Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

 

 

(Mark One)

 

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

For the quarterly period ended September 30, 2012

OR

 

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

For the transition period from              to             

Commission file number 001-35042

Nielsen Holdings N.V.

(Exact name of registrant as specified in its charter)

 

 

 

The Netherlands   98-0662038

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

770 Broadway

New York, New York 10003

(646) 654-5000

 

Diemerhof 2

1112 XL Diemen

The Netherlands

+31 (0) 20 398 87 77

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

 

 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨

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

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   x   (Do not check if a smaller reporting company)    Smaller reporting company   ¨

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

There were 362,170,303 shares of the registrant’s Common Stock outstanding as of September 30, 2012.

 

 

 

Table of Contents

Table of Contents

Contents

 

          PAGE  

PART I.

  

FINANCIAL INFORMATION

     3   

Item 1.

  

Condensed Consolidated Financial Statements

     3   

Item 2.

  

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

     17   

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

     31   

Item 4.

  

Controls and Procedures

     32   

PART II.

  

OTHER INFORMATION

     32   

Item 1.

  

Legal Proceedings

     32   

Item 1A.

  

Risk Factors

     32   

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

     32   

Item 3.

  

Defaults Upon Senior Securities

     32   

Item 4.

  

Mine Safety Disclosures

     32   

Item 5.

  

Other Information

     32   

Item 6.

  

Exhibits

     32   
  

Signatures

     33   

Table of Contents

PART I. FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements

Nielsen Holdings N.V.

Condensed Consolidated Statements of Operations (Unaudited)

 

    Three Months  Ended
September 30, 		    Nine Months  Ended
September 30, 		 
(IN MILLIONS EXCEPT SHARE AND PER SHARE DATA)   2012     2011     2012     2011  

Revenues

  $ 1,423      $ 1,413      $ 4,148      $ 4,111   
 

 

 

   

 

 

   

 

 

   

 

 

 

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

    565        554        1,694        1,673   

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

    444        460        1,338        1,453   

Depreciation and amortization

    130        125        388        396   

Restructuring charges

    3        9        56        55   
 

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    281        265        672        534   
 

 

 

   

 

 

   

 

 

   

 

 

 

Interest income

    1        2        3        5   

Interest expense

    (106 )      (114 )      (319 )      (368 ) 

Loss on derivative instruments

    —          —          —          (1 ) 

Foreign currency exchange transaction gains/(losses), net

    1        (4 )      (12 )      (7 ) 

Other (expense)/income, net

    (1 )      —          3        (221 ) 
 

 

 

   

 

 

   

 

 

   

 

 

 

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

    176        149        347        (58 ) 

(Provision)/benefit for income taxes

    (69 )      (44 )      (114 )      51   

Equity in net (loss)/income of affiliates

    (1 )      (2 )      1        (1 ) 
 

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) from continuing operations

    106        103        234        (8 ) 

Loss from discontinued operations, net of tax

    —          —          —          (1 ) 
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss)

    106        103        234        (9 ) 

Net income attributable to noncontrolling interests

    1        1       —          2   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) attributable to Nielsen stockholders

  $ 105      $ 102      $ 234      $ (11 ) 
 

 

 

   

 

 

   

 

 

   

 

 

 

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

       

Income/(loss) from continuing operations

  $ 0.29      $ 0.28      $ 0.65      $ (0.03 ) 

Net income/(loss) attributable to Nielsen stockholders

  $ 0.29      $ 0.28      $ 0.65      $ (0.03 ) 

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

       

Income/(loss) from continuing operations

  $ 0.29      $ 0.28      $ 0.64      $ (0.03 ) 

Net income/(loss) attributable to Nielsen stockholders

  $ 0.29      $ 0.28      $ 0.64      $ (0.03 ) 

Weighted-average shares of common stock outstanding, basic

    362,016,373        359,381,233        361,477,554        349,910,371   

Dilutive shares of common stock from stock compensation plans

    4,205,147        5,090,571        4,511,519        —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares of common stock outstanding, diluted

    366,221,520        364,471,804        365,989,073        349,910,371   
 

 

 

   

 

 

   

 

 

   

 

 

 

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

 

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Table of Contents

Nielsen Holdings N.V.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

 

     Three Months Ended
September 30, 		    Nine Months Ended
September 30, 		 

(IN MILLIONS)

   2012     2011     2012     2011  

Net income/(loss)

   $ 106      $ 103      $ 234      $ (9 ) 

Other comprehensive income/(loss), net of tax

      

Foreign currency translation adjustments, net of tax

     64        (216 )      65        (158 ) 

Available for sale securities, net of tax

     (1 )      —          (5 )      —     

Changes in the fair value of cash flow hedges, net of tax

     —          (3 )      (1 )      (3 )

Defined benefit pension plan adjustments, net of tax

     2       —          4        (1 ) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income/(loss)

     65        (219 )      63        (162 ) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income/(loss)

     171        (116 )      297        (171 ) 

Comprehensive income attributable to noncontrolling interests

     1        —          —          2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income/(loss) attributable to Nielsen stockholders

   $ 170      $ (116 )    $ 297      $ (173 ) 
  

 

 

   

 

 

   

 

 

   

 

 

 

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

 

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Nielsen Holdings N.V.

Condensed Consolidated Balance Sheets

 

(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)

   September 30,
2012
(Unaudited) 		    December 31,
2011 		 

Assets:

    

Current assets

    

Cash and cash equivalents

   $ 325      $ 319   

Trade and other receivables, net of allowances for doubtful accounts and sales returns of $26 and $24 as of September 30, 2012 and December 31, 2011, respectively

     1,079        1,080   

Prepaid expenses and other current assets

     279        266   
  

 

 

   

 

 

 

Total current assets

     1,683        1,665   

Non-current assets

    

Property, plant and equipment, net

     555        609   

Goodwill

     7,276        7,155   

Other intangible assets, net

     4,556        4,561   

Deferred tax assets

     114        198   

Other non-current assets

     312        316   
  

 

 

   

 

 

 

Total assets

   $ 14,496      $ 14,504   
  

 

 

   

 

 

 

Liabilities and equity:

    

Current liabilities

    

Accounts payable and other current liabilities

   $ 914      $ 1,025   

Deferred revenues

     370        443   

Income tax liabilities

     94        80   

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

     428        144   
  

 

 

   

 

 

 

Total current liabilities

     1,806        1,692   

Non-current liabilities

    

Long-term debt and capital lease obligations

     6,252        6,619   

Deferred tax liabilities

     936        996   

Other non-current liabilities

     521        556   
  

 

 

   

 

 

 

Total liabilities

     9,515        9,863   
  

 

 

   

 

 

 

Commitments and contingencies (Note 10)

    

Equity:

    

Nielsen stockholders’ equity

    

Common stock, €0.07 par value, 1,185,000,000 shares authorized; 362,383,430 and 360,107,359 shares issued and 362,170,303 and 359,647,605 shares outstanding at September 30, 2012 and December 31, 2011, respectively

     30        30   

Additional paid-in capital

     6,473        6,427   

Accumulated deficit

     (1,291 )      (1,525 ) 

Accumulated other comprehensive loss, net of income taxes

     (236 )      (299 ) 
  

 

 

   

 

 

 

Total Nielsen stockholders’ equity

     4,976        4,633   

Noncontrolling interests

     5        8   
  

 

 

   

 

 

 

Total equity

     4,981        4,641   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 14,496      $ 14,504   
  

 

 

   

 

 

 

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

 

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Nielsen Holdings N.V.

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

     Nine Months Ended
September 30, 		 

(IN MILLIONS)

   2012     2011  

Operating Activities

    

Net income/(loss)

   $ 234      $ (9 ) 

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

    

Stock-based compensation expense

     24        18   

Currency exchange rate differences on financial transactions and other losses

     9        228   

Loss on derivative instruments

     —          1   

Equity in net (loss)/income of affiliates, net of dividends received

     6        10   

Depreciation and amortization

     388        396   

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

    

Trade and other receivables, net

     13        (38 ) 

Prepaid expenses and other current assets

     (30 )      (29 ) 

Accounts payable and other current liabilities and deferred revenues

     (270 )      (148 ) 

Other non-current liabilities

     (2 )      (2 ) 

Interest payable

     46        56   

Income taxes

     26        (144 ) 
  

 

 

   

 

 

 

Net cash provided by operating activities

     444        339   
  

 

 

   

 

 

 

Investing Activities

    

Acquisition of subsidiaries and affiliates, net of cash acquired

     (136 )      (114 ) 

Proceeds from sale of subsidiaries and affiliates, net

     (1 )     3   

Additions to property, plant and equipment and other assets

     (72 )      (84 ) 

Additions to intangible assets

     (153 )      (129 ) 

Other investing activities

     —          (2 ) 
  

 

 

   

 

 

 

Net cash used in investing activities

     (362 )      (326 ) 
  

 

 

   

 

 

 

Financing Activities

    

Net borrowings under revolving credit facility

     65        —     

Proceeds from issuances of debt, net of issuance costs

     1,209        277   

Repayment of debt

     (1,381 )      (1,890 ) 

Increase/(decrease) in other short-term borrowings

     10        (2 ) 

Proceeds from the issuance of common stock

     —          1,801   

Proceeds from the exercise of stock options and other activity under stock plans

     28        3  

Other financing activities

     (11 )      (216 ) 
  

 

 

   

 

 

 

Net cash used in financing activities

     (80 )      (27 ) 
  

 

 

   

 

 

 

Effect of exchange-rate changes on cash and cash equivalents

     4       (3 ) 
  

 

 

   

 

 

 

Net increase/(decrease) in cash and cash equivalents

     6        (17 ) 

Cash and cash equivalents at beginning of period

     319        421   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 325      $ 404   
  

 

 

   

 

 

 

Supplemental Cash Flow Information

    

Cash paid for income taxes

   $ (88 )    $ (92 ) 

Cash paid for interest, net of amounts capitalized

   $ (273 )    $ (312 ) 

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

 

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Nielsen Holdings N.V.

Notes to Condensed Consolidated Financial Statements (continued)

1. Background and Basis of Presentation

Background

Nielsen Holdings N.V. (“Nielsen” or the “Company”), together with its subsidiaries, is a leading global information and measurement company that provides clients with a comprehensive understanding of consumers and consumer behavior. Nielsen is aligned into three reporting segments: what consumers buy (“Buy”), what consumers watch (“Watch”) and Expositions. Nielsen has a presence in approximately 100 countries, with its headquarters located in Diemen, the Netherlands and New York, USA.

The Company was formed by several private equity groups through Valcon Acquisition Holding (Luxembourg) S.à r.l. (“Luxco”). As of December 31, 2011, Luxco owned 270,746,445 shares (or approximately 75%) of the Company’s common stock. On March 26, 2012, Luxco and certain Nielsen employees (the “selling shareholders”) completed a public offering of 34,500,000 shares of Nielsen’s common stock at a price of $30.25 per share. Subsequent to this offering and as of September 30, 2012, Luxco owned 236,266,399 shares (or approximately 65%) of the Company’s common stock.

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited but, in the opinion of management, contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the Company’s financial position and the results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) applicable to interim periods. For a more complete discussion of significant accounting policies, commitments and contingencies and certain other information, refer to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. All amounts are presented in U.S. Dollars (“$”), except for share data or where expressly stated as being in other currencies, e.g., Euros (“€“). The condensed consolidated financial statements include the accounts of Nielsen and all subsidiaries and other controlled entities. The Company has evaluated events occurring subsequent to September 30, 2012 for potential recognition or disclosure in the condensed consolidated financial statements and concluded there were no subsequent events that required recognition or disclosure other than those provided.

Earnings per Share

Basic net income or loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed using the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common stock consist of employee stock options and restricted stock as well as the amount of potential shares to be converted associated with the mandatory convertible subordinated bonds due 2013.

The effect of 8,815,982 and 5,871,363 shares of common stock equivalents under stock compensation plans were excluded from the calculation of diluted earnings per share for the three months ended September 30, 2012 and 2011, respectively, as such shares would have been anti-dilutive.

The effect of 6,960,905 shares of common stock equivalents under stock compensation plans were excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2012, as such shares would have been anti-dilutive. The effect of 18,387,402 shares of common stock equivalents under stock compensation plans have been excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2011, due to the Company’s net loss position in that period. Of this amount and assuming dilution, 5,020,344 potential common shares would have been included in the calculation of diluted earnings per share and 4,038,516 anti-dilutive stock options would have been excluded from the calculation.

Additionally, the Company’s mandatory convertible subordinated bonds due 2013 are convertible into between 10,416,700 and 12,499,925 shares of common stock, of which a weighted-average number of potential common shares of 10,416,700 were excluded from the calculation of diluted earnings per share for the three and nine months ended September 30, 2012 and 10,416,700 and 9,233,851 for the three and nine months ended September 30, 2011, respectively, as such shares would have been anti-dilutive.

2. Summary of Recent Accounting Pronouncements

Fair Value Measurement

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting update that amends Accounting Standards Codification (“ASC”) 820 - “Fair Value Measurement” regarding fair value measurements and disclosure requirements. The amendments were effective for Nielsen as of January 1, 2012. The adoption of this update did not have a significant impact on the Company’s condensed consolidated financial statements.

 

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Presentation of Comprehensive Income

In June 2011, the FASB issued an accounting update that amends ASC 220 - “Presentation of Comprehensive Income”, which eliminates the option to present other comprehensive income and its components in the statement of equity. The Company has presented the items of net income and other comprehensive income in two separate, but consecutive statements and this amended guidance does not have any other impact on the Company’s condensed consolidated financial statements.

Testing Goodwill and Indefinite-Lived Intangible Assets for Impairment

In September 2011 and July 2012, the FASB issued accounting updates that amend ASC 350 - “Goodwill and Other Intangible Assets”, which were intended to simplify impairment testing for goodwill and indefinite-lived intangible assets by adding a qualitative review step to assess whether the previously required quantitative impairment analysis is necessary. The amended guidance permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the prescribed two-step impairment test. Otherwise, the two-step impairment test is not required. The Company will apply the updated guidance to its October 1, 2012 annual impairment test and has considered the results of its 2011 impairment test in forming the basis for its assumptions upon adoption of this update. The adoption of this update will not have a significant impact on the Company’s consolidated financial statements.

3. Business Acquisitions

For the nine months ended September 30, 2012, Nielsen paid cash consideration of $136 million associated with both current period and previously executed acquisitions, net of cash acquired. Had the current period acquisitions occurred as of January 1, 2012, the impact on Nielsen’s consolidated results of operations would not have been material.

For the nine months ended September 30, 2011, Nielsen paid cash consideration of $114 million associated with both current period and previously executed acquisitions, net of cash acquired. Had that period’s acquisitions occurred as of January 1, 2011, the impact on Nielsen’s consolidated results of operations would not have been material.

4. Goodwill and Other Intangible Assets

Goodwill

The table below summarizes the changes in the carrying amount of goodwill by reportable segment for the nine months ended September 30, 2012.

 

(IN MILLIONS)

   Buy      Watch     Expositions      Total  

Balance, December 31, 2011

   $ 3,055       $ 3,540      $ 560       $ 7,155   

Acquisitions, divestitures and other adjustments

     13         62        —           75   

Effect of foreign currency translation

     47         (1 )      —           46   
  

 

 

    

 

 

   

 

 

    

 

 

 

Balance, September 30, 2012

   $ 3,115       $ 3,601      $ 560       $ 7,276   
  

 

 

    

 

 

   

 

 

    

 

 

 

At September 30, 2012, $129 million of the goodwill is expected to be deductible for income tax purposes.

Other Intangible Assets

 

(IN MILLIONS)

   Gross Amounts      Accumulated Amortization  
   September 30,
2012 		     December 31,
2011 		     September 30,
2012 		    December 31,
2011 		 

Indefinite-lived intangibles:

          

Trade names and trademarks

   $ 1,921       $ 1,921       $ —        $ —     
  

 

 

    

 

 

    

 

 

   

 

 

 

Amortized intangibles:

          

Trade names and trademarks

   $ 127       $ 113       $ (43 )    $ (37 ) 

Customer-related intangibles

     2,880         2,823         (854 )      (747 ) 

Covenants-not-to-compete

     36         32         (24 )      (22 ) 

Computer software

     1,240         1,089         (763 )      (648 ) 

Patents and other

     91         83         (55 )      (46 ) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 4,374       $ 4,140       $ (1,739 )    $ (1,500 ) 
  

 

 

    

 

 

    

 

 

   

 

 

 

 

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Amortization expense associated with the above intangible assets was $80 million and $77 million for the three months ended September 30, 2012 and 2011, respectively. These amounts included amortization expense associated with computer software of $39 million and $36 million for the three months ended September 30, 2012 and 2011, respectively.

The amortization expense associated with the above intangible assets was $237 million and $235 million for the nine months ended September 30, 2012 and 2011, respectively. These amounts included amortization expense associated with computer software of $115 million and $114 million for the nine months ended September 30, 2012 and 2011, respectively.

5. Restructuring Activities

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

 

(IN MILLIONS)

   Total
Initiatives 		 

Balance at December 31, 2011

   $ 67   

Charges

     56   

Payments

     (67 ) 

Effect of foreign currency translation and reclassification adjustments

     (2 ) 
  

 

 

 

Balance at September 30, 2012

   $ 54   
  

 

 

 

Nielsen recorded $3 million and $9 million in restructuring charges, primarily relating to severance cost, for the three months ended September 30, 2012 and 2011, respectively. Nielsen recorded $56 million and $55 million in restructuring charges for the nine months ended September 30, 2012 and 2011, respectively, primarily relating to severance costs.

Of the $54 million in remaining liabilities for restructuring actions, $44 million is expected to be paid within one year and is classified as a current liability within the condensed consolidated balance sheet as of September 30, 2012.

6. Fair Value Measurements

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

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

 

Level 1:       Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2:       Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3:       Pricing inputs that are generally unobservable and may not be corroborated by market data.

