NIELSEN INVESTOR OVERVIEW 4Q 2015

Transcription

1 NIELSEN INVESTOR OVERVIEW 4Q 2015

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 December 11, 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 2014 Revenue $6.3B 2014 Free Cash Flow $681M 2014 Adjusted EBITDA Margin 29.2% Cash returned to shareholders over $1.1B Measurement and analytics for content, advertising and activity for television, digital, social and audio Measurement and analytics for sales, market share and consumer goods Watch 44% Buy 56% 2014 Revenue $2.8B Adjusted EBITDA Margin 44% 2014 Revenue $3.4B Adjusted EBITDA Margin 19% Dividend Yield 2.5% Market Cap $16.3 Revenues recurring in nature ~70% Our focus is to drive shareholder value through consistent growth, profitability and free cash flow generation Market Cap and Dividend Yield are reported as of 12/14/15 3

4 NIELSEN S BUSINESS STRATEGY & OBJECTIVES OUR VALUES Expand coverage of consumer purchase behavior globally OUR BRAND OPEN BUY Capture Total Audience across all screens and platforms QUALITY SIMPLE WATCH INTEGRITY INTEGRATED MARKETING EFFECTIVENESS Help clients understand how individuals viewing behavior impacts purchase behavior NEUTRALITY Execution of our strategy drives shareholder value through the cycles 4

5 THE NIELSEN VALUE PROPOSITION PERFORMANCE MANAGEMENT CONSUMER FOCUS WATCH BROADCAST TV CABLE SATELLITE TV TIME SHIFTING DIGITAL MOBILE TOTAL AUDIENCE BUY GROCERY MASS RETAIL DRUG STORE CLUB OUTLETS SPECIALTY STORE E-COMMERCE TOTAL CONSUMER GLOBAL PRESENCE Well positioned to meet client needs of today and tomorrow 5

6 Copyright 2015 The Nielsen Company. Confidential and proprietary. COMPELLING FINANCIAL PERFORMANCE RESULTS CONSISTENT REVENUE GROWTH 7% CAGR from 10 to 15E* 38 quarters of consecutive growth Investing in key growth opportunities MARGIN EXPANSION Powerful syndicated business model Disciplined pricing and cost-out initiatives ~3.5 pts of margin expansion 10 to 15E STRONG FREE CASH FLOW Generated $3B+ of Free Cash Flow 32% CAGR from 10 to 15E BALANCED CAPITAL ALLOCATION Tremendous flexibility to invest in growth ~$2B+ back to shareholders from Strong track record of delivering consistent results * 10 to 15 CAGR ~4.5% ex Harris and Audio 6

7 WHY INVEST IN NIELSEN? Measuring the Total Consumer and Total Audience Unmatched global footprint of 106 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 Strong free cash flow generation and compelling capital allocation strategy Driving shareholder value is the cornerstone of our strategy 7

8 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 106 countries REVENUE REVENUE DISTRIBUTION U.S. & Canada 58% Western Europe 16% Asia <15% Nielsen presence LatAm, Africa, <15% Middle East, Eastern Europe ~20% of revenues in emerging markets, growing at double digit pace underscored by a global employee base of 42,000 talented associates we work hard to attract, develop and retain 8

9 LONG-TERM, BEST-IN-CLASS CLIENT BASE BUY WATCH PARTNERSHIPS 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 3% of 2014 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 9

10 Copyright 2015 The Nielsen Company. Confidential and proprietary. STRATEGIC IMPERATIVE: MEASURE THE TOTAL AUDIENCE TOTAL AUDIENCE unduplicated across all devices and business models Ads includes ratings regardless of where + how ad is consumed, including both linear and dynamic ad models Content combined ratings for a program or content regardless of where + how content is consumed, including both linear TV viewing and dynamic TV/ video viewing Framework that integrates our capabilities to offer comparable measurement 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 MEASUREMENT AND ANALYTICS Total 2014 Revenue: $3.5B Approximately 60% recurring in nature DEVELOPED MARKETS: $2.4B EMERGING MARKETS: $1.1B Retail sales measurement and market share information Presence in 106 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 Advanced analytical capabilities and solutions Demand strategy Help clients see around corners Product Innovation 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 DIGITAL SHOPPING & E-COMMERCE SALES SHOPPER SHELF DELIVER SHARE MEASUREMENT FOR E- COMMERCE COMPARABLE TO BRICK & MORTAR DELIVER SHARE Presence in 5 MEASUREMENT markets (UK, France, FOR Spain, E- China, and COMMERCE Korea); plans to COMPARABLE expand across NA, Europe TO BRICK and & SE MORTAR Asia INSIGHT TO UNDERSTAND THE 21ST CENTURY SHOPPER BEHAVIOR AND SEGMENTATION INSIGHT TO UNDERSTAND THE 21 ST Insights on CENTURY how shoppers SHOPPER browse and buy BEHAVIOR across devices AND SEGMENTATION COMPETITIVE BENCHMARKS AND ANALYTICS TO DIGITAL SHELF COMPETITIVE BENCHMARKS AND Insights ANALYTICS to understand TO and improve the WINdigital shelf DIGITAL SHELF Nielsen Omnichannel for an Alibaba key account in China to compliment the channel measurement Shopper segmentations to guide communication and engagement plans Analytics to optimize assortment choice for multi-channel retail Recent launch of New Offer Advisor (NOA), innovative analytical tool in partnership with Alibaba Measure shoppers and content similar to media Powerful long-term opportunity for Nielsen 13

