NIELSEN INVESTOR OVERVIEW MARCH 2014

Transcription

1 NIELSEN INVESTOR OVERVIEW MARCH 2014

2 FORWARD LOOKING STATEMENTS The following discussion contains forward-looking statements, including those about Nielsen s outlook and prospects, in the meaning of the Private Securities Litigation Reform Act of Forward-looking statements are those which are not historical facts. These and other statements that relate to future results and events are based on Nielsen s current expectations as of March 20, Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties. The risks and uncertainties that we believe are material are outlined in our disclosure filings and materials, which you can find on Please consult these documents for a more complete understanding of these risks and uncertainties. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Our outlook is provided for the purpose of providing information about current expectations for This information may not be appropriate for other purposes. 2

3 NIELSEN AT A GLANCE 2013 Revenue $5.7B 2013 Free Cash Flow $573M 2013 Adjusted EBITDA Margin 28.4% Measurement and analytics for content, advertising, and activity for TV, digital, social and audio Watch Buy 40% 60% Measurement of sales, market share and analytics for consumer goods 2013 Revenue $2.3B Adjusted EBITDA Margin 43% 2013 Revenue $3.4B Adjusted EBITDA Margin 19% Dividend Yield 1.8% Market Cap $16.8B Private Equity Ownership 25% Our focus is to drive shareholder value through substantial growth, profitability and improvement of cash flow *Market Cap and Dividend Yield are reported as of 3/20/14 3

4 NIELSEN S BUSINESS STRATEGY & OBJECTIVES OUR VALUES Expand coverage of consumer purchase behavior globally OUR BRAND BUY OPEN Measure more ways that consumers spend time with media QUALITY SIMPLE INTEGRATED WATCH BUY + WATCH Understand how media consumption relates to purchase behavior INTEGRITY NEUTRALITY 4

5 SOLID BUSINESS MODEL DRIVES COMPELLING RESULTS FRAMEWORK CONSISTENT REVENUE GROWTH RESULTS 5% revenue CAGR from 08 to quarters of consecutive growth Investing in key growth opportunities OPERATING LEVERAGE More than 400bps of margin expansion 08 to 13 Significant market/product reinvestment Sustainable operating efficiencies ADJ. NET INCOME GROWTH 8x increase in Adj. Net Income Reduced Int. expense by more than $300M since 08 Cash Tax rate down 50% to ~16% CAPITAL EFFICIENCY De-levered from 9.1x to ~3.5xPF between 06 to 13 Capital return through Dividend ~40% Payout ratio $500M stock buy-back program announced Well positioned to deliver consistent results (1) Based on constant currency growth 5

6 LEADERSHIP POSITIONS RETAIL MEASUREMENT AUDIENCE MEASUREMENT VIDEO AUDIENCE MEASUREMENT AUDIO INFORMATION AUDIENCE MEASUREMENT SOCIAL MARKETING EFFECTIVENESS NEW PRODUCT INNOVATION INSIGHTS Only scale player with broad capabilities and global footprint 6

7 OUR GROWING GLOBAL FOOTPRINT Our focus is relentless on our pursuit to provide clients with the most complete understanding of what consumers buy and watch in approximately 100 countries 2013PF REVENUE DISTRIBUTION U.S. & Canada 56% Western Europe 17% Asia <15% LatAm, Africa, <15% Middle East, Eastern Europe Nielsen presence No single currency is >3%, excluding USD, CAD, EUR & GBP underscored by a global employee base of 35,000 talented associates we work hard to attract, develop and retain 7

8 LONG-TERM, BEST-IN-CLASS CLIENT BASE BUY WATCH HIGHLIGHTS 20,000+ clients Relationships with top 10 clients for over 30 years Long-term contracts provide stable, recurring revenues average length of 3-10 years No client represents more than 4% of 2013 revenues For 90 years, we have been at the forefront of measuring consumers around the world, helping clients drive better business decisions and profitable growth over time 8

