UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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Nielsen House John Smith Drive Oxford Oxfordshire OX4 2WB United Kingdom |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
Item 2.02. Results of Operations and Financial Condition.
The information under this Item 2.02, including Exhibit 99.1 and Exhibit 99.2 to this Current Report, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.
On April 30, 2020, Nielsen Holdings plc (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2020.
A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
Item 8.01. Other Events.
On April 29, 2020, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with Elliott Management Corporation (“EMC”) and certain of its affiliated funds (together with EMC, “Elliott”). The Cooperation Agreement will remain effective until the close of business on the earlier of (i) the date of the consummation of the separation of the Company’s Global Connect business and (ii) December 31, 2020 (the “Cooperation Period”).
Pursuant to the Cooperation Agreement, the Company agreed to increase the size of its board of directors (the “Board”) and appoint Mr. Jonathan Miller to the Board, in each case as promptly as practicable following the Company’s 2020 Annual General Meeting of Shareholders scheduled for May 12, 2020. The Company expects the appointment of Mr. Miller to be effective in June. The Company also agreed to form a Finance Committee of the Board (the “Finance Committee”), whose responsibilities include reviewing and providing advice on the Company’s strategic, operational, capital and financial plans, including the separation of the Company’s Global Connect business, and the Company’s employee benefit and pension policies, dividend policies, share repurchases and tax strategy and planning. The Finance Committee will be chaired by Mr. James Attwood, and will include Mr. Miller following his appointment to the Board, and three other independent directors selected by the Board.
Pursuant to the Cooperation Agreement, Elliott agreed to cause all of the ordinary shares, €0.07 nominal value per share, of the Company (“Ordinary Shares”) that Elliott or any of its affiliates has the right to vote as of the applicable record date to be voted, during the Cooperation Period, (i) in favor of each director nominated and recommended by the Board for election at the Company’s 2020 Annual General Meeting of Shareholders or, if applicable, any other meeting of shareholders of the Company, (ii) against any shareholder nominations for director that are not approved and recommended by the Board for election, (iii) against any proposals or resolutions to remove any member of the Board and (iv) in accordance with recommendations by the Board on all other proposals or business that may be the subject of shareholder action (except that Elliott and its affiliates may vote in their sole discretion on any proposal related to an Extraordinary Transaction (as defined in the Cooperation Agreement)).
Elliott also agreed to a standstill restricting certain conduct and activities during the Cooperation Period including, among other restrictions, (i) acquiring beneficial ownership of more than 9.9% of the outstanding Ordinary Shares, (ii) calling an extraordinary general meeting, nominating directors to the Board or making other shareholder proposals, or seeking to remove Board members, (iii) engaging in or becoming a participant in any proxy solicitation, (iv) proposing certain Extraordinary Transactions or changes in the Company’s capitalization or corporate structure and (v) engaging in short sales or transacting in certain derivative securities that would result in Elliott ceasing to have a net long position in the Company.
The Cooperation Agreement also includes procedures regarding any replacement for Mr. Miller during the Cooperation Period and a mutual non-disparagement provision.
The foregoing summary of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation Agreement, including the form of Finance Committee charter attached as an exhibit thereto, a copy of which is attached as Exhibit 99.3 and is incorporated herein by reference.
On April 29, 2020, the Company also entered into an Information Sharing Agreement (the “Information Sharing Agreement”) with EMC, pursuant to which EMC has the right during the Cooperation Period, upon EMC’s request and subject to confidentiality obligations, to receive certain information from the Company in connection with any upcoming Company earnings release or other major Company announcement. In connection therewith, EMC also may request meetings with members of the Company’s senior executive team, the Board or the Finance Committee to present its views.
On April 30, 2020, the Company issued a press release announcing Mr. Miller’s planned appointment to the Board, the planned formation of the Finance Committee and the Company’s entry into the Cooperation Agreement and the Information Sharing Agreement. A copy of the press release is attached as Exhibit 99.4 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
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(d) |
Exhibits
* Furnished herewith |
Exhibit No. |
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Description |
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99.1 |
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99.2 |
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Investor Presentation, dated April 30, 2020, entitled “Nielsen: 1st Quarter 2020 Earnings”.* |
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99.3 |
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99.4 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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 hereunto duly authorized.
Date: April 30, 2020
NIELSEN HOLDINGS PLC |
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By: |
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/s/ Linda Zukauckas |
Name: |
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Linda Zukauckas |
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Chief Financial Officer |
Exhibit 99.1
News Release |
Investor Relations: Sara Gubins, +1 646 654 8153
Media Relations: Laura Nelson, +1 203 563 2929
NIELSEN REPORTS 1st QUARTER 2020 RESULTS
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Revenues of $1,559 million decreased 0.3% on a reported basis and increased 1.5% on a constant currency basis |
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Diluted net loss per share of $0.05 and adjusted earnings per share of $0.29 |
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Updated full year 2020 guidance to reflect current estimated impact of COVID-19 |
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Continued progress on positioning Nielsen Global Connect as a standalone public company |
New York, USA – April 30, 2020 – Today, Nielsen Holdings plc (NYSE: NLSN) announced its results for the quarter ended March 31, 2020. The company also updated its 2020 guidance to reflect its most recent expectations, incorporating the estimated impact of COVID-19. Additionally, the Company announced that it remains focused on and committed to the planned separation of Nielsen Global Media and Nielsen Global Connect, with the spin-off transaction now expected to close in early 2021 largely due to temporary shutdowns of government agencies that are necessary to move forward with the separation.
David Kenny, Chief Executive Officer, commented, “During this unprecedented time, our employees have demonstrated tremendous focus, agility and perseverance, partnering closely with clients to provide the measurement and analytics data that is so critical to clients’ businesses. Our teams have moved quickly to innovate around new ways of collecting and delivering data that is essential to our clients. Moving forward, we will leverage these new learnings to drive permanent process improvement and efficiency.”
“Nielsen has a strong and enduring business model, serving the essential media, consumer packaged goods and retail industries, with a high volume of subscription revenue. We delivered solid results in the first quarter, but we saw slowing momentum in Connect as the quarter progressed. This trend continued into April, with increased pressure in both Media and Connect primarily in non-contracted revenue. We quickly implemented cost actions in the first quarter to mitigate the impact, and we are taking additional actions to protect profits and cash flow amidst ongoing economic uncertainty as we plan for a range of scenarios. We remain well-capitalized and are closely managing cash flow and our balance sheet. Our cost actions allow us to continue investing in the key strategic priorities that will drive our long-term growth. We also continue to make progress on operational readiness as we position Media and Connect for success as separate, standalone companies.”
First Quarter 2020 Results
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Revenues were $1,559 million, down 0.3% on a reported basis, or up 1.5% on a constant currency basis, compared to the prior year. |
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Nielsen Global Media revenues increased 1.9% to $842 million on a reported basis, or 2.6% on a constant currency basis, compared to the prior year. |
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Audience Measurement revenues of $615 million increased 1.7% on a reported basis, or 2.2% on a constant currency basis, primarily due to continued client adoption of Total Audience Measurement and growth in audio which was timing driven, partly offset by pressure in local television measurement. |
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Plan/Optimize revenues of $227 million increased 2.7% on a reported basis, or 3.7% on a constant currency basis, compared to the prior year, driven in part by growth in targeting solutions for consumer packaged goods clients and continued growth in Gracenote. |
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Nielsen Global Connect revenues of $717 million decreased 2.7% on a reported basis, or an increase of 0.3% on a constant currency basis, compared to the prior year. |
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Measure revenues of $510 million decreased 5.4% on a reported basis, or 2.3% on a constant currency basis, reflecting the impact of COVID-19 on retail measurement services in markets that are heavy in traditional trade. |
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Predict/Activate revenues of $207 million increased 4.5% on a reported basis, or 7.3% on a constant currency basis, primarily reflecting the January 2020 acquisition of Precima, along with strength in analytics and innovation, partly offset by pressure in custom insights which saw greater pressure due to the COVID-19 pandemic. |
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Net loss for the first quarter was $18 million, compared to net income of $43 million in the first quarter of 2019. Net loss per share on a diluted basis for the first quarter was $0.05, compared to net income per share on a diluted basis of $0.12 for the first quarter of 2019. Net income was impacted by separation-related costs and higher depreciation and amortization expense, partially offset by lower restructuring charges. |
1
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Adjusted EBITDA for the first quarter of $395 million was down 4.8% on a reported basis compared to the prior year, or down 2.9% on a constant currency basis. |
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Adjusted EBITDA margin of 25.3% decreased 121 basis points on a reported basis, or a decrease of 116 basis points on a constant currency basis, compared to the prior year, reflecting an elevated level of investments in Media and pressures in Connect from the COVID-19 pandemic. |
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The reported amounts above were impacted by weaker currencies versus the dollar during the first quarter, which had a 180 basis negative impact on reported revenue growth and a 190 basis negative impact on EBITDA growth. |
Financial Position
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As of March 31, 2020, Nielsen’s cash and cash equivalents were $359 million and gross debt was $8,413 million. |
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Net debt (gross debt less cash and cash equivalents) was $8,054 million and Nielsen’s net debt leverage ratio was 4.39x at the end of the quarter. |
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On a reported basis, cash flow from operations for the first quarter of 2020 increased to $(5) million, compared to $(43) million in the first quarter of 2019. Cash flow performance was primarily driven by working capital timing and lower interest payments, partially offset by lower adjusted EBITDA, higher employee annual incentive payments and higher income tax payments during the quarter ended March 31, 2020. |
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Cash taxes were $52 million for the first quarter of 2020, compared to $42 million for the first quarter of 2019, largely due to the cash settlement of certain intercompany amounts in anticipation of the separation of the Connect business. |
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Net capital expenditures were 8% lower, at $112 million for the first quarter of 2020, compared to $122 million for the first quarter of 2019. |
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Free cash flow for the first quarter of 2020 improved 29%, to $(117) million, compared to $(165) million for the first quarter of 2019. |
Dividend
On April 16, 2020, our Board of Directors declared a quarterly dividend of $0.06 per share of Nielsen’s common stock. The dividend is payable on June 18, 2020 to shareholders of record at the close of business on June 4, 2020 and is an estimated $21 million.
Update on Planned Separation of Nielsen Global Media and Nielsen Global Connect
On February 27, 2020, Nielsen announced that it planned to complete the spinoff of Nielsen Global Connect by November 2020. The company continues to make operational progress towards separation but now expects the closing to take place in Q1 2021, largely due to temporary shutdowns of government agencies that are necessary to move forward with the separation. The company now expects $275 - $300 million of cash separation related costs in 2020 versus its prior expectation of $350 - $400 million in 2020. The remaining cash separation related costs will occur in 2021, given the Q1 2021 separation target time frame.
2020 Full Year Guidance
The Company is updating full year 2020 guidance, as highlighted below:
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Total revenue growth on a constant currency basis: -4% to -1% (previously: +1.5% to +3.0%) |
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Adjusted EBITDA margin: 28.5% - 29.5% (previously 27.7% - 28.5%) |
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Adjusted EBITDA: $1,790 - $1,860 million (previously $1,830 - $1,910 million) |
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Adjusted earnings per share: $1.43 - $1.58 (previously $1.67 - $1.80) |
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Free cash flow: $460 - $530 million (previously $530 - $580 million) |
These estimates exclude $275 - $300 million of cash separation-related costs in 2020, the majority of which will occur close to the separation date. The updated guidance reflects lower revenue due to COVID-19 pressure and greater FX impact. The company is managing operating expenses and capital expenditures to improve profitability and cash flow.
Due to the uncertainties associated with COVID-19, Nielsen has analyzed a range of scenarios that are contingent on the depth and duration of the COVID-19 pandemic and its resulting impact on economic and market-specific drivers that may impact the Company’s businesses. Nielsen has disclosed a range of economic scenarios as part of its first quarter 2020 earnings materials, with the “recovery beginning in 2H'20” being the baseline scenario at this point in time and the basis for the above revised guidance.
2020 Guidance Non-GAAP Reconciliations
These reconciliations include preliminary forecasts based on current expectations and include certain assumptions on the classification and timing of certain separation-related costs and the tax deductibility of such costs.