14 EMERGING MARKETS GROWTH OF MIDDLE CLASS EMERGING MARKETS REVENUE 7.0B 8.3B 10% CAGR $1.1B $0.4B LOCALS 10-30% Growth 3.7B $0.6B $0.7B GLOBAL MNCs Biggest increase ever Acceleration with locals Source: OECD; CAGR represented in constant currency 14

15 WHAT CONSUMERS WATCH Measuring Total Audience across screens 181M Watching Time-Shifted TV 164M Using App/Web on a Smartphone 146M Watching Video on Internet 258M Listening to AM/FM Radio 142M Using Social Media on an App on a Smarthphone * Number of users engaging with these forms of media 15

16 WATCH: MEASURING THE TOTAL AUDIENCE Total 2014 Revenue: $2.8B Approximately 85% recurring in nature TELEVISION Global television audience measurement A leader in US television advertising Television audience measurement in 35 countries Proprietary data methods Gold standard, MRC accredited panel DIGITAL Digital measurement, audience analytics and consumer research Digital Ad Ratings Digital Content Ratings Mobile measurement VOD Measurement A leader in social media measurement Our measurement and analytics are embedded in the operating disciplines of our clients, helping to drive their growth Media Executives Programmers Strategic relationships (Adobe, Experian, Facebook, Twitter, Roku) Media Sales Agencies and Advertisers Marketing Investor and Media Relations 16

17 dynamic linear THE ONLY TOTAL AUDIENCE MEASUREMENT TV CONNECTED TV PC TABLET SMARTPHONE Programs & Ads C3/C7/Program Ratings Content Digital Content Ratings Ads Digital Ad Ratings 17

18 TOTAL AUDIENCE MEASUREMENT TRACKING PROGRESS TV Audience Measurement TV clients are supplementing their C3 and C7 ratings with our reaction-based analytics Complementary analytics to current ratings Digital Audio Measurement Video on Demand VOD Continue to work with the industry to align on single measurement Using audio signatures to measure audience Measuring viewing of nearly 1,200 shows, covering nearly 4,000 episodes as of Oct 2015 Additional capabilities in 2016 Digital Ad Ratings DAR Digital Content Ratings DCR Google/Double Click is progressing well and expanding internationally Global Expansion: DAR available in 16 markets by year end 2015 Digital Content Ratings released in Fall 18

19 Copyright 2015 The Nielsen Company. Confidential and proprietary. TOTAL AUDIENCE EXECUTION AND ADOPTION Execute Digital Content Ratings released: Nielsen s capabilities now cover the Total Audience Evaluate Clients ask themselves: What do the numbers look like? Can I use them for guarantees? Adopt Digital Ad Ratings emerging as the standard for digital video ads Growing relationships with Google and Facebook List of clients implementing Digital Content Ratings rapidly growing Continued strong growth in Video On Demand measurement CBS All Access digital and mobile viewing adding to their ratings Transact Many clients already using the new metrics (e.g. Digital Ad Ratings) individually Convening a series of multi-stakeholder meetings to broaden the current definition of currency beyond TV Next step: Gain consensus for a new broader, redefined currency rating for buying and selling media Goal: Consensus for new framework in place for the 2016 upfronts Executed on every deliverable laid out YTD 22 out of22 19

20 DIFFERENTIATED CROSS PLATFORM ARCHITECTURE TWO TYPES OF CONTENT Native Digital Content HARDWARE & HARDWARE SOFTWARE METER COMPARABLE OVERNIGHT RATING BIG DATA ENABLED MEASUREMENT Digital Ratings ONE CLIENT-SIDE IMPLEMENTATION Total Audience SDKs ONE ENCODING PROCESS UNIVERSAL GOLD STANDARD PROCESS MRC ACCREDITED Linear Ratings Traditional Linear Content 20

