As filed with the Securities and Exchange Commission on July 22, 1998
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NIELSEN MEDIA RESEARCH, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1450569
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
299 PARK AVENUE
NEW YORK, NEW YORK 10171
(212) 708-7500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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STEPHEN J. BOATTI, ESQ.
SENIOR VICE PRESIDENT AND CHIEF LEGAL OFFICER
NIELSEN MEDIA RESEARCH, INC.
299 PARK AVENUE, 22ND FLOOR
NEW YORK, NEW YORK 10171
(212) 708-7004
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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With Copies to:
MICHAEL D. NATHAN, ESQ. ROBERT E. BUCKHOLZ, JR., ESQ.
SIMPSON THACHER & BARTLETT SULLIVAN & CROMWELL
425 LEXINGTON AVENUE 125 BROAD STREET
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10004
(212) 455-2538 (212) 558-3876
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BY REGISTERED PER NOTE (1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Notes ........................ $225,000,000 100% $225,000,000 $66,375
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(1) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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SUBJECT TO COMPLETION DATED JULY 22, 1998
$225,000,000
NIELSEN MEDIA RESEARCH, INC.
[LOGO] __% NOTES DUE ________, ____
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Interest on the Notes is payable on __________ and __________ of each year,
commencing __________, 1999. The Notes will be redeemable, in whole or in part,
at the option of the Company at any time at a redemption price equal to the
greater of (i) 100% of the principal amount of such Notes or (ii) the sum of the
present values of the remaining scheduled payments of principal and interest
(not including the portion of any such payments of interest accrued as of the
redemption date) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined herein), plus, in each case, accrued and unpaid
interest thereon to the redemption date. The Notes will not be entitled to any
sinking fund. The Notes will be represented by one or more global Notes and
registered in the name of the nominee of The Depository Trust Company.
Beneficial interests in the global Notes will be shown on, and transfers thereof
will be effected only through, records maintained by DTC and its participants.
Except as described herein, Notes in definitive form will not be issued. The
Notes will be issued only in registered form in denominations of $1,000 and
integral multiples thereof. The Notes will trade in DTC's settlement system
until maturity, and secondary market trading activity for the Notes will
therefore settle in immediately available funds. All payments of principal and
interest will be made by the Company in immediately available funds. See
"Description of the Notes".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) DISCOUNT (2) COMPANY (1)(3)
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<S> <C> <C> <C>
Per Note ............................................... % % %
Total .................................................. $ $ $
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(1) Plus accrued interest, if any, from _______, 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $___ payable by the Company.
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The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the Notes
will be ready for delivery in book-entry form only through the facilities of DTC
in New York, New York on or about August __, 1998, against payment therefor in
immediately available funds.
GOLDMAN, SACHS & CO. CHASE SECURITIES INC.
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The date of this Prospectus is _______, 1998.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OR ANY SUCH STATE.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH NOTES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THIS
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Notes offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, part of which has been omitted in accordance with the
rules and regulations of the Commission. For further information about the
Company and the Notes offered hereby, reference is made to the Registration
Statement, including the exhibits filed as a part thereof and otherwise
incorporated therein. Statements made in this Prospectus as to the contents of
any agreement or other document referred to herein are qualified by reference to
the copy of such agreement or other document filed as an exhibit to the
Registration Statement or such other document, each such statement being
qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statementsand other information with
the Commission. The Registration Statement, including the exhibits thereto, as
well as such reports and other information filed by the Company with the
Commission, can be inspected, without charge, and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington D.C., 20549; 7 World Trade Center, Suite 1300, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
Commission also maintains a site on the World Wide Web at http://www.sec.gov,
which contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission and certain of the
Company's filings are available at such web site. Copies of such materials can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Reports and other
information concerning the Company can also be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (which in the case of item 2
was filed by the Company under its prior name of Cognizant Corporation) with the
Commission pursuant to the Exchange Act are hereby incorporated by reference in
this Prospectus: (1) Current Report on Form 8-K dated July 20, 1998; (2) Proxy
Statement on Schedule 14A dated March 13, 1998; and (3) all other documents
subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus and before the termination
of the offering of all Notes to which this Prospectus relates shall be deemed to
be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company herein undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon written or oral request of such person,
a copy of any and all documents incorporated by
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reference in this Prospectus (other than exhibits to such documents unless such
exhibits are incorporated by reference therein). Requests for such copies should
be directed to Nielsen Media Research, Inc., 299 Park Avenue, New York, New York
10171, Attn: Chief Legal Officer, telephone number (212) 708-7004. The
information relating to the Company contained in this Prospectus does not
purport to be comprehensive and should be read together with the information
contained in the documents incorporated or deemed to be incorporated by
reference herein.
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents that are incorporated by reference herein
contain statements which, in the opinion of the Company, may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Litigation Reform Act"). These statements
include, but are not limited to, all statements relating to plans for future
growth and other business development activities as well as capital
expenditures, financing sources and the effects of regulation and competition
and all other statements regarding the intent, plans, beliefs or expectations of
the Company or its directors or officers. Investors are cautioned that such
forward-looking statements are not assurances of future performance or events
and involve risks and uncertainties that could cause actual results and
developments to differ materially from those covered in such forward-looking
statements. These risks and uncertainties include, but are not limited to, risks
associated with competition in the market for audience measurement services; the
ability to develop new or advanced technologies and systems for the Company's
business on a cost-effective basis; the ability to timely and cost-effectively
resolve any problems associated with the Year 2000 issue; the results of
litigation affecting the Company; the ability to successfully achieve estimated
effective tax rates and corporate overhead levels; regulatory and legislative
initiatives; leverage and debt service (including sensitivity to fluctuations in
interest rates); compliance with covenants in loan agreements; the ability to
obtain future financing on satisfactory terms and deterioration in economic
conditions, particularly in the media, or other industries in which customers
operate. The Company has no obligation to publicly release any revision to any
forward-looking statement contained or incorporated herein to reflect any future
events or occurrences.
THE COMPANY
GENERAL
Nielsen Media Research, Inc. (the "Company" or "Nielsen Media Research") is
the leading source of television audience measurement and related services in
the United States and Canada. Customers have used Nielsen Media Research's
television audience research information in the United States for over 40 years.
Through its core ratings business, the Company estimates television audience
size and demographics and reports this and related information to a diverse
customer base on a subscription basis. Customers include advertisers,
advertising agencies, broadcast networks, cable networks, program syndicators,
cable operators, sports organizations, television stations and station
representatives. The Company's ratings serve as the "currency" for national and
local television advertising. In 1997, advertisers spent approximately $42
billion in the United States on national and local television advertising,
according to McCann-Erickson Worldwide, to bring a variety of advertising
messages to approximately 98 million U.S. television households. The Company
offers rating services in four principal areas: (i) National Ratings Services;
(ii) Local Ratings Services; (iii) U.S. Hispanic Ratings Services; and (iv)
Canadian Ratings Services. The Company also offers services that enable
advertisers to manage their media spending by linking television ratings to
commercial occurrences, and that provide Internet and Web page usage analysis to
the expanding interactive media industry.
Until June 30, 1998, the business of Nielsen Media Research was operated as
part of Cognizant Corporation ("Cognizant") which also included the business of
IMS Health Incorporated ("IMS HEALTH"). On June 30, 1998, Cognizant (which is
now the Company) distributed to all holders of its common stock the shares of
IMS HEALTH, which was a wholly-owned subsidiary of Cognizant and became an
independent public company (the "Distribution"). As a result of the
Distribution, the sole business of the Company is the
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business of Nielsen Media Research. Because of the relative significance of
IMS HEALTH's business to Cognizant, IMS HEALTH was treated as the "accounting
successor" to Cognizant and the financial statements of the Company have been
prepared on a stand-alone basis. In connection with the Distribution, the
Company incurred $300 million of indebtedness from third parties, the proceeds
of which were used by Cognizant to repay existing intercompany liabilities to
certain entities included in IMS HEALTH.
Prior to November 1, 1996, Cognizant was owned by The Dun & Bradstreet
Corporation ("D&B"). D&B had acquired the Company as a part of A.C. Nielsen
Company in 1984. Cognizant began operating as an independent public company on
November 1, 1996 as a result of its spin-off from D&B. STRATEGY
The Company's strategic goal is to be the acknowledged worldwide leader in
satisfying the media industry's needs for high quality information which defines
the value of media and for services which enable its customers and the
marketplace to operate more effectively.
The Company's strategy has two components: first, to realize the potential
of its existing businesses, both national and local; and second, to optimize its
market strengths and capabilities into realizing new opportunities in adjacent
markets and new businesses.
o Nielsen Media Research intends to realize the potential of its core
businesses by enhancing quality in its operations, enhancing
productivity, anticipating environmental and marketplace changes and
competitive threats, responding with fast moving and flexible
capabilities and decision support solutions, adding derivative
products and services, and providing value-added solutions. Central to
this strategy are its investments in data collection and processing
technology, as well as in data and sample quality.
o Nielsen Media Research intends to optimize its capabilities and
infrastructure into new high-potential opportunities by providing
services that not only enable its customers to make better decisions
but allow them to better anticipate their own futures. Nielsen Media
Research's most significant initiatives in this area include
Monitor-Plus, New Media Services, Nielsen Interactive Services and New
Millennium, which are described below.
NATIONAL SERVICES
Through its U.S. national services, which accounted for approximately 45%
of 1997 revenues, the Company serves the television audience measurement needs
of 6 national television broadcast networks, 47 national and regional cable
networks, more than 100 program syndicators, and more than 150 national
advertising agencies and advertisers. Audience measurement data are collected
nationally through Nielsen People Meters installed in over 5,000 randomly
selected households across the U.S. Audience estimates are produced and
delivered to subscribers daily. People meters not only collect television set
tuning data (which channel the set is tuned to) but also the demographics of the
audience (who in the household is watching).
Three national services are offered in the United States:
o Nielsen Television Index (NTI) provides daily audience total and
demographic estimates for all national broadcast network television
programs to broadcast networks and agencies. This service was
established in 1950.
o Nielsen Homevideo Index (NHI)--National provides audience estimates of
cable and pay cable television. This service was established in 1980.
o Nielsen Syndication Services (NSS) provides reports and services on
both the local and national levels to the program syndication segment
of the television industry. This service was established in 1985.
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LOCAL SERVICES
The Company's local services, which accounted for approximately 45% of 1997
revenues, serve the television audience measurement needs of more than 1,000
television stations, more than 150 local cable operators and syndicators, and
over 2,000 national, regional and local advertising agencies and advertisers in
over 200 local television markets throughout the United States. The Company
currently provides metered service in 40 of the nation's largest markets
representing about 60% of television households in the United States. Four
additional markets are scheduled to be metered during 1998, bringing the total
number of local metered markets to 44. Television set tuning data are collected
electronically using a Nielsen Media Research set meter. Household audience (as
opposed to persons) estimates are delivered daily to subscribers. In these
markets, written diaries also are used during designated measurement periods to
collect audience demographic estimates for integration with the metered tuning
data. Diaries are used in the balance of local markets to collect both tuning
and persons-viewing information during designated periods.
Two local services are offered in the United States:
o Nielsen Station Index (NSI) provides local market television audience
measurement to stations and agencies throughout the U.S. This service
was established in 1954.
o Nielsen Homevideo Index (NHI)--Local provides audience measurement
services for more than 150 local cable operators.
U.S. HISPANIC SERVICES
The Company's Hispanic Services provide both national and local television
audience measurement of U.S. Hispanic households.
o Nielsen Hispanic Television Index (NHTI) provides viewing estimates of
national Hispanic audiences. Begun in November 1992, the NHTI service
remains the first and only metered national Hispanic audience
measurement service. Based on a sample of 800 Hispanic households
across the U.S., it uses the same methodology as the other national
services (the Nielsen People Meter) to collect Hispanic audience data.
o Nielsen Hispanic Station Index (NHSI) uses a language-stratified
sample to reflect the unique characteristics of each local Hispanic
market. The NHSI service provides advertisers, agencies, networks and
syndicators viewing information in more than a dozen television
markets with significant Hispanic population. The data are collected
using a people meter methodology in the Los Angeles market and a
variety of set meter and diary methodologies in the remaining markets.
CANADIAN SERVICES
In Canada, the Company has offered national people meter service since 1989
to Canadian national and regional broadcasters, cable networks, agencies and
advertisers. The Company has also provided local people meter service in
Canada's two largest English-language markets, Toronto (since 1995) and
Vancouver (begun in the fall of 1997) to local broadcasters, agencies and
advertisers.
OTHER SERVICES
o Monitor-Plus. Nielsen Media Research's Monitor-Plus service links
television ratings to commercial occurrence data and tracks "share of
spending" and "share of voice" (the proportion of all advertising
within a product category attributable to a brand or advertiser) by
company, by brand, and by product category across fifteen monitored
media. These include print, outdoor, radio and free-standing inserts
as well as television, for which it also reports at the creative
execution and campaign level. This service offers the data and tools
necessary for advertisers and their agencies to actively manage their
media spending by enabling them to understand their own performance
and that of their competitors. Customers use the data to determine
competitive
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advertising trends and performance within markets of interest. The
media also use this service for sales planning and targeting.