 

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Financial Assets and Liabilities Measured on a Recurring Basis

The Company’s financial assets and liabilities are measured and recorded at fair value, except for equity method investments, cost method investments, and long-term debt. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The following table summarizes the valuation of the Company’s material financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011:

 

(IN MILLIONS)

    September 30, 
2012 		     Level 1      Level 2      Level 3  

Assets:

        

Investments in equity securities (1)

   $ 15       $ 15       $ —         $ —     

Plan assets for deferred compensation (2)

     22         22         —           —     

Investment in mutual funds (3)

     2         2         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 39       $ 39       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Interest rate swap arrangements (4)

   $ 26       $ —         $ 26       $ —     

Deferred compensation liabilities (5)

     22         22         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 48       $ 22       $ 26       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(IN MILLIONS)

    December 31, 
2011 		     Level 1      Level 2      Level 3  

Assets:

        

Investments in equity securities (1)

   $ 21       $ 21       $ —         $ —     

Plan assets for deferred compensation (2)

     20         20         —           —     

Investment in mutual funds (3)

     2         2         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 43       $ 43       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Interest rate swap arrangements (4)

   $ 24       $ —         $ 24       $ —     

Deferred compensation liabilities (5)

     20         20         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 44       $ 20       $ 24       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Investments in equity securities are carried at fair value, which is based on the quoted market price at period end in an active market. These investments are classified as available-for-sale with any unrealized gains or losses resulting from changes in fair value recorded, net of tax, as a component of accumulated other comprehensive income/(loss) until realized.
(2) Plan assets are comprised of investments in mutual funds, which are intended to fund liabilities arising from deferred compensation plans. These investments are carried at fair value, which is based on quoted market prices at period end in active markets. These investments are classified as trading securities with any gains or losses resulting from changes in fair value recorded in other (expense)/income, net.
(3) Investments in mutual funds are money-market accounts held with the intention of funding certain specific retirement plans.
(4) Derivative financial instruments include interest rate swap arrangements recorded at fair value based on externally-developed valuation models that use readily observable market parameters and the consideration of counterparty risk.
(5) The Company offers certain employees the opportunity to participate in a deferred compensation plan. A participant’s deferrals are invested in a variety of participant directed stock and bond mutual funds and are classified as trading securities. Changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation.

 

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Derivative Financial Instruments

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

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

Nielsen manages exposure to possible defaults on derivative financial instruments by monitoring the concentration of risk that Nielsen has with any individual bank and through the use of minimum credit quality standards for all counterparties. Nielsen does not require collateral or other security in relation to derivative financial instruments. A derivative contract entered into between Nielsen or certain of its subsidiaries and a counterparty that was also a lender under Nielsen’s senior secured credit facilities at the time the derivative contract was entered into is guaranteed under the senior secured credit facilities by Nielsen and certain of its subsidiaries (see Note 7 - Long-term Debt and Other Financing Arrangements for more information). Since it is Nielsen’s policy to only enter into derivative contracts with banks of internationally acknowledged standing, Nielsen considers the counterparty risk to be remote.

It is Nielsen’s policy to have an International Swaps and Derivatives Association (“ISDA”) Master Agreement established with every bank with which it has entered into any derivative contract. Under each of these ISDA Master Agreements, Nielsen agrees to settle only the net amount of the combined market values of all derivative contracts outstanding with any one counterparty should that counterparty default. Certain of the ISDA Master Agreements contain cross-default provisions where if the Company either defaults in payment obligations under its credit facility or if such obligations are accelerated by the lenders, then the Company could also be declared in default on its derivative obligations. At September 30, 2012, Nielsen had no material exposure to potential economic losses due to counterparty credit default risk or cross-default risk on its derivative financial instruments.

Interest Rate Risk

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

As of September 30, 2012, the Company had the following outstanding interest rate swaps utilized in the management of its interest rate risk:

 

     Notional Amount      Maturity Date      Currency  

Interest rate swaps designated as hedging instruments

        

US Dollar term loan floating-to-fixed rate swaps

   $ 500,000,000         November 2012         US Dollar   

US Dollar term loan floating-to-fixed rate swaps

   $ 250,000,000         March 2013         US Dollar   

US Dollar term loan floating-to-fixed rate swaps

   $ 1,000,000,000         November 2013         US Dollar   

US Dollar term loan floating-to-fixed rate swaps

   $ 250,000,000         November 2014         US Dollar   

US Dollar term loan floating-to-fixed rate swaps

   $ 250,000,000         September 2015         US Dollar   

US Dollar term loan floating-to-fixed rate swaps

   $ 125,000,000         November 2015         US Dollar   

Euro term loan floating-to-fixed rate swaps

   € 125,000,000         November 2015         Euro   

Nielsen expects to recognize approximately $15 million of net pre-tax losses from accumulated other comprehensive loss to interest expense in the next 12 months associated with its interest-related derivative financial instruments.

 

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Fair Values of Derivative Instruments in the Consolidated Balance Sheets

The fair values of the Company’s derivative instruments as of September 30, 2012 and December 31, 2011 were as follows:

 

     September 30, 2012      December 31, 2011  

Derivatives Designated as Hedging Instruments

(IN MILLIONS)

   Accounts
Payable and
Other
Current
Liabilities 		     Other
Non-
Current
Liabilities 		     Accounts
Payable and
Other
Current
Liabilities 		     Other
Non-
Current
Liabilities 		 

Interest rate swaps

   $ 4       $ 22       $ 10       $ 14   
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivatives in Cash Flow Hedging Relationships

The pre-tax effect of derivative instruments in cash flow hedging relationships for the three months ended September 30, 2012 and 2011 was as follows:

 

Derivatives in Cash Flow

Hedging Relationships

(IN MILLIONS)

   Amount of
Loss
Recognized in OCI
(Effective Portion)
Three Months Ended
September 30, 		     Location of Loss
Reclassified from OCI
into Income  (Effective
Portion) 		     Amount of Loss
Reclassified from
OCI into Income
(Effective Portion)
Three Months Ended
September 30, 		     Amount of Loss
Recognized in
Income
(Ineffective Portion
and Amount
Excluded from
Effectiveness
Testing)
Three Months Ended
September 30, 		 
   2012      2011         2012      2011      2012      2011  

Interest rate swaps

   $ 6       $ 14         Interest expense       $ 6       $ 5       $ —         $ 5   
  

 

 

    

 

 

       

 

 

    

 

 

    

 

 

    

 

 

 

The pre-tax effect of derivative instruments in cash flow hedging relationships for the nine months ended September 30, 2012 and 2011 was as follows:

 

Derivatives in Cash Flow

Hedging Relationships

(IN MILLIONS)

   Amount of
Loss
Recognized in OCI
(Effective Portion)
Nine Months Ended
September 30, 		     Location of Loss
Reclassified from OCI
into Income  (Effective
Portion) 		     Amount of Loss
Reclassified from
OCI into Income
(Effective Portion)
Nine Months Ended
September 30, 		     Amount of Loss
Recognized in
Income
(Ineffective Portion
and Amount
Excluded from
Effectiveness
Testing)
Nine Months Ended
September 30, 		 
   2012      2011         2012      2011      2012      2011  

Interest rate swaps

   $ 21       $ 36         Interest expense       $ 19       $ 15       $ —         $ 16   
  

 

 

    

 

 

       

 

 

    

 

 

    

 

 

    

 

 

 

Derivatives Not Designated as Hedging Instruments

The pre-tax effect of derivative instruments not designated as hedges for the nine months ended September 30, 2012 and 2011 was as follows:

 

Derivatives Not Designated

as Hedging Instruments

(IN MILLIONS)

  

Location of Loss Recognized

in Statement of Operations on

Derivatives

   Nine Months Ended
September 30, 		 
      2012      2011  

Interest rate swaps

   Loss on derivative instruments    $ —         $ 1   
     

 

 

    

 

 

 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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

The Company did not measure any material non-financial assets or liabilities at fair value during the three or nine months ended September 30, 2012.

 

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7. Long-term Debt and Other Financing Arrangements

Unless otherwise stated, interest rates are as of September 30, 2012.

 

(IN MILLIONS)

   September 30, 2012      December 31, 2011  
   Weighted
Interest
Rate 		    Carrying
Amount 		     Fair
Value 		     Weighted
Interest
Rate 		    Carrying
Amount 		     Fair
Value 		 

USD Senior secured term loan (LIBOR based variable rate of 2.23%) due 2013

     $ 218       $ 218         $ 1,287       $ 1,270   

USD Senior secured term loan (LIBOR based weighted-average variable rate of 3.69%) due 2016

       2,320         2,329           2,338         2,290   

USD Senior secured term loan (LIBOR based variable rate of 2.48%) due 2017

       1,192         1,176           —           —     

Euro Senior secured term loan (Euro LIBOR based variable rate of 2.07%) due 2013

       33         34           186         183   

Euro Senior secured term loan (Euro LIBOR based weighted-average variable rate of 3.65%) due 2016

       340         340           345         338   

$500 million 8.50% senior secured term loan due 2017

       500         545           500         538   

$635 million senior secured revolving credit facility (LIBOR based variable rate of 2.98%) due 2016

       65         64           —           —     
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total senior secured credit facilities (with weighted-average interest rate)

     4.06 %      4,668         4,706         4.13 %      4,656         4,619   

$325 million 11.50% senior debenture loan due 2016

       309         345           307         350   

$215 million 11.625% senior debenture loan due 2014

       208         236           204         234   

$1,080 million 7.75% senior debenture loan due 2018

       1,084         1,220           1,084         1,165   

€50 million private placement debenture loan (EMTN) due 2012

       —           —             65         64   

€30 million 6.75% private placement debenture loan (EMTN) due 2012

       —           —             39         39   

$288 million 6.25% mandatory convertible subordinated bonds due 2013

       288         326           288         346   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total debenture loans (with weighted-average interest rate)

     10.03 %      1,889         2,127         9.72 %      1,987         2,198   

Other loans

       2         2           4         4   
    

 

 

    

 

 

      

 

 

    

 

 

 

Total long-term debt

     5.78 %      6,559         6,835         5.80 %      6,647         6,821   

Capital lease and other financing obligations

       110              115      

Bank overdrafts

       11              1      
    

 

 

         

 

 

    

Total debt and other financing arrangements

       6,680              6,763      

Less: Current portion of long-term debt, capital lease and other financing obligations and other short-term borrowings (1)

       428              144      
    

 

 

         

 

 

    

Non-current portion of long-term debt and capital lease and other financing obligations

     $ 6,252            $ 6,619      
    

 

 

         

 

 

    

 

(1) Current portion of long-term debt includes $65 million outstanding under the senior secured revolving credit facility due 2016 and does not include the $288 million mandatory convertible subordinated bonds due 2013 as such bonds will be converted into shares of the Company’s common stock.

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

In February 2012, the Company’s €30 million 6.75% EMTN matured and was repaid and in April 2012, the Company’s €50 million variable rate EMTN matured and was repaid.

 

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

 

(IN MILLIONS)

      

For October 1, 2012 to December 31, 2012

   $ 87   

2013 (2)

     630   

2014

     342   

2015

     149   

2016

     3,034   

2017

     1,233   

Thereafter

     1,084   
  

 

 

 
   $ 6,559   
  

 

 

 

 

(2) Includes the $288 million mandatory convertible subordinated bonds due 2013.

Amendment to Senior Secured Credit Facility

In February 2012, the Senior Secured Credit Agreement was amended and restated to provide for a new five-year amortizing term loan facility in an aggregate principal amount of $1,222 million, the proceeds from which were used to repay a corresponding amount of the existing senior secured term loans due 2013. The Company accounted for this as a new term loan due 2017 and an extinguishment of the amounts repaid under the existing term loan due 2013 and recorded a charge of $6 million associated with the combined elements of this transaction as a component of other (expense)/income, net in the condensed consolidated financial statements.

Borrowings under the new term loan facility bear interest at a rate as determined by the type of borrowing, equal to either the “base rate” or LIBOR rate, plus, in each case, an applicable margin. The applicable margin on base rate loans under this new term loan facility ranges from 0.75% to 1.50% based on a total leverage ratio. The applicable margin on LIBOR loans under this new term loan facility ranges from 1.75% to 2.50% based on the total leverage ratio. Loans under this new term loan facility mature in full in February 2017, but the maturity date shall be January 2016 if at such time there is more than $750 million in the aggregate of existing other term loans under the Senior Secured Credit Agreement with a maturity of May 2016. The loans under this new term loan facility are required to be repaid in an amount equal to 5% of the original principal amount in the first year after the closing date, 5% in the second year, 10% in the third year, 10% in the fourth year and 70% in the fifth year (with payments in each year being made in equal quarterly installments other than the fifth year, in which payments shall be equal to 3.33% of the original principal amount of loans in each of the first three quarters and the remaining principal balance due in February 2017 (unless repayment is required in January 2016 as indicated above)). Loans under this new term loan facility are secured on a pari passu basis with the Company’s existing obligations under the Senior Secured Credit Agreement and Senior Secured Loan Agreement.

Subsequent Event

In October 2012, the Company issued $800 million in aggregate principal amount of 4.50% Senior Notes due 2020 at par with cash proceeds of approximately $788 million, net of fees and expenses. Further, in October 2012, the Company redeemed and subsequently retired all of its 11.50% Senior Notes due 2016 and prepaid its 8.50% Senior Secured Term Loan due 2017. The redemption and prepayment transactions will result in a pre-tax charge of approximately $115 million in the fourth quarter of 2012.

8. Stockholders’ Equity

Common stock activity is as follows:

 

     Nine Months Ended
September 30,
2012 		 

Actual number of shares of common stock outstanding

  

Beginning of period

     359,647,605   

Shares of common stock issued through compensation plans

     2,276,071   

Shares of common stock issued through business combinations

     246,627   
  

 

 

 

End of period

     362,170,303   
  

 

 

 

Cumulative shares of treasury stock were 213,127 and 459,754 with a corresponding cost of $4 million and $8 million as of September 30, 2012 and December 31, 2011, respectively. No dividends were declared or paid during the nine months ended September 30, 2012.

 

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9. Income Taxes

The effective tax rates for the three months ended September 30, 2012 and 2011 were 39% and 30%, respectively. The tax rates for the three months ended September 30, 2012 and 2011 were higher than the statutory rate as the favorable impact of certain financing activities was more than offset by tax rate and other differences in other jurisdictions where the Company files tax returns.

The effective tax rates for the nine months ended September 30, 2012 and 2011 were 33% and 88% (benefit), respectively. The tax rate for the nine months ended September 30, 2012 was higher than the statutory expense rate as the favorable impact of certain financing activities was more than offset by tax rate and other differences in other jurisdictions where the Company files tax returns. The tax rate benefit for the nine months ended September 30, 2011 was higher than the statutory rate benefit would have been primarily due to the favorable impact of certain financing activities and the tax rate differences in other jurisdictions where the Company files tax returns.

Liabilities for unrecognized income tax benefits totaled $92 million and $96 million as of September 30, 2012 and December 31, 2011, respectively. If the Company’s tax positions are favorably sustained by the taxing authorities, the reversal of the underlying liabilities would reduce the Company’s effective tax rate in future periods.

The Company files numerous consolidated and separate income tax returns in the U.S. Federal jurisdiction and in many state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal income tax examinations for 2006 and prior periods. In addition, the Company has subsidiaries in various states, provinces and countries that are currently under audit for years ranging from 2001 through 2010.

The Company is under Canadian audit for the years 2007 and 2008. It is anticipated that these examinations will be completed within the next twelve months. To date, the Company is not aware of any material adjustments not already accrued related to any of the current Federal, state or foreign audits under examination.

10. Commitments and Contingencies

Legal Proceedings and Contingencies

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

11. Related Party Transactions

On July 26, 2012, Iain Leigh resigned from the Boards of Directors of Nielsen Holdings N.V. and The Nielsen Company B.V. and Vivek Y. Ranadivé was elected as a member of the unitary Board of Directors to serve until the next Annual Meeting of Shareholders. Mr. Ranadivé, age 54, has been the Chief Executive Officer and Chairman of the Board of Directors of TIBCO Software Inc. (“TIBCO”) since its inception in 1997, and beneficially owned approximately 9% of TIBCO’s stock as of March 1, 2012. The Company has an ongoing contractual relationship with TIBCO. During 2011, the Company paid approximately $10 million to TIBCO for certain software licenses and related support, maintenance and training. In connection with his appointment, the Board of Directors of the Company affirmatively determined that Mr. Ranadivé is independent for purposes of the New York Stock Exchange listing rules and the Company’s Corporate Governance Guidelines.

12. Segments

The Company aligns its operating segments in order to conform to management’s internal reporting structure, which is reflective of service offerings by industry. Management aggregates such operating segments into three reporting segments: what consumers buy (“Buy”), consisting principally of market research information and analytical services; what consumers watch (“Watch”), consisting principally of television, online and mobile audience and advertising measurement and corresponding analytics and Expositions, consisting principally of trade shows, events and conferences.

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

 

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Table of Contents

Business Segment Information

 

(IN MILLIONS)

   Buy      Watch      Expositions     Corporate     Total  

Three Months Ended September 30, 2012

            

Revenues

   $ 852       $ 504       $ 67      $ —        $ 1,423   

Depreciation and amortization

   $ 52       $ 70       $ 7      $ 1      $ 130   

Restructuring charges

   $ 2       $ 2       $ (1 )   $ —        $ 3   

Stock-based compensation expense

   $ 3       $ 2       $ —        $ 5      $ 10   

Operating income/(loss)

   $ 118       $ 138       $ 35      $ (10 )    $ 281   

Business segment income/(loss) (2)

   $ 175       $ 212       $ 41      $ (4 )    $ 424   

Total assets as of September 30, 2012

   $ 6,864       $ 6,629       $ 770      $ 233      $ 14,496   

(IN MILLIONS)

   Buy      Watch      Expositions     Corporate     Total  

Three Months Ended September 30, 2011

            

Revenues

   $ 864       $ 485       $ 64      $ —        $ 1,413   

Depreciation and amortization

   $ 50       $ 67       $ 7      $ 1      $ 125   

Restructuring charges

   $ 6       $ 3       $ —        $ —        $ 9   

Stock-based compensation expense

   $ 2       $ 2       $ —        $ 4      $ 8   

Other items (1)

   $ —         $ —         $ —        $ 1      $ 1   

Operating income/(loss)

   $ 119       $ 123       $ 30      $ (7 )    $ 265   

Business segment income/(loss) (2)

   $ 177       $ 195       $ 37      $ (1 )    $ 408   

Total assets as of December 31, 2011

   $ 6,782       $ 6,560       $ 794      $ 368      $ 14,504   

(IN MILLIONS)

   Buy      Watch      Expositions     Corporate     Total  

Nine Months Ended September 30, 2012

            

Revenues

   $ 2,500       $ 1,482       $ 166      $ —        $ 4,148   

Depreciation and amortization

   $ 154       $ 210       $ 19      $ 5      $ 388   

Restructuring charges

   $ 41       $ 14       $ (1 )   $ 2      $ 56   

Stock-based compensation expense

   $ 7       $ 5       $ —        $ 12      $ 24   

Other items (1)

   $ —         $ —         $ —        $ 5      $ 5   

Operating income/(loss)

   $ 263       $ 380       $ 73      $ (44 )    $ 672   

Business segment income/(loss) (2)

   $ 465       $ 609       $ 91      $ (20 )    $ 1,145   

(IN MILLIONS)

   Buy      Watch      Expositions     Corporate     Total  

Nine Months Ended September 30, 2011

            

Revenues

   $ 2,513       $ 1,440       $ 158      $ —        $ 4,111   

Depreciation and amortization

   $ 148       $ 222       $ 21      $ 5      $ 396   

Restructuring charges

   $ 40       $ 11       $ 1      $ 3      $ 55   

Stock-based compensation expense

   $ 5       $ 4       $ —        $ 9      $ 18   

Other items (1)

   $ 1       $ —         $ —        $ 110      $ 111   

Operating income/(loss)

   $ 283       $ 334       $ 61      $ (144 )    $ 534   

Business segment income/(loss) (2)

   $ 477       $ 571       $ 83      $ (17 )    $ 1,114   

 

(1) Other items include costs associated with the Company’s secondary public offering of common stock and other transaction-related costs of $5 million for the nine months ended September 30, 2012, and transaction-related costs and preparatory costs for Nielsen’s initial public offering of common stock of $1 million and $9 million for the three and nine months ended September 30, 2011, respectively. Other items for the nine months ended September 30, 2011 also include $102 million for the termination and settlement of the Sponsor Advisory Agreements.