9 KEEPING PACE WITH THE CHANGING LANDSCAPE Nielsen Twitter TV Ratings Syndicated-standard metric around the reach of the TV conversation on Twitter Complements Nielsen s existing TV ratings, giving TV networks and advertisers the real-time metrics required to understand TV audience social activity Live Q Digital Program Ratings Measuring audience reach by age and gender of content viewed online, with additional content types and devices to be supported in future releases Leverages same measurement methodology used in Nielsen Online Campaign Ratings Live Q Mobile Measurement Expanding our TV ratings to include mobile devices able Viewing STB of or TV Satellite programming receiver content and/or with consumed a broadband on tablets connection. or smartphones will Live be credited Q to the existing TV ratings Live Fall 2014 Local Buyer Reach Connects what viewers watch and buy, by linking proprietary local television viewing data with consumer transactions and auto registrations Extends into 40+ buyer categories, including automotive, retail shopping, quickservice restaurants, and grocery stores Live Q

10 WHY INVEST IN NIELSEN? Comprehensive understanding of what consumers buy and watch Global leader in our segments with market presence in 100+ countries Mission critical measurement and analytics embedded in client workflows Syndicated, scalable products and services Strategic investments to drive continued and future growth opportunities Proven track record of growth and economic resilience Accelerated earnings growth through deleveraging Return of capital to shareholders through dividend Focus on delivering value to clients and shareholders 10

11 WHAT CONSUMERS BUY Broad, unparalleled reach of consumers worldwide 2B electronic records collected weekly 3M store level data files annually 25M+ characteristics collected for 30M products 1.7M+ store visits monthly 16M consumer surveys per year 11

12 BUY: PROVIDING INFORMATION AND INSIGHTS Total 2013 Revenue: $3.4B INFORMATION 2013 Revenue: $2.6B Retail sales measurement and market share information Presence in 100+ countries Measure billions of monthly point-of-sale transactions Store level data from nearly 2 million stores, supplemented from proprietary household level data from 240K households INSIGHTS 2013 Revenue: $758M Advanced analytical capabilities and solutions Demand strategy Help clients see around corners Product innovation Pricing and promotion Marketing ROI Our measurement and analytics are embedded in the operating disciplines of our clients, helping to drive their growth Marketing C-Suite Supply Chain Research Sales Investor and Media Relations 12

13 BUY: HELPING CLIENTS MAKE KEY BUSINESS DECISIONS INFORMATION Retail Measurement Services (RMS) Provides metrics for sales, package, market share, distribution 100+ countries measured Allows clients to track brands and category performance Consumer Panel Service (CPS) Provides metrics around consumer behavior penetration, buying rate, frequency using a panel of households 27 countries measured Allows clients to understand shopping habits of households INSIGHTS Allows clients to understand sales potentials and answer questions regarding marketing ROI Product Innovation Sales volume Concept/product testing Pricing & Promotion Marketing Mix Shelf & Assortment 13

14 DEVELOPING MARKETS GROWTH OF MIDDLE CLASS DEVELOPING MARKETS REVENUE 8.3B 7.0B $1.2B 3.7B $0.6B 11% CAGR $0.4B LOCALS 10-30% Growth $0.8B GLOBAL MNCs BIGGEST INCREASE EVER ACCELERATION WITH LOCALS Source: OECD; CAGR represented in constant currency 14

15 NIELSEN IN DEVELOPING MARKETS TREND EARLY STAGE LATE STAGE INVESTMENT $$$ $ COVERAGE NATIONAL HYPER-LOCAL, GRANULAR LOCAL CLIENTELE <50% >50% MARGINS LOW- TO MID-TEENS (i.e., Africa) LOW 30 S (i.e., Brazil) Predictable, attractive long-term investment 15

16 WHAT CONSUMERS WATCH Measuring consumption across screens 6K+ TV stations monitored 6M+ television programs measured 1.6T+ web impressions collected annually 1B+ web ads tracked daily 7+M mobile phones on which activity is monitored 16

17 WATCH: MEASURING CONSUMPTION ACROSS SCREENS Total 2013 Revenue: $2.3B TELEVISION Global television audience measurement Currency in US television advertising International television measurement Television audience measurement in 33 countries Proprietary data methods Innovation around viewer behavior and fragmentation DIGITAL Digital measurement, audience analytics and consumer research Online Campaign Ratings Digital Program Ratings Mobile measurement Leader in social media measurement Strategic partnerships (Facebook, Twitter) Our measurement and analytics are embedded in the operating disciplines of our clients, helping to drive their growth Media Executives Programmers Media Sales Agencies and Advertisers Marketing Investor and Media Relations 17