The below table presents a reconciliation from forecasted revenue to revenue on a constant currency basis for our 2020 guidance:
2
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2020 Guidance |
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% Variance Constant Currency |
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2019 Revenue Constant Currency |
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Total Revenue |
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$ |
~6,200 |
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-4% to -1% |
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$ |
6,350 |
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The below table presents a reconciliation from Net Income/(Loss) to Adjusted EBITDA for our 2020 guidance:
(IN MILLIONS) |
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Net income/(Loss) |
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$(50) - $(10) |
Interest expense, net |
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~375 |
Provision/(benefit) for income taxes |
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~160 |
Depreciation and amortization |
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~820 |
Restructuring charges |
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~130 |
Share-based compensation expense and Other |
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~135 |
Separation-related costs |
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~235 |
Adjusted EBITDA |
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$1,790 – $1,860 |
The below table presents a reconciliation from Net Income/(Loss) Attributable to Nielsen Shareholders to Adjusted Net Income to calculate Adjusted Earnings per Share (diluted) for our 2020 guidance:
(IN MILLIONS EXCEPT PER SHARE AMOUNTS) |
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Net income/(loss) attributable to Nielsen shareholders |
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$(65) - $(20) |
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Depreciation and amortization associated with acquisition-related tangible and intangible assets |
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~200 |
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Restructuring charges |
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~130 |
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Share-based compensation expense and Other |
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~135 |
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Separation-related costs |
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~235 |
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Tax effect of above items |
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~(120) |
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Adjusted earnings |
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$510 - $565 |
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Adjusted earnings per share |
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$1.43 – $1.58 |
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The below table presents a reconciliation from Net Cash Provided by Operating Activities to Free Cash Flow for our 2020 guidance. This excludes $350 - $400 million of separation-related costs.
(IN MILLIONS) |
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Net cash provided by operating activities |
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$980 - $1,050 |
Less: Capital expenditures, net |
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~(520) |
Free cash flow |
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$460 - $530 |
Conference Call and Webcast
Nielsen will hold a conference call to discuss today’s announcements at 8:00 a.m. U.S. Eastern Time (ET) on April 30, 2020.
Interested parties are encouraged to listen to the webcast as wait times for the call operator may be longer than normal. The webcast can be found on Nielsen’s Investor Relations website at http://nielsen.com/investors. Within the United States, listeners can also access the call by dialing 1+833-502-0473. Callers outside the U.S. can dial 1+236-714-2183.The conference ID is 1864148; please note that this ID is required to access this call.
A replay of the event will be available on Nielsen’s Investor Relations website, http://nielsen.com/investors, from 11:00 a.m. Eastern Time, April 30, 2020 until 11:59 p.m. Eastern Time, May 7, 2020. The replay can be accessed from within the United States by dialing +1-800-585-8367. Other callers can access the replay at +1-416-621-4642. The replay pass code is 1864148.
3
Forward-looking Statements
This news release includes information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements include those set forth above under “2020 Full Year Guidance,” those related to the impact of the recent COVID-19 pandemic on our business, those regarding our plan to spin-off Nielsen Global Connect as well as those that may be identified by words such as “will,” “intend,” “expect,” “anticipate,” “should,” “could” and similar expressions. These statements are subject to risks and uncertainties, and actual results and events could differ materially from what presently is expected. Factors leading thereto may include, without limitation, the risks related to the COVID-19 pandemic on the global economy and financial markets, the uncertainties relating to the impact of the COVID-19 pandemic on Nielsen's business, the expected benefits and costs of the spin-off transaction, the expected timing of completion of the spin-off transaction, the ability of Nielsen to complete the spin-off transaction considering the various conditions to the completion of the spin-off transaction (some of which are outside Nielsen’s control, including those conditions related to regulatory approvals), business disruption during the pendency of or following the spin-off transaction, diversion of management time on the spin-off transaction-related issues, failure to receive the required shareholder approval of the spin-off transaction, retention of existing management team members, the reaction of customers and other parties to the spin-off transaction, the qualification of the spin-off transaction as a tax-free transaction for U.S. federal income tax purposes (including whether or not an IRS ruling will be obtained), potential dis-synergy costs between Nielsen Global Connect and Nielsen Global Media, the impact of the spin-off transaction on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets Nielsen is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting Nielsen’s business and other specific risk factors that are outlined in our disclosure filings and materials, which you can find on http://www.nielsen.com/investors, such as our 10-K, 10-Q and 8-K reports that have been filed with the Securities and Exchange Commission. Please consult these documents for a more complete understanding of these risks and uncertainties. This list of factors is not intended to be exhaustive. Such forward-looking statements only speak as of the date of this press release, and we assume no obligation to update any written or oral forward-looking statement made by us or on our behalf as a result of new information, future events or other factors, except as required by law.
About Nielsen
Nielsen Holdings plc (NYSE: NLSN) is a global measurement and data analytics company that provides the most complete and trusted view available of consumers and markets worldwide. Nielsen is divided into two business units. Nielsen Global Media, the arbiter of truth for media markets, provides media and advertising industries with unbiased and reliable metrics that create a shared understanding of the industry required for markets to function. Nielsen Global Connect provides consumer packaged goods manufacturers and retailers with accurate, actionable information and insights and a complete picture of the complex and changing marketplace that companies need to innovate and grow.
Our approach marries proprietary Nielsen 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.
An S&P 500 company, Nielsen has operations in over 100 countries, covering more than 90% of the world's population. For more information, visit www.nielsen.com.
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.
4
Results of Operations—(Three Months Ended March 31, 2020 and 2019)
The following table sets forth, for the periods indicated, the amounts included in our condensed consolidated statements of operations:
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Three Months Ended March 31, (Unaudited) |
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(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) |
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2020 |
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2019 |
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Revenues |
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$ |
1,559 |
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$ |
1,563 |
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Cost of revenues |
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721 |
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695 |
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Selling, general and administrative expenses |
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515 |
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480 |
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Depreciation and amortization (1) |
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214 |
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179 |
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Restructuring charges |
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11 |
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35 |
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Operating income/(loss) |
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98 |
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174 |
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Interest income |
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1 |
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|
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2 |
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Interest expense |
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(94 |
) |
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(99 |
) |
Foreign currency exchange transaction gains/(losses), net |
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(6 |
) |
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(3 |
) |
Other income/(expense), net |
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(1 |
) |
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5 |
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Income/(loss) from continuing operations before income taxes and equity in net income/(loss) of affiliates |
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(2 |
) |
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79 |
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Benefit/(provision) for income taxes |
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(11 |
) |
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(32 |
) |
Net income/(loss) |
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(13 |
) |
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47 |
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Net income/(loss) attributable to noncontrolling interests |
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5 |
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4 |
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Net income/(loss) attributable to Nielsen shareholders |
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$ |
(18 |
) |
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$ |
43 |
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Net income/(loss) per share of common stock, basic |
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|
|
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Net income/(loss) attributable to Nielsen shareholders |
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$ |
(0.05 |
) |
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$ |
0.12 |
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Net income/(loss) per share of common stock, diluted |
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|
|
|
|
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|
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Net income/(loss) attributable to Nielsen shareholders |
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$ |
(0.05 |
) |
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$ |
0.12 |
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Weighted-average shares of common stock outstanding, basic |
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356,389,022 |
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|
|
355,444,756 |
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Dilutive shares of common stock |
|
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- |
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|
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912,327 |
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Weighted-average shares of common stock outstanding, diluted |
|
|
356,389,022 |
|
|
|
356,357,083 |
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(1) |
Depreciation and amortization associated with tangible and intangible assets acquired in business combinations were $51 million and $54 million, respectively, for the three months ended March 31, 2020 and 2019, respectively. |
5
Condensed Consolidated Balance Sheets
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March 31, |
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December 31, |
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(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) |
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2020 |
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2019 |
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(Unaudited) |
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Assets: |
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Current assets |
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|
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Cash and cash equivalents |
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$ |
359 |
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$ |
454 |
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Trade and other receivables, net of allowances for doubtful accounts and sales returns of $34 and $28 as of March 31, 2020 and December 31, 2019, respectively |
|
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1,182 |
|
|
|
1,103 |
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Prepaid expenses and other current assets |
|
|
473 |
|
|
|
420 |
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Total current assets |
|
|
2,014 |
|
|
|
1,977 |
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Non-current assets |
|
|
|
|
|
|
|
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Property, plant and equipment, net |
|
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426 |
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|
|
466 |
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Operating lease right-of-use asset |
|
|
378 |
|
|
|
393 |
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Goodwill |
|
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5,979 |
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|
|
5,993 |
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Other intangible assets, net |
|
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4,806 |
|
|
|
4,881 |
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Deferred tax assets |
|
|
267 |
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|
|
276 |
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Other non-current assets |
|
|
323 |
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|
|
333 |
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Total assets |
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$ |
14,193 |
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$ |
14,319 |
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Liabilities and equity: |
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Current liabilities |
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Accounts payable and other current liabilities |
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$ |
1,077 |
|
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$ |
1,182 |
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Deferred revenues |
|
|
402 |
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345 |
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Income tax liabilities |
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35 |
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|
60 |
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Current portion of long-term debt, finance lease obligations and short-term borrowings |
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1,054 |
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|
914 |
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Total current liabilities |
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2,568 |
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|
|
2,501 |
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Non-current liabilities |
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Long-term debt and finance lease obligations |
|
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7,359 |
|
|
|
7,395 |
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Deferred tax liabilities |
|
|
1,031 |
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|
|
1,052 |
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Operating lease liabilities |
|
|
363 |
|
|
|
370 |
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Other non-current liabilities |
|
|
641 |
|
|
|
613 |
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Total liabilities |
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11,962 |
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11,931 |
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Commitments and contingencies (Note 13) |
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Equity: |
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Nielsen shareholders’ equity |
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|
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|
|
Common stock, €0.07 par value, 1,185,800,000 and 1,185,800,000 shares authorized, 356,487,712 and 356,158,879 shares issued and 356,475,591 and 356,149,883 shares outstanding at March 31, 2020 and December 31, 2019, respectively |
|
|
32 |
|
|
|
32 |
|
Additional paid-in capital |
|
|
4,370 |
|
|
|
4,378 |
|
Retained earnings/(accumulated deficit) |
|
|
(1,228 |
) |
|
|
(1,210 |
) |
Accumulated other comprehensive loss, net of income taxes |
|
|
(1,130 |
) |
|
|
(1,005 |
) |
Total Nielsen shareholders’ equity |
|
|
2,044 |
|
|
|
2,195 |
|
Noncontrolling interests |
|
|
187 |
|
|
|
193 |
|
Total equity |
|
|
2,231 |
|
|
|
2,388 |
|
Total liabilities and equity |
|
$ |
14,193 |
|
|
$ |
14,319 |
|
6
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
(IN MILLIONS) |
|
2020 |
|
|
2019 |
|
||
Operating Activities |
|
|
|
|
|
|
|
|
Net income/(loss) |
|
$ |
(13 |
) |
|
$ |
47 |
|
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
16 |
|
|
|
15 |
|
Currency exchange rate differences on financial transactions and other (gains)/losses |
|
|
7 |
|
|
|
(2 |
) |
Depreciation and amortization |
|
|
214 |
|
|
|
179 |
|
Changes in operating assets and liabilities, net of effect of businesses acquired and divested: |
|
|
|
|
|
|
|
|
Trade and other receivables, net |
|
|
(107 |
) |
|
|
(115 |
) |
Prepaid expenses and other assets |
|
|
(13 |
) |
|
|
(50 |
) |
Accounts payable and other current liabilities and deferred revenues |
|
|
(92 |
) |
|
|
(130 |
) |
Other non-current liabilities |
|
|
(20 |
) |
|
|
(21 |
) |
Interest payable |
|
|
44 |
|
|
|
44 |
|
Income taxes |
|
|
(41 |
) |
|
|
(10 |
) |
Net cash provided by/(used in) operating activities |
|
|
(5 |
) |
|
|
(43 |
) |
Investing Activities |
|
|
|
|
|
|
|
|
Acquisition of subsidiaries and affiliates, net of cash acquired |
|
|
(27 |
) |
|
|
(59 |
) |
Additions to property, plant and equipment and other assets |
|
|
(4 |
) |
|
|
(30 |
) |
Additions to intangible assets |
|
|
(108 |
) |
|
|
(92 |
) |
Other investing activities |
|
|
(3 |
) |
|
|
1 |
|
Net cash provided by/(used in) investing activities |
|
|
(142 |
) |
|
|
(180 |
) |
Financing Activities |
|
|
|
|
|
|
|
|
Net borrowings under revolving credit facility |
|
|
135 |
|
|
|
263 |
|
Repayment of debt |
|
|
(14 |
) |
|
|
(14 |
) |
Cash dividends paid to shareholders |
|
|
(21 |
) |
|
|
(124 |
) |
Activity from share-based compensation plans |
|
|
(4 |
) |
|
|
(3 |
) |
Proceeds from employee stock purchase plan |
|
|
1 |
|
|
|
1 |
|
Finance leases |
|
|
(11 |
) |
|
|
(16 |
) |
Other financing activities |
|
|
(4 |
) |
|
|
(3 |
) |
Net cash provided by/(used in) financing activities |
|
|
82 |
|
|
|
104 |
|
Effect of exchange-rate changes on cash and cash equivalents |
|
|
(30 |
) |
|
|
(3 |
) |
Net increase/(decrease) in cash and cash equivalents |
|
|
(95 |
) |
|
|
(122 |
) |
Cash and cash equivalents at beginning of period |
|
|
454 |
|
|
|
524 |
|
Cash and cash equivalents at end of period |
|
$ |
359 |
|
|
$ |
402 |
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
|
$ |
(52 |
) |
|
$ |
(42 |
) |
Cash paid for interest, net of amounts capitalized |
|
$ |
(50 |
) |
|
$ |
(55 |
) |
Certain Non-GAAP Measures
We use the non-GAAP financial measures discussed below to evaluate our results of operations, financial condition, liquidity and indebtedness. We believe that the presentation of these non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations, cash flows and indebtedness and that, when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance. These non-GAAP measures are also consistent with how management evaluates the company’s operating performance and liquidity. In addition, these non-GAAP measures address questions the Company routinely receives from analysts and investors, and in order to assure that all investors have access to similar data, we have determined that it is appropriate to make this data available to all investors. None of the non-GAAP measures presented should be considered as an alternative to net income or loss, operating income or loss, cash flows from operating activities, total indebtedness or any other measures of operating performance and financial condition, liquidity or indebtedness derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.