 

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

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion and analysis supplements management’s discussion and analysis of Nielsen Holdings N.V. (“the Company” or “Nielsen”) for the year ended December 31, 2011 as contained in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission on February 22, 2012, and presumes that readers have read or have access to such discussion and analysis. The following discussion and analysis should also be read together with the accompanying Condensed Consolidated Financial Statements and related notes thereto. Further, this report may contain material that includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, Nielsen’s current views with respect to current events and financial performance. Statements, other than those based on historical facts, which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements. Such forward-looking statements are subject to many risks, uncertainties and factors relating to Nielsen’s operations and business environment that may cause actual results to be materially different from any future results, express or implied, by such forward-looking statements, including but not limited to, those set forth in this Item 2 and Part II, Item 1A, if any, and those noted in our 2011 Annual Report on Form 10-K under “Risk Factors.” Forward-looking statements speak only as of the date of this report or as of the date they were made. We disclaim any intention to update the current expectations or forward-looking statements contained in this report. Unless required by context, references to “we”, “us”, and “our” refer to Nielsen and each of its consolidated subsidiaries.

Background and Executive Summary

We are a global information and measurement company that provides clients with a comprehensive understanding of consumers and consumer behavior. We deliver critical media and marketing information, analytics and industry expertise about what consumers buy (referred to herein as “Buy”) and what consumers watch on a global and local basis (consumer interaction across the television, online and mobile viewing platforms referred to herein as “Watch”). Our information, insights and solutions help our clients maintain and strengthen their market positions and identify opportunities for profitable growth. We have a presence in approximately 100 countries, including many developing and emerging markets, and hold leading market positions in many of our services and geographies.

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

Our business strategy is built upon a model that has traditionally yielded consistent revenue performance. Typically, before the start of each year, nearly 70% of our annual revenue has been committed under contracts in our combined Buy and Watch segments, which provides us with a high degree of stability to our revenue and allows us to effectively manage our profitability and cash flows. We continue to look for growth opportunities through global expansion, specifically within developing markets, as well as through the cross-platform expansion of our insights services and measurement services.

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

Achieving our business objectives requires us to manage a number of key risk areas. Our growth objective of geographic market and service expansion requires us to maintain the consistency and integrity of our information and underlying processes on a global scale, and to invest effectively our capital in technology and infrastructure to keep pace with our clients’ demands and our competitors. Our operating footprint across approximately 100 countries requires disciplined global and local resource management of internal and third party providers to ensure success. In addition, our high level of indebtedness requires active management of our debt profile, with a focus on underlying maturities, interest rate risk, liquidity and operating cash flows.

Business Segment Overview

Our Buy and Watch segments, which together generate substantially all of our revenues, are built on a foundation of proprietary data assets that are designed to yield essential information and insights for our clients to successfully measure, analyze and grow their businesses.

 

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Our Buy segment provides Information services, which include our core tracking and scan data (primarily transactional measurement data and consumer behavior information), and Insights services (primarily comprised of our analytical solutions) to businesses in the consumer packaged goods industry. Our services also enable our clients to better manage their brands, uncover new sources of demand, launch and grow new products, analyze their sales, improve their marketing mix and establish more effective consumer relationships. Our data is used by our clients to measure their market share, tracking billions of sales transactions per month in retail outlets around the world. Our extensive database of retail and consumer information, combined with our advanced analytical capabilities, helps generate strategic insights that influence our clients’ key business decisions. Within our Buy segment, we have two primary geographic groups, developed and developing markets. Developed markets primarily include the United States, Canada, Western Europe, Japan and Australia while developing markets include Latin America, Eastern Europe, Russia, China, India and Southeast Asia.

Our Watch segment provides viewership data and analytics primarily to the media and advertising industries across television, online and mobile screens. Our Watch data is used by our media clients to understand their audiences, establish the value of their advertising inventory and maximize the value of their content, and by our advertising clients to plan and optimize their spending. We are a leader in providing cross-platform measurement services.

Our Expositions segment operates one of the largest portfolios of business-to-business trade shows and conference events in the United States. Each year, we produce more than 40 trade shows and conference events, which in 2011 connected over 300,000 buyers and sellers across 20 industries.

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

Factors Affecting Our Financial Results

Acquisitions and Investments in Affiliates

For the nine months ended September 30, 2012, we paid cash consideration of $136 million associated with both current period and previously executed acquisitions, net of cash acquired. Had the current period acquisitions occurred as of January 1, 2012, the impact on our consolidated results of operations would not have been material.

For the nine months ended September 30, 2011, we paid cash consideration of $114 million associated with both current period and previously executed acquisitions, net of cash acquired. Had that period’s acquisitions occurred as of January 1, 2011, the impact on our consolidated results of operations would not have been material.

Foreign Currency

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

 

     Nine Months Ended
September 30, 		 
     2012     2011  

U.S. Dollar

     53 %      50 % 

Euro

     12 %      14 % 

Other Currencies

     35 %      36 % 
  

 

 

   

 

 

 

Total

     100 %      100 % 

As a result, fluctuations in the value of foreign currencies relative to the U.S. dollar impact our operating results. Impacts associated with fluctuations in foreign currency are discussed in more detail under “Item 3.—Quantitative and Qualitative Disclosures about Market Risk.” In countries with currencies other than the U.S. dollar, assets and liabilities are translated into U.S. dollars using end-of-period exchange rates; revenues, expenses and cash flows are translated using average rates of exchange. The average U.S. dollar to Euro exchange rate was $1.28 to €1.00 and $1.41 to €1.00 for the nine months ended September 30, 2012 and 2011, respectively. Constant currency growth rates used in the following discussion of results of operations eliminate the impact of year-over-year foreign currency fluctuations.

 

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

Results of Operations – Three Months Ended September 30, 2012 Compared to the Three Months Ended September 30, 2011

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

 

     Three Months Ended
September 30, 		 

(IN MILLIONS)

   2012     2011  

Revenues

   $ 1,423      $ 1,413   
  

 

 

   

 

 

 

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

     565        554   

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

     444        460   

Depreciation and amortization

     130        125   

Restructuring charges

     3        9   
  

 

 

   

 

 

 

Operating income

     281        265   
  

 

 

   

 

 

 

Interest income

     1        2   

Interest expense

     (106 )      (114 ) 

Foreign currency exchange transaction gains/(losses), net

     1        (4 )

Other expense, net

     (1 )      —     
  

 

 

   

 

 

 

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

     176        149   

Provision for income taxes

     (69 )      (44 ) 

Equity in net loss of affiliates

     (1 )      (2 ) 
  

 

 

   

 

 

 

Net income

   $ 106      $ 103   
  

 

 

   

 

 

 

Net Income to Adjusted EBITDA Reconciliation

We define Adjusted EBITDA as net income or loss from our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, goodwill and intangible asset impairment charges, stock compensation expense and other non-operating items from our consolidated statements of operations as well as certain other items specifically described below.

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.

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.

 

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The below table presents a reconciliation from net income to Adjusted EBITDA for the three months ended September 30, 2012 and 2011:

 

     Three Months Ended
September 30, 		 

(IN MILLIONS)

   2012      2011  

Net income

   $ 106       $ 103   

Interest expense, net

     105         112   

Provision for income taxes

     69         44   

Depreciation and amortization

     130         125   
  

 

 

    

 

 

 

EBITDA

     410         384   

Equity in net loss of affiliates

     1         2   

Other non-operating expense, net

     —           4   

Restructuring charges

     3         9   

Stock-based compensation expense

     10         8   

Other items (a)

     —           1   
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 424       $ 408   
  

 

 

    

 

 

 

 

(a) Other items include $1 million of transaction-related costs for the three months ended September 30, 2011.

Consolidated Results for the Three Months Ended September 30, 2012 Compared to the Three Months Ended September 30, 2011

Revenues

Revenues increased 0.7% to $1,423 million for the three months ended September 30, 2012 from $1,413 million for the three months ended September 30, 2011, or an increase of 4.6% on a constant currency basis, excluding a 3.9% unfavorable impact of changes in foreign currency exchange rates. Revenues within our Buy segment decreased 1.4% (an increase of 4.2% on a constant currency basis). Revenues within our Watch segment increased 3.9% (5.2% on a constant currency basis). Revenues within our Expositions segment increased 4.7%.

Cost of Revenues, Exclusive of Depreciation and Amortization

Cost of revenues increased 2.0% to $565 million for the three months ended September 30, 2012 from $554 million for the three months ended September 30, 2011, or an increase of 6.0% on a constant currency basis, excluding a 4.0% favorable impact of changes in foreign currency exchange rates. Costs within our Buy segment increased 3.7% (an increase of 9.3% on a constant currency basis) as the investments in the continued global expansion of our services and increases in retail measurement costs were partially offset by the favorable impact of changes in foreign currency exchange rates. Costs within our Watch segment decreased 1.6% (flat on a constant currency basis).

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

Selling, general and administrative expenses decreased 3.5% to $444 million for the three months ended September 30, 2012 from $460 million for the three months ended September 30, 2011, or an increase of 1.1% on a constant currency basis, excluding a 4.6% favorable impact of changes in foreign currency exchange rates. Costs within our Buy segment decreased 6.5% (a decrease of 1.3% on a constant currency basis) due primarily to the favorable impact of changes in foreign currency exchange rates. Costs within our Watch segment increased 3.8% (5.8% on a constant currency basis) due primarily to increased continued investments in the development of our services. Costs within our Expositions segment and Corporate costs were flat.

Depreciation and Amortization

Depreciation and amortization expense was $130 million for the three months ended September 30, 2012 as compared to $125 million for the three months ended September 30, 2011. The increase resulted from depreciation and amortization expense associated with ongoing capital expenditures. Depreciation and amortization expense associated with tangible and intangible assets acquired in business combinations remained flat at $41 million for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011.

Restructuring Charges

We recorded $3 million and $9 million in restructuring charges primarily relating to employee severance associated with productivity initiatives during the three months ended September 30, 2012 and 2011, respectively.

 

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Operating Income

Operating income for the three months ended September 30, 2012 was $281 million as compared to $265 million for the three months ended September 30, 2011. Operating income within our Buy segment was $118 million for the three months ended September 30, 2012 as compared to $119 million for the three months ended September 30, 2011. Operating income within our Watch segment was $138 million for the three months ended September 30, 2012 as compared to $123 million for the three months ended September 30, 2011. Operating income within our Expositions segment was $35 million for the three months ended September 30, 2012 as compared to $30 million for the three months ended September 30, 2011. Corporate operating expenses were $10 million for the three months ended September 30, 2012 as compared to $7 million for the three months ended September 30, 2011.

Interest Expense

Interest expense was $106 million for the three months ended September 30, 2012 as compared to $114 million for the three months ended September 30, 2011. The decline was driven by lower interest costs from interest rate swaps that previously matured, partially offset by increases in interest costs associated with our senior secured term loans.

Foreign Currency Exchange Transaction Gains/(Losses), Net

Foreign currency exchange transaction gains/(losses), net, represent the net gain or loss on revaluation of external debt, intercompany loans and other receivables and payables. Fluctuations in the value of foreign currencies relative to the U.S. Dollar have a significant effect on our operating results, primarily the Euro. The average U.S. Dollar to Euro exchange rate was $1.25 to €1.00 for the three months ended September 30, 2012 as compared to $1.41 to €1.00 for the three months ended September 30, 2011.

We incurred a gain of $1 million for the three months ended September 30, 2012 as compared to losses of $4 million for the three months ended September 30, 2011, resulting primarily from fluctuations in certain foreign currencies associated with intercompany transactions.

Income Taxes

The effective tax rates for the three months ended September 30, 2012 and 2011 were 39% and 30%, respectively. The tax rates for both the three months ended September 30, 2012 and 2011 were higher than the statutory rate as the favorable impact of certain financing activities was more than offset by tax rate and other differences in other jurisdictions where we file tax returns.

Liabilities for unrecognized income tax benefits totaled $92 million and $96 million as of September 30, 2012 and December 31, 2011, respectively. If our tax positions are favorably sustained by the taxing authorities, the reversal of the underlying liabilities would reduce our effective tax rate in future periods.

Adjusted EBITDA

Adjusted EBITDA increased 3.9% to $424 million for the three months ended September 30, 2012 from $408 million for the three months ended September 30, 2011, or 6.5% on a constant currency basis, excluding a 2.6% unfavorable impact of changes in foreign currency exchange rates. See “Results of Operations – Three Months Ended September 30, 2012 Compared to the Three Months Ended September 30, 2011” for the reconciliation of net income to Adjusted EBITDA.

 

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Business Segment Results for the Three Months Ended September 30, 2012 Compared to the Three Months Ended September 30, 2011

Revenues

The table below sets forth our segment revenue performance data for the three months ended September 30, 2012 compared to the three months ended September 30, 2011, both on an as-reported and constant currency basis.

 

(IN MILLIONS)

   Three
Months Ended
September 30,
2012
Reported 		     Three
Months Ended
September 30,
2011
Reported 		     % Variance
2012 vs. 2011
Reported 		    Three Months Ended
September 30,
2011
Constant
Currency 		     % Variance
2012 vs. 2011
Constant
Currency 		 

Revenues by segment

             

Buy

   $ 852       $ 864         (1.4 )%    $ 818         4.2 % 

Watch

     504         485         3.9 %      479         5.2 % 

Expositions

     67         64         4.7 %      64         4.7 % 
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 1,423       $ 1,413         0.7 %    $ 1,361         4.6 % 
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Buy Segment Revenues

Revenues decreased 1.4% to $852 million for the three months ended September 30, 2012 from $864 million for the three months ended September 30, 2011, or an increase of 4.2% on a constant currency basis. The decrease was primarily driven by a 5.6% unfavorable impact of changes in foreign currency exchange rates. Revenues from Developed markets were flat (an increase of 4.2% on a constant currency basis) as increases in spending on Information services by existing clients were partially offset by the unfavorable impact of changes in foreign currency exchange rates and decreases in Insights services in North America and Western Europe. Revenues from Developing markets declined 4.1% (an increase of 4.1% on a constant currency basis) as the unfavorable impact of changes in foreign currency exchange rates more than offset increases driven by our clients continuing to expand geographically.

Revenues from Information services increased 2.7% to $658 million for the three months ended September 30, 2012 from $641 million for the three months ended September 30, 2011, or an increase of 8.8% on a constant currency basis. Revenues from Developed markets increased 5.2% (an increase of 10.0% on a constant currency basis). This performance was driven by increased client investment in retail measurement, including the impact of additional coverage in the U.S. market, partially offset by the unfavorable impact of changes in foreign currency exchange rates. Revenues from Developing markets decreased 2.3% (an increase of 6.1% on a constant currency basis) as the unfavorable impact of changes in foreign currency exchange rates more than offset growth resulting from the continued expansion of both our retail measurement and consumer panel services to both new and existing clients and new markets.

Revenues from Insights services decreased 13.0% to $194 million for the three months ended September 30, 2012 from $223 million for the three months ended September 30, 2011, or 8.9% on a constant currency basis driven by declines in discretionary customer spending in Western Europe, North America and Developing markets, as well as the unfavorable impact of changes in foreign currency exchange rates.

Watch Segment Revenues

Revenues increased 3.9% to $504 million for the three months ended September 30, 2012 from $485 million for the three months ended September 30, 2011, or 5.2% on a constant currency basis, as 5.1% growth in Television measurement (6.2% on a constant currency basis) was partially offset by the unfavorable impact of changes in foreign currency exchange rates. Television measurement growth was driven by increases in measurement services spending from both new and existing clients, as well as increased client investment in insights and analytics.

Expositions Segment Revenues

Revenues increased 4.7% to $67 million for the three months ended September 30, 2012 from $64 million for the three months ended September 30, 2011. These increases predominately relate to growth driven by certain sectors of existing shows.

 

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Business Segment Profitability

We do not allocate items below operating income/(loss) to our business segments and therefore the tables below set forth a reconciliation of operating income/(loss) at the business segment level for the three months ended September 30, 2012 and 2011, adjusting for certain items affecting operating income/(loss), such as restructuring charges, depreciation and amortization, stock-based compensation expense and certain other items described below resulting in a presentation of our non-GAAP business segment profitability. Non-GAAP business segment profitability provides useful supplemental information to management and investors regarding financial and business trends related to our results of operations. When this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with a meaningful understanding of our ongoing operating performance. It is important to note that the non-GAAP business segment profitability corresponds in total to our consolidated Adjusted EBITDA described within our consolidated results of operations above, which our chief operating decision making group and other members of management use to measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. These non-GAAP measures should not be considered as an alternative to net income/(loss), operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

 

THREE MONTHS ENDED SEPTEMBER 30, 2012 (IN
MILLIONS)

   Operating
Income/(Loss) 		    Restructuring
Charges 		    Depreciation and
Amortization 		     Stock-Based
Compensation
Expense 		     Non-GAAP
Business Segment
Income/(Loss) 		 

Buy

   $ 118      $ 2      $ 52       $ 3       $ 175   

Watch

     138        2        70         2                           212   

Expositions

     35        (1 )     7         —           41   

Corporate and Eliminations

     (10 )      —          1         5         (4 ) 
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 281      $ 3      $                 130       $ 10       $ 424   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

THREE MONTHS ENDED SEPTEMBER 30,
2011 (IN MILLIONS)

   Operating
Income/(Loss) 		    Restructuring
Charges 		     Depreciation and
Amortization 		     Stock-Based
Compensation
Expense 		     Other Items (1)      Non-GAAP
Business Segment
Income/(Loss) 		 

Buy

   $ 119      $ 6       $ 50       $ 2       $ —         $ 177   

Watch

     123        3         67         2                     —                             195   

Expositions

     30        —           7         —           —           37   

Corporate and Eliminations

     (7 )      —           1         4         1         (1 ) 
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 265      $ 9       $                 125       $ 8       $ 1       $ 408   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Other items include transaction-related costs of $1 million for the three months ended September 30, 2011.