18 NIELSEN AUDIO Expanded measurement of global consumers STRATEGY Transition all measurement to Nielsen platforms Eliminate duplicate functions and layers Cultivate the best talent UNDISPUTED LEADER IN AUDIO ENCODING TECH + FOOTPRINT + TALENT COST SYNERGIES Corporate Overhead Real estate and procurement Operations Platform consolidation INVESTMENTS Quality Enhancements Digital Audio (Streaming) Audience Measurement Audio Sales Effect - ROI Global expansion $45MM NET BENEFIT Radio to add ~2 hours of additional measurement 18

19 WATCH: TRENDS SHAPING WHAT CONSUMERS WATCH TREND CLIENT NEED NIELSEN S ANSWER FRAGMENTATION Audience measurement standards for video, audio, text ONLINE CAMPAIGN & DIGITAL PROGRAM RATINGS TABLET & SMARTPHONE MEASUREMENT DIGITAL AUDIO MEASUREMENT MARKETING SPEND ROI Advertising effectiveness, audience engagement and impact metrics BUYER INSIGHTS TWITTER TV RATINGS NIELSEN CATALINA SOLUTIONS MARKETING MIX GLOBAL World class currency quality measurement for video & audio GLOBAL EXPANSION OF TV RATINGS, AUDIO, ONLINE CAMPAIGN RATINGS, BRANDEFFECT 19

20 NIELSEN ONLINE CAMPAIGN RATINGS Directly measures demographics from Facebook s 150mm+ person registry, surpassing other methods of reporting campaign audience Delivers unique reach, frequency, viewability and verification across campaigns, by publisher, by placement Provides Online Gross Rating Points (GRPs) consistent with Nielsen TV Ratings Delivers results overnight WITH demographics Provides MRC* accredited demographic ratings, that provide unique audience views for internet advertising campaigns Q4 10 Nielsen/Facebook announcement Q3 11 OCR launch MRC accreditation Q campaigns Q1 12 Unilever, Group M announcements Q2 12 KEY MILESTONES Publisher guarantees at Upfronts 1,000 campaigns Q3 12 XCR beta period Q4 12 XCR launches TV & Digital Q1 13 ABC cross-platform guarantees Q2 13 OCR international expansion Digital Program Ratings Q3 13 First testing of mobile OCR complete Experian as 2 nd data provider Q4 13 Google tag acceptance 11,000 campaigns Delivering accurate audience measurement for online advertising campaigns, comparable to TV, helping advertisers, agencies and publishers deliver improved ROI across platforms *Nielsen Online Campaign Ratings is accredited by the Media Rating Council (MRC). Featured elements including DMA, verification and viewability are not currently accredited, but are undergoing review by MRC. 20

21 THE DIGITAL OPPORTUNITY U.S. INDUSTRY OUTLOOK 2013 TV/Radio Spend CAGR: 4% $83B 2% AD SPEND MEASUREMENT SPEND 2017 Digital Video (incl. Mobile) Spend 2017 Digital Display Spend CAGR: 25% CAGR: 11% $15B ~$300M opportunity ~2% $18B ~$200M opportunity <1% AD SPEND MEASUREMENT SPEND AD SPEND MEASUREMENT SPEND Industry significantly benefits from a single currency 21

22 POISED TO CAPITALIZE ON SIGNIFICANT GROWTH OPPORTUNITIES REACH RESONANCE REACTION SOCIAL TV MARKETS.BIG & GETTING BIGGER PRODUCTS ROBUST & REAL MOMENTUM PC Over the Top Device Smartphone Tablet GLOBAL OVERNIGHT TO REAL TIME Industry alignment (buyers and sellers) drive pace 22

23 ADVERTISER SOLUTIONS Helping clients understand how individuals viewing behavior is impacting their purchasing behavior to increase ROI marketing efforts WATCH BUY 23