7
Constant Currency Presentation
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company’s performance. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period exchange rates and comparing these adjusted amounts to our current period reported results. No adjustment has been made to foreign currency exchange transaction gains or losses in the calculation of constant currency net income.
Organic Constant Currency Presentation
We define organic constant currency revenue as constant currency revenue excluding the net effect of business acquisitions and divestitures over the past 12 months. Refer to the Constant Currency Presentation section above for the definition of constant currency. We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
The below table presents a reconciliation from revenue on a reported basis to revenue on a constant currency basis and organic constant currency basis for the three months ended March 31, 2020.
(IN MILLIONS) (UNAUDITED) |
|
Three Months Ended March 31, 2020 Reported |
|
|
Three Months Ended March 31, 2019 Reported |
|
|
% Variance 2020 vs. 2019 Reported |
|
|
Three Months Ended March 31, 2019 Constant Currency |
|
|
% Variance 2020 vs. 2019 Constant Currency |
|
|
Three Months Ended March 31, 2020 Organic |
|
|
Three Months Ended March 31, 2019 Organic Constant Currency |
|
|
% Variance 2020 vs. 2019 Organic Constant Currency |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measure |
|
$ |
510 |
|
|
$ |
539 |
|
|
|
(5.4 |
)% |
|
$ |
522 |
|
|
|
(2.3 |
)% |
|
$ |
510 |
|
|
$ |
522 |
|
|
|
(2.3 |
)% |
Predict/Activate |
|
|
207 |
|
|
|
198 |
|
|
|
4.5 |
% |
|
|
193 |
|
|
|
7.3 |
% |
|
|
187 |
|
|
|
191 |
|
|
|
(2.1 |
)% |
Connect |
|
$ |
717 |
|
|
$ |
737 |
|
|
|
(2.7 |
)% |
|
$ |
715 |
|
|
|
0.3 |
% |
|
$ |
697 |
|
|
$ |
713 |
|
|
|
(2.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audience |
|
$ |
615 |
|
|
$ |
605 |
|
|
|
1.7 |
% |
|
$ |
602 |
|
|
|
2.2 |
% |
|
$ |
615 |
|
|
$ |
602 |
|
|
|
2.2 |
% |
Plan/Optimize |
|
|
227 |
|
|
|
221 |
|
|
|
2.7 |
% |
|
|
219 |
|
|
|
3.7 |
% |
|
|
224 |
|
|
|
213 |
|
|
|
5.2 |
% |
Media |
|
$ |
842 |
|
|
$ |
826 |
|
|
|
1.9 |
% |
|
$ |
821 |
|
|
|
2.6 |
% |
|
$ |
839 |
|
|
$ |
815 |
|
|
|
2.9 |
% |
Total |
|
$ |
1,559 |
|
|
$ |
1,563 |
|
|
|
(0.3 |
)% |
|
$ |
1,536 |
|
|
|
1.5 |
% |
|
$ |
1,536 |
|
|
$ |
1,528 |
|
|
|
0.5 |
% |
The below table presents a reconciliation of Net Income and Adjusted EBITDA on a reported basis to a constant currency basis for the three months ended March 31, 2020.
(IN MILLIONS) (UNAUDITED) |
|
Three |
|
|
Three |
|
|
% Variance |
|
|
Three |
|
|
% Variance |
|
|||||
Net Income/(Loss) attributable to Nielsen Shareholders |
|
$ |
(18 |
) |
|
$ |
43 |
|
|
|
(141.9 |
)% |
|
$ |
35 |
|
|
|
(151.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
395 |
|
|
$ |
415 |
|
|
|
(4.8 |
)% |
|
$ |
407 |
|
|
|
(2.9 |
)% |
Adjusted EBITDA
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, impairment of goodwill and other long-lived assets, share-based
8
compensation expense and other non-operating items from our consolidated statements of operations, as well as certain other items that arise outside the ordinary course of our continuing 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, management is 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 more 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 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 expenses, 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 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 continuing operations. Such costs primarily include legal settlements, acquisition related expenses, business optimization costs and other transaction costs. We believe the exclusion of such amounts allows management and the users of the financial statements to better understand our financial results.
Separation-related costs: To measure operating performance, we exclude certain separation-related costs that would not be incurred if we were not undertaking a separation of our Global Connect business from Global Media and positioning Global Connect and Global Media to operate as two independent companies. These costs include: third-party advisor costs, tax friction, technology related spend, and incremental costs of beginning to operate as two independent companies. We believe that exclusion of these costs will allow users of our financial statements to better understand our financial performance in 2020.
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.
Adjusted Earnings per Share
We define Adjusted Earnings per Share as net income attributable to Nielsen shareholders per share (diluted) from continuing operations from our consolidated statements of operations, excluding depreciation and amortization associated with acquired tangible and intangible assets, restructuring charges, impairment of goodwill and other long-lived assets, share-based compensation expense, other non-operating items from
9
our consolidated statements of operations, certain other items considered unusual or non-recurring in nature and separation-related costs, adjusted for income taxes related to these items. Management believes that this non-GAAP measure is useful in providing period-to-period comparisons of the results of the Company’s ongoing operating performance.
The below table presents reconciliations from net income to Adjusted EBITDA for the three months ended March 31, 2020 and 2019:
|
|
Three Months Ended March 31, (Unaudited) |
|
|
|||||
(IN MILLIONS) |
|
2020 |
|
|
2019 |
|
|
||
Net income/(loss) attributable to Nielsen shareholders |
|
$ |
(18 |
) |
|
$ |
43 |
|
|
Interest expense, net |
|
|
93 |
|
|
|
97 |
|
|
(Benefit)/Provision for income taxes |
|
|
11 |
|
|
|
32 |
|
|
Depreciation and amortization |
|
|
214 |
|
|
|
179 |
|
|
EBITDA |
|
|
300 |
|
|
|
351 |
|
|
Other non-operating expense, net |
|
|
12 |
|
|
|
2 |
|
|
Restructuring charges |
|
|
11 |
|
|
|
35 |
|
|
Share-based compensation expense |
|
|
16 |
|
|
|
15 |
|
|
Other items (a) |
|
|
21 |
|
|
|
12 |
|
|
Separation-related costs |
|
|
35 |
|
|
|
- |
|
|
Adjusted EBITDA |
|
$ |
395 |
|
|
$ |
415 |
|
|
|
(a) |
For the three months ended March 31, 2020, other items primarily consist of business optimization costs and transaction related costs. For the three months ended March 31, 2019, other items primarily consist of business optimization costs, including strategic review costs, and transaction related costs. |
The below table presents reconciliations from diluted net income per share to Adjusted earnings per share for the three months ended March 31, 2020 and 2019:
|
|
Three Months Ended March 31, (Unaudited) |
|
|
|||||
(IN MILLIONS) |
|
2020 |
|
|
2019 |
|
|
||
Net income/(loss) attributable to Nielsen shareholders per share of common stock, diluted |
|
$ |
(0.05 |
) |
|
$ |
0.12 |
|
|
Depreciation and amortization associated with acquisition-related tangible and intangible assets |
|
|
0.14 |
|
|
|
0.15 |
|
|
Restructuring |
|
|
0.03 |
|
|
|
0.10 |
|
|
Share-based compensation |
|
|
0.04 |
|
|
|
0.04 |
|
|
Other non-operating (income)/expense, net |
|
|
0.02 |
|
|
|
(0.01 |
) |
|
Other items (a) |
|
|
0.06 |
|
|
|
0.03 |
|
|
Separation-related costs |
|
|
0.10 |
|
|
|
- |
|
|
Tax effect of above items |
|
|
(0.10 |
) |
|
|
(0.09 |
) |
|
Discrete tax benefit/(provision) |
|
|
0.04 |
|
|
|
- |
|
|
Adjusted earnings per share |
|
$ |
0.29 |
|
|
$ |
0.35 |
|
|
|
(a) |
For the three months ended March 31, 2020, other items primarily consist of business optimization costs and transaction related costs. For the three months ended March 31, 2019, other items primarily consist of business optimization costs, including strategic review costs, and transaction related costs. |
Free Cash Flow
We define free cash flow as net cash provided by operating activities, less capital expenditures, net. We believe providing free cash flow information provides valuable supplemental liquidity information regarding the cash flow that may be available for discretionary use by us in areas such as the distributions of dividends, repurchase of common stock, voluntary repayment of debt obligations or to fund our strategic initiatives, including acquisitions, if any. However, free cash flow does not represent residual cash flows entirely available for discretionary purposes; for example, the repayment of principal amounts borrowed is not deducted from free cash flow. Key limitations of the free cash flow
10
measure include the assumptions that we will be able to refinance our existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt. Free cash flow is not a presentation made in accordance with GAAP. The following table presents reconciliation from net cash provided by operating activities to free cash flow:
|
|
Three Months Ended |
|
|||||
(IN MILLIONS) |
|
2020 |
|
|
2019 |
|
||
Net cash provided by operating activities |
|
$ |
(5 |
) |
|
$ |
(43 |
) |
Less: Capital expenditures, net |
|
|
(112 |
) |
|
|
(122 |
) |
Free cash flow (a) |
|
$ |
(117 |
) |
|
$ |
(165 |
) |
|
(a) |
Includes an insignificant amount of cash payments for separation-related costs. |
Net Debt and Net Debt Leverage Ratio
The net debt leverage ratio is defined as net debt (gross debt less cash and cash equivalents) as of the balance sheet date divided by Adjusted EBITDA for the 3 months then ended. Net debt and the net debt leverage ratio are commonly used metrics to evaluate and compare leverage between companies and are not presentations made in accordance with GAAP. The calculation of net debt and the net debt leverage ratio as of March 31, 2020 is as follows:
(IN MILLIONS) (Unaudited) |
|
|||
Gross debt as of March 31, 2020 |
|
$ |
8,413 |
|
Less: Cash and cash equivalents as of March 31, 2020 |
|
|
(359 |
) |
Net debt as of March 31, 2020 |
|
$ |
8,054 |
|
Adjusted EBITDA for the year ended December 31, 2019 |
|
$ |
1,853 |
|
Less: Adjusted EBITDA for the three ended March 31, 2019 |
|
|
(415 |
) |
Add: Adjusted EBITDA for the three months ended March 31, 2020 |
|
|
395 |
|
Adjusted EBITDA for the twelve months ended March 31, 2020 |
|
$ |
1,833 |
|
Net debt leverage ratio as of March 31, 2020 |
|
|
4.39x |
|
11
NYSE: NLSN 1ST QUARTER 2020 EARNINGS Thursday, April 30, 2020 | 8:00 am ET EXHIBIT 99.2
The following discussion includes information that could constitute forward-looking statements, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include those set forth below under “2020 Guidance,” those related to the impact of the COVID-19 pandemic on our business, those regarding our plan to spin-off the Company’s Global Connect business as well as those that may be identified by words such as “will,” “intend,” “expect,” “anticipate,” “should,” “could,” and similar expressions. These statements are subject to risks and uncertainties, and actual results and events could differ materially from what presently is expected. Factors leading thereto may include, without limitation, the risks related to the COVID-19 pandemic on the global economy and financial markets, the uncertainties relating to the impact of the COVID-19 pandemic on Nielsen’s business, the expected benefits and costs of the spin-off transaction, the expected timing of completion of the spin-off transaction, the ability of Nielsen to complete the spin-off transaction considering the various conditions to the completion of the spin-off transaction (some of which are outside Nielsen’s control, including those conditions related to regulatory approvals), business disruption during the pendency of or following the spin-off transaction, diversion of management time on the spin-off transaction-related issues, failure to receive the required shareholder approval of the spin-off transaction, retention of existing management team members, the reaction of customers and other parties to the spin-off transaction, the qualification of the spin-off transaction as a tax-free transaction for US federal income tax purposes (including whether or not an IRS ruling will be obtained), potential dissynergy costs between Nielsen Global Connect and Nielsen Global Media, the impact of the spin-off transaction on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets Nielsen is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting Nielsen’s business and other specific risk factors that are outlined in our disclosure filings and materials, which you can find on http://ir.nielsen.com, such as our most recent 10-K, 10-Q and 8-K reports that have been filed with the Securities and Exchange Commission. Please consult these documents for a more complete understanding of these risks and uncertainties. The list of factors is not intended to be exhaustive. Such forward looking statements only speak as of the date of this document, and the Company assumes no obligation to update any written or oral forward-looking statement made by it or on its behalf as a result of new information, future events or other factors, except as required by law. FORWARD-LOOKING STATEMENTS
Business Update Separation Progress Q1 2020 Results Updated 2020 Guidance TODAY’S DISCUSSION
