ended September 30, 2019.  Other items primarily consists of business optimization costs and transaction related costs for the three months ended September 30, 2018.

Consolidated Results for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018

Revenues

Revenues increased 1.0% to $1,616 million for the three months ended September 30, 2019 from $1,600 million for the three months ended September 30, 2018, or an increase of 2.4% on a constant currency basis. Revenues within our Connect segment decreased 2.2%, or were flat on a constant currency basis. Revenues within our Media segment increased 3.9%, or an increase of 4.6% on a constant currency basis. Refer to the “Business Segment Results for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018” section for further discussion of our revenue performance.

Cost of Revenues, Exclusive of Depreciation and Amortization

Cost of revenues increased 1.9% to $694 million for the three months ended September 30, 2019 from $681 million for the three months ended September 30, 2018, or an increase of 3.4% on a constant currency basis.

Costs within our Connect segment decreased 1.8%, or an increase of 0.3% on a constant currency basis.  The increase in cost of revenues for the three months ended September 30, 2019 as compared to the three months ended September 30, 2018 was primarily due to increases in retailer costs, partially offset by our productivity initiatives.

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Costs within our Media segment increased 7.9%, or an increase of 8.7% on a constant currency basis.  Cost of revenues increased primarily due to the impact of our investments and higher spending on product portfolio management initiatives, partially offset by productivity initiatives.

Selling, General and Administrative Expenses, Exclusive of Depreciation and Amortization

Selling, general and administrative expenses increased 0.6% to $467 million for the three months ended September 30, 2019 from $464 million for the three months ended September 30, 2018, or an increase of 2.6% on a constant currency basis.

Costs within our Connect segment decreased 2.7%, or a decrease of 0.4% on a constant currency basis. Selling, general and administrative expenses decreased on a constant currency basis primarily due to our productivity initiatives, partially offset by our continued investments in our services.

Costs within our Media segment increased 3.8%, or an increase of 4.9% on a constant currency basis. Selling, general and administrative expenses increased primarily due to the impact of our investments.  

Depreciation and Amortization

Depreciation and amortization expense was $186 million for the three months ended September 30, 2019, as compared to $175 million for the three months ended September 30, 2018. This increase was primarily due to higher depreciation and amortization expense associated with capital expenditures, partially offset by lower depreciation and amortization expense associated with assets acquired in business combinations.

Depreciation and amortization expense associated with tangible and intangible assets acquired in business combinations was $49 million for the three months ended September 30, 2019, as compared to $55 million for the three months ended September 30, 2018.

Impairment of Goodwill and other Long-Lived Assets

We recorded a non-cash impairment of goodwill and other long-lived assets charge of $1,004 million for the three months ended September 30, 2019. This charge was recorded within our Connect reporting unit.

Restructuring Charges

We recorded $5 million and $19 million in restructuring charges for the three months ended September 30, 2019 and 2018, respectively, primarily relating to employee severance costs associated with our plans to reduce selling, general and administrative expenses as well as automation initiatives.

Operating Income

Operating loss for the three months ended September 30, 2019 was $(740) million as compared to operating income of $261 million for the three months ended September 30, 2018. Operating loss within our Connect segment was $964 million for the three months ended September 30, 2019 as compared to operating income of $36 million for the three months ended September 30, 2018. Operating income within our Media segment was $250 million for the three months ended September 30, 2019 as compared to $253 million for the three months ended September 30, 2018. Corporate operating expenses were $26 million for the three months ended September 30, 2019 as compared to $28 million for the three months ended September 30, 2018. Refer to the “Business Segment Results for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018” section for further discussion of our operating income.

Interest Expense

Interest expense was $100 million for the three months ended September 30, 2019, as compared to $99 million for the three months ended September 30, 2018.

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Foreign Currency Exchange Transaction Gains/(Losses), Net

Foreign currency exchange transaction losses, net, primarily represent the net loss on revaluation of intercompany loans and other receivables and payables denominated in currencies other than the respective entity’s functional currency. Fluctuations in the value of foreign currencies relative to the U.S. Dollar, primarily the Euro, have a significant effect on our operating results. The average U.S. Dollar to Euro exchange rate was $1.11 to €1.00 for the three months ended September 30, 2019 as compared to $1.16 to €1.00 for the three months ended September 30, 2018.

We realized net losses of $6 million and $8 million for the three months ended September 30, 2019 and 2018, respectively, resulting primarily from fluctuations in certain foreign currencies associated with intercompany transactions.

Other Income/(Expense), Net

Other expense, net of $3 million for the three months ended September 30, 2019, was primarily related to the loss on a consolidated business classified as held for sale, partially offset by certain non-service related pension transactions.

Other income, net of $1 million for the three months ended September 30, 2018, was primarily related to certain non-service related pension transactions.

Income Taxes

The effective tax rates for the three months ended September 30, 2019 and 2018 were a benefit of 45% and an expense of 38%, respectively. The tax rate for the three months ended September 30, 2019 was lower than the statutory rate as a result of the release of certain tax contingencies and the favorable impact of certain financing activities, partially offset by the unfavorable impact of goodwill impairment and the impact of tax rate differences in other jurisdictions where we file tax returns. The tax rate for the three months ended September 30, 2018 was higher than the statutory rate as a result of the impact of tax rate differences in other jurisdictions where we file tax returns, partially offset by the favorable impact of certain financing activities. The principal reason for the decrease in the third quarter effective tax rate in 2019 when compared to 2018 was due to the release of certain tax contingencies.

The estimated liability for unrecognized tax benefits as of December 31, 2018 was $572 million. We have concluded a number of audits in multiple jurisdictions throughout the year. Various statutes of limitation have also expired. This has resulted in a decrease of $421 million in these liabilities in the third quarter of 2019 for a total decrease of $476 million in these liabilities throughout 2019 with a corresponding reduction in our effective tax rate for the respective periods.

Adjusted EBITDA

Adjusted EBITDA increased 1.1% to $476 million for the three months ended September 30, 2019 from $471 million for the three months ended September 30, 2018, an increase of 1.7% on a constant currency basis. See “Results of Operations – Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018” for the reconciliation of net income/(loss) to Adjusted EBITDA.

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Business Segment Results for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018

Revenues

The table below sets forth our segment revenue performance data for the three months ended September 30, 2019 compared to the three months ended September 30, 2018, both on an as-reported and constant currency basis.