24 HELPING CLIENTS ASSESS MARKETING ROI REACH Who Did the Program or Ad Reach? Reach and frequency (GRP), demographics Overnight GRPs for TV and digital NIELSEN ONLINE CAMPAIGN RATINGS First currency quality digital measurement solution Overnight audience ratings by demo, consistent with TV Nielsen s cross platform homes panel data + Facebook s user registration database RESONANCE Did It Change Attitudes Brand recall, likeability, purchase intent NIELSEN BRAND EFFECT Evaluates overall performance of advertising campaign against a relevant metric Recommendations on what ads to run, where and how often NIELSEN TWITTER TV RATINGS Unique daily social TV rating Reach of tweets about TV programs and advertising Nielsen s demographics and TV ratings + Twitter s feed and reach data REACTION Did It Change Behavior? Buy + Watch ROI solutions for marketers NIELSEN CATALINA VENTURES Correlates media exposure with actual CPG purchase behavior Nielsen s TV and digital media exposure data + Catalina s 55M household daily loyalty card data NIELSEN BUYER INSIGHTS Correlates media exposure with actual CPG purchase behavior Nielsen s TV and digital media exposure data + 80% of all credit and debit card purchases in the U.S. 24

25 ADVERTISER SOLUTIONS IMPROVING MARKETING EFFECTIVENESS VERTICAL/MEDIA EXPANSION Automotive CPG Media QSR Travel & Leisure Retail Financial Svcs. Technology Telecom Entertainment TV Audio Digital DRIVES REVENUE OPPORTUNITY 10-20% GROWER Linking audience assets to new verticals 25

26 FINANCIALS

27 ANNUAL PERFORMANCE BY SEGMENT REVENUE ($ BILLIONS) ADJUSTED EBITDA & MARGIN (1) ($ BILLIONS) $4.6 $4.6 $1.6 $1.8 $3.0 $2.8 CAGR 5.5% $5.7 $5.3 $5.4 $4.9 $2.3 $2.0 $2.1 $1.9 $3.3 $3.3 $3.4 $ $1.1 $586 $1.2 $676 CAGR 8.9% $1.5 $1.5 $1.3 $792 $856 $709 $1.6 $ $557 $589 $648 $685 $676 $ Buy Watch ADJUSTED EBITDA MARGIN 23.9% 26.6% 26.8% 27.2% 27.8% 28.4% (1) The representation by segment does not include Corporate, which contributes to the full view of total Adjusted EBITDA for the Company. Note: Figures are as reported 27

28 STEADY SEGMENT REVENUE GROWTH BUY SEGMENT ($ BILLIONS) WATCH SEGMENT ($ BILLIONS) $2.9 $2.8 CAGR 4% $3.0 $3.3 $3.3 $ $1.8 CAGR 7% $1.9 $2.0 $2.1 $ $ CONSTANT CURRENCY GROWTH (1) 3.9% 2.3% 7.4% 5.8% 3.6% 3.1% CONSTANT CURRENCY GROWTH (1) 11.0% 11.4% 4.6% 5.2% 4.8% 11.7% 1) Revenue growth rates derived on a constant currency basis; figures are as reported 2013 includes 4Q of Audio; CAGR excludes Audio. 28

29 SELECTED CASH FLOW & BALANCE SHEET ITEMS ($ in millions) DEBT MATURITY PROFILE BALANCE SHEET 12/31/13 Gross Debt (a) $6,640 Cash $564 Net Debt (a) $6,076 Proforma Net Debt Ratio (b) 3.5x CAPITAL TABLE 12/31/13 12/31/12 Change Loan Debt (secured) $4,016 $4,090 $(74) % Sr. Notes (209) 7.75% Sr. Notes 1,083 1,084 (1) 4.50% Sr. Notes % Sr. Notes Capital lease/misc. debt Total Debt (a) $6,640 $6, Less Cash Net Debt $6,076 $6, Proforma Net Debt Ratio (b) 3.5x 3.9x (0.4) Weighted avg. interest rate (a) 4.28% 4.86% (58) bps (a) (b) Does not include $288 million of mandatory convertible subordinated bonds; weighted avg. interest rate calculated based on amount outstanding at end of quarter Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis. Excludes $288M of mandatory convertible subordinated debt. Proforma net debt leverage ratio for 2013 includes Arbitron (Audio) Adjusted EBITDA of $117 million for the nine months ended September 30, The 2012 comparable ratio of 3.9x has been adjusted to include Audio and exclude Expositions EBITDA and net debt. As reported, 2012 Net Debt Ratio was 3.75x. 29