21 NIELSEN AUDIO Expanded measurement of US consumers by 2+ hours LONG TERM GROWTH OPPORTUNITIES Digital Audio (Streaming) Audience Measurement: 2+ hours of consumer s day Audio ROI linking listening behavior to consumer purchasing habits Global expansion Working with more than 30 players across the industry to implement our SDK in their apss and players Advertisers gain an average of $6 for each $1 spent on radio (a) Radio listening measured in 270+ markets (a) Source: Nielsen Catalina Solutions 21

22 MARKETING EFFECTIVENESS: WHERE WATCH MEETS BUY REACH WHAT TOTAL AUDIENCE DID I REACH? RESONANCE HOW DID IT CHANGE ATTITUDES? REACTION HOW DID IT CHANGE BEHAVIORS? Helping clients understand how individuals viewing behavior is impacting their purchasing behavior to increase ROI marketing efforts 22

23 NIELSEN MARKETING EFFECTIVENESS SOLUTION Nielsen integrates with 1 st party datasets to provide total view OUR CAPABILITIES IMPACT PLANNING Match 1 ST party data to Nielsen total audience measurement SHIFT MEDIA PLANNING FROM DEMOGRAPHICS TO DEMOS+ OPTIMIZATION Integrate daily total audience reach within overall marketing data sets ENABLE MARKETERS TO MAKE ADJUSTMENTS TO PLANS INFLIGHT ROI Assemble longitudinal view of all marketing elements and actual sales DRIVE HIGHER ROI / BUILD STRONGER BRANDS 23

24 NIELSEN IS UNIQUELY POSITIONED DATA OWNERS TRUST NIELSEN 90+ years with retailers, media and manufacturers Independent 3 rd party Sterling reputation with regard to consumer privacy UNIQUE ABILITY TO ENRICH DATA Most experienced measurement scientists anywhere Proprietary panels the source of truth Reference data and hierarchies across Watch & Buy CONNECT AND ACTIVATE Combine with Nielsen s industry standard datasets Embed in systems across the ecosystem 24

25 MARKETING EFFECTIVENESS: GROWTH OPPORTUNITIES MARKETING WILL CONTINUE TO GROW MORE COMPLEX THE VOLUME AND GRANULARITY OF WATCH AND BUY DATA WILL CONTINUE TO EXPAND NO DATA SET ON ITS OWN WILL TELL THE COMPLETE STORY OUR PANEL IS CRUCIAL NIELSEN IS THE ONLY COMPANY POSITIONED TO ASSEMBLE THE TOTAL VIEW WE ARE UNIQUELY TRUSTED TO PROTECT CONSUMER PRIVACY AND THE DATA OWNER S SECURITY WE CAN EXTEND BEYOND CPG TO VIRTUALLY ANY CONSUMER CATEGORY 25

26 FINANCIALS

27 Copyright 2015 The Nielsen Company. Confidential and proprietary. CONSISTENT PERFORMANCE THROUGH THE CYCLES REVENUE ($B) ADJ. EBITDA ($B) ADJ. NET INCOME ($M) 7% CAGR (a) $1.3 $1.5 $1.5 9% CAGR $1.6 $1.8 ~$1.9 $229 $528 $635 44% CAGR $770 $970 ~$970 DELEVERAGING PROGRESS (b) FREE CASH FLOW ($M) (c) 5.8x 4.0x 3.8x 3.5x 3.6x ~3.8x $209 $376 $426 32% CAGR $573 $681 ~$850 Note: Revenue, Adjusted EBITDA and Adjusted Net Income growth rates derived on a constant currency basis; figures are as reported. (a) Revenue CAGR includes Audio and Harris acquisitions; CAGR of ~4.5% ex Harris and Audio (b) Reflects Net Debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months is ProForma and includes nine months of Arbitron Adjusted EBITDA of $117 million and prior years normalized to include adjusted EBITDA of discontinued operations and 2012 exclude $288M of mandatory convertible subordinated debt (c) Excludes impact of 2011 Sponsor Termination Fees ($102M), 2013 one-time Arbitron deal-related costs ($46M), and the 2015 normalization for excess tax on options ($26M) 27