 

(IN MILLIONS)

 

Three Months

Ended
September 30,
2019

 

 

Three Months

Ended
September 30,
2018

 

 

% Variance
2019 vs. 2018
Reported

 

 

Three Months

Ended
September 30,
2018
Constant
Currency

 

 

% Variance
2019 vs. 2018
Constant 

Currency

 

Measure

 

$

530

 

 

$

545

 

 

 

(2.8

)%

 

$

532

 

 

 

(0.4

)%

Predict/Activate

 

 

216

 

 

 

218

 

 

 

(0.9

)%

 

 

214

 

 

 

0.9

%

Connect Segment

 

$

746

 

 

$

763

 

 

 

(2.2

)%

 

$

746

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audience Measurement

 

$

621

 

 

 

596

 

 

 

4.2

%

 

$

593

 

 

 

4.7

%

Plan/Optimize

 

 

249

 

 

 

241

 

 

 

3.3

%

 

 

239

 

 

 

4.2

%

Media Segment

 

$

870

 

 

$

837

 

 

 

3.9

%

 

$

832

 

 

 

4.6

%

Total

 

$

1,616

 

 

$

1,600

 

 

 

1.0

%

 

$

1,578

 

 

 

2.4

%

 

Connect Segment Revenues

Revenues decreased 2.2% to $746 million for the three months ended September 30, 2019 from $763 million for the three months ended September 30, 2018, or were flat on a constant currency basis. Revenues from Measure decreased 2.8% to $530 million, or a decrease of 0.4% on a constant currency basis. Revenues decreased due to declines in Developed Markets, partially offset by stronger performance in retail measurement services and improved trends in the Emerging Markets. Revenues from Predict/Activate decreased 0.9% to $216 million, or an increase of 0.9% on a constant currency basis. Revenues increased on a constant currency basis as a result of an improvement in custom analytics, partially offset by pressure in innovation.

Media Segment Revenues  

Revenues increased 3.9% to $870 million for the three months ended September 30, 2019 from $837 million for the three months ended September 30, 2018, or an increase of 4.6% on a constant currency basis. Revenue growth was primarily driven by growth in Audience Measurement, which increased 4.2%, or an increase of 4.7% on a constant currency basis, primarily due to continued client adoption of our Total Audience Measurement system, partly offset by pressure in local television measurement. Plan/Optimize revenues increased 3.3%, or an increase of 4.2% on a constant currency basis, primarily driven by growth at Gracenote, partially offset by pressure in Telecom.

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Business Segment Profitability

We do not allocate items below operating income/(loss) to our business segments and therefore the tables below set forth a reconciliation of operating income/(loss) at the business segment level for the three months ended September 30, 2019 and 2018, adjusting for certain items affecting operating income/(loss), such as restructuring charges, depreciation and amortization, share-based compensation expense and certain other items described below resulting in a presentation of our non-GAAP business segment profitability. Non-GAAP business segment profitability provides useful supplemental information to management and investors regarding financial and business trends related to our results of operations. When this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with a meaningful understanding of our ongoing operating performance. It is important to note that the non-GAAP business segment profitability corresponds in total to our consolidated Adjusted EBITDA described within our consolidated results of operations above, which our chief operating decision maker and other members of management use 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. These non-GAAP measures should not be considered as an alternative to net income/(loss), operating income/(loss), cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. These non-GAAP measures may differ from similarly titled measures used by others and have important limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

 

THREE MONTHS ENDED SEPTEMBER 30, 2019
(IN MILLIONS)

  

Operating
Income/

(Loss)

 

 

Restructuring

Charges

 

  

Depreciation and

Amortization

 

Impairment of goodwill and other long-lived assets

 

Share-Based
Compensation
Expense

 

  

Other Items (1)

 

  

Non-GAAP
Business Segment
Income/(Loss)

 

Connect

  

$

(964

)

 

$

8

 

  

$

57

 

$

1,004

 

$

4

 

  

$

 

  

$

109

 

Media

  

 

250

 

 

 

1

 

  

 

127

 

 

 

 

3

 

  

 

 

  

 

381

 

Corporate and Eliminations

  

 

(26

)

 

 

(4

)

  

 

2

 

 

 

 

6

 

  

 

8

 

  

 

(14

)

Total Nielsen

  

$

(740

)

 

$

5

 

  

$

186

 

$

1,004

 

$

13

 

  

$

8

 

  

$

476

 

 

THREE MONTHS ENDED SEPTEMBER 30, 2018
(IN MILLIONS)

  

Operating
Income/

(Loss)

 

 

Restructuring

Charges

 

  

Depreciation and

Amortization

 

Impairment of goodwill and other long-lived assets

 

Share-Based
Compensation
Expense

 

  

Other Items (1)

 

  

Non-GAAP
Business Segment
Income/(Loss)

 

Connect

  

$

36

 

 

$

15

 

  

$

57

 

$

 

$

3

 

  

$

 

  

$

111

 

Media

  

 

253

 

 

 

5

 

  

 

115

 

 

 

 

2

 

  

 

 

  

 

375

 

Corporate and Eliminations

  

 

(28

)

 

 

(1

  

 

3

 

 

 

 

(4

  

 

15

 

  

 

(15

)

Total Nielsen

  

$

261

 

 

$

19

 

  

$

175

 

$

 

$

1

 

  

$

15

 

  

$

471

 

 

(1)

Other items primarily consists of business optimization costs, including strategic review costs, and transaction related costs for the three months ended September 30, 2019.  Other items primarily consists of business optimization costs and transaction related costs for the three months ended September 30, 2018.

 

(IN MILLIONS)

  

Three 
Months Ended
September 30,
2019
Reported

 

 

Three 
Months Ended
September 30,
2018
Reported

 

 

% Variance
2019 vs. 2018
Reported

 

 

Three 
Months Ended
September 30, 2018
Constant Currency

 

 

% Variance
2019 vs. 2018
Constant Currency

 

Non-GAAP Business Segment

   Income/(Loss)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Connect

  

$

109

  

 

$

111

  

 

 

(1.8

)% 

 

$

107

  

 

 

1.9

Media

  

 

381

  

 

 

375

  

 

 

1.6

 

 

375

  

 

 

1.6

Corporate and Eliminations

  

 

(14

 

 

(15

 

 

NM

  

 

 

(14

 

 

NM

  

Total Nielsen

  

$

476

  

 

$

471

  

 

 

1.1

 

$

468

  

 

 

1.7

 

- 46 -


Connect Segment Profitability

Operating loss was $964 million for the three months ended September 30, 2019 as compared to operating income of $36 million for the three months ended September 30, 2018. The decrease was primarily driven by the Connect goodwill impairment and the revenue performance mentioned above, partially offset by a decrease in restructuring charges for the three months ended September 30, 2019. Non-GAAP business segment income increased 1.9% on a constant currency basis.

Media Segment Profitability  

Operating income was $250 million for the three months ended September 30, 2019 as compared to $253 million for the three months ended September 30, 2018. The decrease was driven primarily by an increase in depreciation and amortization expense, partially offset by the revenue performance discussed above and a decrease in restructuring charges for the three months ended September 30, 2019. Non-GAAP business segment income increased 1.6% on a constant currency basis.