 

(IN MILLIONS)

   Three Months
Ended
September 30,
2012
Reported 		    Three Months
Ended
September 30,
2011
Reported 		    % Variance
2012  vs. 2011
Reported 		    Three Months Ended
September 30, 2011
Constant Currency 		    % Variance
2012  vs. 2011
Constant Currency 		 

Non-GAAP Business Segment Income/(Loss)

          

Buy

   $ 175      $ 177        (1.1 )%    $ 168        4.2 % 

Watch

     212        195        8.7 %      194        9.3 % 

Expositions

     41        37        10.8 %      37        10.8 % 

Corporate and Eliminations

     (4 )      (1 )      NM        (1 )      NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 424      $ 408        3.9 %    $ 398        6.5 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Buy Segment Profitability

Operating income was $118 million for the three months ended September 30, 2012 as compared to $119 million for the three months ended September 30, 2011, as the unfavorable impact of changes in foreign currency exchange rates and increases in retail measurement costs more than offset the net constant currency revenue performance increases discussed above and lower restructuring charges. Non-GAAP business segment income increased 4.2% on a constant currency basis.

Watch Segment Profitability

Operating income was $138 million for the three months ended September 30, 2012 as compared to $123 million for the three months ended September 30, 2011. The increase was driven by the revenue performance discussed above and the impact of productivity initiatives. Non-GAAP business segment income increased 9.3% on a constant currency basis.

Expositions Segment Profitability

Operating income was $35 million for the three months ended September 30, 2012 as compared to $30 million for the three months ended September 30, 2011 driven primarily by the revenue performance discussed above and the impact of productivity initiatives. Non-GAAP business segment income increased 10.8% on a constant currency basis.

Corporate Expenses and Eliminations

Operating expenses were $10 million for the three months ended September 30, 2012 as compared to $7 million for the three months ended September 30, 2011 due primarily to higher stock-based compensation expense.

Results of Operations – Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011

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

 

     Nine Months Ended
September 30, 		 

(IN MILLIONS)

   2012     2011  

Revenues

   $ 4,148      $ 4,111   
  

 

 

   

 

 

 

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

     1,694        1,673   

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

     1,338        1,453   

Depreciation and amortization

     388        396   

Restructuring charges

     56        55   
  

 

 

   

 

 

 

Operating income

     672        534   
  

 

 

   

 

 

 

Interest income

     3        5   

Interest expense

     (319 )      (368 ) 

Loss on derivative instruments

     —          (1 ) 

Foreign currency exchange transaction losses, net

     (12 )      (7 ) 

Other income/(expense), net

     3        (221 ) 
  

 

 

   

 

 

 

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

     347        (58 ) 

(Provision)/benefit for income taxes

     (114 )      51   

Equity in net income/(loss) of affiliates

     1        (1 ) 
  

 

 

   

 

 

 

Income/(loss) from continuing operations

     234        (8 ) 

Loss from discontinued operations, net of tax

     —          (1 ) 
  

 

 

   

 

 

 

Net income/(loss)

   $ 234      $ (9 ) 
  

 

 

   

 

 

 

 

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Table of Contents

Net Income/(Loss) to Adjusted EBITDA Reconciliation

The below table presents a reconciliation from net income/(loss) to Adjusted EBITDA for the nine months ended September 30, 2012 and 2011:

 

     Nine Months Ended
September 30, 		 

(IN MILLIONS)

   2012     2011  

Net income/(loss)

   $ 234      $ (9 ) 

Loss from discontinued operations, net

     —          1   

Interest expense, net

     316        363   

Provision/(benefit) for income taxes

     114        (51 ) 

Depreciation and amortization

     388        396   
  

 

 

   

 

 

 

EBITDA

     1,052        700   

Equity in net (income)/loss of affiliates

     (1 )      1   

Other non-operating expense, net

     9        229   

Restructuring charges

     56        55   

Stock-based compensation expense

     24        18   

Other items (a)

     5        111   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 1,145      $ 1,114   
  

 

 

   

 

 

 

 

(a) Other items for the nine months ended September 30, 2012, include costs associated with our secondary public offering of common stock and other transaction-related costs of $5 million. Other items for the nine months ended September 30, 2011, primarily consist of Sponsor Advisory Fees (including termination payments of $102 million), preparatory costs related to our initial public offering and other transaction-related costs.

Consolidated Results for the Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011

Revenues

Revenues increased 0.9% to $4,148 million for the nine months ended September 30, 2012 from $4,111 million for the nine months ended September 30, 2011, or 4.1% on a constant currency basis, which excludes a 3.2% unfavorable impact of changes in foreign currency exchange rates. Revenues within our Buy segment were relatively flat during the period (4.0% increase on a constant currency basis), while revenues within our Watch segment increased 2.9% (4.1% on a constant currency basis) and revenues within our Expositions segment increased 5.1%.

Cost of Revenues, Exclusive of Depreciation and Amortization

Cost of revenues increased 1.3% to $1,694 million for the nine months ended September 30, 2012 from $1,673 million for the nine months ended September 30, 2011, or 4.8% on a constant currency basis, excluding a 3.5% favorable impact of changes in foreign currency exchange rates. Costs within our Buy segment increased 1.7% (6.8% on a constant currency basis) due primarily to investments in the continued global expansion of our services and higher retail measurement costs, substantially offset by favorable impact of changes in foreign currency exchange rates. Costs within our Watch segment were relatively flat as the impact of productivity initiatives offset increases in spending on product portfolio management initiatives.

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

Selling, general and administrative expenses decreased 7.9% to $1,338 million for the nine months ended September 30, 2012 from $1,453 million for the nine months ended September 30, 2011, or 5.3% on a constant currency basis, excluding a 2.6% favorable impact of changes in foreign currency exchange rates. Costs within our Buy segment decreased 1.8% (an increase of 1.8% on a constant currency basis) due primarily to the impact of productivity initiatives and the favorable impact of changes in foreign currency exchange rates, which more than offset increases in client service costs and other investments associated with the global expansion of our services. Costs within our Watch segment increased 2.9% (4.6% on a constant currency basis) due primarily to increased investment in product development initiatives. Corporate costs decreased by approximately $103 million primarily as a result of a $102 million charge for the termination and settlement of the Sponsor Advisory Agreements occurring only in 2011.

 

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Depreciation and Amortization

Depreciation and amortization expense was $388 million for the nine months ended September 30, 2012 as compared to $396 million for the nine months ended September 30, 2011. Depreciation and amortization expense associated with tangible and intangible assets acquired in business combinations decreased to $123 million for the nine months ended September 30, 2012 from $140 million for the nine months ended September 30, 2011 resulting from lower amortization on purchase price adjustments for certain assets that became fully amortized. This decline was primarily offset by increases in depreciation and amortization expense associated with higher capital expenditures.

Restructuring Charges

We recorded $56 million and $55 million in restructuring charges primarily relating to employee severance associated with productivity initiatives during the nine months ended September 30, 2012 and 2011, respectively.

Operating Income

Operating income for the nine months ended September 30, 2012 was $672 million as compared to operating income of $534 million for the nine months ended September 30, 2011. Operating income within our Buy segment was $263 million for the nine months ended September 30, 2012 as compared to $283 million for the nine months ended September 30, 2011. Operating income within our Watch segment was $380 million for the nine months ended September 30, 2012 as compared to $334 million for the nine months ended September 30, 2011. Operating income within our Expositions segment was $73 million for the nine months ended September 30, 2012 as compared to $61 million for the nine months ended September 30, 2011. Corporate operating expenses were $44 million for the nine months ended September 30, 2012 as compared to $144 million for the nine months ended September 30, 2011.

Interest Expense

Interest expense was $319 million for the nine months ended September 30, 2012 compared to $368 million for the nine months ended September 30, 2011. The decline primarily related to the impact of debt retirements from our initial public offering of common stock in 2011, partially offset by increases in interest costs associated with our senior secured term loans.

Foreign Currency Exchange Transaction Losses, Net

Foreign currency exchange transaction losses, net, represent the net gain or loss on revaluation of external debt, intercompany loans and other receivables and payables. Fluctuations in the value of foreign currencies relative to the U.S. Dollar, particularly the Euro, have a significant effect on our operating results. The average U.S. Dollar to Euro exchange rate was $1.28 to €1.00 for the nine months ended September 30, 2012 as compared to $1.41 to €1.00 for the nine months ended September 30, 2011.

We incurred $12 million and $7 million in foreign currency exchange losses for the nine months ended September 30, 2012 and 2011, respectively. The loss in 2012 resulted primarily from fluctuations in certain currencies associated with a portion of our intercompany loan portfolio. The loss in 2011 resulted primarily from fluctuations in certain currencies associated with a portion of our intercompany loan portfolio partially offset by the fluctuation in Japanese Yen as compared to the Euro applied to a debenture loan.

Other Income/(Expense), Net

The $3 million of other income amount for the nine months ended September 30, 2012 primarily relates to a $10 million gain on the purchase of a previously nonconsolidated business, partially offset by the write-off of deferred financing costs and other costs associated with the amendment and restatement of the Senior Secured Credit Facility.

The $221 million other expense amount for the nine months ended September 30, 2011 includes charges of approximately $231 million associated with the redemption and subsequent retirement of certain indebtedness through the use of proceeds generated from our initial public offering of common stock and concurrent offering of mandatory convertible subordinated bonds. The charges related to the associated redemption premiums and recognition of previously deferred financing costs. These charges were partially offset by $10 million of other gains primarily related to an acquisition of the remaining interest of a previously nonconsolidated subsidiary.

Income Taxes

The effective tax rates for the nine months ended September 30, 2012 and 2011 were 33% and 88% (benefit), respectively. The tax rate for the nine months ended September 30, 2012 was higher than the statutory expense rate as the favorable impact of certain financing activities was more than offset by tax rate and other differences in other jurisdictions where we file tax returns. The tax rate benefit for the nine months ended September 30, 2011 was higher than the statutory rate benefit would have been primarily due to the favorable impact of certain financing activities and the tax rate differences in other jurisdictions where we file tax returns.

 

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Adjusted EBITDA

Adjusted EBITDA increased 2.8% to $1,145 million for the nine months ended September 30, 2012 from $1,114 million for the nine months ended September 30, 2011, or 5.5% on a constant currency basis, excluding a 2.7% unfavorable impact of changes in foreign currency exchange rates. See “Results of Operations – Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011” for the reconciliation of net income/(loss) to Adjusted EBITDA.

Business Segment Results for the Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011

Revenues

The table below sets forth our segment revenue performance data for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011, both on an as-reported and constant currency basis.

 

(IN MILLIONS)

   Nine Months
Ended
September 30,
2012
Reported 		     Nine Months
Ended
September 30,
2011
Reported 		     % Variance
2012  vs. 2011
Reported 		    Nine Months  Ended
September 30, 2011
Constant Currency 		     % Variance
2012  vs. 2011
Constant Currency 		 

Revenues by segment

             

Buy

   $ 2,500       $ 2,513         (0.5 )%    $ 2,403         4.0 % 

Watch

     1,482         1,440         2.9 %      1,424         4.1 % 

Expositions

     166         158         5.1 %      158         5.1 % 
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 4,148       $ 4,111         0.9 %    $ 3,985         4.1 % 
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Buy Segment Revenues

Revenues decreased 0.5% to $2,500 million for the nine months ended September 30, 2012 from $2,513 million for the nine months ended September 30, 2011, or an increase of 4.0% on a constant currency basis. Revenues from Developing markets were flat for the period (an increase of 7.3% on a constant currency basis) and revenues from Developed markets decreased 0.7% (an increase of 2.5% on a constant currency basis).

Revenues from Information services increased 0.8% to $1,909 million for the nine months ended September 30, 2012 from $1,893 million for the nine months ended September 30, 2011, or 5.8% on a constant currency basis. Revenues from Developed markets increased 1.2% (an increase of 4.8% on a constant currency basis) as growth in retail measurement services in North America and Western Europe was offset in part by the unfavorable impact of changes in foreign currency exchange rates. Revenues from Developing markets were flat during the period (an increase of 7.8% on a constant currency basis) as growth driven by the continued expansion of both our retail measurement and consumer panel services to both new and existing clients and new markets was offset by the unfavorable impact of changes in foreign currency exchange rates.

Revenues from Insights services decreased 4.7% to $591 million for the nine months ended September 30, 2012 from $620 million for the nine months ended September 30, 2011, or 1.2% on a constant currency basis, as the unfavorable impact of changes in foreign currency exchange rates and decreases in client spending in Western Europe more than offset growth in North America and Developing markets.

Watch Segment Revenues

Revenues increased 2.9% to $1,482 million for the nine months ended September 30, 2012 from $1,440 million for the nine months ended September 30, 2011, or 4.1% on a constant currency basis. Television measurement grew 4.3% (5.2% on a constant currency basis) primarily driven by increases in spending from both new and existing clients.

Expositions Segment Revenues

Revenues increased 5.1% to $166 million for the nine months ended September 30, 2012 from $158 million for the nine months ended September 30, 2011. These increases predominately relate to growth driven by certain sectors of existing shows.

 

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Business Segment Profitability

 

NINE MONTHS ENDED SEPTEMBER 30,
2012 (IN MILLIONS)

   Operating
Income/(Loss) 		    Restructuring
Charges 		    Depreciation and
Amortization 		     Stock-Based
Compensation
Expense 		     Other Items (1)      Non-GAAP
Business Segment
Income/(Loss) 		 

Buy

   $ 263      $ 41      $ 154       $ 7       $ —         $ 465   

Watch

     380        14        210         5         —                             609   

Expositions

     73        (1 )      19         —                       —           91   

Corporate and Eliminations

     (44 )      2        5         12         5         (20 ) 
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 672      $ 56                        388       $ 24       $ 5       $ 1,145   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

NINE MONTHS ENDED SEPTEMBER 30,

2011 (IN MILLIONS)

   Operating
Income/(Loss) 		    Restructuring
Charges 		    Depreciation and
Amortization 		     Stock-Based
Compensation
Expense 		     Other Items (1)      Non-GAAP
Business Segment
Income/(Loss) 		 

Buy

   $ 283      $ 40      $ 148       $ 5       $ 1       $ 477   

Watch

     334        11        222         4         —                             571   

Expositions

     61        1        21         —                       —           83   

Corporate and Elimination

     (144 )      3        5         9         110         (17 ) 
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 534      $ 55                        396       $ 18       $ 111       $ 1,114   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Other items for the nine months ended September 30, 2012 include costs associated with our secondary public offering of common stock and other transaction-related costs of $5 million. Other items for the nine months ended September 30, 2011 primarily consist of Sponsor Advisory Fees (including termination payments of $102 million), costs related to our initial public offering and other transaction-related costs.

 

(IN MILLIONS)

   Nine Months
Ended
September 30,
2012
Reported 		    Nine Months
Ended
September 30,
2011
Reported) 		    % Variance
2012  vs. 2011
Reported 		    Nine Months  Ended
September 30, 2011
Constant Currency 		    % Variance
2012  vs. 2011
Constant Currency 		 

Non-GAAP Business Segment Income/(Loss)

          

Buy

   $ 465      $ 477        (2.5 )%    $ 452        2.9 % 

Watch

     609        571        6.7 %      567        7.4 % 

Expositions

     91        83        9.6 %      83        9.6 % 

Corporate and Eliminations

     (20 )      (17 )      NM        (17 )      NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1,145      $ 1,114        2.8 %    $ 1,085        5.5 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Buy Segment Profitability

Operating income was $263 million for the nine months ended September 30, 2012 as compared to $283 million for the nine months ended September 30, 2011, as the unfavorable impact of changes in foreign currency exchange rates more than offset the net constant currency increase primarily driven by the revenue performance mentioned above. The revenue performance was further offset by investments in Developing markets expansion, increases in retail measurement costs and higher restructuring charges. Non-GAAP business segment income increased 2.9% on a constant currency basis.

Watch Segment Profitability

Operating income was $380 million for the nine months ended September 30, 2012 as compared to $334 million for the nine months ended September 30, 2011. The increase was primarily driven by the revenue performance discussed above and decreased depreciation and amortization expense offset in part by higher restructuring charges, increased investment in cross-platform measurement initiatives and the unfavorable impact of changes in foreign currency exchange rates. Non-GAAP business segment income increased 7.4% on a constant currency basis.

 

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Expositions Segment Profitability

Operating income was $73 million for the nine months ended September 30, 2012 as compared to $61 million for the nine months ended September 30, 2011 driven primarily by the revenue performance discussed above as well as lower restructuring charges. Non-GAAP business segment income increased 9.6% on a constant currency basis.

Corporate Expenses and Eliminations

Operating expenses were $44 million for the nine months ended September 30, 2012 as compared to $144 million for the nine months ended September 30, 2011 due primarily to the $102 million charge for the termination and settlement of the Sponsor Advisory Agreements in 2011.

Liquidity and Capital Resources

Overview

Our contractual obligations, commitments and debt service requirements over the next several years are significant. We expect that our primary source of liquidity will continue to be cash generated from operations as well as existing cash. Of the $325 million of cash and cash equivalents at September 30, 2012, approximately $284 million was held in jurisdictions outside the U.S. and as a result there may be tax consequences if such amounts were moved out of these jurisdictions or repatriated to the U.S. We regularly review the amount of cash and cash equivalents held outside of the U.S. to determine the amounts necessary to fund the current operations of our foreign operations and their growth initiatives and amounts needed to service our U.S. indebtedness and related obligations and fund domestic operations.

At September 30, 2012, our total indebtedness was $6,680 million. We had $65 million in outstanding borrowings and $12 million of outstanding letters of credit under our senior secured revolving credit facility, leaving $558 million available for future borrowing. We believe we will have available resources to meet both our short-term and long-term liquidity requirements, including our senior secured debt service. We expect the cash flow from our operations, combined with existing cash and amounts available under the revolving credit facility, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, restructuring obligations, and capital spending over the next year. In addition we may, from time to time, purchase, repay, redeem or retire any of our outstanding debt securities (including any publicly issued debt securities) in privately negotiated or open market transactions, by tender offer or otherwise.

Financing Transactions

In February 2012, the Senior Secured Credit Agreement was amended and restated to provide for a new five-year amortizing term loan facility in an aggregate principal amount of $1,222 million, the proceeds from which were used to repay a corresponding amount of the existing senior secured term loans due 2013. We accounted for this as a new term loan due 2017 and an extinguishment of the amounts repaid under the existing term loan due 2013 and recorded a charge of $6 million associated with the combined elements of this transaction as a component of other (expense)/income net in our condensed consolidated financial statements.

Borrowings under this new term loan facility bear interest at a rate as determined by the type of borrowing, equal to either the “base rate” or LIBOR rate, plus, in each case, an applicable margin. The applicable margin on base rate loans under this new term loan facility ranges from 0.75% to 1.50% based on a total leverage ratio. The applicable margin on LIBOR loans under this new term loan facility ranges from 1.75% to 2.50% based on the total leverage ratio. Loans under this new term loan facility mature in full in February 2017, but the maturity date shall be January 2016 if at such time there is more than $750 million in the aggregate of existing other term loans under the Senior Secured Credit Agreement with a maturity of May 2016. The loans under this new term loan facility are required to be repaid in an amount equal to 5% of the original principal amount in the first year after the closing date, 5% in the second year, 10% in the third year, 10% in the fourth year and 70% in the fifth year (with payments in each year being made in equal quarterly installments other than the fifth year, in which payments shall be equal to 3.33% of the original principal amount of loans in each of the first three quarters and the remaining principal balance due in February 2017 (unless repayment is required in January 2016 as indicated above)). Loans under this new term loan facility are secured on a pari passu basis with our existing obligations under the Senior Secured Credit Agreement and Senior Secured Loan Agreement.