Top priority is safety of our global workforce, their families and our clients Limited number of employees in the field, developing new ways of working to put safety first ~95% of office-based employees working from home Supporting our communities; sharing data with non-profits, academic institutions and governments Continuity of critical business processes through quality, integrity and innovation Working closely with clients to ensure delivery of quality measurement data and analytics Developing innovative solutions for data collection Leveraging digital solutions to virtually engage clients Robust profitability and liquidity through enduring business model Sufficient liquidity and financial flexibility under range of economic recovery scenarios Updating 2020 guidance based on our current assumptions Executing on aggressive cost actions to mitigate revenue pressure based on potential outcomes Continued progress on positioning Global Connect as a standalone public company Initial Form 10 filing set for early May Uncertainty stemming from government shutdowns integral to the process will delay completion of the separation for ~90 days beyond prior November 2020 target Majority of separation-related cash spend to be incurred closer to separation COVID-19 UPDATE: FOCUSING ON THE ESSENTIAL Executing on our key priorities
Media consumption at all-time highs Panel health strong: new solutions for remote panel recruitment & maintenance Leveraging current situation to drive permanent process improvement & efficiencies Prioritizing product roadmaps to focus on the essential Currency depends on independent and trusted measurement Essential data to enable clients to evaluate and respond to emerging trends Helping inform clients’ business decisions globally Underpinned by long-term relationships, with ~80% of revenue under contract MEDIA: ESSENTIAL PROVIDER OF MEASUREMENT AND ANALYTICS Pandemic accelerating shifts in consumer behavior, fragmentation Validates Nielsen’s investment in measuring all platforms Marketers understanding and engaging with consumers in new ways Accelerating innovation and digital transformation Economic challenges reinforcing criticality of Nielsen measurement & data
Nielsen Connect cloud platform: access and collaboration anytime, anywhere (2x higher usage versus January) Stable data production and delivery through operational superhubs Pandemic-driven shifts in consumer purchase behavior underscores need for retailer analytics & total consumer measurement Leading global ecommerce measurement provider in 30+ markets Accelerating innovation and agility in response to the COVID-19 pandemic Essential global retailers and their supply chains continue to operate CONNECT: SERVING ESSENTIAL INDUSTRIES IN CRITICAL TIMES Delivering continuous and reliable modern trade retailer sales information Employing new data collection and ad hoc work methodologies in traditional trade emerging markets Accelerating transformation with operational efficiencies and automation Underpinned by long-term relationships, with ~60% of revenue under contract
Deep cuts in Q2 beginning to subside in Q3 Faster return to sustainable operations Client spend returns along with production/events; custom insights work quickly resumes Benefit from faster revenue growth and already actioned cost initiatives Cost reductions already underway drive structurally higher margins Improving cash flow collections Headwinds from discretionary budget pressures and lower ad spend begin to abate in Q4 Sustainable operations resume in the new normal as key industries pick up gradually Some content, events and auto production restart; resume in-field panel / in-store operations; custom insights work resumes Continued cost actions to mitigate impact and drive EBITDA / Free Cash Flow Accelerated cost reductions Reduced capital expenditures RECOVERY BEGINS IN Q3 RECOVERY BEGINS IN Q4 PROLONGED RECESSION INTO 2021 Greater headwinds from continued ad recession and client pressures Longer delays before return to sustainable operations Sustained ad recession and protracted client pressure; shutdowns impair service delivery More aggressive structural and portfolio actions Defer / cancel certain projects Portfolio actions COVID-19 PANDEMIC SCENARIO PREPAREDNESS Preparing for range of potential scenarios
Q1 2020 RESULTS
Q1’19 Q1’20 Commentary Revenue Growth 0.4% 1.5% Solid growth despite COVID-19 impact on Connect Adjusted EBITDA $415 $395 190 bps of 4.8% decline driven by drag from FX Adjusted EBITDA Margin 26.6% 25.3% Continued investment in business Adjusted EPS $0.35 $0.29 Higher D&A YoY, lower taxes Free Cash Flow $(165) $(117) Up ~30% YoY First quarter results in-line with our expectations $M, except per share amounts; growth in constant currency SUMMARY FINANCIAL PERFORMANCE
$623 Audience Measurement Plan / Optimize 3.7% 2.2% vs Q1’19 2.6% $M, growth in constant currency $2,471 $546 7.3% (2.3)% vs Q1’19 0.3% $2,161 $343 40.7% Adj EBITDA Adj EBITDA Margin $63 8.8% Adj EBITDA Adj EBITDA Margin Measure Predict / Activate Q1 stronger than expected Pressure from COVID-19 in International Markets MEDIA PERFORMANCE CONNECT PERFORMANCE $615 $510 Organic vs. Q1’19 2.9% 2.2% 5.2% Organic vs. Q1’19 (2.2)% (2.3)% (2.1)%
2020 OUTLOOK
Essential services and subscription model makes for relatively stable revenue Significant client need for measurement and analysis in current volatile environment COVID-19 pandemic is accelerating shifts in consumer behavior in Media and CPG ecosystem Substantial portion of revenue under long-term contracts Planning actions across a range of possible macro environments Taking action to maximize cash flow Reducing capital expenditures and aggressively managing operating expenses Intense focus on cash collection and working capital management Continued focus on achieving 50% FCF conversion target over time Majority of separation related cash costs to occur in late 2020 / early 2021 Cost reductions underway to preserve EBITDA Aggressive expense reduction actions already taken Evaluating permanent cost actions in the balance of the year Positioning Nielsen for improved long-term profitability STRONG FINANCIAL POSITION AND COST SAVINGS ACTIONS Robust liquidity and financial profile Ample liquidity, with ~$360M cash and ~$700M available on $850M revolving credit facility Refinancing $800M October bond maturities in the coming months Debt covenant compliance maintained and free cash flow positive across a range of scenarios
METRIC COMMENTARY REVENUE Mid-to-high single digit constant currency revenue declines, largely in non-contracted revenue Media: Mid-single digit declines Connect: High-single digit declines ADJUSTED EBITDA Significant focus on costs, with expense actions already initiated Q2 margins up sequentially, though down ~200 bps YoY FREE CASH FLOW Q2 estimated at ~$80-90M Focusing capex on most strategic initiatives Managing cash collections and payments rigorously Q2 COMMENTARY AND COVID-19 IMPACT Financial challenges most pronounced in Q2 Free Cash Flow outlook excludes separation-related costs.
METRIC UPDATED GUIDANCE FY’20 GUIDANCE AS OF 2/27/20 Revenue Growth* -4% to -1% Media: -3% to -1% Connect: -5% to -2% +1.5% to 3.0% Media: 1% to 2% Connect: 2.5% to 4.5% Adjusted EBITDA $1,790 – $1,860 $1,830 – $1,910 Adj. EBITDA Margin 28.5% – 29.5% 27.7% – 28.5% Adjusted EPS $1.43 – $1.58 $1.67 – $1.80 Free Cash Flow $460 – $530 $530 – $580 $M, except per share amounts; growth in constant currency *Total revenue includes ~80 bps net positive impact of acquisitions/divestitures completed in the past 12 months, including ~70 bps net negative impact in Media and ~250 bps net positive impact in Connect. Free Cash Flow guidance excludes $275-300M of separation-related costs; other guidance metrics also exclude the impact of these costs, as separation-related costs are not included in our adjusted EBITDA or adjusted EPS. Updated guidance for 2020 is based on assumptions about a number of economic factors. These assumptions are subject to uncertainty, and actual results for the year could differ materially from our current guidance. UPDATING GUIDANCE TO REFLECT ESTIMATED IMPACT OF COVID-19 Expecting lower revenue due to COVID-19 pressure and greater FX impact Managing operating expense and capital expenditures to improve profitability and cash flow
Q&A
APPENDIX
CERTAIN NON-GAAP MEASURES Overview of Non-GAAP Presentations The Company uses the non-GAAP financial measures discussed below to evaluate its results of operations, financial condition, liquidity and indebtedness. The Company believes that the presentation of these non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations, cash flows and indebtedness and that when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance. These non-GAAP measures are also consistent with how management evaluates the Company’s operating performance and liquidity. In addition, these non-GAAP measures address questions the Company routinely receives from analysts and investors and, in order to assure that all investors have access to similar data, the Company has determined that it is appropriate to make this data available to all investors. None of the non-GAAP measures presented should be considered as an alternative to net income or loss, operating income or loss, cash flows from operating activities, total indebtedness or any other measures of operating performance and financial condition, liquidity or indebtedness derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Constant Currency Presentation The Company evaluates its results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. The Company believes 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 the Company’s performance. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period exchange rates and comparing these adjusted amounts to our current period reported results. No adjustment has been made to foreign currency exchange transaction gains or losses in the calculation of constant currency net income. Organic Constant Currency Presentation The Company defines organic constant currency revenue as constant currency revenue excluding the net effect of business acquisitions and divestitures over the past twelve months. Refer to the Constant Currency Presentation section above for the definition of constant currency. The Company believes that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
Net Debt and Net Debt Leverage Ratio The net debt leverage ratio is defined as net debt (gross debt less cash and cash equivalents) as of the balance sheet date divided by Adjusted EBITDA for the twelve months then ended. Net debt and the net debt leverage ratio are commonly used metrics to evaluate and compare leverage between companies and are not presentations made in accordance with GAAP. Adjusted EBITDA The Company defines 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, impairment of goodwill and other long-lived assets, share-based compensation expense and other non-operating items from its consolidated statements of operations as well as certain other items that arise outside the ordinary course of our continuing operations, including separation-related costs. The Company uses 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. Adjusted EBITDA margin is Adjusted EBITDA for a particular period expressed as a percentage of revenues for that period. Adjusted EPS The Company defines Adjusted Earnings per Share as net income attributable to Nielsen shareholders per share (diluted) from continuing operations from our consolidated statements of operations, excluding depreciation and amortization associated with acquired tangible and intangible assets, restructuring charges, impairment of goodwill and other long-lived assets, share based compensation expense, other non-operating items from our consolidated statements of operations, certain other items considered unusual or non-recurring in nature and separation-related costs, adjusted for income taxes related to these items. Management believes that this non-GAAP measure is useful in providing period-to-period comparisons of the results of the Company’s ongoing operating performance. (continued) CERTAIN NON-GAAP MEASURES
Free Cash Flow The Company defines free cash flow as net cash provided by operating activities, less capital expenditures, net. The Company believes providing free cash flow information provides valuable supplemental liquidity information regarding the cash flow that may be available for discretionary use by the Company in areas such as the distributions of dividends, repurchase of common stock, voluntary repayment of debt obligations or to fund our strategic initiatives, including acquisitions, if any. However, free cash flow does not represent residual cash flows entirely available for discretionary purposes; for example, the repayment of principal amounts borrowed is not deducted from free cash flow. Key limitations of the free cash flow measure include the assumptions that the Company will be able to refinance our existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt. Free cash flow is not a presentation made in accordance with GAAP. (continued) CERTAIN NON-GAAP MEASURES
