SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------- -------------------
Commission file number 001-12277
ACNIELSEN CORPORATION
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1454128
------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
177 Broad Street, Stamford, CT 06901
- - ----------------------------------------------- ----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 961-3000
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Shares Outstanding
Title of Class at October 29, 1999
------------------------------- ------------------------
Common Stock,
par value $.01 per share 57,912,463
<PAGE>
ACNIELSEN CORPORATION
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended September 30, 1999 and 1998 3
Condensed Consolidated Statements of Income (Unaudited)
Nine Months Ended September 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1999 and 1998 5
Condensed Consolidated Balance Sheets
September 30, 1999 (Unaudited) and December 31, 1998 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 21
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
ACNIELSEN CORPORATION
Condensed Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
(Amounts in thousands, except per share amounts)
Three Months Ended
September 30,
--------------------------------------------
1999 1998
----------------------- ----------------
<S> <C> <C>
Operating Revenue $381,911 $364,665
Operating Costs 188,796 177,191
Selling and Administrative Expenses 133,552 132,329
Depreciation and Amortization 20,028 22,102
Year 2000 Expenses 2,590 4,219
------------------ ----------------
Operating Income 36,945 28,824
Interest Income 1,694 2,322
Interest Expense (900) (572)
Other - Net 1,292 (50)
------------------ ----------------
Other Income - Net 2,086 1,700
Income Before Income Tax Provision 39,031 30,524
Income Tax Provision 15,612 12,821
------------------ ----------------
Net Income $23,419 $17,703
================== ================
Basic Earnings Per Share $0.40 $0.31
================== ================
================== ================
Diluted Earnings Per Share $0.39 $0.30
================== ================
================== ================
Weighted Average Number of Shares Outstanding
Basic 57,952 57,111
Diluted 60,128 59,013
<FN>
See accompanying notes to the condensed consolidated financial statements
(unaudited).
</FN>
</TABLE>
3
<PAGE>
ACNIELSEN CORPORATION
Condensed Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
(Amounts in thousands, except per share amounts)
Nine Months Ended
September 30,
--------------------------------------------
1999 1998
----------------------- ----------------
<S> <C> <C>
Operating Revenue $1,116,562 $1,036,961
Operating Costs 557,558 511,509
Selling and Administrative Expenses 408,335 395,776
Depreciation and Amortization 62,201 64,472
Year 2000 Expenses 9,956 10,256
------------------ ----------------
Operating Income 78,512 54,948
Interest Income 5,343 7,745
Interest Expense (2,583) (1,173)
Other - Net 2,540 (156)
------------------ ----------------
Other Income - Net 5,300 6,416
Income Before Income Tax Provision and Cumulative Effect
of Change in Accounting Principle 83,812 61,364
Income Tax Provision 33,525 25,774
------------------ ----------------
Income Before Cumulative Effect of Change in Accounting
Principle 50,287 35,590
Cumulative Effect to January 1, 1999, of Change in Accounting
For Costs of Start-Up Activities, Net of Income Tax Benefits
of $10,330 (20,173) -
------------------ ----------------
Net Income $30,114 $35,590
================== ================
Basic Earnings Per Share:
Income Before Cumulative Effect of Change in Accounting $0.87 $0.62
Cumulative Effect of Change in Accounting (0.35) -
------------------ ----------------
Net Income $0.52 $0.62
================== ================
Diluted Earnings Per Share:
Income Before Cumulative Effect of Change in Accounting $0.84 $0.60
Cumulative Effect of Change in Accounting (0.34) -
------------------ ----------------
Net Income $0.50 $0.60
================== ================
Weighted Average Number of Shares Outstanding
Basic 57,773 57,249
Diluted 60,203 59,436
<FN>
See accompanying notes to the condensed consolidated financial statements
(unaudited).
</FN>
</TABLE>
4
<PAGE>
ACNIELSEN CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
(Amounts in thousands)
Nine months ended September 30,
------------------------------------------
1999 1998
------------------ ------------------
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 30,114 $ 35,590
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Cumulative Effect of Change in Accounting Principle:
Costs of Start-Up Activities, Net 20,173 -
Depreciation and Amortization 62,201 64,472
Deferred Income Taxes 1,609 (378)
Payments Related to Special Charges (2,898) (20,937)
Postemployment Benefit Expense 1,275 1,971
Postemployment Benefit Payments (6,052) (10,410)
Net Decrease (Increase) in Accounts Receivable 1,933 (3,702)
Net Change in Other Working Capital Items (33,244) (10,102)
Other 3,004 (2,744)
- - ---------------------------------------------------------------------------- ------------------ ------------------
Net Cash Provided by Operating Activities 78,115 53,760
- - ----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital Expenditures (42,143) (32,453)
Additions to Computer Software (27,163) (16,834)
Payments for Acquisition of Businesses and Other Investments (24,540) (94,468)
Other (4,979) (13,084)
- - ---------------------------------------------------------------------------- ------------------ ------------------
Net Cash Used in Investing Activities (98,825) (156,839)
- - ----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Increase in Short-Term Borrowings 22,447 8,541
Treasury Stock Purchases (10,109) (23,498)
Proceeds from the Sale of Common Stock under Option Plans 12,293 7,729
Other 909 1,190
- - ---------------------------------------------------------------------------- ------------------ ------------------
Net Cash Provided by (Used in) Financing Activities 25,540 (6,038)
- - ----------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes
on Cash and Cash Equivalents (4,619) (9,148)
- - ----------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents 211 (118,265)
Cash and Cash Equivalents, Beginning of Period 100,533 205,726
- - ----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $ 100,744 $ 87,461
- - ----------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Period for Interest $ 1,815 $ 1,069
Cash Paid During the Period for Income Taxes $ 27,837 $ 24,478
Noncash Investing and Financing Activities:
Acquisition of Investment and Note Receivable in exchange for
Business Assets and Liabilities - $ 19,400
<FN>
See accompanying notes to the condensed consolidated financial statements
(unaudited).