 

Corporate Expenses and Eliminations

Operating expenses were $26 million for the three months ended September 30, 2019 as compared to $28 million for the three months ended September 30, 2018. The decrease was primarily driven by a decrease in business optimization costs, transaction related costs, restructuring charges and depreciation and amortization expense, partially offset by an increase in share-based compensation expense for the three months ended September 30, 2019.

Results of Operations – Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018

The following table sets forth, for the periods indicated, the amounts included in our Condensed Consolidated Statements of Operations:

 

 

  

Nine Months Ended
September 30,

 

(IN MILLIONS)

  

2019

 

 

2018

 

Revenues

  

$

4,807

 

 

$

4,857

 

Cost of revenues, exclusive of depreciation and amortization shown separately below

  

 

2,088

 

 

 

2,098

 

Selling, general and administrative expenses, exclusive of depreciation and amortization shown separately below

  

 

1,430

 

 

 

1,451

 

Depreciation and amortization

  

 

550

 

 

 

504

 

Impairment of goodwill and other long-lived assets

 

 

1,004

 

 

 

 

Restructuring charges

  

 

52

 

 

 

108

 

Operating income/(loss)

  

 

(317

)

 

 

696

 

Interest income

  

 

4

 

 

 

6

 

Interest expense

  

 

(299

)

 

 

(295

)

Foreign currency exchange transaction gains/(losses), net

  

 

(10

)

 

 

(12

)

Other income/(expense), net

 

 

2

 

 

 

(3

)

Income/(loss) from continuing operations before income taxes and equity in net income/(loss) of affiliates

  

 

(620

)

 

 

392

 

Benefit/(provision) for income taxes

  

 

325

 

 

 

(142

)

Equity in net income/(loss) of affiliates

 

 

 

 

 

(1

)

Net income/(loss)

  

 

(295

)

 

 

249

 

Net income/(loss) attributable to noncontrolling interests

 

 

11

 

 

 

9

 

Net income/(loss) attributable to Nielsen shareholders

 

$

(306

)

 

$

240

 

 

- 47 -


Net Income/(Loss) to Adjusted EBITDA Reconciliation

The below table presents a reconciliation from net income/(loss) to Adjusted EBITDA for the nine months ended September 30, 2019 and 2018:

 

 

 

Nine Months Ended
September 30,

 

(IN MILLIONS)

 

2019

 

 

2018

 

Net income/(loss) attributable to Nielsen shareholders

 

$

(306

)

 

$

240

 

Interest expense, net

 

 

295

 

 

 

289

 

(Benefit)/provision for income taxes

 

 

(325

)

 

 

142

 

Depreciation and amortization

 

 

550

 

 

 

504

 

EBITDA

 

 

214

 

 

 

1,175

 

Equity in net (income)/loss of affiliate

 

 

 

 

 

1

 

Other non-operating (income)/expense, net

 

 

19

 

 

 

24

 

Restructuring charges

 

 

52

 

 

 

108

 

Impairment of goodwill and other long-lived assets

 

 

1,004

 

 

 

 

Share-based compensation expense

 

 

39

 

 

 

21

 

Other items(a)

 

 

33

 

 

 

33

 

Adjusted EBITDA

 

$

1,361

 

 

$

1,362

 

 

(a)

Other items primarily consists of business optimization costs, including strategic review costs, and transaction related costs for the nine months ended September 30, 2019. Other items primarily consist of transaction related costs and business optimization costs for the nine months ended September 30, 2018.

Consolidated Results for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018

Revenues

Revenues decreased 1.0% to $4,807 million for the nine months ended September 30, 2019 from $4,857 million for the nine months ended September 30, 2018, or an increase of 1.3% on a constant currency basis. Revenues within our Connect segment decreased 4.0%, or a decrease of 0.1% on a constant currency basis. Revenues within our Media segment increased 1.8%, or an increase of 2.7% on a constant currency basis. Refer to the “Business Segment Results for the Nine months Ended September 30, 2019 Compared to the Nine months Ended September 30, 2018” section for further discussion of our revenue performance.

Cost of Revenues, Exclusive of Depreciation and Amortization

Cost of revenues decreased 0.5% to $2,088 million for the nine months ended September 30, 2019 from $2,098 million for the nine months ended September 30, 2018, or an increase of 2.0% on a constant currency basis.

Costs within our Connect segment decreased 3.9%, or a decrease of 0.3% on a constant currency basis, primarily due to our productivity initiatives.

Costs within our Media segment increased 4.4%, or an increase of 5.4% on a constant currency basis, primarily due to the impact of our investments and higher spending on product portfolio management initiatives, partially offset by productivity initiatives.

Selling, General and Administrative Expenses, Exclusive of Depreciation and Amortization

Selling, general and administrative expenses decreased 1.4% to $1,430 million for the nine months ended September 30, 2019 from $1,451 million for the nine months ended September 30, 2018, or an increase of 1.6% on a constant currency basis.

Costs within our Connect segment decreased 4.0%, or an increase of 0.1% on a constant currency basis. Selling, general and administrative expenses increased on a constant currency basis primarily due to our continued global investments in our services.

Costs within our Media segment decreased 0.7%, or an increase of 0.9% on a constant currency basis. Selling, general and administrative expenses increased on a constant currency basis primarily due to the impact of our investments.  

- 48 -


Depreciation and Amortization

Depreciation and amortization expense was $550 million for the nine months ended September 30, 2019 as compared to $504 million for the nine months ended September 30, 2018. This increase was primarily due to higher depreciation and amortization expense associated with capital expenditures, partially offset by lower depreciation and amortization expense associated with assets acquired in business combinations.  

Depreciation and amortization expense associated with tangible and intangible assets acquired in business combinations was $156 million for the nine months ended September 30, 2019 as compared to $167 million for the nine months ended September 30, 2018.

Impairment of Goodwill and other Long-Lived Assets

We recorded a non-cash impairment of goodwill and other long-lived assets charge of $1,004 million for the nine months ended September 30, 2019. This charge was recorded within our Connect reporting unit.

Restructuring Charges

We recorded $52 million and $108 million in restructuring charges primarily relating to employee severance costs associated with our plans to reduce selling, general and administrative expenses as well as automation initiatives for the nine months ended September 30, 2019 and 2018, respectively.

 

Operating Income

Operating loss for the nine months ended September 30, 2019 was $317 million as compared to operating income of $696 million for the nine months ended September 30, 2018. Operating loss within our Connect segment was $920 million for the nine months ended September 30, 2019 as compared to operating income of $51 million for the nine months ended September 30, 2018. Operating income within our Media segment was $701 million for the nine months ended September 30, 2019 as compared to $728 million for the nine months ended September 30, 2018. Corporate operating expenses were $98 million for the nine months ended September 30, 2019 as compared to $83 million for the nine months ended September 30, 2018. Refer to the “Business Segment Results for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018” section for further discussion of our operating income.