Monitor-Plus currently serves 75 markets, and the Company plans to
deploy new digital data collection and processing technology by the
end of 1998.
o New Media Services (NMS). NMS is a successor to a service formed in
1980 that provides custom research and start-up services for newly
developed syndicated products, both national and local. This includes
measurement performance of non-traditional research such as
place-based media and out-of-home studies. The automated tracking of
the use of video news releases and the measuring of media exposure in
airports and in-flight are two more examples of NMS research services.
o Nielsen Interactive Services. In 1995, Nielsen Media Research formed a
separate service to develop research products and services for the
Internet and other interactive media.
During 1995, Nielsen Media Research entered into a strategic
relationship with Internet Profiles Corporation ("I/Pro") to jointly
market and brand two Internet measurement tools: Netline (formerly
I/COUNT), which monitors Web site usage and I/AUDIT, which audits and
verifies audience usage and characteristics. In December 1997, Nielsen
Media Research purchased approximately 5% of the outstanding shares in
I/Pro.
In addition, separate from its agreement with I/Pro, Nielsen Media
Research is developing a service which uses a panel to monitor on-line
computer usage and activity in households. The panel will provide high
quality research to computer and Internet industry participants
(media, advertisers, agencies, hardware manufacturers, software
developers, etc.). Roll-out of the service is planned for the end of
1998. Additional offerings in the interactive/Internet area include
the Nielsen CommerceNet Internet Demographics Study (a twice per year
study that profiles the size and audience composition of on-line
users) and the Home Technology Report, a survey that provides data on
consumer interest and use of various technologies in the home.
DATA COLLECTION
PEOPLE METER
The heart of the Nielsen Media Research national and Hispanic services in
the United States and all services in Canada is an electronic measurement system
called the Nielsen People Meter. These meters are placed in a sample of 5,000
households in the U.S., 800 U.S. Hispanic households and over 2,000 households
in Canada, randomly selected and recruited by Nielsen Media Research.
The U.S. national sample is a multi-stage stratified area probability
sample of U.S. housing units with each housing unit having an equal chance of
selection. The current sampling frame is developed based on 1990 Census data
with updates each year based on residential new construction from building
permits as collected and reported by the Census Bureau.
A set meter is installed on each television set in a national sample home
along with a device to record who is watching the television. Each member of the
household is assigned a personal viewing button identified by name or symbol on
the people meter that the viewer can use to enter his or her viewing status.
Household members are instructed to record their viewing on a television set in
a household whenever they are watching or listening to that set. Each button is
linked to the age and gender of a person in the household. Additional buttons on
the meter enable visitors to a sample household to record when they watch
television by entering their age and gender and pushing a visitor button.
The Nielsen Media Research metering system stores half minute by half
minute records of television receiver tuning activity and of people meter
audience data entries in sample households. The U.S. tuning records are
automatically transmitted by phone to Nielsen Media Research's central computer
facility in Dunedin, Florida where the data are matched with program line-up
information and processed to create ratings estimates.
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SET METER
In 40 of the largest local markets in the U.S., a set metering system
provides household television ratings information on a daily basis. In each of
these markets, approximately 400-550 households (or approximately 19,000
households across the U.S.) are recruited to participate in a sample distinct
from the national people meter sample. Electronic meters are attached to each
television set in each sample home. Homes recruited for local samples are not
equipped with people meter attachments, so that the information is limited to
identification of the program to which the set is tuned. The metered market
samples of television households are used to obtain audience estimates with
measurable reliability of television programs for stations which originated in
or are assigned for reporting purposes to Nielsen Media Research's Designated
Market Areas ("DMAs").
The metered household samples are either area probability samples of
housing units in the applicable DMA (12 markets) or samples from a file of
telephone numbers including both listed and unlisted households (28 markets).
This file, known as a total telephone frame ("TTF"), is maintained by Nielsen
Media Research and updated three times each year.
DIARIES
In addition to set meters, Nielsen Media Research uses diaries in local
markets (over 200 DMAs in the U.S.) to collect viewing data during at least four
designated measurement periods each year. The sample frame in all markets is the
TTF. Diary measurement is used to collect viewing information (both tuning and
demographics) from sample homes in every local television market across the
United States in November, February, May and July (known as "sweeps" months) of
each year. The diary provides audience (both tuning and demographics) data in
the smaller non-metered markets and demographic data for the metered markets. In
addition to the four sweeps months, in some larger markets diaries are used to
provide viewer information in as many as three additional months (October,
January, and March). Diaries returned to Nielsen Media Research are examined and
edited using established procedures. Audience estimates are then computed
separately for each quarter hour of viewing recorded in the diary.
SERVICE AND PRODUCT DEVELOPMENT
The Company maintains an active investment program to enhance existing
services and develop new services in response to the rapidly changing media
marketplace, as well as to develop the technology necessary to succeed in the
emerging television environment. Nielsen Media Research will need to make
significant capital expenditures over the next several years, particularly in
light of the rapid technological changes affecting its business. The majority of
the investment effort and spending is dedicated to improving the quality and
efficiency of existing services; realizing the full potential of those services
by adding new, value-added or derivative products, especially new software
products; developing a next-generation data collection capability and
infrastructure; and creating new servicesand businesses.
The Company's most significant investment initiatives include the Universal
Metering Initiative ("UMI"); new client-server based data processing and
delivery software development; the local service diary sample expansion; and new
business development, notably Nielsen Interactive Services andNew Millennium.
As part of its UMI program, Nielsen Media Research is developing a
next-generation metering system, known as the Active/Passive, or "A/P", metering
system, to enable measurement of program viewing in the emerging digital
television environment. This new system uses codes, which are imperceptible to
the viewer, inserted in the audio and/or video portions of programs and
commercials that can be detected by metering equipment installed in the sample
households. The system also has a passive signature-recognition back-up
capability. This encoding approach builds upon Nielsen Media Research's
experience in developing and using its highly successful program video code
technology used in today's analog television environment, which has received
permanent authorization from the Federal Communications Commission (the "FCC").
While preliminary testing of the A/P metering system has been
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successful, there can be no assurance that the coding used by the new system
will be adopted by the television industry, be approved by the FCC, or be
compatible with signal compression techniques implemented by the industry in the
future.
Nielsen Media Research began changing its technology and software systems
in 1993 to provide the television industry with flexible, richer analysis of
large amounts of data. This new "client-server" architecture has enabled Nielsen
Media Research to begin to introduce a range of integrated software systems that
will enable customers to compare daily, demographic-level ratings data across
all national and local television sources.
In response to customer requests, the Company has significantly increased
the size of its diary samples over the past two years. Beginning in 1996, diary
samples were increased by 15% in its local television markets. This increase was
initiated at no cost to its customers. During 1997, Nielsen Media Research
increased diary samples by an additional 35% in 88 markets where stations
provided partial financial support for the increase. The increase in the diary
samples is part of a broad initiative to improve the utility of the diary as a
low-cost, effective method of collecting television viewing information on a
local market basis. These other diary initiatives include efforts to improve
recruitment and cooperation among sample homes, redesigning the diary itself and
testing a new personal diary measurement system.
New Millennium is an agency buying system that the Company believes will be
superior in design and concept to any existing competitive product. It is being
designed to give advertising agencies the ability to perform pre-buy analyses,
track negotiations and scheduling of ad time, evaluate overall performance in
terms of delivery and cost, and finally, perform the reconciliation and
subsequent accounting functions. By automating tasks now done manually at
agencies, the system may substantially reduce agency costs.
In January 1998, the Company announced the development of a new metering
system to track television viewing within Microsoft Corporation's Windows 98t.
This new technology, developed jointly by Nielsen Media Research and Microsoft
engineers, will be used to capture audience for those sample households where
television programming is viewed using this Microsoft operating system.
TECHNOLOGY AND COMPETITION
The Company operates in businesses which require sophisticated data
collection and processing systems, software and other technology. The technology
underlying the media industry continues to undergo rapid change and the Company
will need to continue to develop and refine techniques for data collection and
processing to accommodate such changes, including digital television, and for
interactive television transmission and Internet usage. There can be no
guarantee that the Company will be able to develop and refine new techniques for
data collection and processing or that it will be able to do so as quickly or
cost-effectively as its competition.
Nielsen Media Research has maintained a strong leadership position in the
television ratings measurement industry. The Company's ratings systems have been
from time to time criticized by various participants in the television industry.
This criticism, in part, has increased the likelihood of additional competition
in its business. In particular, a television ratings project originally funded
by the Committee on Nationwide Television Audience Measurement ("CONTAM") and
designed and operated by Statistical Research, Inc. ("SRI"), is operating a 500
household sample in Philadelphia as a national television ratings laboratory.
SRI's Philadelphia sample has provided limited program level data, although in
early 1998 SRI announced plans to provide more complete program level data.
Funding has been contributed primarily by the ABC, CBS, and NBC broadcast
networks. During 1996, ABC, CBS, and NBC together through CONTAM contributed $10
million (in addition to the $30 million they contributed in 1994) in funding for
the completion of the Philadelphia test. In addition, Fox Broadcasting as well
as four cable networks, fifteen major advertising agencies and buying services,
one program syndicator and five of the nation's largest advertisers have agreed
to support and participate in the testing phase. Some of these companies have
contributed to the funding of SRI and SRI is actively seeking financial support
from major media companies for a national ratings service.
8
<PAGE>
On the local level ADCOM offers individual cable system measurement. It is
currently collecting and issuing local cable measurement data in Jacksonville,
Florida, and is believed to be seeking support to roll out a local cable
measurement service in multiple markets in the U.S. Arbitron, a former
competitor, discontinued its local syndicated broadcast and cable television
service as of December 31, 1993. Arbitron, however, continues to develop its
passive people meter technology and is believed to be testing this technology
for possible use in the television audience measurement business. Indirectly, on
both a national and local basis, competition stems from other marketing research
services offering product movement and television audience data and services.
In Canada, BBM, an established media research organization, has joined with
Taylor Nelson/AGB, a U.K.-based media research company, and announced plans to
provide a competing metered service in Vancouver. BBM, alone or with Taylor
Nelson/AGB, could offer other competitive services in Canada.
The Company's Monitor-Plus service has significant competition from
Competitive Media Reports, a subsidiary of VNU, a Netherlands-based media
company, which has long been the major participant inthis market.
Furthermore, there can be no assurance that additional competition will not
develop in the future for the Company's existing core services or that the
Company will not have significant competition in its other services.
INTELLECTUAL PROPERTY
The Company owns and controls a number of patents, trade secrets,
confidential information, trademarks, trade names, copyrights and other
intellectual property rights which, in the aggregate, are of material importance
to its business. Management believes that the "Nielsen Media Research" name and
related names, marks and logos are of material importance to Nielsen Media
Research. Nielsen Media Research is licensed to use certain technology and other
intellectual property rights owned and controlled by others, and similarly,
other companies are licensed to use certain technology and other intellectual
property rights owned and controlled by Nielsen Media Research.
Pursuant to the Intellectual Property Agreement dated as of October 28,
1996 between the Company, D&B and ACNielsen Corporation ("ACNielsen") (the "D&B
IP Agreement"), Nielsen Media Research has exclusive and unrestricted rights to
the "Nielsen Media Research" name worldwide; however, Nielsen Media Research's
use of the "Nielsen" name, standing alone and as part of a name describing new
products and services to be offered, is subject to certain limitations outside
the United States and Canada. In addition, the D&B IP Agreement provided for the
establishment of a limited liability company jointly owned by the Company and
ACNielsen, into which certain trademarks incorporating or relating to the
"Nielsen" name in various countries were assigned. This company is obligated to
license such trademarks on a royalty-free basis to Nielsen Media Research or
ACNielsen for use in a manner consistent with the D&B IP Agreement and for
purposes of conducting their respective businesses, and is responsible for
preserving the quality of those trademarks and minimizing any risk of possible
confusion. Pursuant to the TAM Master Agreement dated as of October 28, 1996
between the Company and ACNielsen, the Company granted a non-exclusive license
to ACNielsen to use certain trademarks, technology and related intellectual
property rights in the conduct of the television audience measurement business
outside of the United States and Canada for a period of at least five years.
Except for the restrictions described above, this agreement does not restrict
Nielsen Media Research from doing business in certain countries outside the
United States and Canada.
The technology and other intellectual property rights licensed by Nielsen
Media Research are of importance to its business, although management of Nielsen
Media Research believes that, with the exception of the trademarks incorporating
or relating to the "Nielsen" name, the business, as a whole, is not dependent
upon any one intellectual property or group of such properties.
The names of Nielsen Media Research's and its subsidiaries' products and
services referred to herein are trademarks, service marks, registered trademarks
or registered service marks owned by or licensed to Nielsen Media Research or
one of its subsidiaries.