</FN>
</TABLE>
5
<PAGE>
ACNIELSEN CORPORATION
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Amounts in thousands)
September 30, December 31,
1999 1998
(Unaudited)
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $100,744 $100,533
Accounts Receivable - Net 271,525 279,708
Other Current Assets 61,748 56,527
-------------------- ------------------
Total Current Assets 434,017 436,768
Notes Receivable and Other Investments 36,082 28,230
Property, Plant and Equipment-Net 156,286 157,664
Other Assets-Net
Prepaid Pension 65,252 62,152
Computer Software 55,719 42,588
Intangibles and Other Assets 33,826 69,889
Goodwill 329,187 328,326
-------------------- ------------------
Total Other Assets-Net 483,984 502,955
- - -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,110,369 $1,125,617
- - -----------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable $70,706 $90,931
Short-Term Debt 79,389 49,032
Accrued and Other Current Liabilities 274,557 304,596
Accrued Income Taxes 45,143 48,901
-------------------- ------------------
Total Current Liabilities 469,795 493,460
Postretirement and Postemployment Benefits 49,304 44,388
Deferred Income Taxes 55,751 55,486
Other Liabilities 29,035 44,235
- - -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 603,885 637,569
- - -----------------------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common Stock 598 589
Additional Paid-in Capital 511,025 492,365
Retained Earnings 130,943 100,829
Treasury Stock (43,590) (33,481)
Accumulated Other Comprehensive Income (Loss):
Cumulative Translation Adjustment (93,208) (72,254)
Unrealized Gains on Investments, Net 35 -
Fair Market Value of Forward Exchange Contracts 681 -
-------------------- ------------------
Total Shareholders' Equity 506,484 488,048
- - -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,110,369 $1,125,617
- - -----------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to the condensed consolidated financial statements
(unaudited).
</FN>
</TABLE>
6
<PAGE>
ACNIELSEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in
thousands, except per share data) (Unaudited)
Note 1 - Interim Consolidated Financial Statements
These interim consolidated financial statements have been prepared in accordance
with the instructions to Form 10-Q and should be read in conjunction with the
consolidated financial statements and related notes in the ACNielsen Corporation
(the "Company") 1998 Annual Report on Form 10-K. In the opinion of management,
all adjustments (which include only normal recurring adjustments), considered
necessary for a fair presentation of financial position, results of operations
and cash flows at the dates and for the periods presented have been included.
Certain prior year amounts have been reclassified to conform with the 1999
presentation.
Note 2 - New Accounting Pronouncements
The Company adopted Statement of Position ("SOP") 98-5, "Reporting on the Costs
of Start-Up Activities" effective January 1, 1999. SOP 98-5 requires that costs
of start-up activities be expensed as incurred. Prior to the adoption of the new
standard, the Company capitalized certain one-time costs related to introducing
new services and conducting business in new geographic areas. The cumulative
effect of adopting SOP 98-5 resulted in a charge in the first quarter of 1999 of
$20,173, net of income tax benefits of $10,330 or $0.34 per diluted share.
The Company also adopted SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133") effective January 1, 1999. The statement
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement. At December 31, 1998, the unrealized loss on
foreign exchange forward contracts was not material. At September 30, 1999, the
Company had $12,395 of foreign currency forward contracts outstanding, which
mature on various dates over the next three months. The net unrealized gain on
the contracts that qualify for hedge accounting was credited to other
comprehensive income and totaled $681.
Adoption of the new accounting policies described above is not expected to have
a material impact on the Company's future results of operations.
Note 3 - Acquisitions
On June 30, 1999, the Company acquired the remaining 55% interest it did not
already own in Market Decisions, a business that provides controlled market and
in-store testing of new and established consumer products in the United States.
The purchase price was comprised of an initial cash payment of $3,943 and a
deferred payment due in the year 2000, which will not be less than $3,625 or
more than $6,375, depending on the achievement of certain operating goals. The
excess of the guaranteed purchase price and the Company's prior equity
investment in Market Decisions, over the fair value of the identifiable net
assets at the date of acquisition amounted to $10,703, has been recorded as
goodwill, and will be amortized over forty years.
7
<PAGE>
On June 30, 1998, the Company acquired BBI Marketing Services, Inc. ("ACNielsen
BASES"). The final purchase price was $70,448 (exclusive of payments contingent
on achieving future operating goals), including direct acquisition and
integration costs totaling $6,575. Additionally, in the third quarter of 1999,
the Company made a contingent payment totaling $792. The direct acquisition and
integration costs consist of $830 for severance, $2,380 for licensee termination
fees, and $3,365 for other costs, primarily investment banking, legal and
accounting fees. These costs are incremental and the integration costs are a
direct result of the formal plan to exit certain activities as part of the
overall integration effort. The excess of the purchase price over the fair value
of identifiable net assets (goodwill) totals $63,332 and is being amortized over
forty years. As of September 30, 1999, the balance of accrued acquisition and
integration costs totaled $4,684 and related primarily to licensee termination
fees and severance. These amounts are scheduled per contractual terms to be
disbursed in 1999 and 2000.
Note 4 - ACNielsen eRatings.com and Related Investment
On September 22, 1999, the Company announced the formation of a venture to
launch a global service for tracking audiences, advertising and user activity on
the Internet. The Company has an 80.1% ownership interest in the venture, with
NetRatings, Inc. owning the remainder. The venture, known as ACNielsen
eRatings.com, is expected to operate in all major geographic regions worldwide
other than the United States and Canada and it plans to roll out the service
initially in five countries by the end of the first quarter of 2000. ACNielsen
plans to spend approximately $50 million over the next two years to roll out the
service.
In addition, the Company purchased 3,992,455 shares of preferred stock of
NetRatings, Inc. for $12.5 million. This investment is classified as "other
investments" in the consolidated balance sheet.
Note 5 - Special Charges
In the fourth quarter of 1997, the Company recorded a special charge of $36,000.
