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 June 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 July 30, 1999
- - ----------------------------- -------------------------------
Common Stock,
par value $.01 per share 58,040,471
<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 June 30, 1999 and 1998 3
Condensed Consolidated Statements of Income (Unaudited)
Six Months Ended June 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 1999 and 1998 5
Condensed Consolidated Balance Sheets
June 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 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 23
<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
June 30,
--------------------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
Operating Revenue $380,700 $346,495
Operating Costs 185,130 165,043
Selling and Administrative Expenses 136,867 131,872
Depreciation and Amortization 20,990 20,959
Year 2000 Expenses 3,522 2,701
--------------- ----------------
Operating Income 34,191 25,920
Interest Income 1,273 2,342
Interest Expense (889) (317)
Other - Net 267 (207)
------------------ ----------------
Other Income - Net 651 1,818
Income Before Income Tax Provision 34,842 27,738
Income Tax Provision 13,937 11,650
------------------ ----------------
Net Income $20,905 $16,088
================== ================
Basic Earnings Per Share $0.36 $0.28
================== ================
================== ================
Diluted Earnings Per Share $0.35 $0.27
================== ================
================== ================
Weighted Average Number of Shares Outstanding
Basic 57,808 57,281
Diluted 60,147 59,670
<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)
Six Months Ended
June 30,
--------------------------------------------
1999 1998
----------------------- ----------------
<S> <C> <C>
Operating Revenue $734,651 $672,296
Operating Costs 368,762 334,318
Selling and Administrative Expenses 274,783 263,447
Depreciation and Amortization 42,173 42,370
Year 2000 Expenses 7,366 6,037
------------------ ----------------
Operating Income 41,567 26,124
Interest Income 3,638 5,423
Interest Expense (1,683) (601)
Other - Net 1,259 (106)
------------------ ----------------
Other Income - Net 3,214 4,716
Income Before Income Tax Provision and Cumulative Effect
of Change in Accounting Principle 44,781 30,840
Income Tax Provision 17,913 12,953
------------------ ----------------
Income Before Cumulative Effect of Change in Accounting
Principle 26,868 17,887
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 $6,695 $17,887
================== ================
Basic Earnings Per Share:
Income Before Cumulative Effect of Change in Accounting $0.47 $0.31
Cumulative Effect of Change in Accounting (0.35) -
------------------ ----------------
Net Income $0.12 $0.31
================== ================
Diluted Earnings Per Share:
Income Before Cumulative Effect of Change in Accounting $0.45 $0.30
Cumulative Effect of Change in Accounting (0.34) -
------------------ ----------------
Net Income $0.11 $0.30
================== ================
Weighted Average Number of Shares Outstanding
Basic 57,682 57,319
Diluted 60,026 59,604
<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)
Six months ended June 30,
------------------------------------------
1999 1998
------------------ ------------------
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 6,695 $ 17,887
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 42,173 42,370
Deferred Income Taxes 8,004 205
Payments Related to Special Charges (1,593) (15,162)
Postemployment Benefit Expense 1,137 1,923
Postemployment Benefit Payments (5,411) (6,879)
Net Increase in Accounts Receivable (17,827) (14,769)
Net Change in Other Working Capital Items (33,653) (3,589)
Other 3,066 (1,472)
- - ----------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 22,764 20,514
- - ----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital Expenditures (29,163) (19,551)
Additions to Computer Software (16,735) (11,535)
Payments for Acquisition of Businesses (11,457) (68,360)
Other (9,015) (9,258)
- - ----------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (66,370) (108,704)
- - ----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Increase in Short-Term Borrowings 26,111 20,797
Treasury Stock Purchases (6,111) (21,517)
Proceeds from the Sale of Common Stock under Option Plans 9,099 7,035
Other 825 (142)
- - ---------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 29,924 6,173
- - ----------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes
on Cash and Cash Equivalents (3,843) (4,380)
- - ----------------------------------------------------------------------------------------------------------------------------
Decrease in Cash and Cash Equivalents (17,525) (86,397)
Cash and Cash Equivalents, Beginning of Period 100,533 205,726
- - ----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $ 83,008 $ 119,329
- - ----------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Period for Interest $ 1,331 $ 609
Cash Paid During the Period for Income Taxes $ 19,930 $ 13,778
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)
June 30, December 31,
1999 1998
(Unaudited)
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $ 83,008 $ 100,533
Accounts Receivable - Net 292,251 279,708
Other Current Assets 61,865 56,527
------------------- ------------------
Total Current Assets 437,124 436,768
Notes Receivable and Other Investments 23,546 28,230
Property, Plant and Equipment-Net 155,807 157,664