In February 2012, our €30 million 6.75% EMTN matured and was repaid and in April 2012, our €50 million variable rate EMTN matured and was repaid.

Subsequent Event

In October 2012, we issued $800 million in aggregate principal amount of 4.50% Senior Notes due 2020 at par with cash proceeds of approximately $788 million, net of fees and expenses. Further, in October 2012, we redeemed and subsequently retired all of our 11.50% Senior Notes due 2016 and prepaid our 8.50% Senior Secured Term Loan due 2017. The redemption and prepayment transactions will result in a pre-tax charge of approximately $115 million in the fourth quarter of 2012.

 

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Cash Flows

Operating activities. Net cash provided by operating activities was $444 million for the nine months ended September 30, 2012, as compared to $339 million for the nine months ended September 30, 2011. Net cash provided by operating activities for the nine months ended September 30, 2011 included the $102 million payment for the termination and settlement of the Sponsor Advisory Agreements. Excluding this payment, cash flows from operating activities increased $3 million as compared to the prior period. This increase was driven by favorable client billing performance, the Adjusted EBITDA performance described above and lower interest payments, substantially offset by the timing of vendor and employee payroll payments and accounts receivable collection performance. Our key collections performance measure, days billing outstanding (DBO), was 50 days at September 30, 2012 compared to 49 days at September 30, 2011.

Investing activities. Net cash used in investing activities was $362 million for the nine months ended September 30, 2012, as compared to $326 million for the nine months ended September 30, 2011. The primary driver for the increased usage of cash from investing activities was the increase in acquisition payments and capital expenditures.

Capital expenditures for property, plant, equipment, software and other assets totaled $225 million for the nine months ended September 30, 2012 as compared to $213 million for the nine months ended September 30, 2011.

Financing activities . Net cash used in financing activities was $80 million for the nine months ended September 30, 2012 as compared to $27 million for the nine months ended September 30, 2011. The decrease in cash flow was driven by the results of the 2012 transactions described under the “ Financing Transactions ” section above.

Financial Debt Covenants Attributable to TNC B.V.

Financial covenants contained in our Senior Secured Credit Agreement consist of a maximum leverage ratio and a minimum interest coverage ratio as related to our indirect wholly-owned subsidiary, Nielsen Holding and Finance B.V. and its restricted subsidiaries. The leverage ratio requires that we not permit the ratio of total net debt (as defined in the Senior Secured Credit Agreement) at the end of any calendar quarter to Covenant EBITDA (as defined in the facility) for the four quarters then ended to exceed a specified threshold. Currently, the maximum permitted ratio is 7.0 to 1.0, with such maximum ratio declining to 6.25 to 1.0 for periods after October 1, 2012.

The interest coverage ratio requires that we not permit the ratio of Covenant EBITDA at the end of any calendar quarter to Consolidated Interest Expense (as defined in the Senior Secured Credit Agreement) for the four quarters then ended to be less than a specified threshold. Currently, the minimum permitted ratio is 1.60 to 1.0, with such minimum ratio declining to 1.50 to 1.0 for periods after October 1, 2012.

Failure to comply with either of these covenants would result in an event of default under our Senior Secured Credit Agreement unless waived by our senior credit lenders. An event of default under our Senior Secured Credit Agreement can result in the acceleration of our indebtedness under the facility, which in turn would result in an event of default and possible acceleration of indebtedness under the agreements governing our debt securities as well. As our failure to comply with the covenants described above can cause us to go into default under the agreements governing our indebtedness, management believes that our Senior Secured Credit Agreement and these covenants are material to us. As of September 30, 2012, we were in full compliance with the covenants described above.

Off-Balance Sheet Arrangements

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

Summary of Recent Accounting Pronouncements

Fair Value Measurement

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting update that amends Accounting Standards Codification (“ASC”) 820—“Fair Value Measurement” regarding fair value measurements and disclosure requirements. The amendments were effective for us as of January 1, 2012. The adoption of this update did not have a significant impact on our condensed consolidated financial statements.

 

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Presentation of Comprehensive Income

In June 2011, the FASB issued an accounting update that amends ASC 220—“Presentation of Comprehensive Income”, which eliminates the option to present other comprehensive income and its components in the statement of equity. We have presented the items of net income and other comprehensive income in two separate but consecutive statements and this amended guidance does not have any other impact on our condensed consolidated financial statements.

Testing Goodwill and Indefinite-Lived Intangible Assets for Impairment

In September 2011 and July 2012, the FASB issued accounting updates that amend ASC 350—“Goodwill and Other Intangible Assets”, which were intended to simplify impairment testing for goodwill and indefinite-lived intangible assets by adding a qualitative review step to assess whether the previously required quantitative impairment analysis is necessary. The amended guidance permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the prescribed two-step impairment test. Otherwise, the two-step impairment test is not required. We will apply the updated guidance to our October 1, 2012 annual impairment test and have considered the results of our 2011 impairment test in forming the basis for our assumptions upon adoption of this update. The adoption of this update will not have a significant impact on our condensed consolidated financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Foreign Currency Exchange Risk

We operate globally and predominantly generate revenue and expenses in local currencies. Approximately 47% of our revenues and 49% of our operating costs were generated in currencies other than the U.S. Dollar for the nine months ended September 30, 2012. Because of fluctuations (including possible devaluations) in currency exchange rates or the imposition of limitations on conversion of foreign currencies into our reporting currency, we are subject to currency translation exposure on the profits of our operations, in addition to transaction exposure. Typically, a one cent change in the U.S. Dollar/Euro exchange rate will impact revenues by approximately $7 million annually, with an immaterial impact on our profitability.

Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating foreign entities’ statements of earnings and balance sheets from functional currency to our reporting currency (the U.S. Dollar) for consolidation purposes.

Translation risk exposure is primarily managed by creating “natural hedges” in our financing or by using derivative financial instruments aimed at offsetting certain exposures in the statement of earnings or the balance sheet.

The table below details the percentage of revenues and expenses by currency for the nine months ended September 30, 2012:

 

     U.S. Dollar     Euro     Other Currencies  

Revenues

     53 %      12 %      35 % 

Operating costs

     51 %      13 %      36 % 

Interest Rate Risk

We continually review our fixed and variable rate debt along with related hedging opportunities in order to ensure our portfolio is appropriately balanced as part of our overall interest rate risk management strategy. At September 30, 2012, we had $4,168 million in carrying value of floating-rate debt under our senior secured credit facilities of which $2,536 million was subject to effective floating-to-fixed interest rate swaps. A one percent increase in interest rates applied to our floating rate indebtedness would therefore increase annual interest expense by approximately $16 million ($42 million without giving effect to any of our interest rate swaps).

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

 

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Equity Price Risk

We are not exposed to material equity risk.

 

Item 4. Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

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

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2012 (the “Evaluation Date”). Based on such evaluation and subject to foregoing, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

 

(b) Changes in Internal Control over Financial Reporting

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

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

There have been no material changes to our Legal Proceedings as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

 

Item 1A. Risk Factors

There have been no material changes to our Risk Factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered repurchases or sales of our common stock for the three months ended September 30, 2012.

 

Item 3. Defaults Upon Senior Securities

Not applicable.

 

Item 4. Mine Safety Disclosures

Not applicable.

 

Item 5. Other Information

Not applicable.

 

Item 6. Exhibits

The exhibit index attached hereto is incorporated herein by reference.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

   

Nielsen Holdings N.V.

        (Registrant)

Date: October 22, 2012     /s/ Jeffrey R. Charlton
    Jeffrey R. Charlton
   

Senior Vice President and Corporate Controller

Duly Authorized Officer and Principal Accounting Officer

 

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EXHIBIT INDEX

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

 

Exhibit
Number 		  

Description of Exhibits

  4.1    Indenture, dated as of October 2, 2012, among Nielsen Finance LLC, Nielsen Finance Co., the Guarantors (as defined therein) and Law Debenture Trust Company of New York, as Trustee (incorporated herein by reference to Exhibit [4.1(a)] [4.1(b)] to the Form 8-K of Nielsen Holdings N.V. filed on October 4, 2012) (File No. 001-35042).
  4.2    Registration Rights Agreement, dated as of October 2, 2012, among Nielsen Finance LLC, Nielsen Finance Co., the Guarantors (as defined therein), J.P. Morgan Securities LLC, Goldman, Sachs & Co., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, HSBC Securities (USA) Inc., RBC Capital Markets, LLC and Wells Fargo Securities, LLC (incorporated herein by reference to Exhibit [4.1(a)] [4.1(b)] to the Form 8-K of Nielsen Holdings N.V. filed on October 4, 2012) (File No. 001-35042).
10.1    Form of Amendment No. 1 to the Amended and Restated Shareholders’ Agreement regarding Nielsen Holdings N.V., dated July 26, 2012, among AlpInvest, Blackstone, Carlyle, Hellman & Friedman, KKR, Thomas H. Lee Partners, Valcon Acquisition Holding (Luxembourg) S.à r.l., Nielsen Holdings N.V., Valcon Acquisition B.V. and The Nielsen Company B.V.
10.2    The Nielsen Company Deferred Compensation Plan, as amended and restated, effective September 11, 2012.
10.3    Nielsen Holdings N.V. Directors Deferred Compensation Plan, effective September 11, 2012.
10.4    Form of Deferred Stock Unit Grant, dated as of September 11, 2012, for non-employee directors of Nielsen Holdings N.V.
31.1    CEO 302 Certification Pursuant to Rule 13a-15(e)/15d-15(e)
31.2    CFO 302 Certification Pursuant to Rule 13a-15(e)/15d-15(e)
32.1    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
101    The following financial information from Nielsen Holdings N.V.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL includes: (i) Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2012 and 2011, (ii) Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2012 and 2011, (iii) Condensed Consolidated Balance Sheets at September 30, 2012 (Unaudited) and December 31, 2011, (iv) Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2012 and 2011, and (v) the Notes to Condensed Consolidated Financial Statements.

 

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Exhibit 10.1

FORM OF AMENDMENT NO. 1 TO

AMENDED AND RESTATED SHAREHOLDER’S AGREEMENT

REGARDING NIELSEN HOLDINGS N.V.

THIS AMENDMENT NO. 1 (this “ Amendment ”) to that certain Amended and Restated Shareholder’s Agreement regarding Nielsen Holdings N.V. dated January 31, 2011 (the “ Agreement ”) by and among AlpInvest, Blackstone, Carlyle, Hellman & Friedman, KKR, Thomas H. Lee Partners, Valcon Acquisition Holding (Luxembourg) S.à r.l., Nielsen Holdings N.V. (the “ Company ”), Valcon Acquisition B.V. and The Nielsen Company B.V. (the foregoing collectively referred to herein as the “ Parties ”). All capitalized terms used in this Amendment but not defined herein shall have the meaning ascribed to such terms under the Agreement.

WHEREAS, on July 26, 2012, Iain Leigh, a nominee of AlpInvest, resigned from the Boards of Directors of the Company and TNC, and Vivek Y. Ranadivé, an independent director, was elected as a member of the Board of Directors of the Company, to serve until the next Annual Meeting of Shareholders of the Company, and as a member of the Board of Directors of TNC;

WHEREAS, in connection therewith, the Parties desire to amend the Agreement as provided herein to provide that AlpInvest will no longer have the right to designate a director to be nominated to the Board of Directors of the Company, and will instead have the right to designate an individual to serve as a board observer; and

WHEREAS, Section 11.1 of the Agreement provides that the Agreement may be amended by a written instrument signed by the parties thereto.

NOW, THEREFORE, in consideration of the mutual agreements specified in this Amendment, the Parties hereby agree as follows:

 

  1. Amendment to Agreement .

 

  (a) Section 3.1.1 of the Agreement is hereby amended by:

 

  (i) Deleting “11” where it appears in Section 3.1.1(a)(i) and replacing it with “10”;

 

  (ii) Deleting “AlpInvest,” where it appears in Section 3.1.1(a)(i);

 

  (iii) Deleting “three” where it appears in Section 3.1.1(a)(ii) and replacing it with “four”;

 

  (iv) Inserting “(with respect to at least three of whom)” before “Rule 10A-3” in Section 3.1.1(a)(ii);

 

  (v) Deleting “11” where it appears in Section 3.1.1(b)(i) and replacing it with “10”;

 

  (vi) Deleting “each of AlpInvest and” where it appears in Section 3.1.1(b)(i); and

 

  (vii) Deleting “three” where it appears in Section 3.1.1(b)(ii) and replacing it with “four”.

 

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  (b) Section 3.4.1 of the Agreement is hereby amended by deleting the phrase: “To the extent the Nielsen Holdings Board is composed of members pursuant to Article 3.1.1(b) and” from the second sentence of this section.

 

  (c) Section 5.4.4 of the Agreement is hereby amended by deleting the phrase: “To the extent the Nielsen Holdings Board is composed of members pursuant to Article 3.1.1(b) and” from the third sentence of this section.

 

  2. Governing Law . The laws of the State of New York shall govern the interpretation, validity and performance of the terms of this Amendment, except to the extent that the matter in question is mandatorily required to be governed by Luxembourg law or Dutch law, in which case it will be governed by the applicable provisions of such law.

 

  3. No Other Amendments . Except to the extent expressly amended by this Amendment, all terms of the Agreement shall remain in full force and effect without amendment, change or modification.

 

  4. Counterparts . This Amendment may be executed in counterparts, and by different parties on separate counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.

[remainder of page left intentionally blank]

 

2

IN WITNESS WHEREOF, each of the following have executed this Amendment as of this 12th day of September, 2012.

 

NIELSEN HOLDINGS N.V.
By:  

 

  Name:
  Title:
VALCON ACQUISITION B.V
By:  

 

  Name:
  Title:
THE NIELSEN COMPANY B.V
By:  

 

  Name:
  Title:
VALCON ACQUISITION HOLDING (LUXEMBOURG) S.À R.L.
By:  

 

  Name:
  Title:

ALPINVEST PARTNERS CS INVESTMENTS 2006 C.V.
By:   AlpInvest Partners 2006 B.V., its general partner
By:   AlpInvest Partners B.V., its managing director
By:  

 

  Name:
  Title:
ALPINVEST PARTNERS LATER STAGE CO-INVESTMENTS CUSTODIAN II-A, BV
By:   AlpInvest Partners B.V., its managing director
By:  

 

  Name:
  Title:

BLACKSTONE CAPITAL PARTNERS (CAYMAN) V, L.P.
By:  

 

  Name:
  Title:
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP (CAYMAN) V, L.P.
By:  

 

  Name:
  Title:
BLACKSTONE PARTICIPATION PARTNERSHIP (CAYMAN) V, L.P.
By:  

 

  Name:
  Title:
BLACKSTONE CAPITAL PARTNERS (CAYMAN) V-A, L.P.
By:  

 

  Name:
  Title:
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP (CAYMAN) V-SMD, L.P.
By:  

 

  Name:
  Title:

BCP (CAYMAN) V-S, L.P.
By:  

 

  Name:
  Title:
BCP V CO-INVESTORS (CAYMAN), L.P.
By:  

 

  Name:
  Title:

CARLYLE PARTNERS IV CAYMAN, L.P.
By:  

 

  Name:
  Title:
CP IV COINVESTMENT CAYMAN, L.P.
By:  

 

  Name:
  Title:
CEP II PARTICIPATIONS S.À R.L. SICAR
By:  

 

  Name:
  Title:

CENTERVIEW CAPITAL, L.P.
By:   Centerview Partners GP, L.P.
Its General Partner
By:   Centerview Capital GP, LLC
Its General Partner
By:  

 

  Name:
  Title:
CENTERVIEW EMPLOYEES, L.P.
By:   Centerview Capital GP, L.P.
Its General Partner
By:   Centerview Capital GP LLC
Its General Partner
By:  

 

  Name:
  Title:
CENTERVIEW VNU LLC
By:   Centerview Capital Holdings LLC,
its Managing Member
By:  

 

  Name:
 

Title:

HELLMAN & FRIEDMAN CAPITAL PARTNERS V (CAYMAN), L.P.
By:   Hellman & Friedman Investors V (Cayman), L.P.
By:   Hellman & Friedman Investors V (Cayman), Ltd.
By:  

 

  Name:
  Title:
HELLMAN & FRIEDMAN CAPITAL PARTNERS V (CAYMAN PARALLEL), L.P.
By:   Hellman & Friedman Investors V (Cayman), L.P.
By:   Hellman & Friedman Investors V (Cayman), Ltd.
By:  

 

  Name:
  Title:
HELLMAN & FRIEDMAN CAPITAL ASSOCIATES V (CAYMAN), L.P.
By:   Hellman & Friedman Investors V (Cayman), L.P.
By:   Hellman & Friedman Investors V (Cayman), Ltd.
By:  

 

  Name:
  Title:

KKR VNU (MILLENIUM) L.P.
By:   KKR VNU (Millennium) Limited
  its General Partner
By:  

 

  Name:
  Title:
KKR MILLENNIUM FUND (OVERSEAS), LIMITED PARTNERSHIP
By: KKR Associates Millennium (Overseas), Limited Partnership
  its General Partner
By:  

KKR Millennium Limited

its General Partner

By:  

 

  Name:
  Title:
KKR VNU EQUITY INVESTORS, L.P.
By:   KKR VNU GP Limited
  its General Partner
By:  

 

  Name:
  Title:

THL FUND VI (ALTERNATIVE) CORP.
By:  

 

  Name:
  Title:
THL COINVESTMENT PARTNERS, L.P.
By:  

 

  Name:
  Title:
THL EQUITY FUND VI INVESTORS (VNU), L.P.
By:  

 

  Name:
  Title:
THL EQUITY FUND VI INVESTORS (VNU) II, L.P.
By:  

 

  Name:
  Title:
THL EQUITY FUND VI INVESTORS (VNU) III, L.P.
By:  

 

  Name:
  Title:
THL EQUITY FUND VI INVESTORS (VNU) IV, LLC
By:  

 

  Name:
  Title:

PUTNAM INVESTMENT HOLDINGS, LLC
By:  

 

  Name:
  Title:
PUTNAM INVESTMENTS EMPLOYEES’ SECURITIES COMPANY I LLC
By:  

 

  Name:
  Title:
PUTNAM INVESTMENTS EMPLOYEES’ SECURITIES COMPANY II LLC
By:  

 

  Name:
  Title:
PUTNAM INVESTMENTS EMPLOYEES’ SECURITIES COMPANY III LLC
By:  

 

  Name:
  Title:

THOMAS H. LEE INVESTORS LIMITED PARTNERSHIP
By:  

 

  Name:
  Title:
THOMAS H. LEE (ALTERNATIVE) PARALLEL FUND V, L.P.
By:  

 

  Name:
  Title:
THOMAS H. LEE (ALTERNATIVE) CAYMAN FUND V, L.P.
By:  

 

  Name:
  Title:
THOMAS H. LEE (ALTERNATIVE) FUND VI, L.P.
By:  

 

  Name:
  Title:
THOMAS H. LEE (ALTERNATIVE) PARALLEL FUND VI, L.P.
By:  

 

  Name:
  Title:
THOMAS H. LEE (ALTERNATIVE) PARALLEL (DT) FUND VI, L.P.
By:  

 

  Name:
  Title:

Exhibit 10.2

THE NIELSEN COMPANY DEFERRED COMPENSATION PLAN

(Originally Effective April 1, 2003)

(As Amended and Restated Effective September 11, 2012)

 

  1. Purpose; Effectiveness.

(a) The purpose of The Nielsen Company Deferred Compensation Plan, as amended (the “Plan”), is to provide certain members of a select group of management or highly compensated employees of TNC (US) Holdings, Inc. (the “Company”) and its affiliates a means to defer receipt of compensation and to have such deferred amounts treated as if invested in specified investment vehicles in order to enhance the competitiveness of the Company’s executive compensation program and, therefore, its ability to attract and retain key personnel necessary for the continued success and progress of the Company.