9
<PAGE>
LITIGATION
On July 29, 1996, Information Resources, Inc. ("IRI") filed a complaint in
the United States District Court for the Southern District of New York, naming
as defendants D&B, A.C. Nielsen Company and a predecessor of IMS HEALTH (the
"IRI Action"). The complaint alleges, among other things, various violations of
the antitrust laws and damages in excess of $350 million, which amount IRI has
asked to be trebled under the antitrust laws. IRI also seeks punitive damages in
an unspecified amount. In light of the potentially significant liabilities which
could arise from the IRI Action and in order to facilitate the D&B spin-off (as
defined below) in 1996, D&B, ACNielsen and Cognizant entered into an Indemnity
and Joint Defense Agreement (the "Indemnity and Joint Defense Agreement")
pursuant to which ACNielsen agreed to be responsible for any potential
liabilities which may ultimately be incurred by D&B or Cognizant as a result of
such action, up to a maximum amount to be determined by an independent
investment bank if and when any such liabilities are incurred. The determination
of such maximum amount will be based on ACNielsen's ability to satisfy such
liabilities and remain financially viable, subject to certain assumptions and
limitations. However, Cognizant and D&B agreed that to the extent that ACNielsen
is unable to satisfy any such liabilities in full and remain financially viable,
Cognizant and D&B will each be responsible for 50% of the difference between the
amount, if any, which may be payable as a result of such litigation and the
maximum amount which ACNielsen is then able to pay as determined by such
investment bank. Under the terms of the Distribution Agreement dated as of
October 28, 1996, among Cognizant, D&B and ACNielsen (the "1996 Distribution
Agreement"), pursuant to which shares of Cognizant and ACNielsen were
distributed to the stockholders of D&B (the "D&B spin-off"), as a condition to
the recent Distribution, IMS HEALTH and the Company were required to undertake
to be jointly and severally liable to D&B and ACNielsen for Cognizant's
obligations under the 1996 Distribution Agreement. However, pursuant to the
Distribution Agreement dated as of June 30, 1998, between Cognizant and IMS
HEALTH, IMS HEALTH and the Company have agreed that, as between themselves, IMS
HEALTH will assume 75%, and the Company will assume 25%, of any payments to be
made in respect of the IRI Action under the Indemnity and Joint Defense
Agreement or otherwise, including any legal fees and expenses related thereto
incurred in 1999 or thereafter. IMS HEALTH has agreed to be fully responsible
for any legal fees and expenses incurred during 1998. In certain circumstances,
IMS HEALTH has agreed to permit the Company to defer the payment of a portion of
its obligations for settlements in respect of the IRI Action. The Company's
aggregate liability to IMS HEALTH for payments in respect of the IRI Action and
certain other contingent liabilities shall not exceed $125 million. The
Company's management is unable to predict at this time the final outcome of the
IRI Action or whether the resolution of such matter could materially affect the
Company's results of operations, cash flows or financial position.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby
(before deducting estimated expenses of $_____ by the Company) will be
approximately $_____ million. The net proceeds from the Offering will be used by
the Company to repay approximately $225 million out of the $300 million which
the Company had incurred under facilities provided by third parties. The
facilities were established by Cognizant to provide funds for the repayment by
Cognizant at the time of the Distribution of existing intercompany liabilities
to certain entities included in IMS HEALTH and for general corporate purposes.
At July 20, 1998 approximately $285 million was outstanding under these
facilities. The interest rate on the indebtedness being repaid was 6.41% on July
20, 1998 and the indebtedness matures in June 1999. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources".
10
<PAGE>
<TABLE>
<CAPTION>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) at
March 31, 1998 on a historical basis, (ii) at March 31, 1998 on a pro forma
basis, as adjusted to give effect to the Distribution and the transactions
contemplated thereby and (iii) proforma as adjusted to give effect to the
Offering and the use of the proceeds from the sale of the Notes. The following
data are qualified in their entirety by the consolidated financial statements of
the Company and other information contained elsewhere in this Prospectus or
incorporated by reference herein.
MARCH 31, 1998
(UNAUDITED)
---------------------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- --------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Cash and Cash Equivalents ........................... $ 4,004 $ 4,004 $ 4,004
======== ========= ========
Short-Term Debt ..................................... -- $ 225,000(1) -- (5)
======== ========= ========
Long-Term Debt
Three-Year Revolving Facility ...................... -- $ 50,000(1) $ 50,000(6)
Other Long-Term Debt ............................... -- 25,000(1) 25,000
The Notes .......................................... -- -- 225,000(5)
Divisional/Shareholders' Equity:
Divisional Equity .................................. $107,137 -- (2) --
Preferred Stock, par value $.01 per share,
authorized--10,000,000 shares;
outstanding--none ................................. -- -- --
Series Common Stock, par value $.01 per
share, authorized--10,000,000 shares;
outstanding--none ................................. -- -- --
Common Stock, par value $.01 per share,
authorized--400,000,000 shares; issued
--171,120,069 shares (Pro forma)(4) ............... -- 1,711(2) 1,711
Capital Surplus -- (2) --
Retained Earnings/Deficit .......................... -- (150,179)(2)(3) (150,179)
Cumulative Translation Adjustment .................. -- 643(2) 643
Treasury Stock--0 shares (Actual) and
8,271,396 shares (Pro forma)(4) ................... -- (45,038)(2)(3) (45,038)
-------- --------- --------
Total Equity ........................................ 107,137 (192,863) (192,863)
-------- --------- --------
Total Capitalization ................................ $107,137 ($117,863) $107,137
======== ========= ========
</TABLE>
- --------------
(1) In connection with the Distribution, Cognizant borrowed $300 million,
which was used at the time of the Distribution to repay existing
intercompany liabilities of Cognizant to certain entities included in IMS
HEALTH. This debt became an obligation of the Company after the
Distribution and is reflected as an increase in short-term and long-term
debt.
(2) This adjustment reflects the recapitalization of the Company in connection
with the Distribution.
(3) The cost basis of the shares of treasury stock on a pro forma basis
reflects an allocation of the historical cost of such treasury shares to
the Company.
(4) This information does not reflect approximately 3.2 million shares issued
by Cognizant from treasury stock in connection with the acquisition of
certain businesses included in IMS HEALTH which was consummated prior to
the Distribution.
(5) This adjustment reflects the issuance of the Notes and the application of
proceeds from the sale of the Notes.
(6) Does not reflect a reduction in the amounts outstanding under the
Three-Year Revolving Facility of $15 million which occurred after the
Distribution. After giving effect to the Offering, the Company will have
$35 million outstanding under the Three-Year Revolving Facility and unused
availability under the Three-Year Revolving Facility of $65 million.
11
<PAGE>
SELECTED FINANCIAL DATA AND PRO FORMA INFORMATION
The following data are qualified in their entirety by the financial
statements of the Company and other information contained elsewhere in this
Prospectus or incorporated by reference herein. The financial data as of
December 31, 1997 and 1996, and for the years ended December 31, 1997, 1996 and
1995, have been derived from the audited financial statements of the Company
incorporated by reference herein. The financial data as of March 31, 1998 and
1997, and December 31, 1994 and 1993, for the three months ended March 31, 1998
and 1997 and for the years ended December 31, 1994 and 1993, are unaudited.
Because of the relative significance of IMS HEALTH's business to Cognizant, IMS
HEALTH was treated as the "accounting successor" to Cognizant and the financial
statements of the Company have been prepared on a stand-alone basis. The
following financial data should be read in conjunction with the information set
forth under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's Consolidated Financial Statements and
Notes thereto appearing elsewhere in this Prospectus or incorporated by
reference herein.
The pro forma statement of income information for the year ended December
31, 1997 and the three months ended March 31, 1998, gives effect to the impact
of interest expense as of the beginning of the period presented related to the
borrowing by the Company of $300 million of third-party debt to repay existing
intercompany liabilities to IMS HEALTH in connection with the Distribution. The
pro forma statement of financial position information as of March 31, 1998 gives
effect to the borrowing of $300 million of third party debt in connection with
the Distribution as if such borrowing had occurred on March 31, 1998. The pro
forma data are for informational purposes only and may not necessarily reflect
future results of operations or what the results of operations would have been
had the Company incurred such borrowings at such time.
12
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
ACTUAL
PRO FORMA ---------------------------------------------------------------------
1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED) (UNAUDITED)
INCOME STATEMENT DATA:
OPERATING REVENUE .................... $ 358,594 $ 358,594 $ 319,404 $ 288,652 $ 250,303 $ 209,894
Operating Costs and Selling
and Administrative
Expenses ........................... 239,670 239,670 212,214 194,741 176,753 156,640
Depreciation and
Amortization ....................... 28,663 28,663 25,229 24,343 21,628 19,356
--------- --------- --------- --------- --------- ---------
OPERATING INCOME ..................... 90,261 90,261 81,961 69,568 51,922 33,898
Interest Expense ..................... 24,400(1) 0 0 0 0 0
--------- --------- --------- --------- --------- ---------
Income Before Provision
for Income Taxes .................... 69,861 90,261 81,961 69,568 51,922 33,898
--------- --------- --------- --------- --------- ---------
Provision for Income
Taxes .............................. 29,272 37,786 34,356 29,156 21,807 14,237
--------- --------- --------- --------- --------- ---------
NET INCOME ........................... $ 40,589 $ 52,475 $ 47,605 $ 40,412 $ 30,115 $ 19,661
========= ========= ========= ========= ========= =========
OTHER DATA:
Capital Investment(2) ................ $ 49,676 $ 49,676 $ 38,551 $ 30,817 $ 28,594 $ 19,050
EBITDA(3) ............................ $ 118,924 $ 118,924 $ 107,190 $ 93,911 $ 73,550 $ 53,254
Fixed Charge Coverage
Ratio(4) ........................... 3.81 21.24 20.59 16.93 13.06 8.92
BALANCE SHEET DATA
(AT PERIOD END):
Current Assets ....................... $ 62,530 $ 62,530 $ 55,475 $ 35,175 $ 47,314 $ 26,992
Property, Plant and
Equipment--Net ..................... 55,050 55,050 44,310 39,677 38,413 33,058
Capitalized Computer
Software ........................... 43,093 43,093 35,653 27,601 19,625 13,550
Intangibles .......................... 10,649 10,649 11,686 12,299 14,968 15,884
Other Assets ......................... 21,112 21,112 23,207 19,769 18,522 8,347
--------- --------- --------- --------- --------- ---------
TOTAL ASSETS ................... $ 192,434 $ 192,434 $ 170,331 $ 134,521 $ 138,842 $ 97,831
========= ========= ========= ========= ========= =========
Current Liabilities
(Other Than Short-Term
Debt) ............................ $ 44,612 $ 44,612 $ 33,338 $ 30,528 $ 23,836 $ 15,378
Short-Term and Long-Term
Debt ............................. 300,000(5) -- -- 78 244 411
Other Liabilities .................... 46,239 46,239 37,640 33,041 26,869 20,525
--------- --------- --------- --------- --------- ---------
TOTAL LIABILITIES .............. 390,851 90,851 70,978 63,647 50,949 36,314
--------- --------- --------- --------- --------- ---------
Divisional/Shareholders'
Equity ............................. (198,417)(5) 101,583 99,353 70,874 87,893 61,517
--------- --------- --------- --------- --------- ---------
TOTAL LIABILITIES AND
DIVISIONAL/
SHAREHOLDERS'
EQUITY ....................... $ 192,434 $ 192,434 $ 170,331 $ 134,521 $ 138,842 $ 97,831
========= ========= ========= ========= ========= =========
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------
ACTUAL
PRO FORMA ------------------------
1998 1998 1997
---------- --------- --------
(DOLLARS IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
OPERATING REVENUE ............................................... $ 96,064 $ 96,064 $ 86,271
-------- -------- --------
Operating Costs and Selling and Administrative
Expenses ....................................................... 67,625 67,625 57,728
Depreciation and Amortization ................................... 7,122 7,122 6,633
-------- -------- --------
OPERATING INCOME ................................................ 21,317 21,317 21,910
Interest Expense ................................................ 5,100(1) -- --
Other Income .................................................... 3,185 3,185 --
Income Before Provision for Income Taxes ........................ 19,402 24,502 21,910
Provision for Income Taxes ...................................... 8,129 10,256 9,180
-------- -------- --------
NET INCOME ...................................................... $ 11,273 $ 14,246 $ 12,730
======== ======== ========
OTHER DATA:
Capital Investment(2) ........................................... $ 14,226 $ 14,226 $ 12,025
EBITDA(3) ....................................................... $ 28,439 $ 28,439 $ 28,543
Fixed Charge Coverage Ratio(4) .................................. 4.11 22.40 20.67
BALANCE SHEET DATA:
Current Assets .................................................. $ 62,085 $ 62,085 $ 59,281
Property, Plant and Equipment--Net .............................. 58,023 58,023 47,222
Capitalized Computer Software ................................... 45,724 45,724 37,336
Intangibles ..................................................... 12,085 12,085 11,482
Other Assets .................................................... 21,728 21,728 21,879
-------- -------- --------
TOTAL ASSETS ................................................... $199,645 $199,645 $177,200
======== ======== ========
Current Liabilities (Other than Short-Term Debt) ................ $ 43,539 $ 43,539 $ 32,594
Short-Term and Long-Term Debt ................................... 300,000(5) -- --
Other Liabilities ............................................... 48,969 48,969 38,682
-------- -------- --------
TOTAL LIABILITIES .............................................. 392,508 92,508 71,276
-------- -------- --------
Divisional/Shareholders' Equity ................................. (192,863)(5) 107,137 105,944
-------- -------- --------
TOTAL LIABILITIES AND DIVISIONAL/
SHAREHOLDERS' EQUITY ........................................ $199,645 $199,645 $177,220
======== ======== ========
</TABLE>
- ----------
(1) Reflects the impact of interest expense as of the beginning of the period
presented related to $300 million of debt at an assumed annual interest
rate of 6.8%. Each 1 @8% variance in the actual interest rate will result
in an increase or decrease in interest expense of $375,000 for the year
ended December 31, 1997 and $94,000 for the three months ended March 31,
1998.