Other Assets-Net
Prepaid Pension 63,418 62,152
Computer Software 49,412 42,588
Intangibles and Other Assets 35,505 69,889
Goodwill 330,833 328,326
------------------- ------------------
Total Other Assets-Net 479,168 502,955
- - -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,095,645 $ 1,125,617
- - -----------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable $ 75,127 $ 90,931
Short-Term Debt 79,888 49,032
Accrued and Other Current Liabilities 292,273 304,596
Accrued Income Taxes 40,090 48,901
------------------- -----------------
Total Current Liabilities 487,378 493,460
Postretirement and Postemployment Benefits 46,085 44,388
Deferred Income Taxes 44,893 55,486
Other Liabilities 28,530 44,235
- - -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 606,886 637,569
- - -----------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common Stock 596 589
Additional Paid-in Capital 505,833 492,365
Retained Earnings 107,524 100,829
Treasury Stock (39,592) (33,481)
Accumulated Other Comprehensive Income (Loss):
Cumulative Translation Adjustment (86,954) (72,254)
Fair Market Value of Forward Exchange Contracts 1,352 -
-------------------- ------------------
Total Shareholders' Equity 488,759 488,048
- - -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,095,645 $ 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 June 30, 1999, the
Company had $23,956 of foreign currency forward contracts outstanding, which
mature on various dates over the next six months. The net unrealized gain on the
contracts that qualify for hedge accounting was credited to other comprehensive
income and totaled $1,352.
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 own in
Market Decisions, a joint-venture 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 $10,900, 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. 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 and 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. $62,540 was recorded as the excess of the purchase price over the fair
value of identifiable net assets (goodwill), which is being amortized over forty
years. As of June 30, 1999, the balance of accrued acquisition and integration
costs totaled $4,915 and related primarily to licensee termination fees and
severance.
Note 4 - 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:
Category Dec. 31, 1998 Cash Payments June 30, 1999
-------- ------------- ------------- -------------
Rationalize Product Lines $ 413 (168) $ 245
Workforce Reductions 3,103 (149) 2,954
Facilities/Real Estate 248 (248) 0
----- ----- -----
Total $ 3,764 (565) $ 3,199
======= ===== =======
In addition, the Company paid $1,028 during the six months ended June 30, 1999
related to a long-term lease obligation, which was accrued as part of a special
charge recorded in 1995.
8
<PAGE>
Note 5 - 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 June 30 1999 1998
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Weighted-average number of shares outstanding for basic EPS 57,808 57,281
Dilutive effect of shares issuable as of period-end under stock option
plans 2,339 2,389
------- -------
Weighted-average number of shares and share equivalents for diluted EPS 60,147 59,670
======= =======
Net Income $20,905 $16,088
======= =======
Basic Earnings Per Share $ 0.36 $ 0.28
====== ======
Diluted Earnings Per Share $ 0.35 $ 0.27
====== ======
</TABLE>
<TABLE>
<CAPTION>
Six months ended June 30 1999 1998
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Weighted-average number of shares outstanding for basic EPS 57,682 57,319
Dilutive effect of shares issuable as of period-end under stock option
plans 2,344 2,285
------ ------
Weighted-average number of shares and share equivalents for diluted EPS 60,026 59,604
====== ======
Income Before Cumulative Effect of Change in Accounting Principle $26,868 $17,887
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 $ 6,695 $17,887
======= =======
Basic Earnings Per Share:
Income Before Cumulative Effect of Change in Accounting $ 0.47 $ 0.31
Cumulative Change in Accounting (0.35) -
------ ------
Net Income $ 0.12 $ 0.31
====== ======
Diluted Earnings Per Share:
Income Before Cumulative Effect of Change in Accounting $ 0.45 $ 0.30
Cumulative Effect of Change in Accounting (0.34) -
------ ------
Net Income $ 0.11 $ 0.30
====== ======
</TABLE>
9
<PAGE>
Note 6 - Other Comprehensive Income (Loss)
The following table sets forth the Company's comprehensive loss, reported net of
tax, for the respective periods:
Three months ended June 30 1999 1998
- - --------------------------------------------------- ----------- -----------
Net Income $ 20,905 $ 16,088
Other Comprehensive Loss, Net of Tax:
Foreign Currency Translation Adjustments (350) (3,363)
Fair Market Value of Forward Exchange Contracts 391 -
--------- ---------
Comprehensive Income $ 20,946 $ 12,725
========= =========
Six months ended June 30 1999 1998
- - --------------------------------------------------- ----------- -----------
Net Income $ 6,695 $ 17,887
Other Comprehensive Loss, Net of Tax:
Foreign Currency Translation Adjustments (14,700) (13,669)
Fair Market Value of Forward Exchange Contracts 1,352 -
-------- --------
Comprehensive Income (Loss) $(6,653) $ 4,218
======== ========
Note 7 - Treasury Stock
The terms of the Indemnity and Joint Defense Agreement (see Note 8 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 half of
1999, the Company repurchased 240,800 shares of its common stock for a total of
$6,111.