(b) Amounts deferred under any Predecessor Plan prior to April 1, 2003 (“Previously Deferred Amounts”) shall be governed by the applicable deferral agreement and the terms of such Predecessor Plan in effect on the date of such deferral, provided that the foregoing shall not prevent the Company from depositing or transferring at any time all or any portion of such Previously Deferred Amounts into any trust or trusts established or designated by the Company to hold assets in connection with this Plan and designating as hypothetical investment vehicles for all or any portion of such Previously Deferred Amounts the mutual funds or such other investment vehicles as may be specified from time to time by the Company as hypothetical investment vehicles available under this Plan.

 

  2. Definitions.

The following terms used in the Plan shall have the meanings set forth below:

(a) “Administrator” shall mean the person or persons to whom the Company has delegated the authority to take any or all action under the Plan.

(b) “Beneficiary” shall mean any person (which may include trusts and is not limited to one person) designated by the Participant in his or her most recent written Beneficiary designation form filed with the Company to receive the benefits specified under the Plan in the event of the Participant’s death. The spouse of a married Participant shall be required to consent to the designation of a Beneficiary or Beneficiaries other than such spouse, unless such spouse cannot be located or the Company, in its sole and absolute discretion, determines in a particular case, that it would be appropriate to waive the spousal consent requirement. If no designated Beneficiary survives the Participant’s death, then “Beneficiary” shall mean any persons(s) entitled by the Participant’s will, or in the absence thereof, the laws of descent and distribution of the Participant’s state of domicile, to receive such benefits.

 

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(c) “Board” shall mean the Board of Directors of the Company, except that any action that may be taken by the Board may also be taken by a duly authorized committee of the Board or the Company or the duly authorized delegees of such duly authorized committee.

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(e) “Company” shall mean TNC (US) Holdings, Inc., a New York corporation.

(f) “Company Account” shall mean the account or subaccount established and maintained by the Company for specified notional contributions, if any, made by the Company or an affiliate with respect to a Participant, as described in Section 6. A Company Account will be maintained solely as a bookkeeping entry by the Company to evidence unfunded obligations of the Company or an affiliate.

(g) “Deferral Account” shall mean the account or subaccount established and maintained by the Company for specified deferrals by a Participant, as described in Section 6. A Deferral Account will be maintained solely as a bookkeeping entry by the Company to evidence unfunded obligations of the Company or an affiliate.

(h) “Deferral Election” shall mean the election made, in accordance with Section 5, on a form, in substance, and at the time or times satisfactory to the Company, entered into between a Participant and the Company pursuant to which the Participant elects to defer compensation in accordance with the terms of this Plan.

(i) “Disability” or “Disabled” shall have the meaning of such term as set forth in Section 409A of the Code.

(j) “Effective Date” shall mean April 1, 2003.

(k) “Fair Market Value” shall mean, on a given date, (i) with respect to any mutual fund, net asset value with respect to the date of valuation, and (ii) with respect to any alternative investment, the value, as determined in good faith by the Company, based on all relevant factors for determining the fair market value of an investment of such type and nature. In determining Fair Market Value, the Company may rely upon a valuation made by independent third party appraisers experienced in the valuation of investments similar to the investment.

(l) “Financial Hardship” shall mean an “unforeseeable emergency” within the meaning of Section 409A(a)(2)(B)(ii) of the Code that (i) would result in severe financial

 

2

hardship to the Participant if early withdrawal were not permitted and (ii) is caused by an event beyond the control of the Participant or beneficiary, such as (A) a severe financial hardship to the Participant caused by a sudden and unexpected illness or accident of the Participant or a dependent of the Participant (as defined in Code Section 152(a)), of (B) a loss of the Participant’s property due to casualty, where neither (A) nor (B) is reimbursed or reimbursable through insurance, or (C) other similar extraordinary and unforeseeable circumstances caused by events beyond the Participant’s control. Financial Hardship shall not include payment of college tuition or home purchases.

(m) “Participant” shall mean any employee of the Company or any affiliate from among a select group of management or highly compensated employees who is designated by the Company as eligible to participate in the Plan and who makes an election to participate in the Plan.

(n) “Plan” shall mean The Nielsen Company Deferred Compensation Plan, as amended.

(o) “Plan Year” shall mean the calendar year.

(p) “Predecessor Plan(s)” shall mean, depending on the context, either or both of (i) the VNU USA, Inc. Executive Deferred Compensation Plan, adopted effective as of February 1, 1994 and as amended and restated effective as of January 1, 1999 (formerly known as the VNU Business Information Services, Inc. Executive Deferred Compensation Plan) or (ii) the ACNielsen Corporation Deferred Compensation Plan, effective as of April 1, 2000.

(q) “Previously Deferred Amounts” shall mean amounts deferred prior to April 1, 2003 under any Predecessor Plan.

(r) “Trust” shall mean any trust or trusts established or designated by the Company to hold assets in connection with the Plan; provided, however, that the assets of such trusts shall remain subject to the claims of the general creditors of the Company in the event of an insolvency of the Company or, if applicable, its affiliate. The Company or the affiliate, as the case may be, shall be considered “insolvent” for purposes of this Plan and any Trust if (i) the Company or the affiliate is unable to pay its debts as they become due, or (ii) the Company or the affiliate is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. Notwithstanding anything herein to the contrary, any trust or trusts designated to hold assets in connection with the Plan also may hold Previously Deferred Assets under any Predecessor Plan or assets previously deferred under other deferred compensation plans of the Company or the affiliate or any predecessor of either.

 

3

  3. Administration.

(a) Authority . The Administrator (subject to the ability of the Company to restrict the Administrator) shall administer the Plan in accordance with its terms, and shall have all powers necessary to accomplish such purpose, including the power and authority to construe and interpret the Plan, to define the terms used herein, to prescribe, amend and rescind rules and regulations, agreements, forms, and notices relating to the administration of the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. Any actions of the Administrator with respect to the Plan shall be conclusive and binding upon all persons interested in the Plan. The Company and Administrator may each appoint agents and delegate thereto powers and duties under the Plan, except as otherwise limited by the Plan.

(b) Limitation of Liability . Each officer of the Company and the Administrator shall be entitled, in good faith, to rely or act upon any report or other information furnished to him or her by any officer or other employee of the Company or any affiliate, the Company’s independent certified public accountants, or any executive compensation consultant, legal counsel, or other professional retained by the Company to assist in the administration of the Plan. To the maximum extent permitted by law, no officer of the Company or the Administrator, nor any person to whom ministerial duties have been delegated, shall be liable to any person for any action taken or omitted in good faith in connection with the interpretation and administration of the Plan.

(c) Indemnification . To the maximum extent permitted by law, officers of the Company and the Administrator shall be fully indemnified and protected by the Company with respect to any action taken or omitted in good faith in connection with the interpretation or administration of the Plan.

 

  4. Participation.

The Company will notify each person of his or her eligibility to participate in the Plan not later than 15 days (or such lesser period as may be practicable in the circumstances) prior to any deadline for filing an election form.

 

  5. Deferrals; Company Contributions.

(a) Deferrals .

(i) In General . To the extent authorized by the Company, a Participant may elect to defer the following cash compensation or awards to be received from the Company or an affiliate: base salary, commissions, annual incentive awards, long-term incentive awards and other compensation as determined by the Company in writing. The Company may

 

4

impose limitations on the amounts permitted to be deferred and other terms and conditions of deferrals under the Plan, including minimum and/or maximum periods of deferral. Any such limitations, and other terms and conditions of deferral, shall be set forth in the rules relating to the Plan or election forms, other forms, or instructions published by the Company.

(ii) Deferral Elections . Except as otherwise may be provided by the Company with respect to annual and long-term incentive awards that otherwise would be payable to the Participant during the first Plan Year, a Deferral Election must be made by a Participant prior to (A) the first day of the calendar year with respect to which base salary and commission are to be earned and (B) the date that is six months prior to the end of the applicable performance period (to the extent permitted under Treas. Reg. § 1.409A-2(a)(8)), in the case of annual and long-term incentive awards that constitute “performance-based compensation” within the meaning of Treas. Reg. § 1.409A-1(e). Notwithstanding the above, newly hired employees who are advised of their eligibility to participate in the Plan may submit their Deferral Elections no later than 30 days following their first day of employment and such Deferral Elections will be effective as soon as practicable after the date of such election with respect to amounts earned after the date of such election, to the extent permitted under Treas. Reg. § 1.409A-2(a)(7). Once a Deferral Election, properly completed, is received by the Administrator, the elections of the Participant thereon shall be irrevocable; provided, however, that the Company may, in its discretion, permit a Participant to change the form or timing of distribution by filing a later election form if the following conditions are met: (A) the redeferral election may not take effect until at least twelve (12) months after the date on which such redeferral election is made; (B) the first payment with respect to which such redeferral election is made must be deferred for a period of not less than five (5) years from the date such payment would otherwise have been made based on the prior deferral election; and (C) the election must be made at least twelve (12) months prior to the date of the first scheduled payment pursuant to the prior applicable deferral election. Notwithstanding the preceding sentence, the Administrator may, in its sole discretion, permit Participants to change their deferral elections under the Plan without meeting the conditions set forth in this Section 5(a)(ii) provided that such deferral election changes comply with transitional relief rules promulgated by the Treasury Department under Section 409A of the Code. Subject to the minimum deferral period set forth in Section 5(c) hereof, a Participant may elect to receive his or her payout at any time set forth on his or her Deferral Election form, and may, on such form, elect to receive his or her payout in (I) a lump sum or (II) from one to ten approximately equal annual installments.

(iii) Deferral Amounts . Participants may, if permitted by the Company, elect to defer (A) up to 75 percent of annual base salary and/or commissions and (B) up to 100 percent of annual incentive awards and/or long-term incentive awards, subject in each case to any minimum deferral percentages or amounts that the Administrator may impose from time to time. In no event may a Participant’s Deferral Elections result in a reduction of his or her nondeferred compensation for the period to an amount below that necessary to satisfy applicable employment taxes on deferred and nondeferred compensation, benefit plan withholding amounts, and income tax withholding for nondeferred compensation.

 

5

(b) Company Notional Contributions . The Company and any affiliate may, at any time, in their sole discretion, credit notional contributions to one or more Company Accounts established on behalf of a Participant. Notional contributions need not be subject to any uniform allocation among Participants. In addition, notional contributions may include any compensation that the Company determines to designate as such, e.g. , sign on bonuses, etc. The vesting schedule and other terms and conditions for such notional Company contributions shall be established from time to time by the Company in its sole discretion.

(c) Deferral Period . At the time a Deferral Election is made, the Participant must specify the deferral period and the first payment date with respect to amounts subject to such deferral. The Company will establish the deferral period for any Company contributions. All Deferral Elections made by the Participant must be for a minimum of one Plan Year (exclusive of the Plan Year in which the deferred amounts are earned or otherwise realized), and the first payment date may be no sooner than the first day of the second Plan Year following the Plan Year in which the deferred amounts are earned or otherwise realized.

 

  6. Accounts.

(a) Establishment of Accounts . One or more Deferral Accounts and one or more Company Accounts will be established for each Participant, as determined by the Company. The amount of base salary and awards deferred with respect to each Deferral Account will be credited to a Participant’s Deferral Account as of the date on which such amounts would have been paid to the Participant but for the Participant’s election to defer receipt hereunder, unless otherwise determined by the Company. Notional Company contributions shall be credited to a Participant’s Company Account as of the date determined by the Company. Participant deferrals and notional Company contributions will be deemed to be invested in one or more of the hypothetical investments, as provided in Section 6(b) hereof, no later than five business days following the date of the deferral or credit, as the case may be. The amounts of hypothetical income and appreciation and depreciation in value of a Deferral Account or a Company Account will be credited and debited to, or otherwise reflected in, such Deferral Account or Company Account from time to time. Unless otherwise determined by the Company, amounts credited to a Deferral Account or Company Account shall be deemed invested in a hypothetical investment as of the date so credited.

(b) Hypothetical Investments . Subject to the provisions of Section 6(c), amounts credited to a Deferral Account or Company Account shall be deemed to be invested, at the Participant’s direction, in one or more of such mutual funds as may be specified from time to time by the Company, and/or such other investment vehicles as may be specified from time to time by the Company. The Company may change or discontinue any hypothetical mutual fund or other investment vehicle available under the Plan in its discretion.

 

6

(c) Reallocation of Hypothetical Investments . A Participant may reallocate amounts credited to his or her Deferral Account or Company Account among the available hypothetical investment vehicles on a basis determined by the Company. The Company may, in its discretion, restrict allocation or reallocation by specified Participants into or out of specified investment vehicles or specify minimum or maximum amounts that may be allocated or reallocated by Participants.

(d) Trusts . The Company may, in its discretion, establish one or more Trusts (including sub-accounts under such Trust(s)), and deposit therein cash or other property in amounts not exceeding the amount of the Company’s obligations with respect to a Participant’s Deferral Account or Company Account established under this Section 6 provided, however, that no amounts shall be contributed to a Trust in a manner or at any time that would result in subjecting Participants to additional taxation under Section 409A(b) of the Code.

(e) Restrictions on Participant Direction . The provisions of Sections 6(b), 6(c), and 7(c) notwithstanding, the Company may restrict or prohibit allocation or reallocation of amounts deemed invested in specified investment vehicles, and subject such amounts to a risk of forfeiture and such other restrictions, in order to conform to restrictions applicable to any award or amount deferred under the Plan and resulting in such deemed investment, to comply with any applicable law or regulation, or for such other purpose as the Company may determine is not inconsistent with the Plan.

 

  7. Settlement of Deferral Accounts.

(a) Payout of Deferrals . Payout of deferrals and vested notional Company contributions shall be made at the time and in the form elected by the Participant on his or her Deferral Election with respect to deferrals made and as determined by the Company with respect to vested notional Company contributions (if any) provided that the designated time(s) for payment constitute permissible payment times or events under Section 409A(a)(2)(A) of the Code. In the event that a Participant or the Company, as applicable, does not specify the timing of payment for a Deferral Account or Company Account, such amounts shall be paid to the Participant in a single installment upon the Participant’s termination of employment.

(b) Payment in Cash . The Company shall settle a Participant’s Deferral Account(s) and vested Company Account(s), and discharge all of its obligations to pay deferred compensation under the Plan with respect to such Accounts, by payment of cash equal to the Fair Market Value of the vested hypothetical amounts credited to the applicable Deferral Account or Company Account.

 

7

(c) Forfeitures Under Other Plans and Arrangements . To the extent that any amount or award (i) is deposited in a Trust pursuant to Section 6 in connection with (A) a deferral of such amount or award or (B) a notional Company contribution and (ii) is forfeited, the Participant shall not be entitled to the value of such award or amount, or any proceeds thereof or earnings thereon.

(d) Timing of Payments .

(i) Payments in settlement of a Deferral Account or a Company Account shall be made as soon as practicable, and in any event, within 70 days, after the date or dates (including upon the occurrence of specified events), and in such number of annual installments (not to exceed ten), as may be directed by the Participant in his or her election relating to such Deferral Account or Company Account. The Company may set a minimum amount for each distribution of deferrals and/or Company contributions in accordance with Section 409A of the Code. All amounts needed for a payment will be deemed withdrawn from the investment vehicle(s) as close in time as is practicable to the requested payment date. If a Participant has elected to receive installment payments, unpaid vested balances will continue to earn gains or losses based upon the performance of the investment vehicle(s) that such Participant has designated as his or her hypothetical investment(s).

(ii) In the event of a Participant’s death or Disability prior to the payment of all vested amounts remaining in his or her Deferral Accounts or Company Accounts, such amounts shall be paid to the Participant or the Participant’s designated Beneficiary in a single lump sum as soon as practicable, and in any event, within 70 days, following the Participant’s death or Disability.

(iii) Irrespective of any elections made by a Participant, the Company may provide that vested amounts credited to a Participant’s Deferral Account or Company Account may be paid out in a single lump sum as soon as practicable, and in any event, within 70 days, following the Participant’s termination of employment from the Company or an affiliate (but ignoring transfers of employment between or among the Company or any of its affiliates).

(iv) Irrespective of any elections made by a Participant, the Company may provide that vested amounts credited to a Participant’s Deferral Account or Company Account may be paid out in a single lump sum as soon as practicable following a termination of the Plan affecting the Participant, to the extent permitted under Treas. Reg. § 1.409A-3(j)(4)(ix).

(e) Financial Hardship and Other Emergency Payments . Other provisions of the Plan notwithstanding, if, upon the written application of a Participant, the Company determines that the Participant has an unforeseeable Financial Hardship of such a substantial nature and beyond the individual’s control that payment of amounts previously deferred under the Plan is warranted, the Company may direct the immediate lump sum payment to the

 

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Participant of the applicable portion of the vested balance of such Participant’s Deferral Accounts and/or Company Accounts, not to exceed the amount necessary to meet the Financial Hardship and the amount necessary to pay the tax on such amount. If a Participant is granted such a withdrawal on account of Financial Hardship, the Participant’s right to make future deferrals under this Plan will be suspended for one Plan Year following the Plan Year in which the withdrawal occurs.

(f) De Minimis Benefit . Notwithstanding any provision of this Section 7 to the contrary, in the event that the Administrator determines, in its sole and absolute discretion, that the amount of any benefit (or any balance thereof) is too small to make it administratively practical to begin or continue paying such benefit in installments, the Company may pay the benefit (or any balance thereof) in the form of a lump sum, to the extent permitted under Treas. Reg. § 1.409A-3(j)(4)(v).