Guidance Assumption Range Interest Expense, Net $370 – $380M Effective Tax Rate Q2-Q4 37% – 39% Restructuring Expense $120 – $140M Depreciation & Amortization $810 – $830M Average Diluted Shares ~358M Net Debt Leverage Ratio ~4.3x Guidance assumptions exclude $275 - 300M of separation-related costs, except with respect to the cash impact on the Net Debt Leverage Ratio and Interest Expense, Net 2020 GUIDANCE ASSUMPTIONS ($M, growth in constant currency)
Note: We report on a constant currency basis to reflect operating performance (a) Projected impact assumes rates in effect at 04/28/20 remain in effect for the balance of 2020. INTERNATIONAL CURRENCY PROFILE – REVENUE PROJECTED FX IMPACT(a): REPORTED VS CONSTANT CURRENCY USD represents 60% of total revenue and is not illustrated *Other includes 26 countries for which revenue for that country is less than 2% of consolidated revenues FOREIGN CURRENCY IMPACT
Q1’20 ADJUSTED EBITDA RECONCILIATION Quarter Ended March 31 2020 2019 Net income/(loss) attributable to Nielsen shareholders $ (18) $ 43 Interest expense, net 93 97 Provision/(benefit) for income taxes 11 32 Depreciation and amortization 214 179 EBITDA 300 351 Other non-operating expense, net 12 2 Restructuring charges 11 35 Share-based compensation expense 16 15 Other items(a) 21 12 Separation-related costs 35 - Adjusted EBITDA $ 395 $ 415 For the three months ended March 31, 2020, other items primarily consist of business optimization costs and transaction related costs. For the three months ended March 31, 2019, other items primarily consist of business optimization costs, including strategic review costs, and transaction related costs. ($ in millions) (unaudited)
Quarter Ended March 31, 2019 Media Connect HQ Total Operating Income $214 (2) (38) $174 Depreciation and Amortization $123 55 1 $179 Restructuring Charges $7 22 6 $35 Share-Based Compensation Expense $4 4 8 $15 Other Items (a) $ ー ー 12 $12 Adjusted EBITDA $347 79 (11) $415 For the three months ended March 31, 2020, other items primarily consist of business optimization costs and transaction related costs. For the three months ended March 31, 2019, other items primarily consist of business optimization costs, including strategic review costs, and transaction related costs. Quarter Ended March 31, 2020 Media Connect HQ Total Operating Income $191 (15) (78) $98 Depreciation and Amortization $147 65 2 $214 Restructuring Charges $1 8 2 $11 Share-Based Compensation Expense $4 5 7 $16 Other Items (a) $ ー ー 21 $21 Separation-related costs $ ー ー 35 $35 Adjusted EBITDA $343 63 (11) $395 Q1’20 ADJUSTED EBITDA RECONCILIATION ($ in millions) (unaudited)
2020 Reported 2019 Reported % V 2020 vs. 2019 Reported 2019 Constant Currency % V 2020 vs. 2019 Constant Currency 2020 Organic 2019 Organic Constant Currency % V 2020 vs. 2019 Organic Constant Currency Audience Measurement $615 $605 1.7% $602 2.2% $615 $602 2.2% Plan / Optimize 227 221 2.7% 219 3.7% 224 213 5.2% Media $842 $826 1.9% $821 2.6% $839 $815 2.9% Measure $510 $539 (5.4)% $522 (2.3)% $510 $522 (2.3)% Predict / Activate 207 198 4.5% 193 7.3% 187 191 (2.1)% Connect $717 $737 (2.7)% $715 0.3% $697 $713 (2.2)% Total $1,559 $1,563 0.3% $1,536 1.5% $1,536 $1,528 0.5% QUARTER ENDED MARCH 31st Q1’20 REVENUE RECONCILIATION ($ in millions) (unaudited)
Quarter ended March 31 2020 2019 Net income/(loss) attributable to Nielsen shareholders per share of common stock, diluted $(0.05) $0.12 Depreciation and amortization associated with acquisition- related tangible and intangible assets 0.14 0.15 Restructuring 0.03 0.10 Share-based compensation 0.04 0.04 Other non-operating (income)/expense, net 0.02 (0.01) Other items(a) 0.06 0.03 Separation-related costs 0.10 - Tax effect of above items (0.10) (0.09) Discrete tax benefit/(provision) 0.04 - Adjusted earnings per share $0.29 $0.35 For the three months ended March 31, 2020, other items primarily consist of business optimization costs and transaction related costs. For the three months ended March 31, 2019, other items primarily consist of business optimization costs, including strategic review costs, and transaction related costs. Q1’20 ADJUSTED EPS– NON-GAAP MEASURES ($ in millions) (unaudited)
Quarter Ended March 31 2020 2019 Net cash provided by operating activities $(5) $(43) Less: Capital expenditures, net (112) (122) Free cash flow (a) $(117) $(165) Includes an insignificant amount of cash payments for separation-related costs. 2020 FREE CASH FLOW RECONCILIATION ($ in millions) (unaudited)
ADJUSTED EBITDA RECONCILIATION 2020 Guidance Range Net income/(loss) $(50) - $(10) Interest expense, net ~375 Provision/(benefit) for income taxes ~160 Depreciation and amortization ~820 Restructuring charges ~130 Share-based compensation and other(a) ~135 Separation-related costs ~235 Adjusted EBITDA $1,790 - $1,860 FREE CASH FLOW(b) Net cash provided by operating activities $980 – $1,050 Less: Capital expenditures, net ~ $(520) Free cash flow $460 – $530 NET DEBT LEVERAGE RATIO Gross Debt ~$8,260 Cash ~$ 400 Net Debt ~$ 7,860 Adjusted EBITDA $1,790 - $1,860 Net Debt Leverage Ratio ~4.3x ($ in millions) 2020 GUIDANCE NON-GAAP RECONCILIATIONS Other represents certain expenses that arise outside the ordinary course of our continuing operations. Such costs primarily include legal settlements, acquisition related expenses, business optimization costs and other transaction costs. Free Cash Flow projections exclude $275-300M in separation related costs.
($ in millions) 2019 Constant Currency % V Constant Currency 2020 Guidance Total $6,350 -4% to -1% ~$6,200 REVENUE RECONCILIATION ADJUSTED EARNINGS PER SHARE RECONCILIATION 2020 Guidance Range Net income/(loss) attributable to Nielsen Shareholders $(65) – $(20) Depreciation and amortization associated with acquisition-related tangible and intangible assets ~200 Restructuring charges ~130 Share-based compensation expense and Other ~135 Separation-related costs ~235 Tax effect of above items ~(120) Adjusted Earnings $510 - $565 Adjusted earnings per share $1.43 - $1.58 2020 GUIDANCE NON-GAAP RECONCILIATIONS
DEBT CAPITAL TABLE 12/31/19 3/31/20 Change Loan Debt (secured) $3,952 $4,064 $112 4.50% Sr. Notes (10/1/20) 799 799 - 5.50% Sr. Notes (10/1/21) 622 623 1 5.00% Sr. Notes (4/15/22) 2,293 2,294 1 5.00% Sr. Notes (2/1/25) 497 497 - Finance lease/misc. debt 146 136 (10) Total Debt $8,309 $8,413 $104 Less Cash 454 359 (95) Net Debt $7,855 $8,054 $199 Adjusted EBITDA(a) $1,853 $1,833 ($20) Net Debt Leverage Ratio(b) 4.24x 4.39x 0.15x Weighted avg. interest rate(c) 4.40% 4.09% (31bps) DEBT CAPITAL TABLE ($ in millions) Adjusted EBITDA calculated based on last twelve months basis by adding reported amounts for each of the quarters contained therein. Reflects Net Debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis. Excludes finance leases.
2020 SELECTED FINANCIAL METRICS & BALANCE SHEET ITEMS ($ in millions) (unaudited) FINANCIAL METRICS Q1’20 Free Cash Flow ($117) Capital Expenditures, net ($112) D&A(a) $214 Net Book Interest $93 Cash Taxes $52 Cash Restructuring $17 Wtd. avg. diluted shares 356.4 BALANCE SHEET – 3/31/20 Gross Debt $8,413 Cash $359 Net Debt $8,054 Net Debt Leverage Ratio(b) 4.39x CURRENT DEBT MATURITY PROFILE – 3/31/20(a) Excludes revolver ($135) and finance leases ($136). Depreciation and amortization expense was $214 million for the three months ended March 31, 2020 as compared to $179 million for the three months ended March 31, 2019. This increase was primarily due to higher depreciation and amortization expense associated with higher capital expenditures, partially offset by lower depreciation and amortization expense associated with tangible and intangible assets acquired in business combinations. Reflects Net Debt (gross debt minus cash and cash equivalents), divided by Adjusted EBITDA calculated on last twelve months basis by adding reported amounts for each of the quarters contained therein.
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EXHIBIT 99.3
EXECUTION VERSION
COOPERATION AGREEMENT
This Cooperation Agreement (this “Agreement”), dated as of April 29, 2020, is by and among Elliott Management Corporation, a Delaware corporation, Elliott Investment Management L.P., a Delaware limited partnership, Elliott Associates, L.P., a Delaware limited partnership, and Elliott International, L.P., a Cayman Islands limited partnership (each, an “Elliott Party,” and together, the “Elliott Parties”), and Nielsen Holdings plc, a public limited company incorporated under the laws of England and Wales with registration number 09422989, whose registered office is at Nielsen House, John Smith Drive, Oxford, OX4 2WB (the “Company”). In consideration of and reliance upon the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Elliott Parties and the Company agree as follows:
New Director Appointment; Formation of Finance Committee
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(a)New Director Appointment. As promptly as practicable following the Company’s 2020 Annual General Meeting of Shareholders (the “2020 Annual Meeting”), the Board of Directors of the Company (the “Board”) shall take such actions as are necessary to increase the size of the Board and appoint Jonathan F. Miller (the “New Director”) as a new member of the Board.
(b)New Director Agreements, Arrangements and Understandings. Each of the Elliott Parties agrees that neither it nor any of its Affiliates (as defined below) (a) will pay any compensation to the New Director (including any Replacement New Director (as defined below)) for such person’s service on the Board or any committee thereof or (b) will have any agreement, arrangement or understanding, written or oral, with the New Director (including any Replacement New Director) regarding such person’s service on the Board or any committee thereof (including pursuant to which such person will be compensated for his or her service as a director on, or nominee for election to, the Board or any committee thereof).
(c)Replacement New Director. If the New Director (or any Replacement New Director) is unable or unwilling to serve as a director, resigns as a director, is removed as a director or ceases to be a director for any other reason prior to the expiration of the Cooperation Period (as defined below), and at such time the Elliott Parties (together with their Affiliates) beneficially own a “net long position” (as defined in Rule 14e-4 under the Exchange Act (as defined below)) of, or have aggregate net long economic exposure to, at least 3.0% (the “Minimum Ownership Threshold”) of the then outstanding Company Ordinary Shares (as defined below), as promptly as practicable, the Elliott Parties and the Company will cooperate to select, and the Company will appoint, a substitute director mutually acceptable to the Company and the Elliott Parties (the “Replacement New Director”) to serve as a director of the Company for the remainder of the New Director’s term, which Replacement New Director will be a Qualified Candidate. Effective upon the appointment of the Replacement New Director to the Board, such Replacement New Director will be considered the New Director for all purposes of this Agreement. In the event that the Elliott Parties seek to exercise their rights under this Section 1(c), the Elliott Parties shall certify in writing to the Company that their (together with their Affiliates) beneficial ownership of, or aggregate economic exposure to, Company Ordinary Shares satisfies the Minimum Ownership Threshold as
of the proposed time of any such exercise. The Company’s obligations under this Section 1(c) shall terminate as a nonexclusive remedy for any material breach of this Agreement (including Section 2) by any Elliott Party upon five (5) business days’ written notice by the Company to the Elliott Parties if such breach has not been cured within such notice period, provided that the Company is not in material breach of this Agreement at the time such notice is given or prior to the end of the notice period.
(d)New Director Information. As a condition to any Replacement New Director’s appointment to the Board, such Replacement New Director will provide any information the Company reasonably requires, including information required to be disclosed in a proxy statement or other filing under applicable law, stock exchange rules or listing standards and information in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal obligations, and will consent to appropriate background checks, in each case, to the extent consistent with the information and background checks required by the Company in accordance with past practice with respect to other members of the Board.
(e)Company Policies. The parties hereto acknowledge that the New Director (and any Replacement New Director), upon appointment to the Board, will be governed by the same protections and obligations regarding confidentiality, conflicts of interest, related party transactions, fiduciary duties, codes of conduct, trading and disclosure policies, director resignation policy, and other governance guidelines and policies of the Company as other directors of the Company (collectively, “Company Policies”), and shall have the same rights and benefits, including with respect to insurance, indemnification, compensation, fees and reimbursement of expenses, as are applicable to all Independent directors of the Company.