The charge consisted of costs to execute plans in Asia Pacific, Europe, and
Latin America, to achieve long-term productivity improvements, rationalize the
Company's product lines, and reduce costs. The actions commenced in 1998 and
will be completed in 1999. The following table recaps the reserve balance
activity by major cost category:
<TABLE>
<CAPTION>
Category Dec. 31, 1998 Cash Payments September 30, 1999
- - -------- ------------- ------------- ------------------
<S> <C> <C> <C>
Rationalize Product Lines $ 413 (413) $ 0
Workforce Reductions 3,103 (679) 2,424
Facilities/Real Estate 248 (248) 0
------- ------- ------
Total $ 3,764 (1,340) $ 2,424
======= ======= =======
</TABLE>
In addition, the Company paid $1,558 during the nine months ended September 30,
1999 primarily related to a long-term lease obligation, which was accrued as
part of a special charge recorded in 1995.
8
<PAGE>
Note 6 - Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share (EPS) for the respective periods:
<TABLE>
<CAPTION>
Three months ended September 30 1999 1998
- - -------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Weighted-average number of shares outstanding for basic EPS 57,952 57,111
Dilutive effect of shares issuable as of period-end under stock option plans 2,176 1,902
------ ------
Weighted-average number of shares and share equivalents for diluted EPS 60,128 59,013
======= ========
Net Income $ 23,419 $ 17,703
======= ========
Basic Earnings Per Share $ 0.40 $ 0.31
====== ======
Diluted Earnings Per Share $ 0.39 $ 0.30
====== ======
</TABLE>
<TABLE>
<CAPTION>
Nine months ended September 30 1999 1998
- - -------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Weighted-average number of shares outstanding for basic EPS 57,773 57,249
Dilutive effect of shares issuable as of period-end under stock option plans 2,430 2,187
------ ------
Weighted-average number of shares and share equivalents for diluted EPS 60,203 59,436
======= ========
Income Before Cumulative Effect of Change in Accounting Principle $50,287 $ 35,590
Cumulative Effect to January 1, 1999, of Change in Accounting For Costs of
Start-Up Activities, Net of Income Tax Benefits of $10,330 (20,173) -
-------- --------
Net Income $ 30,114 $ 35,590
======== ========
Basic Earnings Per Share:
Income Before Cumulative Effect of Change in Accounting $ 0.87 $ 0.62
Cumulative Effect of Change in Accounting (0.35) -
------- ------
Net Income $ 0.52 $ 0.62
====== ======
Diluted Earnings Per Share:
Income Before Cumulative Effect of Change in Accounting $ 0.84 $ 0.60
Cumulative Effect of Change in Accounting (0.34) -
------- ------
Net Income $ 0.50 $ 0.60
====== ======
</TABLE>
9
<PAGE>
Note 7 - Other Comprehensive Income
The following table sets forth the Company's comprehensive income, reported net
of tax, for the respective periods:
<TABLE>
<CAPTION>
Three months ended September 30 1999 1998
- - --------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Net Income $ 23,419 $ 17,703
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation Adjustments (6,254) (12,240)
Unrealized Gains on Investments, Net 35 -
Fair Market Value of Forward Exchange Contracts (671) -
-------- --------
Comprehensive Income $ 16,529 $ 5,463
========= ========
</TABLE>
<TABLE>
<CAPTION>
Nine months ended September 30 1999 1998
- - --------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Net Income $ 30,114 $ 35,590
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation Adjustments (20,954) (25,909)
Unrealized Gains on Investments, Net 35 -
Fair Market Value of Forward Exchange Contracts 681 -
-------- --------
Comprehensive Income $ 9,876 $ 9,681
======== ========
</TABLE>
Note 8 - Treasury Stock
The terms of the Indemnity and Joint Defense Agreement (see Note 9 below) limit
the Company's ability to make certain payments ("Restricted Payments"),
including payments for dividends and stock repurchases. Pursuant to such
limitation, the aggregate amount of all Restricted Payments made by the Company
cannot exceed the sum of $15,000 and 20% of the Company's cumulative net
earnings, as defined, from November 1, 1996. The Board of Directors has
authorized the Company to repurchase ACNielsen common stock up to the amount
permitted by the Indemnity and Joint Defense Agreement. During the first nine
months of 1999, the Company repurchased 388,000 shares of its common stock for a
total of $10,109.
Note 9- 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 The Dun & Bradstreet Corporation ("Old D&B"), A.C. Nielsen Company
which is a subsidiary of the Company ("ACNielsenCo"), and I.M.S. International,
Inc. ("IMS"), formerly a subsidiary of Cognizant Corporation ("Cognizant") and a
predecessor of IMS Health Incorporated (the "IRI Action").
The complaint alleges various violations of the United States antitrust laws,
including alleged violations of Sections 1 and 2 of the Sherman Act. The
complaint also alleges a claim of tortious interference with a contract and a
claim of tortious interference with a prospective business relationship. These
latter claims relate to the acquisition by defendants of Survey Research Group
Limited ("SRG"). IRI alleges that SRG violated an alleged agreement with IRI
when it agreed to be acquired by defendants and that defendants induced SRG to
breach that agreement.
10
<PAGE>
IRI's complaint alleges damages in excess of $350,000, which amount IRI has
asked to be trebled under the antitrust laws. IRI also seeks punitive damages in
an unspecified amount.
By notice of motion dated October 15, 1996, defendants moved for an order
dismissing all claims in the complaint. On May 6, 1997 the United States
District Court for the Southern District of New York issued a decision on the
motion to dismiss. The Court dismissed IRI's claim of attempted monopolization
in the United States with leave to replead within sixty days. The Court denied
defendants' motion with respect to the remaining claims in the complaint.
On June 3, 1997, defendants filed an answer and counterclaims. Defendants denied
all material allegations of the complaint. In addition, ACNielsenCo asserted
counterclaims against IRI alleging that IRI has made false and misleading
statements about ACNielsenCo's services and commercial activities and that such
conduct constitutes a violation of Section 43(a) of the Lanham Act and unfair
competition. ACNielsenCo seeks injunctive relief and damages.