(2) Includes additions to property, plant and equipment, software additions and
additions to intangibles.
(3) EBITDA represents earnings before interest, taxes, depreciation,
amortization and other income. EBITDA is presented because the Company
believes that investors use it as a financial indicator of a company's
ability to service or incur debt. EBITDA is not a measurement of operating
performance computed in accordance with generally accepted accounting
principles and should not be considered a substitute for operating income,
net income, cash flows from operations or other statement of operations or
cash flow data prepared in conformity with generally accepted accounting
principles, or as a measure of profitability or liquidity. In addition,
EBITDA may not be comparable to similarly titled measures of other
companies. EBITDA may not be indicative of the historical operating results
of the Company, nor is it meant to be predictive of future results of
operations or cash flows.
(4) For the purpose of determining the ratio of earnings to fixed charges,
earnings include pre-tax income plus fixed charges (excluding capitalized
interest). Fixed charges consist of interest on all indebtedness
(including capitalized interest) plus that portion of operating lease
rentals representative of the interest factor (deemed to be one-third of
operating lease rentals). The Company's historical statements do not
reflect the $300 million of indebtedness incurred in connection with the
Distribution and, accordingly, the historical ratios of earnings to fixed
charges do not reflect any interest for this indebtedness.
(5) See "Capitalization."
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
In 1984, D&B acquired Nielsen Media Research as part of the acquisition of
A.C. Nielsen Company. In November 1996, D&B spun-off Cognizant which included
Nielsen Media Research. On June 30, 1998, Cognizant (which is now the Company)
distributed to all holders of its common stock the shares of IMS HEALTH. As a
result of the Distribution, the sole business of the Company is the business of
Nielsen Media Research. Because of the relative significance of IMS HEALTH's
business to Cognizant, IMS HEALTH was treated as the "accounting successor" to
Cognizant. The financial statements of the Company and the following discussion
have been prepared on a stand-alone basis. References to Cognizant, in the
discussion below, refer to the accounting successor of Cognizant, IMS HEALTH.
RECENT DEVELOPMENTS
In July 1998, the Company announced that operating revenue increased 12.3%
in the second quarter of 1998 to $97.9 million from $87.2 million for the second
quarter of 1997. Operating income was $23.0 million in the second quarter of
1998 as well as the second quarter of 1997. The Company's operating expenses for
the second quarter of 1998 included $2.4 million of Year 2000 expenses as
compared to none for 1997 and $7.8 million of depreciation and amortization as
compared to $7.0 million in 1997.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH
THREE MONTHS ENDED MARCH 31, 1997
The Company revenue for the first three months of 1998 increased 11.4% to
$96.1 million from $86.3 million. Continuing revenue growth resulted from new
metered markets, additional cable networks and the local Hispanic and
Monitor-Plus measurement services.
Operating costs and selling and administrative expenses for the first three
months of 1998 were $67.6 million compared with $57.7 million in 1997, an
increase of 17.1%. The increase reflects higher costs related to Year 2000 and
increased investment in the business, including the establishment of new metered
markets.
Operating income for the first three months of 1998 were $21.3 million
compared with $21.9 million in 1997, a decline of 2.7%. The decline resulted
primarily from Year 2000 expenses offset by the revenue growth factors noted
above. Excluding the Year 2000 expenses of $3.2 million, operating income would
have increased 11.8%.
Operating margin during the first three months of 1998 was 22.2%, compared
with 25.4% in 1997. Excluding the Year 2000 expense mentioned above, 1997
operating margin for the first three months of 1998 was 25.5%.
Non-operating income--net of $3.2 million for the first three months of
1998 included gains from the disposition of investments.
The consolidated effective tax rate of the Company was 41.9% for the first
three months of 1998 and 1997. The tax rates were computed on a separate-company
basis.
Net income for the first three months of 1998 was $14.2 million, compared
with $12.7 million, for the first three months of 1997, an increase of 11.9%.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
The Company's revenue increased 12.3% in 1997 to $358.6 million from $319.4
million in 1996. Revenue growth resulted from additional cable customers,
entrance into three new metered markets, an increase in the level of special
analyses and the continued growth of the Hispanic service.
15
<PAGE>
Operating costs and selling and administrative expenses in 1997 were $239.7
million, compared with $212.2 million in 1996, an increase of 12.9%. The
increase reflects higher costs related to increased investment in the business,
including the opening of new metered markets and expandedHispanic services.
Operating income in 1997 was $90.3 million compared with $82.0 million in
1996, an increase of 10.1%. The increase resulted primarily from the factors
noted above, partially offset by Year 2000 expenses of $2.7 million. Excluding
the Year 2000 expenses, operating income would haveincreased 13.4%.
Operating margin in 1997 was 25.2%, compared with 25.7% in 1996. Excluding
the Year 2000 expenses mentioned above, 1997 operating margin was 25.9%.
The Company's consolidated 1997 and 1996 effective tax rate was 41.9%. The
tax rates were computed on a separate-company basis.
Net income in 1997 was $52.5 million, compared with $47.6 million in 1996,
an increase of 10.2%.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
Revenue increased 10.7% in 1996 to $319.4 million from $288.7 million in
1995. Revenue growth resulted from the expansion of network schedules, increased
demand for custom analyses, addition of cable customers and entrance into two
new metered markets.
Operating costs and selling and administrative expenses in 1996 were $212.2
million, compared with $194.7 million in 1995, an increase of 9.0%. Operating
costs and selling and administrative expenses in 1995 include a non-recurring
charge of $2.3 million. Excluding this charge, the increase was 10.3%. The
higher operating costs and selling and administrative expenses were the result
of additional costs related to increased investments in the business, including
expanded metered markets and cable operations.
Operating income in 1996 increased 17.8% to $82.0 million from $69.6
million in 1995. Included in the 1995 results were $2.3 million of non-recurring
charges. Excluding these charges, the 1996 operating income growth rate was
14.0%. The increase was the result of the factors mentioned above.
Operating margin in 1996 was 25.7%, compared with 24.1% in 1995. The 1995
margin includes $2.3 million of non-recurring charges. Excluding these charges,
the operating margin was 24.9%.
The Company's consolidated effective tax rate was 41.9%, in 1996 and 1995.
The tax rates were computed on a separate-company basis.
Net income in 1996 was $47.6 million, compared with $40.4 million in 1995,
an increase of 17.8%.
CHANGES IN FINANCIAL POSITION AT DECEMBER 31, 1997
COMPARED WITH DECEMBER 31, 1996
Accounts Receivable-Net increased to $52.0 million at December 31, 1997
from $44.8 million at December 31, 1996, principally due to higher receivables
from increased revenues from cable customers and new metered markets.
Property, Plant and Equipment increased to $55.0 million at December 31,
1997 from $44.3 million at December 31, 1996, principally due to equipment
purchases for metered markets.
Computer Software increased to $43.1 million at December 31, 1997 from
$35.7 million at December 31, 1996, principally due to software related to the
transition from mainframe to clientserver technology.
Unbilled Accounts Receivable (included in Other Assets) decreased to $12.6
million at December 31, 1997 from $15.5 million at December 31, 1996,
principally due to the timing of contract billings.
16
<PAGE>
Accounts Payable increased to $14.4 million at December 31, 1997 from $6.9
million at December 31, 1996, principally due to the timing of payments.
Deferred Income Taxes increased to $34.4 million at December 31, 1997 from
$29.4 million at December 31, 1996, principally due to the future tax impact
arising from computer software additions.
Divisional Equity increased to $101.6 million at December 31, 1997 from
$99.4 million at December 31, 1996, principally due to net income of $52.5
million, partially offset by transfers to Cognizant of $51.1 million.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $4.0 million and $10.1 million at March
31, 1998 and 1997, respectively, a decrease of $6.1 million.
Net cash provided by operating activities was $21.5 million and $28.3
million for the three months ended March 31, 1998 and 1997, respectively. The
decrease of $6.8 million in cash provided by operating activities compared to
the prior period primarily reflected an increase in other working capital.
Net cash used in investing activities totaled $14.9 million for the three
months ended March 31, 1998 compared with $9.7 million in the prior period. The
increase of $5.2 million primarily reflected an increase in additions to
computer software.
Net cash used in financing activities was $8.5 million for the three months
ended March 31, 1998 compared with $14.0 million in the prior period. The
decrease of $5.5 million in cash used in financing activities compared to the
prior period reflected a decrease in the net transfers to Cognizant.
Cash and cash equivalents totaled $6.0 million and $5.6 million at December
31, 1997 and 1996, respectively. The increase in cash and cash equivalents of
$400,000 was primarily due to increased cash flow from operations, offset, in
part, by increased cash used in investing activities and transfersto Cognizant.
Net cash provided by operating activities was $94.4 million, $64.7 million
and $90.3 million in 1997, 1996 and 1995, respectively. The increase of $29.7
million in cash provided by operating activities in 1997 primarily reflected a
lower increase in accounts receivable, an increase in accounts payable and an
increase in postretirement benefits, offset, in part, by a lower increase in
deferred income taxes. The decrease of $25.6 million in net cash provided by
operating activities in 1996 primarily reflected a higher level of accounts
receivable and a decrease in postretirement benefits, offset, in part, by an
increase in deferred income taxes.
Net cash used in investing activities totaled $42.8 million for 1997,
compared with $40.8 million and $30.9 million in 1996 and 1995, respectively.
The increase of $2.0 million in cash used in investing activities in 1997
primarily reflected an increase in capital expenditures and an increase in
additions to computer software. The increase of $9.9 million in cash used in
investing activities in 1996 primarily reflected an increase in capital
expenditures and an increase in additions to intangibles.
Net cash used in financing activities totaled $51.1 million for 1997,
compared with $19.1 million and $58.8 million in 1996 and 1995, respectively.
The increase of $32.0 million of cash used in financing activities in 1997
reflected an increase in the net transfers to Cognizant/D&B. The decrease of
$39.7 million of cash used in financing activities in 1996 reflected a decrease
in the net transfer to Cognizant/D&B.
The Company currently expects that over the next four years it will invest
an estimated $300 million (including amounts already spent in 1998) focused
principally on deployment of digital broadcast measurement technology, new
software development and deployment, additional metered markets and Internet
initiatives.
17
<PAGE>
The Company's existing balances of cash and cash equivalents and, cash
generated from operations and debt capacity currently are expected to be
sufficient to meet the Company's long-term and short-term cash requirements
including continued investment in the business. To the extent that the Company
needs additional funding to finance its operations and investments, no assurance
can be given that the Company will be able to access the capital markets or
otherwise obtain necessary financing in the future, or that any such financing
can be obtained in a timely manner or on commercially favorable terms.
In connection with the Distribution, the Company borrowed $275 million
under an unsecured revolving credit facility ("Revolving Credit Facility")
provided by a group of lenders led by The Chase Manhattan Bank. The Revolving
Credit Facility consists of two tranches: a 364-Day $225 million tranche (all of
which was drawn) and a Three-Year $100 million tranche ($50 million of which was
drawn). The 364-Day tranche will be repaid in full with the proceeds of the
Offering and will be terminated. The outstanding commitments under the
Three-Year tranche will mature on June 15, 2001. Interest under the Revolving
Credit Facility is based upon the London Interbank Offered (LIBO) Rate plus a
spread. The weighted average interest rate on the Revolving Credit Facility was
6.41% on July 20, 1998. The spread for the Three-Year tranche is .50% per annum
and may change based on the credit rating of the Company. The Revolving Credit
Facility contains restrictive covenants which provide, among other things,
limitations on: (i) the incurrence of indebtedness, (ii) the creation of
mortgages and security interests, (iii) certain fundamental changes, (iv)
investments and acquisitions and (v) the existence of certain types of
restrictive agreements. Under the Revolving Credit Facility, the Company is
required to maintain certain specified minimum ratios of cash flow to fixed
charges and to total borrowings and certain minimum levels of net worth. The
Revolving Credit Facility contains various event of default provisions,
including default in payment of principal or interest, material
misrepresentation in the Revolving Credit Facility, default in compliance with
other terms of the Revolving Credit Facility or the related guarantees,
bankruptcy, default on other indebtedness, failure to satisfy or stay certain
judgments or orders entered against the Company or any of its subsidiaries,
failure to pay when due certain amounts with respect to certain employee benefit
plans and the occurrence of a change in control. After giving effect to the
Offering, the Company will have $35 million outstanding under the Revolving
Credit Facility and availability under the Revolving Credit Facility of $65
million.