30 STRONG FREE CASH FLOW FREE CASH FLOW (1) ($MILLIONS) $500 $400 CAGR (2) 25% $376 $426 $573 $300 $200 $235 $209 $100 $0 -$100 ($54) Strong free cash flow supports growth investments and increased shareholder returns 1) Defined as cash flow from operations, normalized for non-recurring Arbitron transaction costs, less CapEx. Excludes $102M sponsor termination fee paid in 2011 and $28M in certain Audio deal-related costs ; CAGR excludes

31 CAPITAL ALLOCATION MEDIUM TERM (2015 & 2016) On course to achieve net debt to adjusted EBITDA ratio of x ahead of 2016 refinancing Committed to dividend growth: 25% increase of quarterly cash dividend to $0.20 intent to grow with earnings over time $500 million share repurchase program: Mitigate dilution associated with equity compensation program DELEVERAGING PROGRESS (1) ~$1B/YR Dividend ~45% Buyback / Tuck-in BD ~35% Mandatory Debt ~20% 9.1x 7.9x 7.4x 6.2x 5.8x 4.1x 3.9x 3.5x Free Cash Flow ) Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis including Arbitron proforma Adjusted EBITDA. Excludes $288M of mandatory convertible subordinated debt due 2013, but includes all other debt, including capital leases; Proforma as if Arbitron had been acquired 12/31/12. 31

32 Copyright 2013 Nielsen Holdings N.V REVENUE RANGE Percentages reflected as constant currency E RANGE $5.6B LOW HIGH RANGE DRIVERS Watch (ex Audio) $2.2B +5.2% Audience Measurement % % Ad Solutions 10-15% ~20% Other (2%) 0-2% WATCH % % Tablets, Smartphones, Social, OCR New verticals, new products Non-core legacy product performance Buy $3.4B +3.1% Western Europe (1%) 1% Insights 4-6% ~10% Developing 7-8% ~10% Developed Info 3% 4% (ex- W. Europe) BUY % % Macro economic tailwind Improved discretionary environment Local client expansion Steady progress with global and local clients Core Nielsen 4.0% 6.0% Total Nielsen, including Audio and Harris, growing 11.5% % 32

33 2014 GUIDANCE FEBRUARY 13, 2014 (amounts in constant currency except adjusted net income per share) Total Revenue 11.5% % OTHER FINANCIAL METRICS Revenue (ex Audio & Harris) 4.0% - 6.0% Capital Expenditures $400M - $410M Adj. EBITDA margin rate 29.0% % Depreciation & Amortization $575M - $600M Adj. Net Income 22.0% % Net book interest $300M - $310M Adj. Net Income Per Share $ $2.55 Cash taxes $170M - $180M Deleveraging ~0.3x Cash restructuring $110M - $130M Free Cash Flow ~$700M Est. wtd. avg. diluted shares outstanding for FY M Total revenue growth increased for Harris Interactive; accretion to ANI/share offset by potential currency impact 33

34 RUNWAY FOR FUTURE PRODUCTIVITY ,000 applications 3,000 applications 2,000 applications SHARED SERVICES for 9% of operations SHARED SERVICES for 45% of operations SHARED SERVICES for 60% of operations 50% revenue generated by electronic data collection 75% revenue generated by electronic data collection 95% revenue generated by electronic data collection Opportunity for continued margin improvement 34

35 LONG TERM FINANCIAL TARGETS REVENUE GROWTH MID-SINGLE DIGIT ADJUSTED EBITDA GROWTH 1X - 2X REVENUE DEVELOPING MARKET GROWTH DOUBLE DIGIT ADJUSTED NET INCOME GROWTH MID-TEENS CASH TAX RATE MID-TEENS TO LOW 20 S TARGET LEVERAGE X DIVIDEND GROWTH IN LINE WITH EARNINGS GROWTH Note: All measures represented on constant currency basis. 35

36 NIELSEN: A DIFFERENTIATED GLOBAL, GROWTH COMPANY Comprehensive understanding of what consumers buy and watch Global leader in our segments with market presence in 100+ countries Mission critical measurement and analytics embedded in client workflows Syndicated, scalable products and services Strategic investments to drive continued and future growth opportunities Proven track record of growth and economic resilience Accelerated earnings growth through deleveraging Return of capital to shareholders through dividend Focus on delivering value to clients and shareholders 36