On July 7, 1997, IRI filed an amended complaint seeking to replead the claim of
attempted monopolization in the United States, which had been dismissed by the
Court in its May 6, 1997 decision. By notice of motion dated August 18, 1997,
defendants moved for an order dismissing the amended claim. On December 1, 1997,
the Court denied defendants' motion. Discovery is currently ongoing.
In connection with the IRI Action, Old D&B, Cognizant (the former parent company
of IMS) and the Company entered into an Indemnity and Joint Defense Agreement
(the "Indemnity and Joint Defense Agreement") pursuant to which they agreed (i)
to certain arrangements allocating potential liabilities ("IRI Liabilities")
that may arise out of or in connection with the IRI Action and (ii) to conduct a
joint defense of such action. In particular, the Indemnity and Joint Defense
Agreement provides that the Company will assume exclusive liability for IRI
Liabilities up to a maximum amount to be calculated at the time such
liabilities, if any, become payable (the "ACN Maximum Amount"), and that
Cognizant and old D&B will share liability equally for any amounts in excess of
the ACN Maximum Amount. The ACN Maximum Amount will be determined by an
investment banking firm as the maximum amount which the Company is able to pay
after giving effect to (i) any plan submitted by such investment bank which is
designed to maximize the claims paying ability of the Company without impairing
the investment banking firm's ability to deliver a viability opinion (but which
will not require any action requiring stockholder approval), and (ii) payment of
related fees and expenses. For these purposes, financial viability means the
ability of the Company, after giving effect to such plan, the payment of related
fees and expenses and the payment of the ACN Maximum Amount, to pay its debts as
they become due and to finance the current and anticipated operating and capital
requirements of its business, as reconstituted by such plan, for two years from
the date any such plan is expected to be implemented.
The Indemnity and Joint Defense Agreement also imposes certain restrictions on
the payment of cash dividends and the ability of the Company to purchase its
stock.
11
<PAGE>
In June 1998, (i) Old D&B changed its name to R.H. Donnelley Corporation and
spun off (the "D&B Spin") a company now named The Dun & Bradstreet Corporation
("New D&B"), and (ii) Cognizant changed its name to Nielsen Media Research, Inc.
("NMR") and spun off (the "Cognizant Spin") a company named IMS Health
Incorporated ("IMS Health"). Pursuant to the terms of a Distribution Agreement
dated as of October 28, 1996 among the Company, Old D&B and Cognizant, New D&B
was required as a condition to the D&B Spin, and IMS Health was required as a
condition to the Cognizant Spin, to undertake to the Company to be jointly and
severally liable with its former parent company for, among other things, the
obligations of such former parent company under the Indemnity and Joint Defense
Agreement. Each of New D&B and IMS Health did provide such undertaking to the
Company.
Management of ACNielsen is unable to predict at this time the final outcome of
the IRI Action or whether its resolution could materially affect the Company's
results of operations, cash flows or financial position.
The Company and its subsidiaries are also involved in other legal proceedings
and litigation arising in the ordinary course of business. In the opinion of
management, the outcome of such current legal proceedings, claims and
litigation, if decided adversely, could have a material effect on quarterly or
annual operating results or cash flows when resolved in a future period.
However, in the opinion of management, these matters will not materially affect
the Company's consolidated financial position.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollar amounts in thousands, except per share data)
Quarter ended September 30, 1999 compared with quarter ended September 30, 1998
Diluted earnings per share rose 30%, to $0.39 compared with $.30 per share in
the prior year. Net income increased 32.3% to $23,419 from $17,703 in 1998.
Revenue for the quarter ended September 30, 1999 was $381,911, an increase of
4.7% from the third quarter of 1998. Excluding a negative foreign currency
translation impact of $7,478, revenue advanced 6.8%.
Year 2000 expense for the quarter ended September 30, 1999 was $2,590, compared
with $4,219 in the third quarter of 1998.
Operating income increased 28.2%, or $8,121 to $36,945, including $2,590 in
expenses for Year 2000 software modifications and a negative currency
translation impact of $1,367. Strong revenue growth in the U.S. and sharply
higher profits in Asia Pacific drove the substantial increase.
Other income-net was $2,086, compared with $1,700 in the third quarter of 1998,
primarily reflecting increased gains from foreign exchange partly offset by
higher interest expense on higher borrowings and lower interest income.
12
<PAGE>
The Company's operating results by geographic region for the quarters ended
September 30, 1999 and 1998 are set forth in the table below.
<TABLE>
<CAPTION>
Operating Revenue Operating Income
------------------------------ ---------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
United States $124,733 $109,160 $17,073 $12,478
Canada/ Latin America 45,232 48,018 8,254 9,562
------ ------ ------ ------
Total Americas 169,965 157,178 25,327 22,040
Europe, Middle East & Africa 142,264 143,919 7,429 7,425
Asia Pacific 69,682 63,568 6,779 3,578
------ ------ ----- -----
Subtotal 381,911 364,665 39,535 33,043
Year 2000 Costs - - (2,590) (4,219)
-------- -------- ------- -------
Total $381,911 $364,665 $36,945 $28,824
======== ======== ======= =======
</TABLE>
The following discusses results on a geographic basis:
Total Americas revenue increased 8.1% to $169,965 from $157,178. Excluding the
negative impact of currency translation of $6,215, which was primarily due to
weak currency translation in Latin America, revenue grew 12.1%, reflecting solid
growth in the U.S. Operating income was $25,327, a $3,287 or 14.9% improvement
over the prior year. Excluding a $1,827 negative foreign currency translation
impact, due primarily to currency devaluation in Latin America, operating income
increased 23.2%.
In the United States, revenue grew 14.3% to $124,733, driven by double-digit
growth in account-level services, incremental revenue from new clients, and
higher revenue from ACNielsen BASES, the company's simulated test-marketing
business. The growth also reflects newly consolidated revenue from ACNielsen
Market Decisions, in which ACNielsen increased its stake from 45% to 100% at the
beginning of the third quarter. Excluding ACNielsen Market Decisions, U.S.
revenue grew 9.4%. Operating income was $17,073, an increase of $4,595, or 36.8%
over the prior year resulting from the higher revenue.