28 Copyright 2015 The Nielsen Company. Confidential and proprietary. CONSISTENT REVENUE GROWTH ($ billions) $4.9 7% CAGR $5.3 $5.4 $5.7 $6.3 ~$6.1 WATCH New products & Total Audience Measurement Marketing Effectiveness growing double-digits Portfolio transformation CC % 6.3% 5.6% 4.1% 6.4% 12.4% % BUY New client wins Accelerating growth in emerging markets Expanding analytical capabilities Consistent and resilient business model Note: Figures are as reported, CAGR and revenue growth in constant currency. 10 to 15 CAGR ~4.5% ex Harris and Audio 28

29 Copyright 2015 The Nielsen Company. Confidential and proprietary. SELECTED FINANCIAL METRICS & BALANCE SHEET ITEMS ($ in millions) FINANCIAL METRICS 3Q 15 Free Cash Flow $345 Capital Expenditures $107 D&A $144 Net Book Interest $78 Cash Taxes $40 Cash Restructuring $15 Wtd. avg. diluted shares CURRENT DEBT MATURITY PROFILE 9/30/15 (b) BALANCE SHEET 9/30/15 Gross Debt $7,453 Cash $358 Net Debt $7,095 Net Debt Ratio (a) 3.83x (a) Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis (b) Excludes Revolver ($210M), Capital Leases ($124M) and Miscellaneous Debt ($9M) 29

30 Copyright 2015 The Nielsen Company. Confidential and proprietary. FREE CASH FLOW AND ANI PER SHARE GROWTH FREE CASH FLOW ($M) ANI PER SHARE $209 $376 32% CAGR $426 $573 $681 ~$850 $0.82 $ % CAGR $1.69 $2.02 $2.52 $ FCF Conversion 91% 71% 67% 74% 70% ~88% 4X+ FCF & 3X+ ANI Share Growth Figures are as reported, CAGR represented in constant currency for ANI per share 30

31 Copyright 2015 The Nielsen Company. Confidential and proprietary. BALANCED CAPITAL ALLOCATION LONG TERM FCF DEPLOYMENT ACTIVITY Generated $2B+ of Free Cash Flow Dividend ~45% Buyback / Tuck-in BD ~40% Returned $2B+ back to shareholders Increased dividend +75% since inception Mandatory Debt ~15% New $500M buyback authorization ~$850M remaining to be executed over Delivering shareholder value 31

32 NIELSEN ACQUISITIONS & JOINT VENTURES Company Capabilities Marketing Analytics Neurofocus Retail Plus (JV) MEMRB Carrier IQ Social Guide Vizu Ibope (JV) Ipsa Perishables Group Arbitron Bowker MediaXIM G4 Nielsen Innovate Harris Nexium MMRD (JV) Czech TAM (JV) Affinova exelate SaaS tool replacing PowerPoint analysis with real time, predictive analytics for marketing mix models Neurological testing for consumer research Measuring / monitoring sales and marketing of products in fast moving consumer goods sector Expansion of retail services within Middle East/Eastern Europe; synergies across several countries On-device meters for service quality measurement Twitter TV ratings Marketing effectiveness Television audience measurement for Mexico, Dominican Republic and Venezuela Retail Measurement Services (RMS) /Consumer Panel Services (CPS) in Ecuador Product expansion for retail services Radio audience measurement E-books Belgium and Netherlands advertising info services Trade promotion optimization; Leader in SaaS analytics solutions for CPG companies Israel based incubator investing in startups that help Nielsen clients (10 countries) U.S. custom surveys Retail shelf image identification technologies that replace manual inventory management systems RMS in Myanmar Television audience measurement Intuitive user interface platform and automated analytics capabilities; Nielsen s Innovation Practice Digital audience intelligence in the Programmatic Media ecosystem Approximately $2B in acquisitions and JVs since 2011, driving growth, value & returns 32

33 Copyright 2015 The Nielsen Company. Confidential and proprietary. FOREIGN CURRENCY IMPACT 2015E 2013PF CURRENCY REVENUE DISTRIBUTION PROFILE - REVENUE PROJECTED FX IMPACT (a) : REPORTED VS CONSTANT CURRENCY. (a) Projected impact assumes rates in effect at 12/7/15 remain in effect for the balance of Also based on company estimates for future periods on distribution of revenue and EBITDA by currency. We report on a constant currency basis to reflect operating performance 33

34 Copyright 2015 The Nielsen Company. Confidential and proprietary. REITERATING 2015 GUIDANCE Total Revenue 4.3% - 4.8% Adj. EBITDA margin growth 70+ bps Adj. Net Income Per Share $ $2.64 Leverage ~3.8x Free Cash Flow ~$850M OTHER FINANCIAL METRICS Net book interest $310M - $320M Cash taxes $160M - $170M Cash restructuring $50M - $75M Est. wtd. avg. diluted shares outstanding for FY 2015 ~371M Consistent with October 2015 Earnings Call ($ in Millions, ANI/Share represented in dollars, Revenue and adj EBITDA margin growth in constant currency) 34