Interest Expense

Interest expense was $299 million for the nine months ended September 30, 2019 as compared to $295 million for the nine months ended September 30, 2018. This increase was primarily due to higher USD LIBOR senior secured term loan interest rates without hedged positions.

Foreign Currency Exchange Transaction Gains/(Losses), Net

Foreign currency exchange transaction losses, net, primarily represent the net loss on revaluation of intercompany loans and other receivables and payables denominated in currencies other than the respective entity’s functional currency. Fluctuations in the value of foreign currencies relative to the U.S. Dollar, primarily the Euro, have a significant effect on our operating results. The average U.S. Dollar to Euro exchange rate was $1.12 to €1.00 for the nine months ended September 30, 2019 as compared to $1.19 to €1.00 for the nine months ended September 30, 2018.

We realized net losses of $10 million and $12 million for the nine months ended September 30, 2019 and 2018, resulting primarily from fluctuations in certain foreign currencies associated with intercompany transactions.

Other Income/(Expense), Net

Other income, net of $2 million for the nine months ended September 30, 2019, was primarily related to certain non-service related pension transactions and a gain from the sale of an equity method investment, partially offset by the loss from a consolidated business classified as held for sale.

Other expense, net of $3 million for the nine months ended September 30, 2018, was primarily related to certain costs incurred in connection with the September 2018 debt refinancing as well as the write-off of certain previously capitalized deferred financing fees in conjunction with the refinancing, partially offset by certain non-service related pension transactions.

- 49 -


Income Taxes

The effective tax rates for the nine months ended September 30, 2019 and 2018 were a benefit of 52% and an expense of 36%, respectively. The tax rate for the nine months ended September 30, 2019 was lower than the statutory rate as a result of the release of certain tax contingencies and the favorable impact of certain financing activities, partially offset by the unfavorable impact of goodwill impairment, the impact of tax rate differences in other jurisdictions where we file tax returns, and audit settlements. The tax rate for the nine months ended September 30, 2018 was higher than the statutory rate primarily as a result of the impact of tax rate differences in other jurisdictions where we file tax returns, partially offset by the favorable impact of certain financing activities. The principal reason for the decrease in the effective tax rate in the nine months ended September 30, 2019 when compared to 2018 was due to the release of certain tax contingencies.

Adjusted EBITDA

Adjusted EBITDA decreased 0.1% to $1,361 million for the nine months ended September 30, 2019 from $1,362 million for the nine months ended September 30, 2018, an increase of 1.4% on a constant currency basis. See “Results of Operations – Nine months Ended September 30, 2019 Compared to the Nine months Ended September 30, 2018” for the reconciliation of net income to Adjusted EBITDA.

Business Segment Results for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018

Revenues

The table below sets forth our segment revenue performance data for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, both on an as-reported and constant currency basis.

 

(IN MILLIONS)

 

Nine Months

Ended
September 30,
2019

 

 

Nine Months

Ended
September 30,
2018

 

 

% Variance
2019 vs. 2018
Reported

 

 

Nine Months

Ended
September 30,
2018
Constant
Currency

 

 

% Variance
2019 vs. 2018
Constant 

Currency

 

Measure

 

$

1,615

 

 

$

1,668

 

 

 

(3.2

)%

 

$

1,599

 

 

 

1.0

%

Predict/Activate

 

 

640

 

 

 

681

 

 

 

(6.0

)%

 

 

658

 

 

 

(2.7

)%

Connect Segment

 

$

2,255

 

 

$

2,349

 

 

 

(4.0

)%

 

$

2,257

 

 

 

(0.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audience Measurement

 

$

1,848

 

 

$

1,793

 

 

 

3.1

%

 

$

1,782

 

 

 

3.7

%

Plan/Optimize

 

 

704

 

 

 

715

 

 

 

(1.5

)%

 

 

704

 

 

 

0.0

%

Media Segment

 

$

2,552

 

 

$

2,508

 

 

 

1.8

%

 

$

2,486

 

 

 

2.7

%

Total

 

$

4,807

 

 

$

4,857

 

 

 

(1.0

)%

 

$

4,743

 

 

 

1.3

%

 

Connect Segment Revenues

Revenues decreased 4.0% to $2,255 million for the nine months ended September 30, 2019 from $2,349 million for the nine months ended September 30, 2018, or a decrease of 0.1% on a constant currency basis. Revenues from Measure decreased 3.2% to $1,615 million, or an increase of 1.0% on a constant currency basis. Revenue growth on a constant currency basis was driven by strong performance in our retail measurement services and improved trends in the Emerging Markets. Revenues from Predict/Activate decreased 6.0% to $640 million, or a decrease of 2.7% on a constant currency basis. Revenues decreased as a result of softness in areas such as innovation and custom analytics.

Media Segment Revenues  

Revenues increased 1.8% to $2,552 million for the nine months ended September 30, 2019 from $2,508 million for the nine months ended September 30, 2018, or an increase of 2.7% on a constant currency basis. Revenue growth was primarily driven by growth in Audience Measurement, which increased 3.1%, or an increase of 3.7% on a constant currency basis, primarily due to continued client adoption of our Total Audience Measurement system, partly offset by pressure in local television measurement. Plan/Optimize revenues decreased 1.5%, or were flat on a constant currency basis.

 

- 50 -


Business Segment Profitability

 

NINE MONTHS ENDED   SEPTEMBER 30, 2019
(IN MILLIONS)

  

Operating
Income/

(Loss)

 

 

Restructuring

Charges

 

  

Depreciation and

Amortization

 

Impairment of

goodwill and

other long-lived

assets

 

 

Share-Based
Compensation
Expense

 

  

Other Items (1)

 

  

Non-GAAP
Business Segment
Income/(Loss)

 

Connect

  

$

(920

)

 

$

34

 

  

$

167

 

$

 

1,004

 

 

$

12

 

  

$

 

  

$

297

 

Media

  

 

701

 

 

 

11

 

  

 

378

 

 

 

 

 

9

 

  

 

 

  

 

1,099

 

Corporate and Eliminations

  

 

(98

)

 

 

7

 

  

 

5

 

 

 

 

 

18

 

  

 

33

 

  

 

(35

)

Total Nielsen

  

$

(317

)

 

$

52

 

  

$

550

 

$

1,004

 

 

$

39

 

  

$

33

 

  

$

1,361

 

 

NINE MONTHS ENDED   SEPTEMBER 30, 2018
(IN MILLIONS)

  

Operating
Income/

(Loss)

 

 