In Canada and Latin America, reported revenue of $45,232 was down 5.8% due to
negative foreign currency translation impact of $6,217 primarily in Brazil and
other markets. Revenues advanced 7.1% in local currency, driven by higher retail
measurement sales in Brazil, Mexico, and Canada. Operating income decreased
13.7%, to $8,254, from $9,562 in 1998, as the currency devaluation in Latin
America continued to reduce operating profits. Local currency operating income
increased 5.4%. Reported revenue and operating income comparisons were also
unfavorably impacted by the absence this year of a customized research project
for the Mexican Government, included in last year's third-quarter results.
Revenue in the Europe, Middle East & Africa ("EMEA") region decreased 1.1% to
$142,264, from $143,919 in 1998. Excluding the negative impact of foreign
currency translation, revenue grew 3.3%, led by solid performances in the United
Kingdom, the Nordic countries and the Emerging Markets, along with higher
revenue in consumer panel and account-level services. EMEA's operating income
remained essentially even with the prior year, as the weak euro had a negative
impact on results. Local-currency operating income increased 6.5% for the
quarter despite investment spending in new retail measurement and consumer panel
services. Overall results were also negatively impacted by revenue and income
shortfalls in Germany, which experienced a delay in rolling out a new retail
measurement service that offers more complete market coverage.
13
<PAGE>
Asia Pacific's revenue increased 9.6% to $69,682 from $63,568 and 1.4% in local
currency. Local-currency revenue growth was reported in Southeast Asia, Korea
and Australia, while across the region, revenue was higher in retail measurement
and consumer panel services. Operating income reached $6,779, compared with
$3,578 reported last year, as the region continued to benefit from improved
efficiency, enhanced client service and stronger local currencies. For the
quarter, foreign currency translation had an $859 positive impact on operating
income. Excluding this impact, operating income increased 65.4%.
Nine months ended September 30, 1999 compared with nine months ended September
30, 1998
The Company reported net income of $30,114 or $0.50 per diluted share, which
included a $20,173 or $0.34 charge, reflecting the cumulative effect of a
change in accounting for costs of start-up activities (see Note 2).
Income before the cumulative effect of a change in accounting was $50,287 or
$0.84 per diluted share, a $14,697 or $0.24 per share improvement over the first
nine months of 1998. In the first nine months of 1999, income included an
after-tax negative currency translation impact of $2,892, or $0.05 per diluted
share.
Revenue for the nine months ended September 30, 1999 was $1,116,562, an increase
of 7.7% from the first nine months of 1998, reflecting continued strong growth
in the United States and the addition of ACNielsen BASES, which was acquired at
the end of last year's second quarter. Driven by solid growth in the Americas
and incremental revenue from ACNielsen BASES, revenue advanced 9.4% in local
currency.
Year 2000 expense for the nine months ended September 30, 1999 was $9,956,
compared with $10,256 in the first nine months of 1998.
Operating income was $78,512, an increase of $23,564 over 1998, despite a
negative currency translation impact of $4,820. Strong revenue growth, coupled
with improved operating efficiency across all three of the Company's regions,
drove the substantial increase.
Other income-net was $5,300, compared with $6,416 in the first nine months of
1998, primarily reflecting higher interest expense on higher borrowings and
lower interest income, partially offset by increased gains from foreign
exchange.
The Company's operating results by geographic region for the nine months ended
September 30, 1999 and 1998 are set forth in the table below.
<TABLE>
<CAPTION>
Operating Revenue Operating Income
-------------------------------- -----------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
United States $352,702 $281,656 $42,073 $27,883
Canada/ Latin America 134,379 142,913 20,349 22,310
------- ------- ------ ------
Total Americas 487,081 424,569 62,422 50,193
Europe, Middle East & Africa 432,088 421,522 13,947 12,087
Asia Pacific 197,393 190,870 12,099 2,924
------- ------- ------ -----
Subtotal 1,116,562 1,036,961 88,468 65,204
Year 2000 Costs - - (9,956) (10,256)
--------- --------- ------- -------
Total $1,116,562 $1,036,961 $78,512 $54,948
========== ========== ======= =======
</TABLE>
14
<PAGE>
The following discusses results on a geographic basis:
Total Americas revenue increased 14.7% to $487,081 from $424,569. Excluding the
negative impact of currency translation of $18,888, which was primarily due to
currency devaluation in Latin America, revenue grew 19.2%, reflecting solid
growth in the U.S. and the addition of ACNielsen BASES and ACNielsen Market
Decisions. Operating income was $62,422, a $12,229 or 24.4% improvement over the
prior year. Excluding a $5,012 negative foreign currency translation impact, due
primarily to the devaluation of currencies in Latin America, operating income
increased 34.4%.
In the United States, revenue grew 25.2% to $352,702, reflecting an increase in
retail measurement, as account-level sales increased 21%. Consumer Panel revenue
rose 11% on higher sales of syndicated products. Excluding ACNielsen BASES and
ACNielsen Market Decisions, U.S. revenue grew 9.8%. Operating income was
$42,073, an increase of $14,190, or 50.8% over the prior year. The gain
reflected strong revenue growth in retail measurement and consumer panels.
Revenue in EMEA increased 2.5% to $432,088, from $421,522 in the first nine
months of 1998, due to higher revenue in most European markets, especially the
United Kingdom, France and the Netherlands; and overall growth in consumer
panels and media measurement. Excluding the negative impact of foreign currency
translation, revenue grew 4.0%. Operating income grew 15.4% to $13,947 in 1999
from $12,087 in 1998. The increase was due to revenue growth throughout most of
the region and continued operating improvements. Local currency operating
income increased 22.8% for the nine month period.