35 Copyright 2015 The Nielsen Company. Confidential and proprietary GUIDANCE Total Revenue 4% - 6% Adj. EBITDA margin growth bps Adj. Net Income Per Share $ $2.93 Leverage ~3.6x Free Cash Flow ~$950M OTHER FINANCIAL METRICS Net book interest $325M - $335M Cash tax rate 14.0% % Cash restructuring $50M - $75M Est. wtd. avg. diluted shares outstanding for FY 2016 ~361M Continued execution in line with long term financial framework ($ in Millions, ANI/Share represented in dollars, Revenue and adj EBITDA margin growth in constant currency) 35

36 Copyright 2015 The Nielsen Company. Confidential and proprietary. THE NEXT FIVE YEARS REVENUE GROWTH MID-SINGLE DIGIT MARGIN EXPANSION BPS ANI PER SHARE GROWTH DOUBLE DIGIT TO LOW TEENS CASH TAX RATE MID-TEENS TO LOW 20 S FREE CASH FLOW CONVERSION ~90%+ ANI DIVIDEND GROWTH IN LINE WITH EARNINGS GROWTH The Nielsen Financial Framework Note: All measures represented on constant currency basis. 36

37 CERTAIN NON-GAAP MEASURES Overview of Non-GAAP Presentations We use the non-gaap financial measures discussed below 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, total indebtedness or any other measures of operating performance and financial condition, liquidity or indebtedness derived in accordance with GAAP. These non-gaap measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Constant Currency Presentation 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 (gross debt less cash and cash equivalents) as of the balance sheet date divided by Adjusted EBITDA for the twelve months then ended. Net debt and the net debt leverage ratio are commonly used metrics to evaluate and compare leverage between companies and are not presentations made in accordance with GAAP. 37

38 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 aswell as certain other items considered unusual or non-recurring in nature. 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. 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 mandatorily convertible subordinated bonds converted on February 1, Adjusted Net Income per share of common stock presented on a diluted basis includes the weighted-average amount of shares of common stock convertible associated with the mandatorily convertible bonds based upon the average price of our common stock during the periods beginning on or before February 1, Such shares are considered anti-dilutive in accordance with GAAP for the periods presented. 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 ADJUSTED NET INCOME RECONCILIATION ($ in millions except per share amounts) Net income $381 $736 $272 $87 $133 $(489) $(589) (Income)/ loss from discontinued operations, net of tax -- (305) (30) (26) Interest expense, net Provision / (benefit) for income taxes (54) (152) 26 Depreciation and amortization EBITDA 1,487 1,339 1,243 1,012 1, Impairment of goodwill and intangible Equity in net (income)/ loss of affiliates 4 (2) (5) (3) (5) 22 7 Other non-operating loss/(income), net (28) 84 6 Restructuring charges Stock-based compensation expense Other items (a) Adjusted EBITDA 1,837 1,617 1,504 1,450 1,324 1,226 1,087 Interest expense, net (297) (307) (386) (443) (614) (598) (633) Depreciation and amortization (573) (510) (493) (502) (530) (519) (462) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (154) (147) (124) (132) (129) (139) (91) Stock-based compensation expense (47) (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 $2.52 $2.02 $1.69 $1.44 $0.82 $0.61 $0.40 (a) Other items primarily consist of non-recurring items, sponsor termination fees (2011), and acquisition adjustments 39

40 WEIGHTED AVERAGE SHARES OUTSTANDING ($ in millions except per share amounts. Year ended December 31 for all years.) 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 Weighted-average shares of common stock outstanding as of December 31, diluted 379,333, ,797, ,787, ,469, ,499, ,905,810 5,038,415 5,130,337 4,523,116 5,032,773 3,153, ,994 10,416,700 9,531, ,371, ,824, ,727, ,033, ,652, ,905,810 40

41 FREE CASH FLOW RECONCILIATION ($ in millions. Year ended December 31 for all years.) Net cash provided by operating activities $1,093 $901 $784 $641 $543 $517 Sponsor termination fee Capital expenditures (412) (374) (358) (367) (334) (282) One-time Arbitron costs -- $46 Free Cash Flow $681 $573 $426 $376 $209 $235 41

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43 NIELSEN INVESTOR RELATIONS Follow Nielsen