Restructuring

Charges

 

  

Depreciation and

Amortization

 

Impairment of

goodwill and

other long-lived

assets

 

 

Share-Based
Compensation
Expense

 

  

Other Items (1)

 

  

Non-GAAP
Business Segment
Income/(Loss)

 

Connect

  

$

51

 

 

$

85

 

  

$

165

 

$

  

  —

 

 

$

10

 

  

$

 

  

$

311

 

Media

  

 

728

 

 

 

19

 

  

 

333

 

 

 

 

 

7

 

  

 

 

  

 

1,087

 

Corporate and Eliminations

  

 

(83

)

 

 

4

 

  

 

6

 

 

 

 

 

4

 

  

 

33

 

  

 

(36

)

Total Nielsen

  

$

696

 

 

$

108

 

  

$

504

 

$

 

 

$

21

 

  

$

33

 

  

$

1,362

 

 

 

(1)

Other Items primarily consists of business optimization costs, including strategic review costs, and transaction related costs for the nine months ended September 30, 2019. Other Items primarily consists of transaction related costs and business optimization costs for the nine months ended September 30, 2018.

 

(IN MILLIONS)

  

Nine 
Months Ended
September 30,
2019
Reported

 

 

Nine 
Months Ended
September 30,
2018
Reported

 

 

% Variance
2019 vs. 2018
Reported

 

 

Nine
Months Ended
September 30, 2018
Constant Currency

 

 

% Variance
2019 vs. 2018
Constant Currency

 

Non-GAAP Business Segment Income/(Loss)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Connect

  

$

297

  

 

$

311

  

 

 

(4.5

)%

 

$

294

  

 

 

1.0

Media

  

 

1,099

  

 

 

1,087

  

 

 

1.1

%

 

 

1,083

  

 

 

1.5

Corporate and Eliminations

  

 

(35

 

 

(36

 

 

NM

  

 

 

(35

 

 

NM

  

Total Nielsen

  

$

1,361

  

 

$

1,362

  

 

 

(0.1

)%

 

$

1,342

  

 

 

1.4

 

Connect Segment Profitability

Operating loss was $920 million for the nine months ended September 30, 2019 as compared to operating income of $51 million for the nine months ended September 30, 2018. The decrease was driven primarily by the Connect goodwill impairment and the revenue performance mentioned above, partially offset by lower restructuring costs for the nine months ended September 30, 2019. Non-GAAP business segment income increased 1.0% on a constant currency basis.

Media Segment Profitability

Operating income was $701 million for the nine months ended September 30, 2019 as compared to $728 million for the nine months ended September 30, 2018. The decrease was driven primarily by higher depreciation and amortization expense, partially offset by the revenue performance discussed above and lower restructuring charges for the nine months ended September 30, 2019. Non-GAAP business segment income increased 1.5% on a constant currency basis.

- 51 -


Corporate Expenses and Eliminations

Operating expenses were $98 million for the nine months ended September 30, 2019 as compared to $83 million for the nine months ended September 30, 2018. The increase was driven primarily by higher share-based compensation expense and higher restructuring charges for the nine months ended September 30, 2019.

Liquidity and Capital Resources

Overview

Cash flows from operations were $596 million for the nine months ended September 30, 2019 as compared to $512 million for the nine months ended September 30, 2018, an increase of $84 million primarily due to lower employee annual incentive payments and lower retailer investments, partially offset by working capital timing and higher income tax and interest payments.

We provide additional liquidity through several sources including maintaining an adequate cash balance, access to global funding sources and a committed revolving credit facility. The following table provides a summary of the major sources of liquidity as of and for the nine months ended September 30, 2019 and 2018:

 

  (IN MILLIONS)

 

Nine 
Months Ended
September 30,
2019

 

 

Nine 
Months Ended
September 30,
2018

 

Net cash from operating activities

 

$

596

 

 

$

512

 

Cash and cash equivalents

 

$

389

 

 

$

446

 

Availability under revolving credit facility

 

$

645

 

 

$

631

 

 

Of the $389 million in cash and cash equivalents, approximately $347 million was held in jurisdictions outside the U.S. and as a result there may be tax consequences if such amounts were moved out of these jurisdictions or repatriated to the U.S. We regularly review the amount of cash and cash equivalents held outside of the U.S. to determine the amounts necessary to fund the current operations of our foreign operations and their growth initiatives and amounts needed to service our U.S. indebtedness and related obligations.

The below table illustrates our weighted average interest rate and cash paid for interest over the nine months ended September 30, 2019 and 2018.

 

 

 

Nine 
Months Ended
September 30,
2019

 

 

Nine
Months Ended
September 30,
2018

 

Weighted average interest rate

 

 

4.52

%

 

 

4.55

%

Cash paid for interest, net of amounts capitalized (in millions)

 

$

250

 

 

$

242

 

 

Our contractual obligations, commitments and debt service requirements over the next several years are significant. We believe we will have available resources to meet both our short-term and long-term liquidity requirements, including our senior secured debt service. We expect the cash flow from our operations, combined with existing cash and amounts available under the revolving credit facility, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, restructuring obligations, dividend payments and capital spending over the next year. In addition, we may, from time to time, purchase, repay, redeem or retire any of our outstanding debt securities (including any publicly issued debt securities) in privately negotiated or open market transactions, by tender offer or otherwise.

Financial Debt Covenants Attributable to The Nielsen Company B.V.

The Fifth Amended and Restated Credit Agreement (the “Amended Credit Agreement”) contains a financial covenant consisting of a maximum leverage ratio applicable to our indirect wholly-owned subsidiary, Nielsen Holding and Finance B.V. and its restricted subsidiaries. The leverage ratio requires that we not permit the ratio of total net debt (as defined in the Amended Credit Agreement) at the end of any calendar quarter to Consolidated EBITDA (as defined in the Amended Credit Agreement) for the four quarters then ended to exceed a specified threshold. The maximum permitted ratio is 5.50 to 1.00.

- 52 -


Failure to comply with this financial covenant would result in an event of default under our Amended Credit Agreement unless waived by our senior credit lenders. An event of default under our Amended Credit Agreement can result in the acceleration of our indebtedness under the facilities, which in turn would result in an event of default and possible acceleration of indebtedness under the agreements governing our debt securities as well. As our failure to comply with the financial covenant described above can cause us to go into default under the agreements governing our indebtedness, management believes that our Amended Credit Agreement and this covenant are material to us. As of September 30, 2019, we were in full compliance with the financial covenant described above.

Revolving Credit Facility

The Amended Credit Agreement contains a senior secured revolving credit facility with aggregate revolving credit commitments of $850 million and a final maturity of July 2023 under which Nielsen Finance LLC, TNC (US) Holdings, Inc., and Nielsen Holding and Finance B.V. can borrow revolving loans. The revolving credit facility can also be used for letters of credit, guarantees and swingline loans.