 

  8. Statements.

The Company will furnish statements to each Participant reflecting the amount credited to a Participant’s Deferral Accounts and Company Accounts and transactions therein from time to time and not less frequently than once each calendar year.

 

  9. Amendment/Termination.

The Company may, with prospective or retroactive effect, amend, alter, suspend, discontinue, or terminate the Plan at any time without the consent of Participants, stockholders, or any other person; provided, however, that, without the consent of a Participant, no such action shall materially and adversely affect the rights of such Participant with respect to any rights to payment of amounts credited to such Participant’s Deferral Accounts or Company Accounts. Notwithstanding the foregoing, the Company may, in its sole discretion, terminate the Plan (in whole or in part) with respect to one or more Participants and distribute to such affected Participants the amounts credited to their Deferral Accounts and Company Accounts in a lump sum as soon as reasonably practicable following such termination, to the extent permitted under Treas. Reg. § 1.409A-3(j)(4)(ix).

 

  10. General Provisions.

(a) Limits on Transfer of Awards . Other than by will, the laws of descent and distribution, or by appointing a Beneficiary, no right, title or interest of any kind in the Plan shall be transferable or assignable by a Participant (or his or her Beneficiary) or be subject to alienation, anticipation, encumbrance, garnishment, attachment, levy, execution or other legal or equitable process, nor be subject to the debts, contracts, liabilities or engagements, or torts of any Participant or his or her Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, garnish, attach or take any other action subject to legal or equitable process or encumber or dispose of any interest in the Plan shall be void.

 

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(b) Receipt of Payments . Payments (in any form) to any Participant or Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims for the awards or other compensation deferred and relating to the Deferral Account and/or Company Account to which the payments relate against the Company or any affiliate, the Administrator, or the Company.

(c) Unfunded Status of Awards; Creation of Trusts . The Plan is intended to constitute an unfunded plan for deferred compensation and Participants shall rely solely on the unsecured promise of the Company for payment hereunder. With respect to any payment not yet made to a Participant under the Plan, nothing contained in the Plan shall give a Participant any rights that are greater than those of a general unsecured creditor of the Company; provided, however, that the Company may authorize the creation of Trusts or other arrangements, including but not limited to the Trusts referred to in Section 6 hereof, to meet the Company’s obligations under the Plan, which Trusts or other arrangements shall be consistent with the unfunded status of the Plan unless the Company otherwise determines with the consent of each affected Participant.

(d) Other Participant Rights . No provision of the Plan or transaction hereunder shall confer upon any Participant any right to be employed by the Company or an affiliate, or to interfere in any way with the right of the Company or an affiliate to increase or decrease the amount of any compensation payable to such Participant, or affect the right of the Company or any affiliate to discharge any Participant. Subject to the limitations set forth in Section 10(a) hereof, the Plan shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns.

(e) Tax Withholding . The Company and any affiliate shall have the right to deduct from amounts otherwise payable in settlement of a Deferral Account or Company Account any sums that federal, state, local or foreign tax law requires to be withheld with respect to such payment.

(f) Offset . Notwithstanding anything contained herein to the contrary, the Company, in its sole and absolute discretion, may offset from the payment or payments otherwise to be made to any Participant of any benefit hereunder, an amount equal to any indebtedness or liability to the Company by such Participant existing at the time of such distribution, including, without limitation, any amount arising out of conversion or wrongful misappropriation of Company property by such Participant, to the extent permitted under Treas. Reg. § 1.409A-3(j)(4)(xiii).

 

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(g) Incapacity of Participant or Beneficiary . If the Company determines that a Participant or Beneficiary is unable to care for his or her affairs and a legal representative has not been appointed for such person, the Company may, in its sole and absolute discretion (and in a manner permitted under Section 409A of the Code) (i) suspend payment to such Participant or Beneficiary until such legal representative is appointed, or (ii) direct that any benefits payable hereunder shall be paid to the spouse, child, parent or other blood relative of such Participant or Beneficiary, or (if and as recognized by the state of domicile of the Participant or Beneficiary) to the domestic partner of such Participant or Beneficiary, or to any other person or entity, so long as such payment is permitted under applicable law and discharges completely all liability of the Company under the Plan to such Participant or Beneficiary.

(h) Governing Law . The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of New York, without giving effect to principles of conflicts of laws, and applicable provisions of federal law.

(i) Limitation . A Participant and his or her Beneficiary shall assume all risk in connection with any decrease in value of his or her Deferral Account and/or his or her Company Account, and neither the Company nor the Administrator shall be liable or responsible therefor.

(j) Construction . The captions and numbers preceding the sections of the Plan are included solely as a matter of convenience of reference and are not to be taken as limiting or extending the meaning of any of the terms and provisions of the Plan. Whenever appropriate, words used in the singular shall include the plural or the plural may be read as the singular.

(k) Severability . In the event that any provision of the Plan shall be declared illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of the Plan but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein.

(l) Status . The establishment and maintenance of, or allocations and credits to, the Deferral Account or Company Account of any Participant shall not vest in any Participant any right, title or interest in and to any Plan or Company assets or benefits except at the time or times and upon the terms and conditions and to the extent expressly set forth in the Plan and in accordance with the terms of any Trust.

 

  11. Effective Date.

The Plan was originally effective as of April 1, 2003.

 

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  12. Compliance with Section 409A of the Code.

This Plan is intended to comply with Section 409A of the Code and will be interpreted in a manner intended to comply with Section 409A of the Code. In furtherance thereof, no payments may be accelerated under the Plan other than to the extent permitted under Section 409A of the Code. To the extent that any provision of the Plan violates Section 409A of the Code such that amounts would be taxable to a Participant prior to payment or would otherwise subject a Participant to a penalty tax under Section 409A, such provision shall be automatically reformed or stricken to preserve the intent hereof. References under the Plan to a Participant’s termination of employment shall be deemed to refer to the date upon which the Participant has experienced a “separation from service” within the meaning of Section 409A of the Code. Notwithstanding anything herein to the contrary, (i) if at the time of a Participant’s termination of employment the Participant is a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company shall defer the commencement of the payment of any such payments or benefits hereunder until the date that is six months following the Participant’s termination of employment (or the earliest date as is permitted under Section 409A of the Code), at which point all payments deferred pursuant to this Section 12 shall be paid to the Participant in a lump sum and (ii) if any other payments due to a Participant hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment compliant under Section 409A of the Code, or otherwise such payment shall be restructured, to the extent possible, in a manner, determined by the Administrator, that does not cause such an accelerated or additional tax. The Administrator shall implement the provisions of this Section 12 in good faith; provided that neither the Company, the Administrator nor any of the Company’s or its subsidiaries’ employees or representatives shall have any liability to Participants with respect to this Section 12.

 

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Exhibit 10.3

NIELSEN HOLDINGS N.V.

DIRECTORS DEFERRED COMPENSATION PLAN

ARTICLE I

Purpose

SECTION 1.01. Purpose. The purpose of this Plan is to provide Directors with the ability to defer the receipt of Compensation.

SECTION 1.02. Unfunded Plan. The Company intends that the Plan be an unfunded and unsecured non-qualified deferred compensation plan maintained for the purpose of providing deferred compensation for Directors.

ARTICLE II

Definitions

The following terms when used in this Plan have the designated meanings unless a different meaning is clearly required by the context.

SECTION 2.01. “ Account ” means the records maintained on the books of the Company to reflect deferrals of Compensation by a Director pursuant to Section 3.03.

SECTION 2.02. “ Administrator ” means the Company’s Executive Compensation Group or such other person or committee designated by the Committee as responsible for the day-to-day administration of the Plan.

SECTION 2.03. “ Beneficiary ” means the person or persons designated pursuant to Article 5 to receive a benefit pursuant to Section 4.03 in the event of a Director’s death before his benefit under this Plan has been paid.

SECTION 2.04. “ Board ” means the Board of Directors of the Company.

SECTION 2.05. “ Code ” means the Internal Revenue Code of 1986, as amended.

SECTION 2.06. “ Committee ” means the Compensation Committee of the Board of the Company or a subcommittee thereof; provided that any determination involving a Director who is a member of the Committee shall be made by the Board.

SECTION 2.07. “ Company ” means Nielsen Holdings N.V. and any successor thereto.

SECTION 2.08. “ Compensation ” means, for any Plan Year, any cash-based retainer or any other cash-based fee to be earned by a Director in respect of services to be performed for the Board or any committee thereof for such Plan Year.

 

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SECTION 2.09. “ Director ” means any member (or designated member) of the Board who is not an employee of the Company or any of its subsidiaries.

SECTION 2.10. “ Fund ” means any investment fund selected by the Administrator to be offered as a notional investment for amounts deferred under the Plan.

SECTION 2.11. “ Payment Period ” means the date or dates designated pursuant to Section 3.04 for payment of some portion or all of a Director’s Account. The designated Payment Period may be a specific calendar date (or dates) or may correspond to the date of a Director’s Termination of Service or to other events, in each case, as permitted by the Administrator from time to time, in accordance with Section 409A of the Code.

SECTION 2.12. “ Plan ” means this “Nielsen Holdings N.V. Directors Deferred Compensation Plan” as set forth herein and as amended from time to time.

SECTION 2.13. “ Plan Year ” means the calendar year.

SECTION 2.14. “ Share(s) ” means a common share(s) of the Company, par value EUR 0.07 per share.

SECTION 2.15. “ Termination of Service ” means cessation for any reason of a Director’s service as a member of the Board to the extent such cessation constitutes a separation from service with the Company and its affiliates within the meaning of Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. § 1.409A-1(h) thereunder.

SECTION 2.16. “ Valuation Date ” means the date that the Administrator makes a valuation of an Account. Unless otherwise provided by the Administrator, each deemed investment alternative within each Account shall be valued as of each day on which a value for such deemed investment alternative reasonably is available to the Administrator.

ARTICLE III

Eligibility and Deferrals

SECTION 3.01. Eligibility. Each Director who receives a retainer or other cash fees in respect of his or her Board service shall be eligible to participate in the Plan.

SECTION 3.02. Accounts . The Administrator shall establish an Account for each Director who elects to defer Compensation pursuant to Section 3.03. Amounts deferred pursuant to Section 3.03, and the value thereof determined pursuant to Section 3.05, shall be credited to such Account.

SECTION 3.03. Deferral of Compensation . A Director may elect to reduce the Compensation otherwise payable to him during or in respect of a Plan Year and to have such amount credited to his Account. A deferral election pursuant to this Section 3.03 shall be made in writing at such time and in such manner as the Administrator shall prescribe but must in any event be made before the applicable deadline for making such a deferral election pursuant to Section 409A of the Code. Generally, a deferral election with respect to Compensation must be made prior to the first day of the Plan Year in which the services related to such Compensation

 

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will be rendered. The Administrator will designate an election period prior to the beginning of each Plan Year during which Directors will be given an opportunity to make new deferral elections with respect to the upcoming Plan Year. A deferral election, once executed and filed with the Administrator, cannot be revoked after the date specified by the Administrator. In the case of the first Plan Year during which this Plan was adopted or in the case of a Director who is first engaged by the Company during a Plan Year, the Administrator may permit such newly eligible Directors to elect within 30 days after becoming eligible to participate in the Plan to defer any unearned portion of his Compensation in respect of such Plan Year related to services to be performed after the date of such election, to the extent permitted under Treas. Reg. § 1.409A-2(a)(7).

SECTION 3.04. Payment Period . (a)  Designation. Each deferral election given pursuant to Section 3.03 shall include designation of the Payment Period for the value of the amount deferred, subject to the limitation set forth in Section 3.04(c).

(b) Adjustments to Deferral Elections. To the extent permitted by Section 409A of the Code, the Administrator may permit a Director to irrevocably elect to make additional deferral elections with respect to amounts previously deferred under the Plan to further delay the relevant Payment Period; provided that the following conditions are met:

(i) the redeferral election may not take effect until at least twelve (12) months after the date on which such redeferral election is made;

(ii) the first payment with respect to which such redeferral election is made must be deferred for a period of not less than five (5) years from the date such payment would otherwise have been made based on the prior deferral election; and

(iii) the election must be made at least twelve (12) months prior to the date of the first scheduled payment pursuant to the prior applicable deferral election.

(c) Limitation . A Director may select an initial Payment Period that begins no sooner than the first anniversary of the date of such election.

(d) Methods of Payments . A Director may elect, at the time a Payment Period is selected, to receive the amount which will become payable as of such Payment Period in a number of installments as determined by the Administrator. Except as may be elected pursuant to this Section 3.04(d), all amounts becoming payable under this Plan shall be paid in a single payment.

(e) Irrevocability . Except as provided in Section 3.04(b) or as set forth in Article IV (including with respect to accelerated payment upon a Termination of Service), a designation of a Payment Period and an election of installment payments shall be irrevocable.

SECTION 3.05. Value of Directors’ Accounts .

(a) General. Compensation deferrals shall be allocated to each Director’s Account as soon as practicable following the date such Compensation is withheld from the Director’s Compensation and shall be deemed invested pursuant to this Section 3.05, as soon as practicable thereafter.

 

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(b) Crediting of Income, Gains and Losses . As of each Valuation Date, income, gain and loss equivalents (determined as if the Account is invested in the manner set forth below) attributable to the period since the preceding Valuation Date shall be credited to and/or deducted from the Account.

(c) Investment of Account Balance; Notional Investment in Shares . The Administrator shall establish Funds from time to time, and each participating Director may select from such various Funds made available hereunder the Funds in which all or part of his Account shall be deemed to be invested, subject to such terms and conditions as the Administrator may establish from time to time. If multiple Funds are made available by the Administrator, the Director shall make an investment designation on a form provided by the Administrator. The Director may amend his investment designation by giving written direction to the Administrator in accordance with procedures established by the Administrator. A timely change to a Director’s investment designation shall become effective on the date determined under the applicable procedures established by the Administrator. Any changes to the Funds to be made available to the Director, and any limitation on the maximum or minimum percentages of the Director’s Account that may be invested in any particular medium, shall be communicated from time to time to the Director by the Administrator. Notwithstanding the foregoing, any Accounts that are notionally invested in Shares (i) may not subsequently be re-invested in an alternative Fund and (ii) shall be credited with dividend equivalents as and when dividends are paid on the Company’s actual Shares, with such dividend equivalents deemed to be invested in additional Shares credited to the applicable Account as of the corresponding dividend payment dates (provided that no dividend equivalents shall be credited with respect to any fractional Shares within an Account). Any Accounts that are notionally invested in a Fund other than a notional investment in Shares may subsequently be re-invested in a Share-based Fund, unless otherwise determined by the Administrator. The Shares allocated to a Share-based Fund shall include any fractional Shares that may be credited to the Director’s Account from time to time, with any payments in respect of such fractional Shares determined in accordance with Section 4.07.

(d) Default Provision . Except as provided below, the Director’s Account shall be deemed to be invested in accordance with his investment designations, provided such designations conform to the provisions of this Section. Notwithstanding the above, the Committee, in its sole discretion, may disregard the Director’s election and determine that all Compensation deferrals shall be deemed to be invested in Shares or in another Fund determined by the Committee. In the event that any Fund under which any portion of the Director’s Account is deemed to be invested ceases to exist, such portion of the Account thereafter shall be deemed held in the Fund selected by the Director or, in the absence of any instructions from the Director, by the Administrator, subject to subsequent deemed investment elections.

(e) Statements . The Company shall provide an annual statement to the Director showing such information as is appropriate, including the aggregate amount credited to the Account, as of a reasonably current date.

(f) Securities Law Issues; Trading Policies . A Director’s ability to direct investments into or out of a Fund that is notionally invested in Shares shall be subject to such terms, conditions and procedures as the Administrator may prescribe from time to time to assure compliance with Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of 1934, as amended (“ Rule 16b-3 ”), and other applicable requirements. Such procedures also may limit or restrict a Director’s ability to make (or modify previously made) deferral and distribution

 

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elections under the Plan. Any election by a Director to notionally invest in Shares under the Plan, and any elections to transfer amounts from or to a notional Share investment, shall be subject to all applicable securities law requirements, including but not limited to the those reflected in the prior sentence and Rule 16b-3, as well as all applicable stock trading policies and procedures of the Company. To the extent any election violates any securities law requirement, applicable trading policies and procedures of the Company, or any terms or conditions established from time to time by the Administrator relating to such elections (whether or not reflected in the Plan), the election shall be void.

ARTICLE IV

Payment of Benefits

SECTION 4.01. Nonforfeitability . A Director’s right to a deferred amount of Compensation and his right to the income and gains credited thereon, shall be fully vested and nonforfeitable at all times.

SECTION 4.02. Income . Any payment made pursuant to this Article IV shall include the income, gains and losses calculated in the manner described in Section 3.05 through the date of payment (or, if not administratively practicable, as of the most recent Valuation Date preceding the date of payment).

SECTION 4.03. Time of Payment . The amount credited to the Account of each Director (which shall include income, gains and losses credited thereon) shall become payable to the Director (or the Director’s Beneficiary if applicable) during the Payment Period designated pursuant to Section 3.04. If the Director has elected installment payments, such payments shall begin as soon as practicable, and in any event within sixty days, following the commencement of the Payment Period. In any other case, payment shall be made as a single sum as soon as practicable, and in any event within sixty days, following the designated Payment Period.

SECTION 4.04. Withdrawal for Emergency Need . (a)  Authorization. The Committee may permit a Director who demonstrates an unforseeable emergency need to withdraw from the Plan an amount no greater than the amount determined by the Committee to be reasonably necessary to satisfy such unforseeable emergency need, to the extent permitted under Section 409A(a)(2)(B)(ii) of the Code.

(b) Emergency Need . For purposes of this Section 4.04, an “unforeseeable emergency” shall be as defined under Section 409A(a)(2)(B)(ii) of the Code. A need will not be considered due to an unforseeable emergency to the extent that it is relieved by reimbursement or compensation by insurance or otherwise, or by liquidation of the Director’s assets insofar as such liquidation would not cause severe financial hardship, or by cessation of deferrals under the Plan.

SECTION 4.05. Source of Payment . The Compensation deferred pursuant to this Plan (and the income, gains and losses credited thereon) shall be a general unsecured obligation of the Company. The claim of a Director or Beneficiary to a benefit shall at all times be merely the claim of an unsecured general creditor of the Company. No trust, security, escrow, or similar account need be established for the purpose of paying benefits hereunder. The Company shall not be required to purchase, hold or dispose of any investments pursuant to this

 

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Plan; however, if in order to cover its obligations hereunder the Company elects to purchase or hold any investments the same shall continue for all purposes to be a part of the general assets and property of the Company, subject to the claims of its unsecured general creditors and no person other than the Company shall by virtue of the provisions of this Plan have any interest in such assets other than an interest as an unsecured general creditor.