Asia Pacific's revenue increased 3.4% to $197,393 from $190,870, helped by
firming currencies and growth in Australia, Korea and the Philippines. Local
currency revenue, however, was down slightly from the prior year, as lower
revenue in customized research offset growth in retail measurement services and
consumer panel. The region produced an operating profit of $12,099, an
improvement of $9,175 versus the prior year. The results reflect improved
quality and efficiency at ACNielsen Japan, region-wide productivity gains, and a
more profitable revenue mix.
Liquidity and Capital Resources
Nine Months Ended September 30, 1999 and 1998
Net cash provided by operating activities was $78,115 for the nine months ended
September 30, 1999, compared with $53,760 for the comparable period in 1998. The
increase of $24,355 is primarily the result of increased cash income ($12,426)
and lower payments related to special charges ($18,039), partially offset by a
change in other working capital items including increased tax payments ($3,359).
Net cash used in investing activities decreased to $98,825 for the nine months
ended September 30, 1999, compared with $156,839 for the comparable period in
1998. The decrease in cash usage was due to a decrease in payments made for the
acquisition of businesses ($69,928), offset by higher capital expenditures,
reflecting the expansion of consumer panel and television audience measurement
(TAM) services ($9,690), and higher additions to computer software ($10,329).
15
<PAGE>
Net cash provided by financing activities for the nine months-ended September
30, 1999, totaled $25,540, compared with cash used in financing activities of
$6,038 for the comparable period in 1998. The increase in cash provided of
$31,578, primarily reflected the increase in short-term borrowings ($13,906) and
a decrease in the amount of treasury stock purchases ($13,389).
During the first quarter of 1998, the Company became a partner in a joint
venture that provides media measurement services in Latin America. The joint
venture, IBOPE Media Information, offers TAM, radio audience measurement (RAM),
and advertising expenditure measurement services (AEM) in various Latin American
markets. Under the terms of the agreement, the Company received an 11% equity
interest in the joint venture and a $12,772 interest bearing note in exchange
for the Company's Latin America TAM, RAM and AEM business assets and the
assumption of certain transition liabilities in a non-cash transaction.
ACNielsen eRatings.com
As discussed in Note 4, on September 22, 1999, the Company announced the
formation of a venture to launch a global service for tracking audiences,
advertising and user activity on the Internet. The Company has an 80.1%
ownership interest in the venture, with NetRatings, Inc. owning the remainder.
ACNielsen plans to spend approximately $50 million over the next two years to
roll out the service.
Year 2000
The Year 2000 problem concerns the inability of older computer systems to
properly recognize and process date-sensitive information beyond December 31,
1999. If not corrected, businesses and other entities relying on such computer
systems are at risk for possible miscalculations or systems failures that could
cause disruptions in their business operations.
ACNielsen's business relies substantially on information technology systems ("IT
Systems") and, to a lesser degree, on other systems that contain embedded
technology ("Non-IT Systems"). As a global leader in delivering market research,
information and analysis to the consumer products and services industries,
ACNielsen uses IT Systems and Non-IT Systems (collectively, "Technology
Systems") to gather data from data suppliers, analyze such data and deliver
information products to its clients. The Company also provides software to its
clients for use in connection with the delivery and analysis of ACNielsen data.
Technology Systems are also used by the Company for its own internal operations.
Accordingly, the Year 2000 issue could arise at many stages in the Company's
supply, processing, distribution and financial chains.
The Company's State of Readiness
Over the last two years the Company has been implementing a Year 2000 readiness
program with the goals of (i) having all of its Technology Systems functioning
properly with respect to Year 2000 before January 1, 2000, and (ii) identifying
and minimizing the other business risks created by the Year 2000 issue.
Implementation of the Year 2000 readiness program is nearing completion and the
Company believes that all of its material Technology Systems are Year 2000
compliant. It also believes that its Year 2000 readiness program should
significantly reduce the adverse effects of the Year 2000 issue for the Company.
However, given the general uncertainties inherent in the Year 2000 problem
including, among other things, uncertainties as to the Year 2000 readiness of
third party suppliers and clients, it is possible that the business and results
of operations of the Company could be materially adversely affected by an
inability of the Company to conduct its business in the ordinary course for a
period of time after December 31, 1999.
16
<PAGE>
The Company's Year 2000 readiness program comprises eight principal phases,
these being (i) inventory, (ii) assessment, (iii) analysis and planning, (iv)
remediation, (v) testing, (vi) implementation, (vii) communication, and (viii)
contingency planning.
The inventory phase comprises the development of a complete list of all
components of the Company's Technology Systems that are used in the collection,
processing and delivery of ACNielsen products and services or that are used in
the administration of its general business activities. The inventory phase is
complete.
The assessment phase comprises the evaluation of each item on the inventory to
determine if it is affected by the Year 2000 problem and, if it is, to determine
the most appropriate remediation approach. There are generally four alternative
approaches: (i) renovation; (ii) retirement; (iii) re-engineering; or (iv)
replacement. The assessment phase is also complete and, based on the results of
the assessment, the Company determined that it would be required to renovate,
retire, re-engineer or replace significant portions of its Technology Systems to
make them Year 2000 compliant.
The analysis and planning phase comprises the development of detailed plans and
timetables to accomplish the required remediation actions identified during the
assessment phase and the assignment of the internal or external resources
required to achieve compliance within the planned timeframes. This phase, which
includes the prioritization of systems for remediation activities, is complete.
The remediation phase comprises the actual renovation, re-engineering,
retirement or replacement of affected systems. All major Technology Systems have
been remediated and the phase is substantially complete.
The testing phase, which follows remediation, comprises the establishment of
Year 2000 test environments to do systems and user testing of individual
components, as well as complete end-to-end system testing, of the Company's
Technology Systems. In addition, it includes testing of interfacing systems used
by certain external suppliers and clients. Testing of individual components of
the Company's Technology Systems is substantially complete. End-to-end system
testing that involves the interface with third party systems used by external
suppliers and clients is expected to continue to the Year 2000 and it may not be
feasible to test all such systems prior to the Year 2000.