The senior secured revolving credit facility is provided under the Amended Credit Agreement and so contains covenants and restrictions as noted above with respect to the Amended Credit Agreement. Obligations under the revolving credit facility are guaranteed by the same entities that guarantee obligations under the Amended Credit Agreement.

As of September 30, 2019 and 2018, we had $190 million and $204 million borrowings outstanding and had outstanding letters of credit of $15 million and $15 million, respectively. As of September 30, 2019, we had $645 million available for borrowing under the revolving credit facility.

Dividends and Share Repurchase Program

We remain committed to driving shareholder value as evidenced in 2013 with the adoption of a quarterly cash dividends policy by our Board of Directors (“Board”), under which we have paid $373 million and $370 million in cash dividends during the nine months ended September 30, 2019 and 2018, respectively. On November 3, 2019, the Board approved a plan to reduce the quarterly cash dividend, with the goal of strengthening our balance sheet and providing added flexibility to invest for growth. Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will be subject to the Board’s continuing determination that the dividend policy and the declaration of dividends thereunder are in the best interests of our shareholders, and are in compliance with all laws and agreements to which we are subject. The below table summarizes the dividends declared on our common stock during 2018 and the nine months ended September 30, 2019.

 

  

Declaration Date

 

  

Record Date

 

  

Payment Date

 

  

Dividend Per Share

 

  

 

February 21, 2018

 

 

 

March 7, 2018

 

 

 

March 21, 2018

 

 

$

0.34

  

  

 

April 19, 2018

 

 

 

June 6, 2018

 

 

 

June 20, 2018

 

 

$

0.35

 

  

 

July 19, 2018

 

 

 

August 22, 2018

 

 

 

September 5, 2018

 

 

$

0.35

 

  

 

October 18, 2018

 

 

 

November 21, 2018

 

 

 

December 5, 2018

 

 

$

0.35

 

 

 

February 21, 2019

 

 

 

March 7, 2019

 

 

 

March 21, 2019

 

 

$

0.35

 

 

 

April 18, 2019

 

 

 

June 5, 2019

 

 

 

June 19, 2019

 

 

$

0.35

 

 

 

July 18, 2019

 

 

 

August 22, 2019

 

 

 

September 5, 2019

 

 

$

0.35

 

 

On November 3, 2019, our Board declared a cash dividend of $0.06 per share on our common stock. The dividend is payable on December 5, 2019 to shareholders of record at the close of business on November 21, 2019.

Our Board approved a share repurchase program, as included in the below table, for up to $2 billion of our outstanding common stock. The primary purpose of the program is to return value to shareholders and to mitigate dilution associated with our equity compensation plans.

 

Board Approval

 

Share

Repurchase

Authorization

($ in millions)

July 25, 2013

 

$

500

October 23, 2014

 

$

1,000

December 11, 2015

  

$

500

Total Share Repurchase Authorization

  

$

2,000

 

- 53 -


Repurchases under this program will be made in accordance with applicable securities laws from time to time in the open market or otherwise depending on our evaluation of market conditions and other factors. This program has been executed within the limitations of the authority granted by our shareholders.

As of September 30, 2019, there have been 39,426,521 shares of our common stock purchased at an average price of $44.95 per share (total consideration of approximately $1,772 million) under this program. There were no share repurchases for the nine months ended September 30, 2019.

Cash Flows

Operating activities. Net cash provided by operating activities was $596 million for the nine months ended September 30, 2019, as compared to $512 million for the nine months ended September 30, 2018. This increase was primarily due to lower employee annual incentive payments and lower retailer investments, partially offset by working capital timing and higher income tax and interest payments. Our key collections performance measure, days billing outstanding (DBO), decreased by four days as compared to the same period last year.

Investing activities. Net cash used in investing activities was $422 million for the nine months ended September 30, 2019, as compared to $403 million for the nine months ended September 30, 2018. The primary driver for the increase was higher acquisition payments and the addition of an equity investment, partially offset by lower capital expenditures during the nine months ended September 30, 2019 as compared to the same period for 2018.  

Financing activities. Net cash used in financing activities was $290 million for the nine months ended September 30, 2019 as compared $313 million for the nine months ended September 30, 2018. The decrease in net cash used in financing activities was primarily due to the decrease in share repurchasing, as described in the “Dividends and Share Repurchase Program” partially offset by a decrease in net proceeds from debt issuances and repayments, a decrease in activity from share-based compensation plans and lower net borrowings from the revolving credit facility as compared to the same period for 2018.

Capital Expenditures

Investments in property, plant, equipment, software and other assets totaled $342 million for the nine months ended September 30, 2019 as compared to $371 million for the nine months ended September 30, 2018.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that currently have or are reasonably likely to have a material effect on our consolidated financial condition, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.

 

Summary of Recent Accounting Pronouncements

 

Leases

Effective January 1, 2019, we adopted the new lease accounting standard using the transition method approved by the FASB on July 30, 2018, which allows companies to apply the provisions of the new leasing standard as of January 1, 2019, without adjusting the comparative periods presented. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of this standard resulted in the recording of net operating lease right-of-use (“ROU”) assets of $0.5 billion (amount is net of lease incentives and ASC 420 cease-use liabilities) and corresponding operating lease liabilities of $0.6 billion. Financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance. See Note 5 (“Leases”) for further discussion.

Income taxes

In February 2018, the FASB issued an ASU, “Reclassification of Certain Tax Effects From Accumulated Comprehensive Income”. The new standard gives companies the option to reclassify stranded tax effects caused by the US Tax Cuts and Jobs Act (“TCJA”) from accumulated other comprehensive income (“AOCI”) to retained earnings. The new standard became effective for us on January 1, 2019. We are electing to not reclassify stranded income tax effects of the TCJA from AOCI to retained earnings.

 

- 54 -


Financial Instruments – Credit Losses

 

In June 2016, the FASB issued an ASU, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. We are currently assessing the impact the adoption of this ASU will have on our condensed consolidated financial statements.