The Company has also entered into an investment partnership with NMR
Investing I, Inc. (a subsidiary of the Company) and RBNMR, Inc., pursuant to
which it incurred indebtedness of $25 million. The cost of funds under the
investment partnership is approximately 6.26% per annum and the investment
matures in 2000. The guarantee given in connection with the partnership
agreement contains a limitation on liens by the Company.
ADOPTION OF STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures About
Segments of an Enterprise and Related Information", which changes the way public
companies report information about segments. SFAS No. 131, which is based on the
management approach to segment reporting, includes requirements to report
selected segment information quarterly and entity-wide disclosures about
products and services, major customers, and the material countries in which the
entity holds assets and reports revenues. This statement is effective for
periods beginning after December 15, 1997. The Company is in the process of
evaluating the disclosure requirements under this standard.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
About Pensions And Other Postretirement Benefits", which changes current
financial statement disclosure requirements from those required under SFAS No.
87, "Employers' Accounting for Pensions", SFAS No. 88, "Employers' Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits", and SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions". The statement does not change the
existing measurement or recognition provisions of SFAS Nos. 87, 88 or 106, and
is effective for periods beginning after December 15, 1997. The Company is in
the process of evaluating the disclosure requirements under this standard.
18
<PAGE>
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 provides guidance on
costs to be capitalized and when capitalization of such costs should commence.
The Company is evaluating the impact of this SOP on its financial position and
results of operations and will be required to implement SOP 98-1 for the fiscal
year ended December 31, 1999.
NON-U.S. OPERATING AND MONETARY ASSETS
The Company operates in the U.S. and Canada. Approximately 3% of the
Company's revenues and 4% of operating income in 1997 were derived from Canadian
operations. As a result, fluctuations in the value of the Canadian dollar
relative to the U.S. dollar affect the Company's results of operations, butnot
significantly.
Non-U.S. monetary assets are maintained in Canadian dollars. Changes in the
value of this currency relative to the U.S. dollar are charged or credited to
Divisional Equity. The effect of exchange rate changes during 1997 was not
material.
YEAR 2000
Many existing computer systems and software applications use two digits,
rather than four, to record years, e.g., "98" instead of "1998". Unless
modified, such systems will not properly record or interpret years after 1999,
which could lead to business disruptions. This is known as the "Year 2000
issue".
The Company depends on systems and software both for its internal
operations as well as for the receipt of data used in its information products
and the transmission of those products to its customers. The Company began to
address the Year 2000 issue in 1996. It expects to complete upgrading or
replacing substantially all affected programs during 1998, with testing to be
done during 1999. The operating income impact of Year 2000 compliance in 1997
was $2.7 million and $5.6 million for the first six months of 1998. Based on
current information, the operating income impact of Year 2000 compliance in 1998
is expected to be approximately $9 million. Year 2000 compliance expenditures
for 1999 are in the process of being determined; however, the costs are expected
to be less than in 1998. These costs are being expensed as incurred. In
addition, the Company is communicating with its customers and data suppliers to
assess their ability to address the Year 2000 issue. Failures by customers to be
Year 2000 compliant could hinder their ability to make use of the Company's
products. Failures by data suppliers could disrupt the flow of data used in the
Company's products. While the Company believes most companies it deals with are
addressing the issue, it is unable to determine the effect, if any, such
failures might have on the Company's business or future results of operations.
The costs of addressing the Year 2000 issue and the date on which the
Company expects to complete Year 2000 compliance are based on the best estimates
of the Company's management, which were derived utilizing various assumptions
regarding future events. There can be no guarantee that these estimates will be
achieved and actual results may differ materially. Specific factors that might
cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area of expertise, the
ability to locate and correct all relevant computer codes, and the success of
customers and suppliers in addressing the Year 2000 issue.
19
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT
Principal Occupation
During Last Five Years
Name Position and Directorships Age
---- -------- ---------------------- ---
<S> <C> <C> <C>
John A. Dimling .......... President and President and Chief Executive Officer, 60
Chief Executive July 1998 to present; President and Chief
Officer; Director Operating Officer, July 1993 to June 1998.
Thomas W. Young .......... Executive Vice President Executive Vice President and Chief Financial 59
and Chief Financial Officer, February 1998 to present;
Officer Senior Vice President and Controller,
D&B, April 1992 to October 1996.
Barry P. Cook ............ Senior Vice President and Senior Vice President and Chief Research 53
Chief Research Officer Officer, November 1990 to present.
Stuart J. Goldshein ...... Vice President and Vice President & Controller, July 1998 to 51
Controller present; Assistant Controller, Cognizant,
November 1996 to June 1998; Assistant
Controller, D&B, 1991 to October 1996.
Stephen J. Boatti ........ Senior Vice President, Senior Vice President, Chief Legal Officer 49
Chief Legal Officer and Secretary, July 1998 to present;
and Secretary Associate General Counsel, Cognizant,
November 1996 to June 1998; Associate
General Counsel, D&B, 1993 to
October 1996.
Robert A. Lane ........... Vice President Finance Vice President-Finance and Treasurer, July 38
and Treasurer 1998 to present; Vice President--Finance
and Planning, July 1992 to June 1998.
Anita M. Rubino .......... Senior Vice President Senior Vice President and Chief Human 41
and Chief Human Resources Officer, July 1998 to present;
Resources Officer Vice President--Human Resources,
May 1994 to June 1998; Vice President--
Organizational Development, Marketing
Information Services Division, D&B
May 1993 to May 1994.
John A. Loftus ........... Senior Vice President Senior Vice President and Chief 55
and Chief Communications Officer, July 1998 to
Communications Officer present; Vice President--Communications,
April 1990 to June 1998.
William G. Jacobi ........ Chairman; Director Chairman, Nielsen Media Research, 54
November 1996 to present; Chairman, IMS,
February 1995 to December 1997;
Executive Vice President, Cognizant,
September 1996 to December 1997;
Senior Vice President, The Dun & Bradstreet
Corporation, Wilton, CT (information services),
July 1993 to October 1996; President and
Chief Operating Officer, Nielsen Media
Research, January 1991 to July 1993;
Director, R.H. Donnelley Corporation.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
During Last Five Years
Name Position and Directorships Age
---- -------- ---------------------- ---
<S> <C> <C> <C>
M. Bernard Puckett ....... Director Private Investor, January 1996 to present; 53
President and Chief Executive Officer,
Mobile Telecommunication Technologies Corp.;
Jackson, MS (telecommunications), May 1995
to January 1996; President, Chief Operating
Officer, January 1994 to May 1995;
Senior Vice President--Corporate Strategy
and Development, International Business
Machines Corporation, Armonk, NY
(computers), July 1993 to December 1993;
General Manager of Applications Solutions,
January 1991 to July 1993; Director, P-Com,
Inc.;. Director, R.R. Donnelley & Sons
Company; Director, Oacis Healthcare Holdings
Corp.; Director, IMS HEALTH Incorporated.
Robert E. Weissman ....... Director Chairman and Chief Executive Officer, IMS 58
Health Incorporated, Westport CT,
(health care information), July
1998 to present; Chairman and Chief
Executive Officer, Cognizant, September
1996 to June 1998; Chairman and Chief
Executive Officer, The Dun & Bradstreet
Corporation, Wilton, CT (information
services), April 1995 to October 1996;
President and Chief Executive
Officer, January 1994 to March
1995; President and Chief
Operating Officer, January 1985 to
December 1993; Director, State
Street Boston Corporation; Director,
Gartner Group, Inc.; Director,
IMS Health Incorporated.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
During Last Five Years
Name Position and Directorships Age
---- -------- ---------------------- ---
<S> <C> <C> <C>
James R. Craigie Director Executive Vice President and General Manager, 44
Beverage and Desserts Division, Kraft Foods,
subsidiary of Philip Morris, Inc., New York,
NY (tobacco, food and beverages), October
1997 to present; Executive Vice President and
General Manager, Beverage Division,
November 1994 to September 1997; Executive Vice
President and General Manager, Dinners and
Enhancers Division, February 1994 to
October 1994; Vice President and General
Manager, Pollio Dairy Products, March 1993 to
January 1994.
Peter A. Lund Director President and Chief Executive Officer, CBS 57
Officer, CBS Television and Cable Group,
CBS Inc., New York, NY (broadcasting),
January 1997 to June 1997; President and Chief
Executive Officer, CBS Inc., November 1995 to
January 1997; Executive Vice President, CBS
Broadcast Group and President, CBS Television
Network, October 1990 to November 1995.
Michael D. Moore Director Executive Vice President, Director of Media 60
Development, The MacManus Group, Inc.,
New York, NY (communications holdings),
January 1998 to present; Executive Vice
President, Worldwide Media Director, D'Arcy
Masius Benton & Bowles, Inc., subsidiary of
The MacManus Group, Inc., 1993 to December 1997.
</TABLE>
22
<PAGE>
DESCRIPTION OF THE NOTES
The Notes are to be issued under an Indenture, to be dated as of __________
__, 1998 (the "Indenture"), between the Company and The Chase Manhattan Bank, as
Trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject, and are qualified in their entirety by reference, to all the
provisions of the Indenture, including the definitions therein of certain terms.
Wherever particular Sections or defined terms of the Indenture are referred to
herein, such Sections or defined terms are incorporated by reference herein. The
Indenture provides for the issuance of debt securities in one or more series at
any time and from time to time, and does not limit the principal amount of debt
securities which may be issued thereunder.
GENERAL
The Notes will be unsecured obligations of the Company, will be limited to
$225,000,000 aggregate principal amount and will mature on __________ __, . The
Notes will bear interest at the rate per annum shown on the front cover of this
Prospectus from __________ __, 1998 or from the most recent Interest Payment
Date to which interest has been paid or provided for, payable semiannually on
__________ __ and __________ __ of each year, commencing __________ __, 1998
(each, an Interest "Payment Date"). Interest on each Note will be paid to the
Person in whose name the Note (or any predecessor Note) is registered at the
close of business on the preceding __________ __ or __________ __, as the case
may be (each, a "Regular Record Date").
The Notes will not have the benefit of any sinking fund.
OPTIONAL REDEMPTION. The Notes will be redeemable, in whole or in part, at
the option of the Company at any time at a redemption price equal to the greater
of (i) 100% of the principal amount of such Notes or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest (not
including the portion of any such payments of interest accrued as of the
redemption date) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (determined on the third Business Day preceding such redemption
date), plus, in each case, accrued and unpaid interest thereon to the redemption
date.
"Adjusted Treasury Rate" means (i) the arithmetic mean of the yields under
the heading "Week Ending" published in the Statistical Release most recently
published prior to the date of determination under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the redemption date, of
the principal being redeemed plus (ii) ___%. If no maturity set forth under such
heading exactly corresponds to the maturity of such principal, yields for the
two published maturities most closely corresponding to the maturity of such
principal shall be calculated pursuant to the immediately preceding sentence,
and the Adjusted Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding in each of the relevant periods to the
nearest month.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively-traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at the time of any determination under the terms of the Notes,
then such other reasonably comparable index which shall be designated by the
Company.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the Notes to be redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the Notes or
portions thereof called for redemption.
FORM, EXCHANGE AND TRANSFER
The Notes will be issuable only in fully registered form, without coupons,
in denominations of $1,000 and integral multiples thereof.
23
<PAGE>
At the option of the holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities (as defined below), the Notes will
be exchangeable for other Notes of any authorized denomination and of a like
tenor and aggregate principal amount.
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Notes may be presented for exchange as provided above or for
registration of transfer (duly endorsed or with the form of transfer endorsed
thereon duly executed) at the office of the Security Registrar (as defined in
the Indenture) or at the office of any transfer agent designated by the Company
for such purpose. No service charge will be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. The Company may at any time
designate additional transfer agents or rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts,
except that the Company will be required to maintain a transfer agent in each
Place of Payment (as defined in the Indenture) for the Notes.
If the Notes are to be redeemed in part, the Company will not be required
to (i) issue, register the transfer of or exchange any Note during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption of any such Note that may be selected for redemption and
ending at the close of business on the day of such mailing or (ii) register the
transfer of or exchange any Note so selected for redemption, in whole or in
part, except the unredeemed portion of any such Note being redeemed in part.
BOOK-ENTRY SYSTEM
Upon issuance, the Notes will be represented by one or more global
securities (each, a "Global Security"). Each such Global Security will be
deposited with, or on behalf of, The Depositary Trust Company, as depositary
(the "Depositary"), and registered in the name of Cede & Co., the nominee ofthe
Depositary.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934. The
Depositary holds securities that its participants ("Participants") deposit with
it. The Depositary also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. The Depositary is owned
by a number of its Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the Depositary's system is also available to others such
as securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. The rules applicable to the Depositary and its Participants are on
file with the Securities and Exchange Commission.