The implementation phase, which follows testing, comprises the actual
implementation into the production environment of the compliant Technology
Systems. For products and services provided by the Company to clients, this
phase includes the implementation of the compliant versions of hardware,
software, and communications services into production in the client
environments. A substantial majority of the work required by this phase has been
completed. Plans for each country and business segment are in place to allow for
adequate time to achieve implementation prior to the end of 1999.
17
<PAGE>
The communication phase comprises the implementation, coordination and
management of a communications process to communicate with clients and other
third parties whose Year 2000 state of readiness could significantly affect the
Company. Several levels and types of communications are involved, including
communications with clients, vendors and other service providers. Communications
with clients include communications regarding (i) the implementation of Year
2000 compliant versions of ACNielsen software used by the client, (ii) the state
of readiness of systems used by the client to receive or analyze ACNielsen data,
and (iii) the state of readiness of ACNielsen Technology Systems that are used
to compile and deliver data to the client. Vendor communications include
communications with (i) data suppliers to assess the Year 2000 status of the
systems they use to compile and deliver data to the Company, (ii) data
processors to assess the Year 2000 status of their processing and delivery
systems, and (iii) providers of third party Technology Systems to establish
plans and timetables for the delivery of Year 2000 compliant versions of those
Technology Systems. Communications with other service providers include
communications with utilities, providers of facilities and environmental
systems, banks and other material service providers to assess their Year 2000
readiness insofar as it may affect the services they provide to the Company. The
Company has been in contact with all of its material (i) clients, (ii) data
suppliers, (iii) data processors, and (iv) third party technology vendors and,
based on the information provided by such parties, the Company currently
believes that there should be no material disruptions in the services provided
by them to the Company due to the non-Year 2000 compliance of their material
technology systems. A substantial majority of the other third parties with whom
the Company does business have also been contacted and communications efforts
will continue to the Year 2000. However, as many third parties either do not
respond to requests for information or provide incomplete information, the
Company has been unable to determine with reasonable certainty whether all of
the third parties whose Year 2000 readiness could significantly affect the
Company have achieved or will achieve Year 2000 compliance on a timely basis and
there can be no assurance that the Company will be able to obtain the
information needed to make such a determination or that all such third parties
will achieve timely compliance.
The final phase is the development of contingency and business continuation
plans for each organization and company location. Contingency plans have been
developed for all countries in which the Company has operations. These plans are
currently being tested and the Company expects that testing will continue until
the Year 2000. Although the aim of the Company's contingency plans is to ensure
the continuity of critical business functions before and after December 31,
1999, there can be no assurance that contingency plans can be developed and/or
successfully implemented to deal with all material risks.
Year 2000 Issues
As mentioned above, Year 2000 issues could arise at many stages in the
Company's supply, processing, distribution, and financial chains.
With respect to data supplies, certain data used by the Company are collected
manually. However, significant amounts of data, including all retail scanning
data and the majority of television audience measurement and consumer panel
services data, are collected and transmitted electronically to ACNielsen or to
its third party data processors. A Year 2000 risk, therefore, is that data
supplies could be disrupted due to Year 2000 problems with the Technology
Systems of data suppliers or of the Company.
Once data has been collected, it is generally transmitted electronically to
ACNielsen or third party data processors, then analyzed and processed and
finally transmitted electronically to the client. Accordingly, other Year 2000
risks include possible disruptions in data processing and transmission
capabilities. Also, certain clients use their own Technology Systems to analyze
ACNielsen data. Revenue, therefore, could be affected in the event that clients
are unable for some period of time to make normal use of the Company's products
and services. Additional Year 2000 risks include disruptions in the Company's
own internal operations, including financial and administrative systems, and in
critical services and utilities on which the Company relies, such as
electricity, telephone systems, and banking services. In this regard, as the
governmental authorities of some countries have been slow to deal with the Year
2000 issue, there is a risk that certain country infrastructures, particularly
those of less well developed countries, could fail leading to a generalized
breakdown in the ability to do business in some countries.
18
<PAGE>
The most reasonably likely worst case scenarios that the Company has identified
include lost revenues and profits due to (i) non-receipt of, or temporary delays
in receiving, scanning data from data suppliers, (ii) delays in deliveries to
clients due to data supply, processing and/or transmission problems, (iii)
non-compliance of clients' Technology Systems such that they are unable to make
normal use of the Company's products and services, and (iv) the temporary
inability to conduct business in certain countries due to a failure of critical
services, utilities or the overall infrastructure in such countries. The Company
does not currently anticipate that any such effects would be of a long-term
nature.
Costs
Incremental Year 2000 compliance costs, primarily for maintenance and system
modifications, are presently estimated to be approximately $12,000 for 1999.
Costs to acquire new software and computer systems in advance of their normal
replacement schedules are estimated to total between $12,000 and $15,000 over
1998 and 1999. The Company does not separately track internal costs that are not
related to incremental Year 2000 activities. Such costs are principally for
payroll.
The following table sets forth expenditures by category for the periods
indicated:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended Total Through
December 31, 1998 September 30, 1999 September 30,1999
----------------- ------------------ -----------------
<S> <C> <C> <C>
Incremental Y2K Expense $15,911 $9,956 $25,867
Capital expenditures for
software and systems $5,407 $6,102 $11,509
</TABLE>
Euro
The introduction of a common currency across eleven European countries, the
"Euro", is expected to have a significant impact on the European marketplace and
on the operations of a number of the Company's key clients and data suppliers.
The introduction is on a phased basis between January 1999 and January 2002, at
which date full notes and coinage in Euros will be issued and, no later than
July 1, 2002, will replace existing local currencies.
As the Company has operations in all of the affected countries, it is impacted
by the Euro's introduction. The Company has established a multi-functional,
cross-border taskforce for the purpose of preparing the Company for the
introduction of the Euro. As part of its Euro readiness efforts, the Company has
assessed the capabilities of its existing internal processes and software
systems to deal with the introduction of the Euro. Changes to internal processes
relating to accounting, billing, production and delivery systems, and supporting
software changes, required to meet the initial introduction are substantially
complete. Additional modifications will be made as the phase-in period
progresses.