 

Commitments and Contingencies

Legal Proceedings and Contingencies

In August 2018, a putative shareholder class action lawsuit was filed in the Southern District of New York, naming as defendants Nielsen, former Chief Executive Officer Dwight Mitchell Barns, and former Chief Financial Officer Jamere Jackson. Another lawsuit, which alleged similar facts but also named other defendants, including former Chief Operating Officer Stephen Hasker, was filed in the Northern District of Illinois in September 2018 and transferred to the Southern District of New York in December 2018. The actions were consolidated on April 22, 2019, and the Public Employees’ Retirement System of Mississippi was appointed lead plaintiff for the putative class. An amended complaint was filed on June 21, 2019, asserting violations of certain provisions of the Securities Exchange Act of 1934, as amended, based on allegedly false and materially misleading statements relating to the outlook of our Buy (now “Connect”) segment, our preparedness for changes in global data privacy laws and our reliance on third-party data. We moved to dismiss the amended complaint on September 6, 2019. A second amended complaint was filed on September 27, 2019. We anticipate filing a renewed motion to dismiss in the coming months. In addition, in January 2019, a shareholder derivative lawsuit was filed in New York Supreme Court against a number of our current and former officers and directors. The derivative lawsuit alleges that the named officers and directors breached their fiduciary duties to us in connection with factual assertions substantially similar to those in the putative class action complaints. The derivative lawsuit further alleges that certain officers and directors engaged in trading our stock based on material, nonpublic information. By agreement dated June 26, 2019, the derivative lawsuit has been stayed pending resolution of our motion to dismiss the aforementioned securities litigation. We intend to defend these lawsuits vigorously. Based on currently available information, we believe that we have meritorious defenses to these actions and that their resolution is not likely to have a material adverse effect on our business, financial position, or results of operations.

We are subject to litigation and other claims in the ordinary course of business, some of which include claims for substantial sums. Accruals have been recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be determined, we expect that the ultimate disposition of these matters will not have a material adverse effect on our operations or financial condition. However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect our future results of operations or cash flows in a particular period.

Other Contractual Obligations

Our other contractual obligations include capital lease obligations (including interest portion), facility leases, leases of certain computer and other equipment, agreements to purchase data and telecommunication services and the payment of principal and interest on debt and pension fund obligations.

Outsourced Services Agreements

In July 2019, we amended our Second Amended and Restated Master Services Agreement (the “MSA”), dated as of October 1, 2017 and effective as of January 1, 2017 (the “Effective Date”), with Tata America International Corporation and Tata Consultancy Services Limited (jointly, “TCS”) by executing Amendment Number One (the “Amendment”) with TCS, dated as of July 1, 2019 and effective as of January 1, 2019 (the “Amendment Effective Date”). The Amendment reduces the amount of services we have committed to purchase from TCS from the Amendment Effective Date through the remaining term of the MSA (the “Minimum Commitment”) to $1.413 billion, including a commitment to purchase at least $275 million in services during 2019, at least $250 million in services during 2020, $184.3 million in services per year from 2021 through 2024, and $137.8 million in services in 2025 (in each of the foregoing cases, the “Annual Commitment”). TCS’s charges under existing and future statements of work (“SOW”) pursuant to the MSA will continue to be credited against the Minimum Commitment and the Annual Commitment and the occurrence of certain events, some of which also provide us with the right to terminate the Agreement or SOWs, as applicable, will continue to be available to reduce the Minimum and Annual Commitment Amounts as they occur. The parties also agreed to certain other commercial terms. However, the other material terms of the MSA as reflected in the MSA and as previously disclosed remain unchanged.

 

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in market rates and market prices such as interest rates, foreign currency exchange rates, and changes in the market value of equity instruments. We are exposed to market risk, primarily related to foreign exchange and interest rates. We actively monitor these exposures. Historically, in order to manage the volatility relating to these exposures, we entered into a variety of derivative financial instruments, mainly interest rate swaps, cross-currency swaps and forward rate agreements. Currently we only employ basic contracts, that is, without options, embedded or otherwise. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings, cash flows and the value of our net investments in subsidiaries resulting from changes in interest rates and foreign currency rates. It is our policy not to trade in financial instruments for speculative purposes.

Foreign Currency Exchange Risk

We operate globally and predominantly generate revenues and expenses in local currencies. Approximately 42% of our revenues and operating costs were generated in currencies other than the U.S. Dollar for the nine months ended September 30, 2019. Because of fluctuations (including possible devaluations) in currency exchange rates or the imposition of limitations on conversion of foreign currencies into our reporting currency, we are subject to currency translation exposure on the profits of our operations, in addition to transaction exposure. Typically, a one cent change in the U.S. Dollar/Euro exchange rate, holding all other currencies constant, will impact revenues by approximately $6 million annually, with an immaterial impact on our profitability.

We recorded a net loss of zero and $1 million for the nine months ended September 30, 2019 and 2018, respectively, associated with foreign currency derivative financial instruments within foreign currency exchange transactions gains/(losses), net in our condensed consolidated statements of operations.  As of September 30, 2019 and December 31, 2018, the notional amounts of outstanding foreign currency derivative financial instruments were $122 million and $76 million, respectively.

The table below details the percentage of revenues and expenses by currency for the nine months ended September 30, 2019:

 

 

U.S. Dollar

 

 

 

Euro

 

 

 

Other Currencies

 

Revenues

58

 

 

10

 

 

32

Operating costs

58

 

 

10

 

 

32

 

Operations in Argentina

 

We have operations in both the Connect and Media segments in Argentina and the functional currency for those operations is the Argentine Peso. In accordance with U.S. GAAP, Argentina’s currency has been considered hyperinflationary since July 1, 2018, and, accordingly, local currency transactions have been denominated in U.S. dollars since July 1, 2018, and will continue to be denominated in U.S. dollars until Argentina’s currency is no longer deemed to be hyperinflationary. We will continue to access the appropriate conversion rate based on events in Argentina and our Argentina operations. This event has had an immaterial impact on our condensed consolidated financial statements.

Interest Rate Risk

We continually review our fixed and variable rate debt along with related hedging opportunities in order to ensure our portfolio is appropriately balanced as part of our overall interest rate risk management strategy. At September 30, 2019, we had $4,139 million in carrying value of floating-rate debt under our senior secured credit facilities of which $2,050 million was subject to effective floating-fixed interest rate swaps. A one percent increase in interest rates applied to our floating rate indebtedness would therefore increase annual interest expense by approximately $21 million ($41 million without giving effect to any of our interest rate swaps).

Derivative instruments involve, to varying degrees, elements of non-performance, or credit risk. We do not believe that we currently face a significant risk of loss in the event of non-performance by the counterparties associated with these instruments, as these transactions were executed with a diversified group of major financial institutions with a minimum investment-grade or better credit rating. Our credit risk exposure is managed through the continuous monitoring of our exposures to such counterparties.

Equity Price Risk

We are not exposed to material equity price risk.

- 56 -


Item 4.