Ownership of beneficial interests in the Notes will be limited to
Participants or persons that may hold interests through Participants. The
Company expects that upon the issuance of the Global Securities representing the
Notes, the Depositary will credit, on its book-entry registration and transfer
system, the Participants' accounts with the respective principal amounts of the
Notes beneficially owned by such Participants. Ownership of beneficial interests
in such Global Securities will be shown on, and the transfer of such ownership
interests will be effected only through, records maintained by the Depositary
(with respect to the interests of Participants) and on the records of
Participants (with respect to interests of persons holding through
Participants). The laws of some states may require that certain purchasers of
24
<PAGE>
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability of certain persons to own, transfer
or pledge beneficial interests in a Global Security.
No Global Security may be exchanged in whole or in part for Notes
registered, and no transfer of a Global Security in whole or in part may be
registered, in the name of any Person other than the Depositary or a nominee
thereof unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (ii)
has creased to be a clearing agency registered under the exchange Act or (B)
there shall have occurred and be continuing an Event of Default with respect to
such Global Security.
So long as the Depositary, or its nominee, is the registered owner of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and holder of such Global Security and the Notes
represented thereby for all purposes under the Notes and the Indenture. Except
in the limited circumstances referred to above, owners of beneficial interests
in a Global Security will not be entitled to have such Global Security or the
Notes represented thereby registered in their names, will not receive or be
entitled to receive physical delivery of certificated Notes in exchange therefor
and will not be considered to be the owners or holders of such Global Security
or the Notes represented thereby for any purpose under the Notes or the
Indenture. Accordingly, each person owning a beneficial interest in a Global
Security must rely on the procedures of the Depositary and, if such person is
not a Participant, on the procedures of the Participant through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of holders or that an owner of a
beneficial interest in such a Global Security desires to give or take any action
which a holder is entitled to give or take under the Indenture, the Depositary
would authorize the Participants holding the relevant beneficial interests to
give or take such action, and such Participants would authorize beneficial
owners owning through such Participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.
Payment of principal of and interest on the Notes registered in the name of
the Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the holder thereof. None of the Company, the Trustee or any
agent of the Company or the Trustee will have any responsibility or liability
for any aspect of the records relating to, or payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests. The Company expects
that the Depositary, upon receipt of any payment of principal or interest in
respect of a Global Security, will credit the accounts of the Participants with
payment in amounts proportionate to their respective beneficial interests in
such Global Security as shown on the records of the Depositary. The Company also
expects that payments by Participants to owners of beneficial interests in a
Global Security will be governed by standing customer instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name", and will be the responsibility of
such Participants.
Although the Depositary has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Securities among Participants,
it is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Trustee nor the
Company will have any responsibility for the performance by the Depositary or
its Participantsor indirect participants of their respective obligations under
the rules and procedures governing their operations.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds. All
payments of principal and interest will be made by the Company in immediately
available funds or the equivalent. Secondary trading in long-term notes and
debentures of corporate issuers is generally settled in clearing-house or
next-day funds. In contrast, the Notes will trade in the Depositary's same-day
funds settlement system, and secondary market trading activity in the Notes will
therefore be required by the Depositary to settle in immediately available
funds. No assurances can be given to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
25
<PAGE>
PAYMENT AND PAYING AGENTS
Payment of interest on a Note on any Interest Payment Date will be made to
the Person in whose name such Note is registered at the close of business on the
Regular Record Date for such interest.
Principal of and any premium and interest on the Notes will be payable at
the office of such Paying Agent or Paying Agents as the Company may designate
for such purpose from time to time, except that at the option of the Company
payment of any interest may be made by check mailed to the address of the Person
entitled thereto as such address appears in the Security Register (as defined in
the Indenture). The corporate trust office of the Trustee in The City of New
York will be designated initially as the Company's sole Paying Agent for
payments with respect to Notes. The Company may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent or approve a change
in the office through which any Paying Agent acts, except that the Company will
be required to maintain a Paying Agent in each Place of Payment for the Notes.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Note which remains unclaimed at
the end of two years after such principal, premium or interest has become due
and payable will be repaid to the Company, and the holder of such Note
thereafter may look only to the Company for payment thereof.
COVENANTS
The Indenture contains the following covenants:
Limitation on Secured Debt
The Company may not issue, incur, create, assume or guarantee, and may not
permit any Restricted Subsidiary to issue, incur, create, assume or guarantee,
any debt for borrowed money secured by a mortgage, security interest, pledge,
lien, charge or other encumbrance ("mortgages") upon any assets of the Company
or any Restricted Subsidiary or upon any shares of stock or indebtedness of any
Restricted Subsidiary (whether such assets, shares or indebtedness are now
existing or owned or hereafter created or acquired) without in any such case
effectively providing concurrently with the issuance, incurrence, creation,
assumption or guarantee of any such secured debt, or the grant of a mortgage
with respect to any such indebtedness, that the Notes (together with, if the
Company shall so determine, any other indebtedness of or guaranteed by the
Company ranking equally with the Notes or any indebtedness of or guaranteed by
any Restricted Subsidiary, as the case may be) shall be secured equally and
ratably with (or, at the option of the Company, prior to) such secured debt. The
foregoing restriction, however, will not apply to: (a) mortgages on property
existing at the time of acquisition thereof by the Company or any Subsidiary;
(b) mortgages on property, shares of stock or indebtedness or other assets of
any corporation existing at the time such corporation becomes a Restricted
Subsidiary; (c) mortgages on property, shares of stock or indebtedness to secure
the payment of all or any part of the purchase price thereof, or mortgages on
property, shares of stock or indebtedness to secure any indebtedness for
borrowed money incurred prior to, at the time of, or within 180 days after, the
latest of the acquisition thereof, or, in the case of property, the completion
of construction, the completion of improvements, or the commencement of
substantial commercial operation of such property, for the purpose of financing
all or any part of the purchase price thereof, such construction, or the making
of such improvements; (d) mortgages to secure indebtedness owing to the Company
or to a Restricted Subsidiary; (e) mortgages existing at the date of the
issuance of the Notes; (f) mortgages on property of a corporation existing at
the time such corporation is merged into or consolidated with the Company or a
Restricted Subsidiary or at the time of a sale, lease or other disposition of
all or substantially all the properties of a corporation to the Company or a
Restricted Subsidiary; (g) mortgages in favor of the United States or any State,
territory or possession thereof (or the District of Columbia), or any
department, agency, instrumentality or political subdivision of the United
States or any State, territory or possession thereof (or the District of
Columbia), to secure partial, progress, advance or other payments pursuant to
any contract or statute or to secure any indebtedness incurred for the purpose
of financing all or any part of the purchase price or the cost of constructing
or improving the property subject
26
<PAGE>
to such mortgages; and (h) extensions, renewals, refinancings or replacements of
any mortgage referred to in the foregoing clauses (a), (b), (c), (e) and (f);
provided, however, that any mortgages permitted by any of the foregoing clauses
(a), (b), (c), (e) and (f) shall not extend to or cover any property of the
Company or such Restricted Subsidiary, as the case may be, other than the
property, if any, specified in such clauses and improvements thereto.
Notwithstanding the restrictions outlined in the preceding paragraph, the
Company or any Restricted Subsidiary will be permitted to issue, incur, create,
assume or guarantee, debt secured by a mortgage which would otherwise be subject
to such restrictions, without equally and ratably securing the Notes, provided
that after giving effect thereto, the sum of (i) all debt so secured by
mortgages (not including mortgages permitted under clauses (a) through (h)
above) and (ii) all Attributable Debt (as defined below) with respect to Sale
and Lease-Back Transactions (as defined below), at the time of determination,
does not exceed 10% of the Consolidated Net Assets of the Company.
Limitation on Sale and Lease-Back Transactions
The Company may not, nor may any Restricted Subsidiary, enter into any Sale
and Lease-Back Transaction with respect to any property, other than any such
transaction involving a lease for a term of not more than three years or any
such transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries, unless: (a) the Company or such Restricted Subsidiary
would be entitled to incur indebtedness pursuant to the first or second
paragraph of the limitation on secured debt covenant described above secured by
a mortgage on the property involved in such transaction at least equal in amount
to the Attributable Debt with respect to such Sale and Lease-Back Transaction
without equally and ratably securing the Notes; or (b) the Company shall apply
an amount equal to the greater of the net proceeds of such sale or the
Attributable Debt with respect to such Sale and Lease-Back Transaction within
180 days of such sale to either (or a combination of) the retirement of debt for
borrowed money (other than mandatory scheduled principal payments) of the
Company or a Restricted Subsidiary that matures more than twelve months after
the creation of such indebtedness or the purchase, acquisition, construction or
development of property, plant and equipment, computer software or other
intangibles to be used in the business of the Company or its Restricted
Subsidiaries.
Consolidation, Merger and Sale of Assets
The Company may not consolidate with or merge into, or convey, transfer or
lease all or substantially all of its properties and assets to, any Person,
unless (i) the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer, or which leases,
all or substantially all of the properties and assets of the Company shall be a
corporation, partnership or trust, shall be organized and validly existing under
the laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual payment of the principal of and any premium and
interest on all the Notes and the performance or observance of every covenant of
the Indenture on the part of the Company to be performed or observed, (ii)
immediately after giving effect to the transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing, (iii) if, as a result of the
transaction, property of the Company would become subject to a mortgage that
would notbe permitted under the limitation on mortgages described above under
"Limitation on Secured Debt", the successor Person takes such steps as shall be
necessary to secure the Notes equally and ratably with (or prior to) the
indebtedness secured by such mortgage and (iv) certain other conditions are met.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
27
<PAGE>
"Attributable Debt" when used in connection with a Sale and Lease-Back
Transaction means, at the time of determination, the lesser of: (a) the fair
value of the property involved (as determined in good faith by the Board of
Directors of the Company); or (b) the present value of the total net amount of
rent required to be paid under such lease during the remaining term thereof
(including any renewal term or period for which such lease has been extended),
discounted at the rate of interest set forth or implicit in the terms of such
lease or, if not practicable to determine such rate, the interest rate per annum
borne by the Notes compounded semi-annually. For purposes of the foregoing
definition, rent shall not include amounts required to be paid by the lessee,
whether or not designated as rent or additional rent, on account of or
contingent upon maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges. In the case of any lease which is terminable by the
lessee upon the payment of a penalty, such net amount shall be the lesser of the
net amount determined assuming termination upon the first date such lease may be
terminated (in which case the net amount shall also include the amount of the
penalty, but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated) or the net
amount determined assuming no such termination.
"Consolidated Net Assets" means, at any time of determination, (i) the
aggregate amount of assets of the Company and its Subsidiaries at such time
minus (ii) the aggregate amount of current liabilities at such time, calculated
in accordance with generally accepted accounting principles.
"Restricted Subsidiary" means any Subsidiary organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia or Canada or any province thereof.
"Sale and Lease-Back Transaction" means any arrangement with any person
providing for the leasing by the Company or any Restricted Subsidiary of any
property, which property has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such person.
"Subsidiary" means (i) a corporation more than 50% of the voting stock of
which is owned by the Company and/or one or more Subsidiaries or (ii) any other
Person (other than a corporation) of which the Company and/or one or more
Subsidiaries has at least a majority ownership and power to direct the policies,
management and affairs.
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) under the Indenture with respect to the
Notes: (a) failure to pay principal of or any premium on any Note when due; (b)
failure to pay any interest on any Note when due, continued for 30 days; (c)
failure to perform any other covenant of the Company in the Indenture, continued
for 60 days after written notice has been given by the Trustee, or the holders
of at least 25% in principal amount of the Notes Outstanding (as defined in the
Indenture), as provided in the Indenture; (d) acceleration of any indebtedness
for money borrowed by the Company having an aggregate principal amount
outstanding of at least $20 million, if such indebtedness has not been
discharged, or such acceleration has not been rescinded or annulled, within 10
days after written notice has been given by the Trustee, or the Holders of at
least 25% in principal amount of Notes, as provided in the Indenture; and (e)
certain events of bankruptcy, insolvency or reorganization involving the
Company.
If an Event of Default (other than an Event of Default described in clause
(e) above) with respect to the Notes at the time Outstanding shall occur and be
continuing, either the Trustee or the holders of at least 25% in aggregate
principal amount of the Outstanding Notes by notice as provided in the Indenture
may declare the principal amount of the Notes to be due and payable immediately.
If an Event of Default described in clause (e) above shall occur, the principal
amount of all the Notes will automatically, and without any action by the
Trustee or any holder, become immediately due and payable. After any such
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principal amount of the Outstanding Notes may, under
certain circumstances, rescind and annul
28
<PAGE>
such acceleration if all Events of Default, other than the non-payment of
accelerated principal, have been cured or waived as provided in the Indenture.
For information as to waiver of defaults, see "Modification and Waiver".
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such holders
shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, the holders of a majority in
aggregate principal amount of the Outstanding Notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Notes.
No holder of a Note will have any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless (i) such holder has previously given to
the Trustee written notice of a continuing Event of Default with respect to the
Notes, (ii) the holders of at least 25% in aggregate principal amount of the
Outstanding Notes have made written request, and such holder or holders have
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee and (iii) the Trustee has failed to institute such proceeding, and has
not received from the holders of a majority in aggregate principal amount of the
Outstanding Notes a direction inconsistent with such request, within 60 days
after such notice, request and offer. However, such limitations do not apply to
a suit instituted by a holder of a Note for the enforcement of payment of the
principal of or any premium or interest on such Note on or after the applicable
due date specified in such Note.