SECTION 4.06. Right of Offset . Any amount payable pursuant to this Plan (other than amounts payable from any Share-based Fund) shall be reduced at the discretion of the Administrator to take account of any amount due, and not paid, by the Director to the Company at the time payment is to be made hereunder, subject to Treas. Reg. § 1.409A-3(j)(4)(xiii).

SECTION 4.07. Payment in Cash or Shares. The form of payment for amounts due under the Plan at the times designated pursuant to the relevant Payment Period or this Article IV shall be (i) Shares, for payments in respect of any Account that is notionally invested in Shares, and (ii) cash, for payments in respect of any Account that is notionally invested in a Fund that represents a notional investment other than Shares. Any Shares distributed to Directors in accordance with this Section shall be issued under the Company’s 2010 Stock Incentive Plan as a form of “Other Stock-Based Award” thereunder. To the extent that a scheduled payment under a Director’s Share-based Fund would include any fractional Shares, unless otherwise determined by the Committee, such payment shall be rounded to the nearest whole Share.

ARTICLE V

Beneficiaries

SECTION 5.01. Beneficiary Designation . (a)  Designation. A Director may from time to time designate, in the manner specified by the Administrator, a Beneficiary to receive payment pursuant to Section 4.03 in the event of his death.

(b) Absence of Beneficiary . In the event that there is no properly designated Beneficiary living at the time of a Director’s death, his benefit hereunder shall be paid to his estate.

SECTION 5.02. Payment to Incompetent . If any person entitled to benefits under this Plan shall be a minor or shall be physically or mentally incompetent in the judgment of the Administrator, such benefits may be paid in any one or more of the following ways, as the Administrator in his sole discretion shall determine:

(a) to the legal representatives of such minor or incompetent person;

(b) directly to such minor or incompetent person; or

(c) to a parent or guardian of such minor or incompetent person, to the person with whom such minor or incompetent person resides, or to a custodian for such minor under the Uniform Gifts to Minors Act (or similar statute) of any jurisdiction.

 

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Payment to any person in accordance with the foregoing provisions of this Section 5.02 shall to that extent discharge the Company, which shall not be required to see to the proper application of any such payment.

SECTION 5.03. Doubt as to Right To Payment . If reasonable doubt exists as to the right of any person to any benefits under this Plan or the amount or time of payment of such benefits (including, without limitation, any case of doubt as to identity, or any case in which any notice has been received from any other person claiming any interest in amounts payable hereunder, or any case in which a claim from other persons may exist by reason of community property or similar laws), the Administrator may, in its discretion, direct that payment of such benefits be deferred in a manner consistent with Section 409A of the Code until such right or amount or time is determined, or pay such benefits into a court of competent jurisdiction in accordance with appropriate rules of law, or direct that payment be made only upon receipt of a bond or similar indemnification (in such amount and in such form as is satisfactory to the Administrator).

SECTION 5.04. Spendthrift Clause . No benefit, distribution or payment under the Plan may be anticipated, assigned (either at law or in equity), alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process whether pursuant to a “qualified domestic relations order” as defined in Section 414(p) of the Code or otherwise.

ARTICLE VI

Administration and Reservation of Rights

SECTION 6.01. Powers of the Committee . The Committee shall have the power and discretion to

(a) determine all questions arising in the interpretation and application of the Plan;

(b) determine the person or persons to whom benefits under the Plan shall be paid;

(c) decide any dispute arising hereunder;

(d) correct defects, supply omissions and reconcile inconsistencies to the extent necessary to effectuate the Plan; and

(e) have all such other powers as may be necessary to discharge its duties hereunder.

SECTION 6.02. Powers of the Administrator. The Administrator shall have the power and discretion to

(a) promulgate and enforce such rules, regulations and procedures as shall be proper for the efficient administration of the Plan, including, without limitation, the establishment of any Funds and rules governing the timing and method of deferral elections under the Plan;

 

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(b) determine all questions arising in the administration of the Plan;

(c) compute the amount of benefits and other payments which shall be payable to any Director in accordance with the provisions of the Plan;

(d) make recommendations to the Committee with respect to proposed amendments to the Plan;

(e) advise the Committee regarding the known future need for funds to be available for distribution;

(f) file all reports with government agencies, Directors and other parties as may be required by law, whether such reports are initially the obligation of the Company or the Plan; and

(g) have all such other powers as may be necessary to discharge its duties hereunder.

SECTION 6.03. Claims Procedure . If the Committee denies any Director’s or Beneficiary’s claim for benefits under the Plan:

(a) the Committee shall notify such Director or Beneficiary of such denial by written notice which shall set forth the specific reasons for such denial; and

(b) the Director or Beneficiary shall be afforded a reasonable opportunity for a full and fair review by the Committee of the decision to deny his claim for Plan benefits.

SECTION 6.04. Consent. By electing to participate in the Plan each Director shall be deemed conclusively to have accepted and consented to all terms of the Plan and all actions or decisions made by the Administrator, the Committee or the Board with regard to the Plan. Such terms and consent shall also apply to, and be binding upon, the Beneficiaries, distributees and personal representatives and other successors in interest of each Director.

SECTION 6.05. Agents and Expenses . The Administrator or the Committee may employ agents and provide for such clerical, legal, actuarial, accounting, medical, advisory or other services as it deems necessary to perform its duties under this Plan. The cost of such services and all other expenses incurred by the Administrator or the Committee in connection with the administration of the Plan (other than any fees charged within a particular non-Share-based Fund, which fees shall be charged against the Director’s corresponding Account that is notionally invested in such non-Share-based Fund) shall be paid by the Company.

SECTION 6.06. Allocation of Duties . The duties, powers and responsibilities reserved to the Committee may be allocated among its members so long as such allocation is pursuant to written procedures adopted by the Committee, in which case no Committee member shall have any liability, with respect to any duties, powers or responsibilities not allocated to him, for the acts or omissions of any other Committee member.

SECTION 6.07. Delegation of Duties . The Administrator and the Committee may delegate any of their respective duties to employees of the Company or its subsidiaries.

 

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SECTION 6.08. Actions Conclusive . Any action on matters within the discretion of the Administrator or the Committee shall be final, binding and conclusive.

SECTION 6.09. Liability and Indemnification . The Administrator and the Committee shall perform all duties required of them under this Plan in a prudent manner. The Administrator and the Committee shall not be responsible in any way for any action or omission of the Company, its subsidiaries or their employees in the performance of their duties and obligations as set forth in this Plan. The Administrator and the Committee also shall not be responsible for any act or omission of any of their respective agents provided that such agents were prudently chosen by the Administrator or the Committee and that the Administrator or the Committee relied in good faith upon the action of such agents.

SECTION 6.10. Right to Amend or Terminate . The Board may at any time amend the Plan in any respect, retroactively or otherwise, or terminate the Plan in whole or in part for any reason, to the extent permitted under Treas. Reg. § 1.409A-3(j)(4)(ix). However, no such amendment or termination shall reduce the amount standing credited to any Director’s Account as of the date of such amendment or termination. In the event of the termination of the Plan, the Board, in its sole discretion, may choose to pay out Directors’ Accounts prior to the designated Payment Periods (a “ Termination Distribution ”), to the extent permitted under Treas. Reg. § 1.409A-3(j)(4)(ix). Otherwise, following a termination of the Plan, income, gains and losses shall continue to be credited to each Account in accordance with the provisions of this Plan until the time such Accounts are paid out.

SECTION 6.11. Usage . Whenever applicable, the masculine gender, when used in the Plan, includes the feminine gender, and the singular includes the plural.

SECTION 6.12. Governing Law and Construction . The Plan is intended to constitute an unfunded and unsecured, nonqualified deferred compensation arrangement. Except to the extent preempted by Federal law, all rights under the Plan shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law. No action shall be brought by or on behalf of any Director or Beneficiary for or with respect to benefits due under this Plan unless the person bringing such action has timely exhausted the Plan’s claim review procedure.

SECTION 6.13. Compliance with Section 409A of the Code. This Plan is intended to comply with Section 409A of the Code and will be interpreted in a manner intended to comply with Section 409A of the Code. In furtherance thereof, no payments may be accelerated under the Plan other than to the extent permitted under Section 409A of the Code. To the extent that any provision of the Plan violates Section 409A of the Code such that amounts would be taxable to a Director prior to payment or would otherwise subject a Director to a penalty tax under Section 409A, such provision shall be automatically reformed or stricken to preserve the intent hereof. Notwithstanding anything herein to the contrary, (i) if at the time of a Director’s Termination of Service the Director is a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such Termination of Service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company shall defer the commencement of the payment of any such payments or benefits hereunder until the date that is six months following the Director’s Termination of Service (or the earliest date as is permitted under Section

 

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409A of the Code) and (ii) if any other payments due to a Director hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment compliant under Section 409A of the Code, or otherwise such payment shall be restructured, to the extent possible, in a manner, determined by the Committee, that does not cause such an accelerated or additional tax. The Committee and the Administrator shall implement the provisions of this Section 6.13 in good faith; provided that neither the Company, the Committee, the Administrator nor any of the Company’s or its subsidiaries’ employees or representatives shall have any liability to Directors with respect to this Section 6.13.

 

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Exhibit 10.4

FORM OF DEFERRED STOCK UNIT GRANT

THIS GRANT, dated as of             , 201     (the “ Grant Date ”) is made by Nielsen Holdings N.V., a public company with limited liability incorporated under the laws of The Netherlands, having its registered office in Diemen, The Netherlands (hereinafter referred to as the “Company”), to the individual whose name is set forth on the last page hereof, who is a non-employee member of the Board of the Company, hereinafter referred to as the “Grantee”. Any capitalized terms herein not otherwise defined in Article I shall have the meaning set forth in the Nielsen Holdings 2010 Stock Incentive Plan (the “Plan”).

WHEREAS, the Company wishes to carry out the Plan, the terms of which are hereby incorporated by reference and made a part of this Grant;

WHEREAS, the Committee, charged with administration of the Plan, has determined that it would be to the advantage and best interest of the Company and its shareholders to grant the Deferred Stock Units provided for herein to the Grantee as an incentive for increased efforts during his provision of services to the Company or its Subsidiaries, and has advised the Company thereof and instructed the undersigned officers to issue said Deferred Stock Units;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:

ARTICLE I

DEFINITIONS

Whenever the following terms are used in this Grant document, they shall have the meaning specified in the Plan or below unless the context clearly indicates to the contrary.

 

Section 1.1. – Deferred Stock Unit

A “Deferred Stock Unit” shall mean an unfunded and unsecured right to receive one share of Nielsen Holdings N.V. Common Stock on and after its vesting date as set forth herein. Delivery of such shares shall be made in accordance with Article IV hereof. Deferred Stock Units shall be held in a notional account maintained by the Company for the purpose of recording any amounts due in accordance with the grant hereunder.

ARTICLE II

GRANT OF DEFERRED STOCK UNITS

 

Section 2.1. – Grant of Deferred Stock Units

For good and valuable consideration, on and as of the date hereof the Company irrevocably grants to the Grantee the number of Deferred Stock Units set forth on the signature page hereof upon the terms and conditions set forth in this Grant document.

 

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Section 2.2. – No Guarantee of Right to Provide Services

Nothing in this Grant document or in the Plan shall confer upon the Grantee any right to continue to serve as a member of the Board.

 

Section 2.3. – Adjustments to Deferred Stock Units

The Deferred Stock Units shall be adjusted pursuant to Section 10 of the Plan, as applicable. Any such adjustment made in good faith thereunder shall be final and binding upon the Grantee, the Company and all other interested persons.

ARTICLE III

VESTING

 

Section 3.1. – Schedule

(a) So long as the Grantee continues to serve as a member of the Board through each of the following applicable vesting dates, the Deferred Stock Units shall become vested with respect to 25% of the shares of Common Stock to be issued in respect of such Deferred Stock Units, on each of August 1, 20    ; November 1, 20    ; February 1, 20    ; and May 1, 20    .

Notwithstanding the foregoing, no Deferred Stock Unit shall become vested as to any additional shares of Common Stock (which do not otherwise become vested in accordance with Section 3.1(a) above) following the separation from service of the Grantee from the Company and any of its Subsidiaries for any reason, and any Deferred Stock Unit which is not vested as of the date of such a separation from service shall be immediately cancelled without payment therefor.

ARTICLE IV

DELIVERY OF SHARES

 

Section 4.1. – Timing

Shares to be issued in respect of vested Deferred Stock Units will be distributed within 60 days following a Grantee’s termination of service from the Board or, if earlier, at a fixed date elected by the Grantee, to the extent permitted, and on such form and such terms and conditions as may be provided, by the Company in accordance with Section 6.9 hereof.

 

Section 4.2. – Conditions to Issuance of Stock

Common Stock issuable in respect of a Deferred Stock Unit shall not be required to be physically issued to the Grantee. For the avoidance of doubt, shares shall be deemed to have been issued when evidenced by entry in the Company’s shareholder register. Such shares shall be fully paid and nonassessable.

 

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Section 4.3. – Fractional Shares

To the extent shares to be issued in respect of vested Deferred Stock Units would include any fractional shares, unless otherwise determined by the Committee, such shares shall be rounded to the nearest whole share.

ARTICLE V

RIGHTS AS A STOCKHOLDER

 

Section 5.1. – In General

Except as otherwise provided herein, the holder of a Deferred Stock Unit shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares he may be issued in respect of the Deferred Stock Unit or any portion thereof unless and until such shares shall have been issued as evidenced by entry in the Company’s shareholder register.

 

Section 5.2. – Dividend Equivalents

Grantees shall not be entitled to receive any dividend equivalent payments or other distributions with respect to shares to be issued in respect of Deferred Stock Units unless and until such Deferred Stock Units become vested in accordance with this agreement. Once vested, Deferred Stock Units shall be credited with dividend equivalents as and when dividends are paid on the Company’s actual shares, with such dividend equivalents deemed to be invested in additional vested Deferred Stock Units for the Grantee’s account as of the corresponding dividend payment date. No dividend equivalents shall be credited with respect to any fractional shares in a Grantee’s account.

ARTICLE VI

MISCELLANEOUS

 

Section 6.1. – Administration

The Committee shall have the power to interpret the Plan and this Grant document and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Grantee, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Deferred Stock Unit. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan and this Grant document.

 

Section 6.2. – Deferred Stock Unit Not Transferable

Subject to applicable law to the contrary, neither the Deferred Stock Unit nor any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Grantee or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by

 

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operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 6.2 shall not prevent transfers by will or by the applicable laws of descent and distribution or to a partnership, limited liability company, corporation, trust or custodianship, the beneficiaries of which may include only the Grantee, his spouse (or ex-spouse) or his lineal descendants (including adopted children) or, if at any time after any such transfer there shall be no then living spouse or lineal descendants, then to the ultimate beneficiaries of any such trust or to the estate of a deceased beneficiary.

 

Section 6.3. – Notices

Any notice to be given under the terms of this Gant to the Company shall be addressed to the Company in care of its General Counsel, and any notice to be given to the Grantee shall be addressed to him at the address last known to the Company. By a notice given pursuant to this Section 6.3, either party may hereafter designate a different address for notices to be given to it or him. Any notice which is required to be given to the Grantee, shall, if the Grantee is then deceased, be given to the Grantee’s personal representative if such representative has previously informed the Company of his status and address by written notice under this Section 6.3. Any notice shall have been deemed duly given (i) upon electronic confirmation of facsimile, (ii) one business day following the date sent when sent by overnight delivery and (iii) five (5) business days following the date mailed when mailed by registered or certified mail return receipt requested and postage prepaid.

 

Section 6.4. – Titles; Pronouns

Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Grant document. The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates.

 

Section 6.5. – Applicability of Plan

The Deferred Stock Unit and the shares of Common Stock issuable to the Grantee pursuant to the Deferred Stock Unit shall be subject to all of the terms and provisions of the Plan to the extent applicable to the Deferred Stock Unit and such shares. In the event of any conflict between this Grant document and the Plan, the terms of the Plan shall control.

 

Section 6.6. – Amendment

This Grant may be amended only by a writing executed by the Company and the Grantee which specifically states that it is amending this Grant.

 

Section 6.7. – Governing Law

The laws of the State of New York shall govern the interpretation, validity and performance of the terms of this Grant document, except to the extent that the issue or transfer of stock shall be subject to mandatory provisions of the laws of The Netherlands.

 

Section 6.8. – Arbitration

In the event of any controversy among the parties hereto arising out of, or relating to, this Grant which cannot be settled amicably by the parties, such controversy shall be finally, exclusively and conclusively settled by mandatory arbitration conducted expeditiously in accordance with the American

 

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Arbitration Association rules, by a single independent arbitrator. Such arbitration process shall take place within the Borough of Manhattan, in the City of New York, New York. The decision of the arbitrator shall be final and binding upon all parties hereto and shall be rendered pursuant to a written decision, which contains a detailed recital of the arbitrator’s reasoning. Judgment upon the award rendered may be entered in any court having jurisdiction thereof. Each party shall bear its own legal fees and expenses. Notwithstanding anything herein to the contrary, if any other agreement between the Grantee and the Company or its subsidiaries concerning the provision of services by the Grantee to the Company contains a similar provision relating to arbitration and/or dispute resolution, such provision in such agreement shall govern any controversy hereunder.

 

Section 6.9. – Code Section 409A

Notwithstanding any other provisions of this Agreement or the Plan, the Deferred Stock Units granted hereunder shall not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon the Grantee. In the event it is reasonably determined by the Committee that, as a result of Section 409A of the Code, the transfer of Shares under this Agreement may not be made at the time contemplated hereunder without causing the Grantee to be subject to taxation under Section 409A of the Code, the Company will make such payment on the first day that would not result in the Grantee incurring any tax liability under Section 409A of the Code. Notwithstanding anything herein to the contrary, if at the time of the Grantee’s termination of service with the Company the Grantee is a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Grantee) until the date that is six months following the Grantee’s termination of service with the Company (or the earliest date as is permitted under Section 409A of the Code without any accelerated or additional tax).

 

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NIELSEN HOLDINGS N.V.
By:  

 

Its:  

 

GRANTEE: [NAME]

Aggregate number of Deferred Stock Units granted hereunder:                     

Exhibit 31.1

Certification of the Chief Executive Officer

I, David L. Calhoun, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Nielsen Holdings N.V.;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 22, 2012

 

By:  

/s/ DAVID L. CALHOUN

David L. Calhoun
Chief Executive Officer

Exhibit 31.2

Certification of the Chief Financial Officer

I, Brian J. West, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Nielsen Holdings N.V.;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 22, 2012

 

By:  

/s/ BRIAN J. WEST

Brian J. West
Chief Financial Officer

Exhibit 32.1

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned does hereby certify that:

The Form 10-Q for the quarter ended September 30, 2012 (the “Form 10-Q”) of Nielsen Holdings N.V. fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

     

/s/ David L. Calhoun

Date: October 22, 2012       David L. Calhoun
      Chief Executive Officer
     

/s/ Brian J. West

Date: October 22, 2012       Brian J. West
      Chief Financial Officer