Controls and Procedures

(a)

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the reports that the Company files or submits to the SEC under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2019 (the “Evaluation Date”). Based on such evaluation and subject to the foregoing, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

(b)

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

 

- 57 -


PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

In August 2018, a putative shareholder class action lawsuit was filed in the Southern District of New York, naming as defendants Nielsen, former Chief Executive Officer Dwight Mitchell Barns, and former Chief Financial Officer Jamere Jackson. Another lawsuit, which alleged similar facts but also named other defendants, including former Chief Operating Officer Stephen Hasker, was filed in the Northern District of Illinois in September 2018 and transferred to the Southern District of New York in December 2018. The actions were consolidated on April 22, 2019, and the Public Employees’ Retirement System of Mississippi was appointed lead plaintiff for the putative class. An amended complaint was filed on June 21, 2019, asserting violations of certain provisions of the Securities Exchange Act of 1934, as amended, based on allegedly false and materially misleading statements relating to the outlook of our Buy (now “Connect”) segment, our preparedness for changes in global data privacy laws and our reliance on third-party data. We moved to dismiss the amended complaint on September 6, 2019. A second amended complaint was filed on September 27, 2019. We anticipate filing a renewed motion to dismiss in the coming months. In addition, in January 2019, a shareholder derivative lawsuit was filed in New York Supreme Court against a number of our current and former officers and directors. The derivative lawsuit alleges that the named officers and directors breached their fiduciary duties to us in connection with factual assertions substantially similar to those in the putative class action complaints. The derivative lawsuit further alleges that certain officers and directors engaged in trading our stock based on material, nonpublic information. By agreement dated June 26, 2019, the derivative lawsuit has been stayed pending resolution of our motion to dismiss the aforementioned securities litigation. We intend to defend these lawsuits vigorously. Based on currently available information, we believe that we have meritorious defenses to these actions and that their resolution is not likely to have a material adverse effect on our business, financial position, or results of operations.

We are subject to litigation and other claims in the ordinary course of business, some of which include claims for substantial sums. Accruals have been recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be determined, we do expect that the ultimate disposition of these matters will not have a material adverse effect on our operations or financial condition. However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect our future results of operations or cash flows in a particular period.

 

Item 1A.

Risk Factors

There have been no material changes to our Risk Factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 other than as set forth below, which, along with the Risk Factors previously disclosed, could materially adversely affect our business, financial condition and results of operations. Additional risks and uncertainties that are not presently known to us or that we deem immaterial may also impair our business operations and financial condition.

We have suffered losses due to goodwill impairment charges in the past and could do so in the future.

Goodwill and indefinite-lived intangible assets are subject to annual review for impairment (or more frequently should indications of impairment arise). In addition, other intangible assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. During the third quarter of 2019, we recorded a goodwill impairment charge of approximately $1.0 billion. Subsequent to the recognition of this impairment, we had goodwill and intangible assets of $10,884 million. Any downward revisions in the fair value of our reporting units or our intangible assets could result in impairment charges for goodwill and intangible assets that could materially affect our financial performance.

The proposed separation of Nielsen Global Connect is contingent upon the satisfaction of a number of conditions, may require significant time and attention of our management, and may have a material adverse effect on us whether or not it is completed.

On November 3, 2019, our Board of Directors completed its strategic review and approved a plan to spin-off our Connect business, creating two independent, publicly traded companies. As independent, publicly traded companies, each business will be smaller and less diversified with a narrower business focus and may be more vulnerable to changing market conditions. The proposed spin-off is subject to certain conditions, including, among others, the receipt of final Board of Directors approval, receipt of an opinion from counsel and/or ruling regarding the U.S. federal income tax treatment of the distribution, the effectiveness of a Form 10 registration statement to be filed with the Securities and Exchange Commission, the approval of the Company’s shareholders and works council consultations. These conditions, among other factors, could delay or prevent the completion of the proposed spin-off on the terms or the timeline that we announced, if at all.  We will incur significant expenses in connection with the spin-off. In addition, completion of the proposed spin-off will require significant amounts of management’s time and effort which may divert management’s attention from other aspects of our business operations and other initiatives. We may also experience increased difficulties in attracting, retaining and motivating key employees during the pendency of the separation and following its completion, which could harm our businesses. We may experience negative reactions from the financial markets if we do not complete the spin-off in a reasonable time period. Even if the proposed spin-off is completed, we may not realize some or all of the anticipated benefits from the spin-off and the spin-off may in fact adversely affect our business.

- 58 -


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

Unregistered Sales of Equity Securities

There were no unregistered sales of our common stock for the three months ended September 30, 2019.

Purchases of Equity Securities by the Issuer

There were no share repurchases for the three months ended September 30, 2019.

 

Our Board approved a share repurchase program for up to $2 billion of our outstanding common stock on the dates indicated under Part 1- Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations- Liquidity and Capital Resources- Dividends and Share Repurchase Program.

 

Item 3.

Defaults Upon Senior Securities

Not applicable.

 

Item 4.

Mine Safety Disclosures

Not applicable.

 

Ite5.

Other Information

None.

 

Item 6.

Exhibits

The exhibit index attached hereto is incorporated herein by reference.

- 59 -


EXHIBIT INDEX

The agreements and other documents filed as exhibits to this quarterly report on Form 10-Q are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by the registrant in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

 

Exhibit
Number

  

Description of Exhibits

 

  

 

10.1√

 

 

Amendment Number One, dated as of July 1, 2019 and effective as of January 1, 2019, by and between TATA America International Corporation and TATA Consultancy Services Limited (jointly, “TCS”) and The Nielsen Company (US), LLC (“Nielsen”), to the Second Amended and Restated Master Services Agreement, dated as of January 1, 2017, among TCS and Nielsen (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Nielsen Holdings plc filed on July 31, 2019 (File No. 001-35042)).

 

 

 

 31.1*

 

CEO 302 Certification Pursuant to Rule 13a-15(e)/15d-15(e)

 

 

 

 31.2*

 

CFO 302 Certification Pursuant to Rule 13a-15(e)/15d-15(e)

 

 

 

 32.1*

 

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

 

 

 

101*

 

The following information from Nielsen Holdings plc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL includes: (i) Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2019 and 2018, (ii) Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2019 and 2018, (iii) Condensed Consolidated Balance Sheets at September 30, 2019 (Unaudited) and December 31, 2018, (iv) Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2019 and 2018, (v) Condensed Consolidated Statement of Changes in Equity for the three and nine months ended September 30, 2019 and 2018 (Unaudited), (vi) the Notes to Condensed Consolidated Financial Statements and (vii) the cover page. - the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL and included in Exhibit 101)

 

*

Filed or furnished herewith

Certain identified information has been omitted from this exhibit because it is both (i) not material and (ii) would be      competitively harmful if publicly disclosed.

 

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

- 60 -


SIGNATURES

Pursuant to the requirements 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.

 

 

 

Nielsen Holdings plc
(Registrant)

 

 

 

Date: November 7, 2019

 

/s/ David J. Anderson

  

 

David J. Anderson

Chief Financial Officer

(Duly Authorized Officer and Principal Accounting Officer)

 

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