19
<PAGE>
The Company is communicating with its principal data and other suppliers,
including its banks, and with its principal clients to assess both their own
level of readiness and their requirements over the transitional period and
beyond. These communications will be ongoing as the phase-in period progresses.
Current estimates of the total incremental Euro compliance costs in respect of
internal and production systems are that they will not be material.
Implementation efforts will continue in line with the phased adoption of the
Euro over the transition period, and the related costs will be expensed as
incurred. The Company has not yet developed a contingency plan.
If the Company failed to successfully address the issues raised by the Euro's
introduction, it could have a material adverse effect on the Company. However,
based on progress to date and the Company's Euro readiness program, the Company
currently does not anticipate any material adverse effects as a result of the
Euro's introduction.
Forward-Looking Statements
Certain statements contained herein are forward looking. These may be identified
by the use of forward-looking words or phrases, such as "anticipate," "believe,"
"expect", "could," "should," "planned," "estimated," "potential," "target,"
"aim" and "goal," among others. In addition, the Company may from time to time
make oral forward-looking statements. In connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, the Company
is hereby identifying important factors that could cause actual results to
differ materially from those contained in forward-looking statements made by or
on behalf of the Company. Any such statement is qualified by reference to the
following cautionary statement.
Risks and uncertainties that may affect the operations, performance, development
and results of the Company's business include: (i) the availability of retail
sources that are willing to sell data to the Company at prices acceptable to the
Company; (ii) changes in general economic or competitive conditions which impact
the Company's clients' demand for the Company's services; (iii) significant
price and service competition; (iv) rapid technological developments in the
collection, manipulation and delivery of information; (v) the Company's ability
to complete the implementation of its Year 2000 and Euro plans on a timely
basis; (vi) the likely incurrence of significant losses by ACNielsen
eRatings.com while its business is being developed, the difficulty of
forecasting its future revenues and costs and uncertainties associated with the
international development of an Internet ratings service; (vii) the impact of
foreign currency fluctuations since so much of the Company's earnings are
generated abroad; (viii) the degree of acceptance of new product introductions;
(ix) the uncertainties of litigation, including the IRI Action; as well as other
risks and uncertainties detailed from time to time in the Company's Securities
and Exchange Commission filings.
The risks and uncertainties that may affect the Company's assessment of Year
2000 issues and new European currency issues include: (i) the complexity
involved in ascertaining all situations in which Year 2000 or new European
currency issues may arise; (ii) the ability of the Company to identify, assess,
remediate, test and successfully implement all relevant computer codes and
embedded technology within the scheduled dates for completion thereof; (iii) the
ability of the Company to obtain the services of sufficient personnel to execute
the programs; (iv) possible increases in the cost of personnel required to
execute the programs; (v) delays in scheduled deliveries of new hardware and
software from third party suppliers; (vi) the receipt and reliability of
responses from suppliers, clients and others to whom compliance inquiries are
being made; (vii) the ability of material third parties to bring their affected
systems into compliance; and (viii) unforeseen events which could delay timely
implementation of the programs.
20
<PAGE>
Developments in any of the areas referred to above could cause the Company's
results to differ from results that have been or may be projected by or on
behalf of the Company. The Company cautions that the foregoing list of important
factors is not exclusive. The Company does not undertake to update any
forward-looking statement that may be made from time to time by or on behalf of
the Company.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
The Company uses foreign exchange forward contracts to hedge significant known
transactional exposures. The Company conducts its business in a wide variety of
currencies. Foreign exchange forward contracts are designated for established
and committed transactions that are expected to occur in less than one year.
Gains or losses on such contracts were not material to the consolidated
financial statements for the quarters ended September 30, 1999 and 1998. The
Company does not utilize derivative financial instruments for trading or other
speculative purposes.
The following table presents the notional amounts, fair values and average
exchange rates of the foreign exchange forward contracts outstanding at
September 30, 1999 (in thousands of U.S. dollars, except average foreign
exchange rates):
<TABLE>
<CAPTION>
Notional Fair Average Foreign
Amounts Value Exchange Rates
<S> <C> <C> <C>
Euro $8,309 $674 0.8643
Australian dollars 575 (8) 1.5792
Canadian dollars 421 (17) 1.5251
Swiss francs 314 31 1.3524
Japanese yen 248 (11) 113.9841
Danish krone 234 21 6.3794
Other 2,294 (9)
---------------------------- ------------ ----------
Total $12,395 $681
---------------------------- ------------ ----------
</TABLE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(27) Financial Data Schedule (filed electronically)
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter ended
September 30, 1999.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACNIELSEN CORPORATION
(Registrant)
Date: November 12, 1999 /s/ Robert J. Chrenc
----------------------
Robert J. Chrenc
Executive Vice President
and Chief Financial Officer
Date: November 12, 1999 /s/ Michael S. Geltzeiler
---------------------------
Michael S. Geltzeiler
Senior Vice President and Controller
22
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 100,744
<SECURITIES> 0
<RECEIVABLES> 271,525
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 434,017
<PP&E> 448,088
<DEPRECIATION> 291,802
<TOTAL-ASSETS> 1,110,369
<CURRENT-LIABILITIES> 469,795
<BONDS> 0
0
0
<COMMON> 598
<OTHER-SE> 505,886
<TOTAL-LIABILITY-AND-EQUITY> 1,110,369
<SALES> 0
<TOTAL-REVENUES> 1,116,562
<CGS> 0
<TOTAL-COSTS> 1,038,050
<OTHER-EXPENSES> (2,540)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,760)
<INCOME-PRETAX> 83,812
<INCOME-TAX> 33,525
<INCOME-CONTINUING> 50,287
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (20,173)
<NET-INCOME> 30,114
<EPS-BASIC> .52
<EPS-DILUTED> .50
</TABLE>