37 Copyright 2013 Nielsen Holdings N.V. CERTAIN NON-GAAP MEASURES Overview of Non-GAAP Presentations We consistently use the below non-gaap financial measures to evaluate the results of our operations. We believe that the presentation of these non-gaap measures provides useful information to investors regarding financial and business trends related to our results of operations, cash flows and indebtedness and that when this non-gaap financial information is viewed with our GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. None of the non-gaap measures presented should be considered as an alternative to net income or loss, operating income or loss, cash flows from operating activities or any other performance measures of operating performance or liquidity derived in accordance with GAAP. These non-gaap measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Constant Currency Presentation We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-gaap measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, 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 exchange rates and comparing these adjusted amounts to our current period reported results. Net Debt and Net Debt Leverage Ratio The net debt leverage ratio is defined as net debt as of the balance sheet date divided by Adjusted EBITDA for the twelve months then ended. Net debt and the net debt leverage ratio are not presentations made in accordance with GAAP, and our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. 37

38 Copyright 2013 Nielsen Holdings N.V. CERTAIN NON-GAAP MEASURES (continued) Adjusted EBITDA We define Adjusted EBITDA as net income or loss from our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, goodwill and intangible asset impairment charges, stock-based compensation expense and other non-operating items from our consolidated statements of operations as well as certain other items considered unusual or non-recurring in nature. 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 consistently measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. Adjusted Net Income We define Adjusted Net Income as net income or loss from our consolidated statements of operations before income taxes, depreciation and amortization associated with acquired tangible and intangible assets, restructuring charges, goodwill and intangible asset impairment charges, other non-operating items from our consolidated statements of operations and certain other items considered unusual or non-recurring in nature, reduced by cash paid for income taxes. Also excluded from Adjusted Net Income is interest expense attributable to the mandatory convertible subordinated bonds converted on February 1, Free Cash Flow We define free cash flow as net cash provided by operating activities, normalized for non-recurring Arbitron transaction costs, less capital expenditures. We believe providing free cash flow information provides valuable supplemental information regarding the cash flow that may be available for discretionary use by us. Free cash flow is not a presentation made in accordance with GAAP. 38

39 Copyright 2013 Nielsen Holdings N.V. ADJUSTED NET INCOME RECONCILIATION ($ in millions except per share amounts) Net income $736 $272 $87 $133 $(489) $(589) $(354) $(419) (Income)/ loss from discontinued operations, net of tax (305) (30) (26) (104) (114) Interest expense, net Provision / (benefit) for income taxes (54) (152) (114) Depreciation and amortization EBITDA 1,339 1,243 1,012 1, Impairment of goodwill and intangible Equity in net (income)/ loss of affiliates (2) (5) (3) (5) (12) Other non-operating loss/(income), net (28) Restructuring charges Stock-based compensation expense Other items (a) Adjusted EBITDA 1,617 1,504 1,450 1,324 1,226 1, Interest expense, net (307) (386) (443) (614) (598) (633) Depreciation and amortization (510) (493) (502) (530) (519) (462) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (147) (124) (132) (129) (139) (91) Stock-based compensation expense (47) (34) (27) (18) (14) (18) Interest expense attributable to mandatory convertible bonds Adjusted net income Adjusted net income per share of common stock, diluted $2.02 $1.69 $1.44 $0.82 $0.61 $0.40 (a) Other items primarily consist of transaction-related fees. 39

40 ADJUSTED NET INCOME RECONCILIATION ($ in millions except per share amounts. Year ended December 31 for all years.) (continued) Weighted-average shares of common stock outstanding as of December 31, basic Dilutive shares of common stock from stock compensation plans Shares of common stock convertible associated with the mandatory convertible bonds Shares of common stock convertible associated with the mandatory convertible bonds 375,797, ,787, ,469, ,499, ,905, ,674,754 5,130,337 4,523,116 5,032,773 3,153, ,994 10,416,700 9,531, ,824, ,727, ,033, ,652, ,905, ,674,754 40

41 FREE CASH FLOW RECONCILIATION ($ in millions. Year ended December 31 for all years.) Net cash provided by operating activities $901 $784 $641 $543 $517 $318 Sponsor termination fee 102 Capital expenditures (374) (358) (367) (334) (282) (370) One-time Arbitron costs $46 Free Cash Flow $573 $426 $376 $209 $235 $(53) 41

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