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture with respect to the Notes may
be made by the Company and the Trustee with the consent of the holders of a
majority in aggregate principal amount of the Outstanding Notes affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the holder of each Outstanding Note
affected thereby, (a) change the stated maturity of the principal of, or any
instalment of principal of or interest on, any Note, (b) reduce the principal
amount of, or any premium or interest on, any Note, (c) reduce the amount of
principal of the Notes payable upon acceleration of the maturity thereof, (d)
change the place or currency of payment of principal of, or any premium or
interest on, any Note, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Note, (f) reduce the
percentage in principal amount of Outstanding Notes, the consent of whose
holders is required for modification or amendment of the Indenture or for waiver
of compliance with certain provisions of the Indenture or for waiver of certain
defaults or (g) modify such provisions with respect to modification and waiver.
Without the consent of the holders of the Notes, the Company and the
Trustee, at any time and from time to time, may modify the Indenture with
respect to the Notes for, among other things, any of the following purposes: (a)
to evidence the succession of another corporation to the Company and the
assumption by any such successor of the covenants of the Company in the
Indenture and in the Notes, (b) to add to the covenants of the Company for the
benefit of the holders of the Notes or to surrender any right or power conferred
in the Indenture upon the Company, (c) to add any additional Events of Default
for the benefit of the holders, (d) to secure the Notes, (e) to evidence and
provide for the acceptance of appointment hereunder by a successor Trustee with
respect to the Notes and to add to or change any of the provisions of the
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, (f) to cure any ambiguity, to
correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under the Indenture, and (g) to
change or modify any
29
<PAGE>
of the provisions of the Indenture, provided that such action shall not
adversely affect the interests of the holders of Notes in any material respect.
The holders of a majority in principal amount of the Outstanding Notes may
waive compliance by the Company with certain restrictive provisions of the
Indenture. The holders of a majority in principal amount of the Outstanding
Notes may waive any past default under the Indenture, except a default in the
payment of principal, premium or interest and certain covenants and provisions
of the Indenture which cannot be amended without the consent of the holder of
each Outstanding Note affected.
Except in certain limited circumstances, the Company will be entitled to
set any day as a record date for the purpose of determining the holders of
Outstanding Notes entitled to give or take any direction, notice, consent,
waiver or other action under the Indenture, in the manner and subject to the
limitations provided in the Indenture. In certain limited circumstances, the
Trustee will be entitled to set a record date for action by holders. If a record
date is set for any action to be taken by holders, such action may be taken only
by persons who are holders of Outstanding Notes on the record date. To be
effective, such action must be taken by holders of the requisite principal
amount of such Notes within a specified period following the record date. For
any particular record date, this period will be 180 days or such period as may
be specified by the Company (or the Trustee, if it set the record date), and may
be shortened or lengthened (but not beyond 180 days) from time to time.
DEFEASANCE AND COVENANT DEFEASANCE
Defeasance and Discharge. The Indenture will provide that, upon the
Company's exercise of its option (if any) to have the defeasance and discharge
provisions of the Indenture applied to the Notes, the Company will be discharged
from all its obligations with respect to such Notes (except for certain
obligations to exchange or register the transfer of Notes, to replace stolen,
lost or mutilated Notes, to maintain paying agencies and to hold moneys for
payment in trust) upon the deposit in trust for the benefit of the holders of
the Notes of money or U.S. Government Obligations, or both, which, through the
payment of principal and interest in respect thereof in accordance with their
terms, will provide money in an amount sufficient to pay the principal of and
any premium and interest on the Notes on the stated maturity in accordance with
the terms of the Indenture and the Notes. Such defeasance or discharge may occur
only if, among other things, the Company has delivered to the Trustee an Opinion
of Counsel (as defined in the Indenture) to the effect that the Company has
received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that holders of the Notes will not recognize gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge were not to occur.
Defeasance of Certain Covenants. The Indenture will provide that, upon the
Company's exercise of its option to have the provisions relating to the
defeasance of certain covenants applied to the Notes, the Company may omit to
comply with certain restrictive covenants, including those described under
"Covenants" and in clause (iii) under "Consolidation, Merger and Sale of Assets"
and the occurrence of certain Events of Default, which are described above in
clause (d) (with respect to such restrictive covenants) under "Events of
Default", will be deemed not to be or result in an Event of Default, in each
case with respect to the Notes. The Company, in order to exercise such option,
will be required to deposit, in trust for the benefit of the holders of the
Notes, money or U.S. Government Obligations, or both, which, through the payment
of principal and interest in respect thereof in accordance with their terms,
will provide money in an amount sufficient to pay the principal of and any
premium and interest on the Notes on the stated maturity in accordance with the
terms of the Indenture and the Notes. The Company will also be required, among
other things, to deliver to the Trustee an Opinion of Counsel to the effect that
holders of the Notes will not recognize gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amount, in the same manner and
at the same times as would have been the case if such deposit and defeasance
were not to occur. In the
30
<PAGE>
event the Company exercised this option with respect to the Notes and the Notes
were declared due and payable because of the occurrence of any Event of Default,
the amount of money and U.S. Government Obligations so deposited in trust would
be sufficient to pay amounts due on the Notes at the time of their stated
maturity but may not be sufficient to pay amounts due on the Notes upon any
acceleration resulting from such Event of Default. In such case, the Company
would remain liable for such payments.
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Note is registered as the absolute owner
thereof (whether or not such Note may be overdue) for the purpose of making
payment and for all other purposes.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the law of the State of New York.
REGARDING THE TRUSTEE
The Chase Manhattan Bank, an affiliate of Chase Securities Inc., is a
lender to the Company under the Revolving Credit Facility and will receive a
portion of the amounts repaid under such facility with the proceeds of the
offering. Pursuant to the Trust Indenture Act, upon the occurrence of a default,
The Chase Manhattan Bank will be required to resign as Trustee within 90 days of
such default unless it is curedor waived.
VALIDITY OF THE NOTES
The validity of the Notes offered hereby will be passed upon for the
Company by Simpson Thacher & Bartlett, New York, New York and for the
Underwriters by Sullivan & Cromwell, New York, New York.
EXPERTS
The consolidated financial statements and the related financial statement
schedule of the Company as of December 31, 1997 and for each of the three years
in the period ended December 31, 1997, incorporated by reference in this
Registration Statement have been incorporated herein in reliance on the reports
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of that firm as experts in auditing and accounting.
31
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amount of the Notes set forth opposite its name below:
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
----------- ------------
Goldman, Sachs & Co. ............................... $
Chase Securities Inc. ..............................
------------
Total ............................................ $225,000,000
============
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes if any are
taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus and in part to certain securities dealers at such price less a
concession of % of the principal amount of the Notes. The Underwriters may
allow, and such dealers may reallow, a concession not to exceed % of the
principal amount of the Notes to certain brokers and dealers. After the Notes
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
In connection with the offering, the Underwriters may purchase and sell the
Notes in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover short positions created by the
Underwriters in connection with the offering. Stabilizing transactions consist
of certain bids or purchases for the purpose of preventing or retarding a
decline in the market price of the Notes and short positions created by the
Underwriters involve the sale by the Underwriters of a greater number of Notes
than they are required to purchase from the Company in the offering. The
Underwriters also may impose a penalty bid, whereby selling concessions allowed
to broker-dealers in respect of the Notes sold in the offering may be reclaimed
by the Underwriters if such Notes are repurchased by the Underwriters in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of Notes, which may be higher than the
price that might otherwise prevail in the open market, and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
in the over-the-counter market or otherwise.
Certain of the Underwriters and their affiliates maintain ongoing business
relationships with the Company and in connection therewith may provide
investment banking, commercial banking and advisory services. The Chase
Manhattan Bank, an affiliate of Chase Securities Inc., is a lender to the
Company under the Revolving Credit Facility and will receive a portion of the
amounts repaid under such facility with the proceeds of the offering. Because
more than 10% of the proceeds of the offering will be paid to affiliates of a
member of the National Association of Securities Dealers, Inc. ("NASD") who are
participating in the offering, the offering is being made pursuant to Rule
2710(c)(8) of the Conduct Rules of the NASD.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
U-1
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------
TABLE OF CONTENTS
PAGE
----
The Company .................................................... 3
Use of Proceeds ................................................ 10
Capitalization ................................................. 11
Selected Financial Data and Pro Forma Information .............. 12
Selected Historical and Pro Forma Financial Data ............... 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................... 15
Management ..................................................... 20
Description of the Notes ....................................... 23
Validity of the Notes .......................................... 31
Experts ........................................................ 31
Underwriting ................................................... U-1
================================================================================
================================================================================
$225,000,000
NIELSEN MEDIA RESEARCH, INC.
___% NOTES DUE
,
----------
[LOGO]
----------
GOLDMAN, SACHS & CO.
CHASE SECURITIES INC.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Registration Fee .......................................... $ 66,375
Fees and Expenses of Trustee and its Counsel .............. 11,000
Printing .................................................. 50,000
Fees of Accountants ....................................... 50,000
Blue Sky and Legal Investment Fees and Expenses ........... 10,000
Legal Fees ................................................ 125,000
Rating Agency Fees ........................................ 150,000
Miscellaneous ............................................. 25,000
--------
$487,375
========
- ----------
* All amounts, other than the registration fee, are estimated and are subject to
future contingencies.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Sixth of the Company's Restated Certificate of Incorporation
provides for indemnification of officers, directors and others to the extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware. The Company maintains insurance policies under which officers,
directors, and others (including officers and directors of the Company) may be
indemnified against certain losses arising from certain claims, including claims
under the Securities Act of 1933.
ITEM 16. EXHIBITS.
See Index to Exhibits on page II-4.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
II-1
<PAGE>
Provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to section
13 or 15(d) of the 1934 Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the 1933
Act, each filing of the Registrant's annual reports pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
The Registrant hereby further undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of said Registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by a registrant of expenses incurred or paid by a director, officer
or controlling person of such registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been entitled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York on this 22nd day of
July, 1998.
Nielsen Media Research, Inc.
By:/s/ STEPHEN J. BOATTI
----------------------------
Stephen J. Boatti
Senior Vice President and
Chief Legal Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 22nd day of July, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ JOHN A. DIMLING* President, Chief Executive Officer and Director
------------------------------------------ (Principal Executive Officer)
(JOHN A. DIMLING)
/s/ THOMAS W. YOUNG* Executive Vice President and Chief Financial Officer
------------------------------------------ (Principal Financial Officer)
(THOMAS W. YOUNG)
/s/ STUART J. GOLDSHEIN* Vice President and Controller
------------------------------------------ (Principal Accounting Officer)
(STUART J. GOLDSHEIN)
/s/ WILLIAM G. JACOBI* Director
------------------------------------------
(WILLIAM J. JACOBI)
/s/ M. BERNARD PUCKETT* Director
------------------------------------------
(M.BERNARD PUCKETT)
/s/ ROBERT E. WEISSMAN* Director
------------------------------------------
(ROBERT E. WEISSMAN)
/s/ JAMES R. CRAIGIE* Director
------------------------------------------
(JAMES R. CRAIGIE)
/s/ PETER A. LUND* Director
------------------------------------------
(PETER A. LUND)
/s/ MICHAEL D. MOORE* Director
------------------------------------------
(MICHAEL D. MOORE)
*By STEPHEN J. BOATTI As Attorney-in-Fact
------------------------------------------
(STEPHEN J. BOATTI)
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1* -- Form of Underwriting Agreement.
3 -- Articles of Incorporation and By-laws:
.1 Restated Certificate of Incorporation of Cognizant Corporation dated
October 7, 1996 (incorporated by reference to Exhibit 3.1 to
Registrant's Registration Statement on Form 10 filed October 7,
1996, file number 001-12275).
.2 Amended and Restated By-laws of Registrant (incorporated by
reference to Exhibit 3.2 to Registrant's Registration Statement on
Form 10 filed October 7, 1996, file number 001-12275).
.3 Certificate of Ownership and Merger Merging Nielsen Media Research,
Inc. into Cognizant Corporation filed June 30, 1998 with the
Secretary of State of the State of Delaware.
4
.1* -- Indenture dated as of between the Company and The Chase
Manhattan Bank, as Trustee, Registrar and Paying Agent.
.2* Form of Registered Security (contained as part of Exhibit 4(a)).
5* -- Opinion of Simpson Thacher & Bartlett.
10 -- Material Contracts:
.1 Distribution Agreement among Cognizant Corporation, The Dun &
Bradstreet Corporation and ACNielsen Corporation dated as of October
28, 1996 (incorporated by reference to Exhibit 10.1 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996,
filed March 27, 1997, file number 001-12275).
.2 Tax Allocation Agreement among Cognizant Corporation, The Dun &
Bradstreet Corporation and ACNielsen Corporation dated as of October
28, 1996 (incorporated by reference to Exhibit 10.2 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996,
filed March 27, 1997, file number 001-12275).
.3 Employee Benefits Agreement among Cognizant Corporation, The Dun &
Bradstreet Corporation and ACNielsen Corporation dated as of October
28, 1996 (incorporated by reference to Exhibit 10.3 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996,
filed March 27, 1997, file number 001-12275).