(f)Finance Committee. As promptly as practicable following the date hereof, the Board shall take such actions as are necessary to establish a Finance Committee of the Board (the “Finance Committee”), which shall initially consist of the following members: the Chairman of the Board as of the date hereof (who shall serve as the Chairman of the Finance Committee); three other Independent directors of the Company selected by the Board; and the New Director, from and after his appointment to the Board. The charter of the Finance Committee shall be in the form attached to this Agreement as Exhibit A. Any amendment to such charter during the Cooperation Period will require the consent of the Elliott Parties, and the Finance Committee will remain in place at least until the Separation (as defined below).
Cooperation
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(a)Non-Disparagement. Each of the Elliott Parties and the Company agrees that, from the date of this Agreement until the Expiration Time (as defined below) (such period, the “Cooperation Period”), the Company and each Elliott Party shall refrain from making, and shall cause its respective Affiliates and its and their respective principals, directors, members, general partners, officers and employees to refrain from making any ad hominem attack on or other statement that disparages, defames, slanders, impugns or is reasonably likely to damage the reputation of (A) in the case of any such statements by any of the Elliott Parties or their related parties: the Company and its Affiliates or any of its or their current or former officers, directors or employees, and (B) in the case of any such statements by the Company or its related parties: the Elliott Parties and their Affiliates or any of their current or former principals, directors, members,
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general partners, officers or employees, in each case including (x) in any statement, document or report filed with, furnished or otherwise provided to the SEC (as defined below) or any other governmental or regulatory agency, (y) in any press release or other publicly available format or (z) to or through any journalist or member of the media (including, in a television, radio, newspaper or magazine interview or podcast, Internet or social media communication), shareholder, sell-side or buy-side analyst or other person; provided, however, that any unpremeditated, private, informal remark to any person that is not part of any coordinated communication or campaign, and is not intended or designed to circumvent, directly or indirectly, the restrictions contemplated by this Section 2(a), will not be deemed a breach of this Section 2(a). The foregoing shall not (x) restrict the ability of any person to comply with any subpoena or other legal process or respond to a request for information from any governmental authority with jurisdiction over the party from whom information is sought or to enforce such person’s rights hereunder or (y) apply to any private communications among the Elliott Parties and their Affiliates and Representatives (in their capacity as such), on the one hand, and among the Company and its Affiliates and Representatives (in their capacity as such), on the other hand.
(b)Voting of the Elliott Parties’ Shares. During the Cooperation Period, each Elliott Party will cause all of the outstanding ordinary shares, €0.07 nominal value per share, of the Company (“Company Ordinary Shares”) that such Elliott Party or any of its Affiliates has the right to vote as of the applicable record date, to be present in person or by proxy for quorum purposes and to be voted at any meeting of shareholders of the Company or at any adjournments or postponements thereof, and to consent in connection with any action by written consent in lieu of a meeting, (w) in favor of each director nominated and recommended by the Board for election at the 2020 Annual Meeting or, if applicable, any other meeting of shareholders of the Company during the Cooperation Period, (x) against any shareholder nominations for director that are not approved and recommended by the Board for election at any such meeting or through any such written consent, (y) against any proposals or resolutions to remove any member of the Board and (z) in accordance with recommendations by the Board on all other proposals or business that may be the subject of shareholder action at such meetings or written consents; provided, however, that the Elliott Parties and their Affiliates shall be permitted to vote in their sole discretion on any proposal related to any Extraordinary Transaction (as defined below).
(c)Standstill. During the Cooperation Period, each Elliott Party will not, and will cause its controlling and controlled Affiliates and its and their respective Representatives acting on their behalf (collectively with the Elliott Parties, the “Restricted Persons”) to not, directly or indirectly, without the prior written consent, invitation or authorization by the Company or the Board:
(i)acquire, or offer or agree to acquire, by purchase or otherwise, or direct any Third Party in the acquisition of, any Voting Securities, or engage in any swap or hedging transactions or other derivative agreements of any nature with respect to any Voting Securities, in each case, if such acquisition, offer, agreement or transaction would result in the Elliott Parties (together with their Affiliates) having beneficial ownership of more than 9.9% of the Company Ordinary Shares outstanding at such time;
(ii)(A) call or seek to call (publicly or otherwise), alone or in concert with others, an extraordinary general meeting of the Company’s shareholders or action by written consent (or the setting of a record date therefor), (B) seek, alone or in concert with others,
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election or appointment to, or representation on, the Board or nominate or propose the nomination of, or recommend the nomination of, any candidate to the Board, except as expressly set forth in Section 1, (C) make or be the proponent of any shareholder proposal to the Company, (D) seek, alone or in concert with others (including through any “withhold” or similar campaign), the removal of any member of the Board or (E) conduct a referendum of shareholders of the Company; provided that nothing in this Agreement will prevent the Elliott Parties or their Affiliates from taking actions in furtherance of identifying any Replacement New Director;
(iii)make any request for stock list materials or other books and records of the Company or any of its subsidiaries under any statutory or regulatory provisions providing for shareholder access to books and records;
(iv)engage in any “solicitation” (as such term is used in the proxy rules promulgated under the Exchange Act excluding, for the avoidance of doubt, carve-outs relating to solicitations of ten or fewer shareholders) of proxies or consents with respect to the election or removal of directors of the Company or any other matter or proposal relating to the Company or become a “participant” (as such term is defined in Instruction 3 to Item 4 of Schedule 14A promulgated under the Exchange Act) in any such solicitation of proxies or consents;
(v)make any offer or proposal with respect to any tender offer, exchange offer, merger, consolidation, acquisition, business combination, recapitalization, restructuring, liquidation, dissolution or similar extraordinary transaction involving the Company (including its subsidiaries and joint ventures or any of their respective securities or assets) (each, an “Extraordinary Transaction”) either publicly or in a manner that would reasonably require public disclosure by the Company or any of the Elliott Parties (it being understood that (x) the Separation shall not be considered an Extraordinary Transaction and (y) the foregoing shall not restrict the Restricted Persons from tendering shares, receiving payment for shares or otherwise participating in any Extraordinary Transaction on the same basis as other shareholders of the Company);
(vi)make any public proposal with respect to any change in the capitalization, stock repurchase programs, dividend policy, Board, management or corporate structure of the Company or any of its subsidiaries, except for such statements that are consistent with the Press Release (as defined below) or the provisions of this Agreement;
(vii)knowingly encourage or advise any Third Party or knowingly assist any Third Party in encouraging or advising any other person (A) with respect to the giving or withholding of any proxy or consent relating to, or other authority to vote, any Voting Securities, or (B) in conducting any type of referendum relating to the Company (other than such encouragement or advice that is consistent with the Board’s recommendation in connection with such matter, or as otherwise specifically permitted under this Agreement);
(viii)form, join or act in concert with any “group” as defined in Section 13(d)(3) of the Exchange Act, with respect to any Voting Securities, other than solely with Affiliates of the Elliott Parties with respect to Voting Securities now or hereafter owned by them;
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(ix)enter into a voting trust, arrangement or agreement with respect to any Voting Securities, or subject any Voting Securities to any voting trust, arrangement or agreement (excluding customary brokerage accounts, margin accounts, prime brokerage accounts and the like), in each case other than (A) this Agreement, (B) solely with Affiliates of the Elliott Parties or (C) granting proxies in solicitations approved by the Board;
(x)engage in any short sale or any purchase, sale or grant of any option, warrant, convertible security, stock appreciation right or other similar right (including any put or call option or “swap” transaction) with respect to any security (other than any index fund, exchange traded fund, benchmark fund or broad basket of securities) that includes, relates to or derives any significant part of its value from a decline in the market price or value of the securities of the Company and would, in the aggregate or individually, result in the Elliott Parties ceasing to have a “net long position” in the Company;
(xi)sell, offer or agree to sell, all or substantially all, directly or indirectly, through swap or hedging transactions or otherwise, voting rights decoupled from the underlying Company Ordinary Shares held by a Restricted Person to any third party;
(xii)institute, solicit or join, as a party, any litigation, arbitration or other proceeding against or involving the Company or any of its subsidiaries or any of its or their respective current or former directors or officers (including derivative actions); provided, however, that for the avoidance of doubt, the foregoing shall not prevent any Restricted Person from (A) bringing litigation to enforce any provision of this Agreement instituted in accordance with and subject to Section 10, (B) making counterclaims with respect to any proceeding initiated by, or on behalf of, the Company or its Affiliates against a Restricted Person, (C) bringing bona fide commercial disputes that do not relate to the subject matter of this Agreement (including the Press Release), (D) exercising statutory appraisal rights or (E) responding to or complying with validly issued legal process;
(xiii)enter into any negotiations, agreements or understandings with any Third Party to take any action that the Restricted Persons are prohibited from taking pursuant to this Section 2(c); or
(xiv)make any request or submit any proposal to amend or waive the terms of this Agreement (including this clause), in each case publicly or which would reasonably be expected to result in a public announcement or disclosure of such request or proposal by the Company or any of the Restricted Persons;
provided, that the restrictions in this Section 2(c) shall terminate automatically upon the earliest of (i) as a nonexclusive remedy for any material breach of this Agreement by the Company (including, without limitation, a failure to appoint the New Director to the Board or the Finance Committee in accordance with Section 1 or a failure to issue the Press Release in accordance with Section 3) upon five (5) business days’ written notice by any of the Elliott Parties to the Company if such breach has not been cured within such notice period, provided that the Elliott Parties are not in material breach of this Agreement at the time such notice is given or prior to the end of the notice period, (ii) the Company’s entry into (x) a definitive agreement with respect to any Extraordinary Transaction that would result in the acquisition by any person of
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more than 50% of the Voting Securities or assets having an aggregate value exceeding 50% of the aggregate enterprise value of the Company during the Cooperation Period or (y) one or more definitive agreements providing for a transaction or series of transactions which would in the aggregate result in the Company issuing to one or more Third Parties at least 5% of the outstanding Company Ordinary Shares immediately prior to such issuance(s) (including in a PIPE, convertible note, convertible preferred security or similar structure) on an as-converted basis during the Cooperation Period; (iii) the commencement of any tender or exchange offer (by any person other than the Elliott Parties or their Affiliates) which, if consummated, would constitute an Extraordinary Transaction that would result in the acquisition by any person of more than 50% of the Voting Securities, where the Company files with the SEC a Schedule 14D-9 (or any amendment thereto) that does not recommend that its shareholders reject such tender or exchange offer (provided that nothing herein will prevent the Company from issuing a “stop, look and listen” communication pursuant to Rule 14d-9(f) promulgated under the Exchange Act in response to the commencement of any tender or exchange offer); (iv) such time as the Company determines it is no longer pursuing the Separation, or the Company, its Affiliates or its or their Representatives acting on behalf of the Company, makes any public statement that the Company does not intend to complete the Separation; and (v) the adoption by the Board of any amendment to the Company’s articles of association (the “Articles of Association”), as in effect on the date hereof, that would reasonably be expected to impair the ability of a shareholder to submit nominations of individuals for election to the Board or shareholder proposals in connection with any shareholder meeting to be held after the 2020 Annual Meeting. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement (including but not limited to the restrictions in this Section 2(c)) will prohibit or restrict any of the Restricted Persons from (A) making any public or private statement or announcement with respect to any Extraordinary Transaction (other than the Separation) that is publicly announced by the Company or a Third Party, (B) making any factual statement to comply with any subpoena or other legal process or respond to a request for information from any governmental authority with jurisdiction over such person from whom information is sought (so long as such process or request did not arise as a result of discretionary acts by any Restricted Person), (C) granting any liens or encumbrances on any claims or interests in favor of a bank or broker-dealer or prime broker holding such claims or interests in custody or prime brokerage in the ordinary course of business, which lien or encumbrance is released upon the transfer of such claims or interests in accordance with the terms of the custody or prime brokerage agreement(s), as applicable, or (D) negotiating, evaluating and/or trading, directly or indirectly, in any index fund, exchange traded fund, benchmark fund or broad basket of securities which may contain or otherwise reflect the performance of, but not primarily consist of, securities of the Company.
(d)Private Communications. Notwithstanding anything to the contrary contained in this Agreement, during the Cooperation Period, the Elliott Parties and their Affiliates are not prohibited from initiating and holding private communications regarding any matter with the Company’s directors, Chief Executive Officer, Chief Financial Officer, Chief Executive Officer of the Company’s Global Connect business, Chief Legal and Corporate Affairs Officer and Senior Vice President of Investor Relations, in each case, only so long as such private communications would not reasonably be expected to require any public disclosure thereof by the Company or the Elliott Parties. Each Elliott Party acknowledges and agrees that the directors of the Company may engage
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in discussions with the Elliott Parties and their Affiliates only subject to, and in accordance with, their respective fiduciary duties and other obligations to the Company and the Company Policies.
(e)Investor Day. Prior to the consummation of the separation of the Company’s Global Connect business (the “Separation”), the Company will hold an “Investor Day” during which the Company will present its go-forward operating plan and updated business strategy and financial information to the Company’s ordinary shareholders.
Public Announcement
. Not later than 8:30 a.m. Eastern Time on April 30, 2020, the Company shall (x) issue a press release in the form attached to this Agreement as Exhibit B (the “Press Release”) and (y) file a Current Report on Form 8-K with this Agreement and the Press Release as exhibits, which shall be in form and substance reasonably acceptable to the Company and the Elliott Parties (for the avoidance of doubt, nothing herein shall prohibit the Company from complying with its obligation to file such Current Report by the deadline therefor); provided, however, that if the Company is unable to file such Current Report on Form 8-K by such time due to circumstances outside its control, it shall make such filing as promptly as practicable thereafter (and in any event within 24 hours). Neither of (i) the Company or any of its Affiliates or (ii) the Elliott Parties or any of their Affiliates shall make any public statement regarding the subject matter of this Agreement or the matters set forth in the Press Release prior to the issuance of the Press Release. Neither the Company nor the Elliott Parties, nor any of their respective Affiliates, will issue a press release in connection with this Agreement, other than the Press Release.
Information Sharing Agreement
. Concurrently with execution of this Agreement, the Company is entering into a letter agreement with Elliott Management Corporation (the “Information Sharing Agreement”) with respect to potential meetings with the Company and the potential sharing of confidential information, and various confidentiality and other obligations relating thereto.
Representations and Warranties of the Company
. The Company represents and warrants to the Elliott Parties as follows: (a) the Company has the power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated by this Agreement; (b) this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company and is enforceable against the Company in accordance with its terms, except as enforcement of this Agreement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles; and (c) the execution, delivery and performance of this Agreement by the Company does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to the Company, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could constitute a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.
Representations and Warranties of the Elliott Parties
. Each Elliott Party represents and warrants to the Company as follows: (a) such Elliott Party has the power and authority to
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execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated by this Agreement; (b) this Agreement has been duly and validly authorized, executed and delivered by such Elliott Party, constitutes a valid and binding obligation and agreement of such Elliott Party and is enforceable against such Elliott Party in accordance with its terms, except as enforcement of this Agreement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles; (c) the execution, delivery and performance of this Agreement by such Elliott Party does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to such Elliott Party, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could constitute a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which such Elliott Party is a party or by which it is bound; and (d) as of the date of this Agreement, the Elliott Parties and their Affiliates collectively have aggregate economic exposure to 45,932,965 Company Ordinary Shares.
Definitions
. For purposes of this Agreement:
(a)the term “Affiliate” has the meaning set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act; provided, that none of the Company or its Affiliates or Representatives, on the one hand, and the Elliott Parties and their Affiliates or Representatives, on the other hand, shall be deemed to be “Affiliates” with respect to the other for purposes of this Agreement; provided, further, that “Affiliates” of a person shall not include any entity, solely by reason of the fact that one or more of such person’s employees or principals serves as a member of its board of directors or similar governing body, unless such person otherwise controls such entity (as the term “control” is defined in Rule 12b-2 promulgated by the SEC under the Exchange Act); provided, further, that with respect to the Elliott Parties, “Affiliates” shall not include any portfolio operating company (as such term is understood in the private equity industry) of any of the Elliott Parties or their Affiliates;
(b)the terms “beneficial owner” and “beneficially own” have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act, except that a person will also be deemed to be the beneficial owner of all shares of the Company’s authorized share capital which such person has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to the exercise of any rights in connection with any securities or any agreement, arrangement or understanding (whether or not in writing), regardless of when such rights may be exercised and whether they are conditional, and all shares of the Company’s authorized share capital which such person or any of such person’s Affiliates has or shares the right to vote or dispose;
(c)the term “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder;
(d)the term “Expiration Time” means the close of business on the earlier of (i) the date of consummation of the Separation and (ii) December 31, 2020.
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(e)the term “Independent” means that such person qualifies as independent of the Company under all applicable listing standards, applicable rules of the SEC and publicly disclosed standards used by the Board in determining the independence of the Company’s directors;
(f)the terms “person” or “persons” mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability or unlimited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature;
(g)the term “Qualified Candidate” shall mean an individual who (i) qualifies as Independent, (ii) is not an employee, officer, director, general partner, manager or other agent of an Elliott Party or of any Affiliate of an Elliott Party, (iii) is not a limited partner, member or other investor (unless such investment has been disclosed to the Company) in any Elliott Party or any Affiliate of an Elliott Party, (iv) does not have any agreement, arrangement or understanding, written or oral, with any Elliott Party or any Affiliate of an Elliott Party regarding such person’s service as a director of the Company, and (v) meets all other qualifications required for service as a director set forth in Articles of Association and the Company’s Corporate Governance Guidelines;
(h)the term “Representatives” means a party’s directors, members, general partners, managers, officers, employees, agents and other representatives;
(i)the term “SEC” means the U.S. Securities and Exchange Commission;
(j)the term “Third Party” means any person that is not a party to this Agreement or a controlling or controlled Affiliate thereof, a director or officer of the Company, or legal counsel to any party to this Agreement; and
(k)the term “Voting Securities” means the Company Ordinary Shares and any other Company securities entitled to vote in the election of directors, or securities convertible into, or exercisable or exchangeable for, such shares or other securities, whether or not subject to the passage of time or other contingencies; provided that as pertains to any obligations of the Elliott Parties or any Restricted Persons hereunder (including under Section 2(b) and (c)), “Voting Securities” will not include any securities contained in any index fund, exchange traded fund, benchmark fund or broad basket of securities which may contain or otherwise reflect the performance of, but not primarily consist of, securities of the Company.
Notices
. All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard to this Agreement will be in writing and will be deemed validly given, made or served, if (a) given by email, when such email is sent to the email address set forth below, or (b) if given by any other means, when actually received during normal business hours at the address specified in this Section 8:
if to the Company:
Nielsen Holdings plc
85 Broad Street
New York, New York 10004
Attention: General Counsel
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Email: george.callard@nielsen.com
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Steven A. Rosenblum, Esq.
Sabastian V. Niles, Esq.
Raaj S. Narayan, Esq.
Email:SARosenblum@wlrk.com
SVNiles@wlrk.com
RSNarayan@wlrk.com
if to the Elliott Parties:
Elliott Management Corporation
Elliott Investment Management L.P.
Elliott Associates, L.P.
Elliott International, L.P.
40 West 57th Street
New York, New York 10019
Attention: Jesse Cohn
Marc Steinberg
Email: jcohn@elliottmgmt.com
msteinberg@elliottmgmt.com
with a copy to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, New York 10019
Attention: Steve Wolosky
Kenneth Mantel
Email: swolosky@olshanlaw.com
kmantel@olshanlaw.com
Expenses
. All fees, costs and expenses incurred in connection with this Agreement and all matters related to this Agreement will be paid by the party incurring such fees, costs or expenses.
Specific Performance; Remedies; Venue
.
(a)The Company and the Elliott Parties acknowledge and agree that irreparable injury to the other party hereto would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that such injury would not be adequately compensable by the remedies available at law (including the payment of money damages). It is accordingly agreed that the Company and the Elliott Parties will be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in addition to any other remedy
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to which they are entitled at law or in equity. FURTHERMORE, THE COMPANY AND EACH ELLIOTT PARTY AGREES (1) THE NON-BREACHING PARTY WILL BE ENTITLED TO SEEK INJUNCTIVE AND OTHER EQUITABLE RELIEF, WITHOUT PROOF OF ACTUAL DAMAGES; (2) THE BREACHING PARTY WILL NOT PLEAD IN DEFENSE THERETO THAT THERE WOULD BE AN ADEQUATE REMEDY AT LAW; AND (3) THE BREACHING PARTY AGREES TO WAIVE ANY BONDING REQUIREMENT UNDER ANY APPLICABLE LAW, IN THE CASE ANY OTHER PARTY SEEKS TO ENFORCE THE TERMS BY WAY OF EQUITABLE RELIEF. THIS AGREEMENT WILL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE (EXCEPT THAT MATTERS RELATING TO THE DUTIES OF THE MEMBERS OF THE BOARD SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF ENGLAND AND WALES).
(b)The Company and each Elliott Party (a) irrevocably and unconditionally submits to the personal jurisdiction of the Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, the federal or other state courts located in Wilmington, Delaware), (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such courts, (c) agrees that any actions or proceedings arising in connection with this Agreement or the transactions contemplated by this Agreement shall be brought, tried and determined only in such courts, (d) waives any claim of improper venue or any claim that those courts are an inconvenient forum and (e) agrees that it will not bring any action relating to this Agreement or the transactions contemplated hereunder in any court other than the aforesaid courts. The parties to this Agreement agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 8 or in such other manner as may be permitted by applicable law as sufficient service of process, shall be valid and sufficient service thereof.
Severability
. If at any time subsequent to the date hereof, any provision of this Agreement is held by any court of competent jurisdiction to be illegal, void or unenforceable, such provision will be of no force and effect, but the illegality or unenforceability of such provision will have no effect upon the legality or enforceability of any other provision of this Agreement.
Termination
. This Agreement will terminate upon the expiration of the Cooperation Period. Upon such termination, this Agreement shall have no further force and effect. Notwithstanding the foregoing, Sections 7, 8, 9, 10, 11, 12, 14 (solely with respect to the provisions that survive termination of this Agreement), 15, 16, 17 and 18 hereof shall survive termination of this Agreement, and no termination of this Agreement shall relieve any party of liability for any breach of this Agreement arising prior to such termination.
Counterparts
. This Agreement may be executed in one or more counterparts and by scanned computer image (such as .pdf), each of which will be deemed to be an original copy of this Agreement.
Affiliates
. Each of the Elliott Parties agrees that it will cause its Affiliates and their respective Representatives to comply with the terms of this Agreement applicable to such persons.
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. This Agreement is solely for the benefit of the Company and the Elliott Parties and is not enforceable by any other persons. No party to this Agreement may assign its rights or delegate its obligations under this Agreement, whether by operation of law or otherwise, without the prior written consent of the other parties, and any assignment in contravention hereof will be null and void.
No Waiver
. No failure or delay by any party in exercising any right or remedy hereunder will operate as a waiver thereof, nor will any single or partial waiver thereof preclude any other or further exercise thereof or the exercise of any other right or remedy hereunder.
Entire Understanding
; Amendment. This Agreement and the Information Sharing Agreement (and agreements referred to therein) contain the entire understanding of the parties with respect to the subject matter hereof and supersede any and all prior and contemporaneous agreements, memoranda, arrangements and understandings, both written and oral, between the parties, or any of them, with respect to the subject matter of this Agreement. This Agreement may be amended only by an agreement in writing executed by the Company and the Elliott Parties.
Interpretation and Construction
. The Company and each Elliott Party acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said counsel. Each party and its counsel cooperated and participated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto exchanged among the parties will be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by the Company and each Elliott Party, and any controversy over interpretations of this Agreement will be decided without regard to events of drafting or preparation. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”
[Signature page follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the parties as of the date hereof.
ELLIOTT PARTIES
ELLIOTT MANAGEMENT CORPORATION
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/s/ Elliot Greenberg |
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Elliot Greenberg |
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Vice President |
ELLIOTT INVESTMENT MANAGEMENT, L.P.
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/s/ Elliot Greenberg |
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Elliot Greenberg |
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Vice President |
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ELLIOTT ASSOCIATES, L.P. |
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Elliott Investment Management L.P., |
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/s/ Elliot Greenberg |
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Name: |
Elliot Greenberg |
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Title: |
Vice President |
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ELLIOTT INTERNATIONAL, L.P. |
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By: |
Hambledon, Inc., |
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By: |
Elliott Investment Management L.P., |
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/s/ Elliot Greenberg |
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Elliot Greenberg |
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Vice President
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* * * *
[Signature Page to Cooperation Agreement]
NIELSEN HOLDINGS PLC
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By: |
/s/ George Callard |
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Name: |
George Callard |
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Title: |
Chief Legal Officer |
[Signature Page to Cooperation Agreement]
NIELSEN HOLDINGS PLC
FINANCE COMMITTEE
OF THE BOARD OF DIRECTORS
CHARTER
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I. |
PURPOSE AND RESPONSIBILITIES |
The Finance Committee (the “Committee”) of the Board of Directors (the “Board”) of Nielsen Holdings plc (the “Company”) shall provide assistance to the Board and management of the Company by, among other things, reviewing and providing advice with respect to:
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The Company’s strategic and operational plans and transactions, including mergers, acquisitions and divestitures, as well as joint ventures and other equity investments; the Company’s annual and long-term financial plans; and the Company’s capital spending plans; |
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The Company’s capital structure, including potential issuances of debt and equity securities, credit agreements, and other financing transactions; |
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Any significant financial exposures or contingent liabilities, hedging and other financial risk management strategies, and the Company’s relationships with credit rating agencies; |
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Employee benefit and pension plan policies, administration and performance; |
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Dividend policy and share repurchases; |
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Tax strategy and planning; |
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The separation of the Company’s Global Connect business; |
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H. |
An investor day in advance of the separation of the Global Connect business, to present the Company’s strategy, operating plan and related matters to shareholders, to be held at such time as determined appropriate by the Board; and |
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I. |
Such other topics as the Board may deem appropriate. |
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II. |
STRUCTURE AND OPERATIONS |
Composition and Qualifications
The Committee shall be comprised of five members of the Board, which shall initially include James Attwood, Jon Miller and three other directors selected by the Board.