.4 Indemnity and Joint Defense Agreement among Cognizant Corporation,
The Dun & Bradstreet Corporation and ACNielsen Corporation dated as
of October 28, 1996 (incorporated by reference to Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1996, filed March 27, 1997, file number 001-12275).
.5 TAM Master Agreement between Cognizant Corporation and ACNielsen
Corporation dated as of October 28, 1996 (incorporated by reference
to Exhibit 10.5 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996, filed March 27, 1997, file number
001-12275).
.6 Intellectual Property Agreement among Cognizant Corporation, The Dun
& Bradstreet Corporation and ACNielsen Corporation dated as of
October 28, 1996 (incorporated by reference to Exhibit 10.6 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1996, filed March 27, 1997, file number 001-12275).
.7 1996 Cognizant Corporation Non-Employee Directors Stock Incentive
Plan, as adopted effective November 1, 1996 (incorporated by
reference to Exhibit 10.7 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996, filed March 27, 1997, file
number 001-12275)**.
II-4
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
.8 1996 Cognizant Corporation Non-Employee Directors' Deferred
Compensation Plan, as adopted effective October 15, 1996
(incorporated by reference to Exhibit 10.8 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996, filed
March 27, 1997, file number 001-12275)**.
.9 1996 Cognizant Corporation Key Employees' Stock Incentive Plan, as
amended December 16, 1997 (incorporated by reference to Exhibit 10.9
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997, filed March 18, 1998, file number 001-12275)**.
.10 1996 Cognizant Corporation Replacement Plan for Certain Employees
Holding the Dun & Bradstreet Corporation Equity-Based Awards, as
adopted effective November 1, 1996 (incorporated by reference
to Exhibit 10.10 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996, filed March 27, 1997, file number
001-12275)**.
.11 1996 Cognizant Corporation Replacement Plan for Certain Employees
Holding I.M.S. International, Inc. Stock Options, as adopted
November 1, 1996 (incorporated by reference to Exhibit 10.11 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1996, filed March 27, 1997, file number 001-12275)**.
.12 Form of Non-Employee Directors' Stock Option Agreement (incorporated
by reference to Exhibit 10.12 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, filed March 27, 1997,
file number 001-12275)**.
.13 Form of Non-Employee Directors' Restricted Stock Agreement
(incorporated by reference to Exhibit 10.13 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996, filed
March 27, 1997, file number 001-12275)**.
.14 Forms of Stock Option Agreement (incorporated by reference to
Exhibit 10.14 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996, filed March 27, 1997, file number
001-12275)**.
.15 Forms of Purchased Option Agreement (incorporated by reference to
Exhibit 10.15 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996, filed March 27, 1997, file number
001-12275)**.
.16 Forms of Limited Stock Appreciation Right Agreement (incorporated by
reference to Exhibit 10.16 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, filed March 27, 1997,
file number 001-12275)**.
.17 Forms of Change-in-Control Agreement for Certain Executives of
Cognizant Corporation, as adopted October 15, 1996 (incorporated by
reference to Exhibit 10.17 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, filed March 27, 1997,
file number 001-12275)**.
.18 Cognizant Corporation Executive Transition Plan, as adopted
effective November 1, 1996 (incorporated by reference to Exhibit
10.18 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, filed March 27, 1997, file number 001-12275)**.
.19 Cognizant Corporation Executive Annual Incentive Plan, as adopted
effective January 1, 1997 (incorporated by reference to Exhibit
10.19 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, filed March 27, 1996, file number 001-12275)**.
.20 Cognizant Corporation Supplement Executive Retirement Plan, as
adopted effective November 1, 1996 (incorporated by reference to
Exhibit 10.20 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996, filed March 27, 1997, file number
001-12275)**.
.21 Rights Agreement dated as of October 15, 1996 between Cognizant
Corporation and First Chicago Trust Company of New York
(incorporated by reference to Exhibit 1 to Registrant's Current
Report on Form 8-K filed October 15, 1996, file number 001-12275).
II-5
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
.22 Cognizant Corporation Retirement Excess Plan, as adopted effective
January 1, 1997 (incorporated by reference to Exhibit 10.22 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed May 13, 1997, file number 001-12275)**.
.23 Cognizant Corporation Savings Equalization Plan, as adopted
effective November 1, 1996 (incorporated by reference to Exhibit
10.22 to Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, filed May 13, 1997, file number 001-12275)**.
.24 Severance Agreement and Release between Cognizant Corporation and
Dennis G. Sisco dated as of February 28, 1997 (incorporated by
reference to Exhibit 10.24 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, filed November 14,
1997, file number 001-12275).
12.1 -- Statement re: Computation of Ratios of Earnings to Fixed Charges.
21 -- List of Active Subsidiaries as of July 1, 1998.
23
.1 -- Consent of PricewaterhouseCoopers LLP.
.2* -- Consent of Simpson Thacher & Bartlett (included in Exhibit 5).
24 -- Powers of Attorney.
25* -- Form T-1 Statement of Eligibility and Qualifications under the
Trust Indenture Act of The Chase Manhattan Bank.
- ----------
* To be filed by amendment.
** Management contract or compensatory plan or arrangement.
II-6
Exhibit 3.3
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
NIELSEN MEDIA RESEARCH, INC.
INTO
COGNIZANT CORPORATION
Cognizant Corporation, a corporation organized and existing under
the laws of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Corporation was incorporated on January 2, 1996,
pursuant to the General Corporation Law of the State of Delaware (the "DGCL").
SECOND: That the Corporation owns all of the outstanding shares of
the Common Stock, par value $1.00 per share, of Nielsen Media Research, Inc., a
corporation incorporated on October 1, 1996 pursuant to the DGCL.
THIRD: That the Corporation, by the following resolutions of its
Board of Directors, duly adopted at a meeting of the Board of Directors on June
15, 1998, determined to merge into itself Nielsen Media Research, Inc. (the
"Merger"):
RESOLVED, that the Corporation's wholly-owned subsidiary, Nielsen
Media Research, Inc., a Delaware corporation, merge with
and into the Corporation pursuant to Section 253 of the
DGCL, as set forth in the Certificate of Ownership and
Merger (the "NMR Certificate of Merger") required to be
filed with the Secretary of State of the State of
Delaware; and be it further
RESOLVED, that the NMR Certificate of Merger and the transactions
contemplated thereby, be, and each of them hereby is, in
all respects authorized and approved, and the officers
of the Corporation be, and each of them hereby is,
authorized to execute and file on behalf of the
Corporation the NMR Certificate of Merger in the form as
the officer or officers executing the NMR Certificate of
Merger may deem necessary or appropriate; and be it
further
RESOLVED, that the merger shall be effective upon the date of
filing of the NMR Certificate of Merger merging Nielsen
Media Research, Inc. into the Corporation with the
Secretary of State of the State of Delaware or such
other date and time as are set forth in the NMR
Certificate of Merger; and be it further
<PAGE>
2
RESOLVED, that the surviving corporation of the merger shall amend
its name from "Cognizant Corporation" to "Nielsen Media
Research, Inc." and be it further
FOURTH: The surviving corporation shall be the Corporation and shall
amend its name from "Cognizant Corporation" to "Nielsen Media Research, Inc."
FIFTH: The Merger shall be effective at 5:30 p.m., Eastern Daylight
Time, on June 30, 1998.
SIXTH: Anything herein or elsewhere to the contrary notwithstanding,
this merger may be amended or terminated and abandoned by the Board of Directors
of the Corporation at any time prior to the filing of this Certificate of
Ownership and Merger with the Secretary of State.
<PAGE>
3
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be signed by Kenneth Siegel, its Senior Vice President, General Counsel and
Secretary and attested by Robin Nance on June 30, 1998.
COGNIZANT CORPORATION
By: /s/ Kenneth S. Siegel
-----------------------------------------
Name: Kenneth S. Siegel
Title: Senior Vice President, General Counsel
and Secretary
Attest:
By: /s/ Robin Y. Nance
-----------------------------------
Name: Robin Y. Nance
Title: Assistant Secretary
EXHIBIT 12.1
NIELSEN MEDIA RESEARCH. INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------
1998 1998 1997
--------- ------- -------
(PROFORMA)
<S> <C> <C> <C>
Pre-tax income from continuing operations ........................................ $19.402 $24.502 $21.910
------- ------- -------
Fixed charges: Interest expense and amortization of debt
discount and premium on all indebtedness ........................................ 5.100 0.000 0.000
Rentals:
Buildings ....................................................................... 0.791 0.791 0.738
Autos ........................................................................... 0.187 0.187 0.206
Office and other equipment ...................................................... 0.167 0.167 0.170
------- ------- -------
Total fixed charges .............................................................. 6.245 1.145 1.114
------- ------- -------
Earnings before income taxes and fixed charges ................................... $25.647 $25.647 $23.024
======= ======= =======
Ratio of earnings to fixed charges (A) ........................................... 4.107 22.398 20.665
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1997 1997 1996 1995 1994 1993
---------- ------- ------- ------- ------- -------
(PROFORMA)
<S> <C> <C> <C> <C> <C> <C>
Pre-tax income from continuing
operations .................................. $69.861 $90.261 $81.961 $69.568 $51.922 $33.893
------- ------- ------- ------- ------- -------
Fixed charges: Interest expense and
amortization of debt discount
and premium on all indebtedness ............. 20.400 0.000 0.000 0.000 0.000 0.000
Rentals:
Buildings ................................... 2.952 2.952 2.944 2.976 2.930 2.930
Autos ....................................... 0.826 0.826 0.596 0.527 0.477 0.420
Office and other equipment .................. 0.681 0.681 0.643 0.865 0.899 0.932
------- ------- ------- ------- ------- -------
Total fixed charges .......................... 24.859 4.459 4.183 4.368 4.306 4.282
------- ------- ------- ------- ------- -------
Earnings before income taxes
and fixed charges ........................... $94.720 $94.720 $86.144 $73.936 $56.228 $38.175
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges (A) ....... 3.810 21.243 20.593 16.927 13.057 8.916
</TABLE>
- ----------
(A) For the purpose of determining the ratio of earnings to fixed charges,
earnings include pre-tax income plus fixed charges (excluding capitalized
interest). Fixed charges consist of interest on all indebtedness (including
capitalized interest) plus that portion of operating lease rentals
representative of the interest factor (deemed to be one-third of operating
lease rentals). The Company's historical statements do not reflect the $300
million of indebtedness incurred in connection with the Distribution and,
accordingly, the historical ratios of earnings to fixed charges do not
reflect any interest for this indebtedness.
Exhibit 21
NIELSEN MEDIA RESEARCH, INC.
Active Subsidiaries as of July 1, 1998
Jurisdiction of
Name Incorporation % Ownership
- ---- ------------- -----------
CZT/ACN Trademarks, L.L.C. Delaware 50%
Nielsen Media Research Ltd. Nova Scotia 100%
NMR Investing I, Inc. Delaware 100%
NMR Licensing Associates, L.P. Delaware 78.53%
Athenian Leasing Corporation Delaware 100%
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our reports dated March 30, 1998 on the consolidated financial
statements and financial statement schedule of Nielsen Media Research, Inc. as
of December 31, 1997 and 1996 and for each year in the three year period ended
December 31, 1997, which reports are included in the Information Statement dated
June 22, 1998 and incorporated by reference in the Current Report on Form 8-K
dated June 30, 1998. We also consent to the reference to us under the heading
"Experts" in the Registration Statement.
PricewaterhouseCoopers LLP
New York, New York
July 21, 1998
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 8th day of July, 1998.
/s/ John A. Dimling
-----------------------------------
Name: John A. Dimling
<PAGE>
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 8th day of July, 1998.
/s/ William G. Jacobi
-----------------------------------
Name: William G. Jacobi
<PAGE>
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 8th day of July, 1998.
/s/ M. Bernard Puckett
-----------------------------------
Name: M. Bernard Puckett
<PAGE>
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 8th day of July, 1998.
/s/ Robert E. Weissman
-----------------------------------
Name: Robert E. Weissman
<PAGE>
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 8th day of July, 1998.
/s/ James R. Craigie
-----------------------------------
Name: James R. Craigie
<PAGE>
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 8th day of July, 1998.
/s/ Peter A. Lund
-----------------------------------
Name: Peter A. Lund
<PAGE>
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 8th day of July, 1998.
/s/ Michael D. Moore
-----------------------------------
Name: Michael D. Moore
<PAGE>
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 21st day of July, 1998.
/s/ Thomas W. Young
-----------------------------------
Name: Thomas W. Young
<PAGE>
Exhibit 24
NIELSEN MEDIA RESEARCH, INC.
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned constitutes
and appoints John A. Dimling, Thomas W. Young and Stephen J. Boatti, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Nielsen Media Research, Inc.
registration statements and amendments thereto (including post-effective
amendments) relating to the issuance or guarantee of an aggregate of up to
$275,000,000 in principal amount of debt securities, and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney this 21st day of July, 1998.
/s/ Stuart J. Goldshein
-----------------------------------
Name: Stuart J. Goldshein