Appointment and Removal
The members of the Committee shall be appointed by the Board and shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation,
removal, disqualification or death. The members of the Committee may, at any time, be removed, with or without cause, by action of the Board.
Chairperson
The initial chairperson of the Committee (the “Chairperson”) shall be James Attwood. Any successor Chairperson may be selected by the Board or by majority vote of the full Committee membership. The Chairperson is expected to chair all regular sessions of the Committee and be responsible for setting the agendas for Committee meetings (in consultation with management, as appropriate). In the absence of the Chairperson, the Committee shall select another member to preside.
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III. |
MEETINGS |
The Committee shall meet periodically as circumstances dictate. The Chairperson or any two members of the Committee may call meetings of the Committee. Meetings of the Committee may be held telephonically.
All directors who are not members of the Committee may attend meetings of the Committee but may not vote. Additionally, the Committee may invite to its meetings any director or member of management of the Company and such other persons as it deems appropriate in order to carry out its responsibilities. The Committee may also exclude from its meetings any persons it deems appropriate in order to carry out its responsibilities.
A majority of the Committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which there is a quorum shall be the act of the Committee.
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IV. |
MINUTES AND REPORTS TO THE BOARD |
The Committee shall maintain minutes or other records of its meetings and shall give regular reports to the Board on these meetings, including the Committee’s actions, conclusions and recommendations and such other matters as required by this charter or as the Board shall from time to time specify. Reports to the Board may take the form of oral reports by the Chairperson or by any other member of the Committee designated by the Committee to give such report.
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V. |
ANNUAL PERFORMANCE EVALUATION |
The Committee shall perform a review and evaluation, at least annually, of the performance of the Committee and its members, including by reviewing the compliance of the Committee with this Charter. In addition, the Committee shall periodically review and reassess the adequacy of this Charter and recommend to the Board any proposed changes to this Charter that the Committee considers necessary or appropriate. The Committee shall conduct such evaluations and reviews in such manner as it deems appropriate.
Effective Date: [l], 2020
News Release
Investor Relations: Sara Gubins, +1 646 654 8153
Media Relations: Laura Nelson, +1 203 563 2929
Nielsen to Appoint Jonathan Miller to Board of Directors
Forming Finance Committee of the Board
Enters into Information Sharing and Cooperation Agreements with Elliott Management
NEW YORK, NY – April 30, 2020 — Nielsen (NYSE: NLSN) (the “Company”) announced today that it plans to appoint digital media veteran Jonathan Miller to the Company's Board of Directors following the Company’s Annual General Meeting of Shareholders scheduled for May 12, 2020. The Company expects the appointment to be effective in June. The Company’s Board will also form a Finance Committee whose responsibilities include overseeing the Company’s strategic, capital and financial plans, including the separation of the Company’s Global Connect business and the Company’s go-forward strategy.
In addition, to facilitate continuing engagement and collaboration with one of its largest shareholders, Nielsen entered into Information Sharing and Cooperation Agreements with Elliott Management Corporation ("Elliott"), owner of a 13% economic interest in Nielsen. The agreements will allow Elliott to access certain confidential information at Elliott’s request and to continue to engage with members of the Company’s senior management team and Board. The agreements also provide for the appointment of Mr. Miller, the formation of the Finance Committee, and customary standstill, voting and other provisions. The Cooperation Agreement will be filed as an exhibit to the Company’s Current Report on Form 8-K.
A 30-year veteran of the digital media industry, Miller’s career has included senior roles at News Corporation, Viacom, AOL and NBA Entertainment. As Chief Digital Officer, Chairman and CEO of News Corporation’s Digital Media Group, Miller drove the company’s overall digital strategy including Fox Interactive Media and Hulu. During his tenure as Chairman and CEO of AOL, Miller led the company’s transformation, including the acquisition of Advertising.com. Currently, he serves as the CEO of Integrated Media Co. and a Senior Advisor at Advancit Capital focusing on investments in companies at the intersection of media, technology and entertainment. Miller is a recipient of the inaugural Vanguard Award from the International Emmy Association, the Hollywood Power Player of the Year from the Hollywood Reporter and the inaugural Pioneer Prize from the Producers Guild of America.
"Jon brings deep experience as a leader of global media businesses and a driver of digital innovation and growth. We are confident he will add significant value to our Board of Directors. Jon marks the fourth new board member we have welcomed in the last six months as we prepare for the separation of Connect and ensure we have the right capabilities to execute on our strategic plans and increase value for our company and shareholders. We are also pleased to form a new Finance Committee. We have planned for this for some time, and with our expanded Board, we are now in a position to execute on this goal," said James Attwood, Chairman of the Board, Nielsen.
Chief Executive Officer David Kenny said, “Amidst a challenging environment around the world, we remain focused on executing our strategy to drive the next phase of growth over the long-term. Jon is a visionary leader and innovator, and I look forward to his contribution.” Kenny added, “In addition to our regular quarterly communication cadences, we plan to provide further detail on Nielsen’s strategies and opportunities during an investor day prior to the separation of Connect.”
"Nielsen plays a fundamentally important role in the global digital media and consumer packaged goods ecosystem. I believe the company is well-positioned to capture the many growth opportunities ahead in both Media and Connect as they continue to evolve. I look forward to joining the board during this pivotal time," said Miller.
“Elliott believes that Nielsen is significantly undervalued, and we have increased our economic stake in the Company to 13% given our conviction in the value opportunity. We have had collaborative engagement with Nielsen over the past two years, and today’s agreement allows us to further this engagement,” said Elliott Partner Jesse Cohn. “We believe that the addition of Jon and the formation of a Finance Committee to help oversee the separation of Global Connect and the development of a plan to drive increased growth and profitability for Nielsen’s Global Media business represent critical steps toward unlocking the value-creation potential that we believe exists at Nielsen.”
Finance Committee
The Finance Committee will be a standing committee and will meet regularly to oversee the Company’s strategic, capital and financial plans, among other matters. Under the scope, the Committee will oversee the separation of Global Connect. In addition, the Committee will oversee the strategic and operating plan for Global Media.
The Finance Committee will be chaired by Jim Attwood and will include Mr. Miller following his appointment to the Board, as well as three other independent directors. The Charter of the Finance Committee is an exhibit to the Cooperation Agreement to be filed with the Company’s Current Report on Form 8-K.
About Nielsen
Nielsen Holdings plc (NYSE: NLSN) is a global measurement and data analytics company that provides the most complete and trusted view available of consumers and markets worldwide. Nielsen is divided into two business units. Nielsen Global Media, the arbiter of truth for media markets, provides media and advertising industries with unbiased and reliable metrics that create a shared understanding of the industry required for markets to function. Nielsen Global Connect provides consumer packaged goods manufacturers and retailers with accurate, actionable information and insights and a complete picture of the complex and changing marketplace that companies need to innovate and grow.
Our approach marries proprietary Nielsen 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.
An S&P 500 company, Nielsen has operations in over 100 countries, covering more than 90% of the world's population. For more information, visit www.nielsen.com.
EXHIBIT 99.4
News Release
Investor Relations: Sara Gubins, +1 646 654 8153
Media Relations: Laura Nelson, +1 203 563 2929
Nielsen to Appoint Jonathan Miller to Board of Directors
Forming Finance Committee of the Board
Enters into Information Sharing and Cooperation Agreements with Elliott Management
NEW YORK, NY – April 30, 2020 — Nielsen (NYSE: NLSN) (the “Company”) announced today that it plans to appoint digital media veteran Jonathan Miller to the Company's Board of Directors following the Company’s Annual General Meeting of Shareholders scheduled for May 12, 2020. The Company expects the appointment to be effective in June. The Company’s Board will also form a Finance Committee whose responsibilities include overseeing the Company’s strategic, capital and financial plans, including the separation of the Company’s Global Connect business and the Company’s go-forward strategy.
In addition, to facilitate continuing engagement and collaboration with one of its largest shareholders, Nielsen entered into Information Sharing and Cooperation Agreements with Elliott Management Corporation ("Elliott"), owner of a 13% economic interest in Nielsen. The agreements will allow Elliott to access certain confidential information at Elliott’s request and to continue to engage with members of the Company’s senior management team and Board. The agreements also provide for the appointment of Mr. Miller, the formation of the Finance Committee, and customary standstill, voting and other provisions. The Cooperation Agreement will be filed as an exhibit to the Company’s Current Report on Form 8-K.
A 30-year veteran of the digital media industry, Miller’s career has included senior roles at News Corporation, Viacom, AOL and NBA Entertainment. As Chief Digital Officer, Chairman and CEO of News Corporation’s Digital Media Group, Miller drove the company’s overall digital strategy including Fox Interactive Media and Hulu. During his tenure as Chairman and CEO of AOL, Miller led the company’s transformation, including the acquisition of Advertising.com. Currently, he serves as the CEO of Integrated Media Co. and a Senior Advisor at Advancit Capital focusing on investments in companies at the intersection of media, technology and entertainment. Miller is a recipient of the inaugural Vanguard Award from the International Emmy Association, the Hollywood Power Player of the Year from the Hollywood Reporter and the inaugural Pioneer Prize from the Producers Guild of America.
EXHIBIT 99.4
"Jon brings deep experience as a leader of global media businesses and a driver of digital innovation and growth. We are confident he will add significant value to our Board of Directors. Jon marks the fourth new board member we have welcomed in the last six months as we prepare for the separation of Connect and ensure we have the right capabilities to execute on our strategic plans and increase value for our company and shareholders. We are also pleased to form a new Finance Committee. We have planned for this for some time, and with our expanded Board, we are now in a position to execute on this goal," said James Attwood, Chairman of the Board, Nielsen.
Chief Executive Officer David Kenny said, “Amidst a challenging environment around the world, we remain focused on executing our strategy to drive the next phase of growth over the long-term. Jon is a visionary leader and innovator, and I look forward to his contribution.” Kenny added, “In addition to our regular quarterly communication cadences, we plan to provide further detail on Nielsen’s strategies and opportunities during an investor day prior to the separation of Connect.”
"Nielsen plays a fundamentally important role in the global digital media and consumer packaged goods ecosystem. I believe the company is well-positioned to capture the many growth opportunities ahead in both Media and Connect as they continue to evolve. I look forward to joining the board during this pivotal time," said Miller.
“Elliott believes that Nielsen is significantly undervalued, and we have increased our economic stake in the Company to 13% given our conviction in the value opportunity. We have had collaborative engagement with Nielsen over the past two years, and today’s agreement allows us to further this engagement,” said Elliott Partner Jesse Cohn. “We believe that the addition of Jon and the formation of a Finance Committee to help oversee the separation of Global Connect and the development of a plan to drive increased growth and profitability for Nielsen’s Global Media business represent critical steps toward unlocking the value-creation potential that we believe exists at Nielsen.”
Finance Committee
The Finance Committee will be a standing committee and will meet regularly to oversee the Company’s strategic, capital and financial plans, among other matters. Under the scope, the Committee will oversee the separation of Global Connect. In addition, the Committee will oversee the strategic and operating plan for Global Media.
The Finance Committee will be chaired by Jim Attwood and will include Mr. Miller following his appointment to the Board, as well as three other independent directors. The Charter of the Finance Committee is an exhibit to the Cooperation Agreement to be filed with the Company’s Current Report on Form 8-K.
About Nielsen
Nielsen Holdings plc (NYSE: NLSN) is a global measurement and data analytics company that provides the most complete and trusted view available of consumers and markets worldwide. Nielsen is divided into two business units. Nielsen Global Media, the arbiter of truth for media markets, provides media and advertising industries with unbiased and reliable metrics that create a shared understanding of the industry required for markets to function. Nielsen Global Connect provides consumer packaged goods manufacturers and retailers with accurate, actionable information and insights and a complete picture of the complex and changing marketplace that companies need to innovate and grow.
Our approach marries proprietary Nielsen 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.
An S&P 500 company, Nielsen has operations in over 100 countries, covering more than 90% of the world's population. For more information, visit www.nielsen.com.
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