Note 8- 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 June 30, 1999 compared with Quarter ended June 30, 1998
Diluted earnings per share rose 29.6%, to $0.35, and net income increased 29.9%
to $20,905. Reported earnings were reduced by an after-tax expense of $2,113, or
$0.04 per share, for Year 2000 computer software modifications, and a negative,
after-tax impact of $1,253, or $0.02 per share, as a result of foreign currency
translation.
Revenue for the quarter ended June 30, 1999 was $380,700, an increase of 9.9%
from the second quarter of 1998, reflecting continued strong growth in the
United States and incremental revenue from ACNielsen BASES, which was acquired
in June 1998. Excluding a negative foreign currency translation impact of 9,266,
revenue advanced 12.5%.
Operating income increased 31.9%, or $8,271 to $34,191, despite a negative
currency translation impact of $2,088. Strong revenue growth in the U.S.,
coupled with operating improvements across all three of the Company's regions,
drove the substantial increase. Excluding incremental Year 2000 costs,
operating income increased $9,092 over 1998 to $37,713.
Other income-net was $651, compared with $1,818 in the second quarter of 1998,
primarily reflecting higher interest expense on higher borrowings and lower
interest income, partially offset by increased gains from foreign exchange.
12
<PAGE>
The Company's operating results by geographic region for the quarters ended June
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 $119,734 $89,329 $15,272 $9,620
Canada/ Latin America 44,980 46,829 7,604 7,312
-------- ------- ------- ------
Total Americas 164,714 136,158 22,876 16,932
Europe, Middle East & Africa 150,711 146,005 10,468 9,699
Asia Pacific 65,275 64,332 4,369 1,990
------- ------- ------- ------
Subtotal 380,700 346,495 37,713 28,621
Year 2000 Costs - - (3,522) (2,701)
------- ------- ------- ------
Total $380,700 $346,495 $34,191 $25,920
======== ======== ======= =======
</TABLE>
The following discusses results on a geographic basis:
Total Americas revenue increased 21.0% to $164,714 from $136,158. Excluding the
negative impact of currency translation of $6,927, which was primarily due to
currency devaluation in Brazil, revenue grew 26.1%, reflecting solid growth in
the U.S. and the addition of ACNielsen BASES. Operating income was $22,876, a
$5,944 or 35.1% improvement over the prior year. Excluding a $1,934 negative
foreign currency translation impact, due primarily to the devaluation the
Brazilian real, operating income increased 46.5%.
In the United States, revenue grew 34.0% to $119,734, reflecting the addition of
ACNielsen BASES, and an increase in retail measurement, as account-level sales
increased 21% and incremental revenue was realized from new clients and from
products that offer expanded coverage of retail channels. In addition, consumer
panel revenue rose 19.8% on higher sales of syndicated products. Excluding
ACNielsen BASES, U.S. revenue grew 10%. Operating income was $15,272, an
increase of $5,652, or 58.8% over the prior year. The gain reflected strong
revenue growth in retail measurement and consumer panels. Excluding ACNielsen
BASES, operating income increased 45%.
In Canada and Latin America, reported revenue of $44,980 was down 4.0%, due to
negative foreign currency translation impact of $6,926, primarily in Brazil.
Revenues advanced 10.8% in local currency, driven by higher retail measurement
sales in Mexico, Colombia and Chile, and solid retail measurement and consumer
panel growth in Canada. Operating income was up 4.0%, to $7,604, from $7,312 in
1998, as the currency devaluation in Brazil continued to reduce operating
profits. Local currency operating income increased 30.5% on revenue growth and
cost controls.
Revenue in the Europe, Middle East & Africa ("EMEA") region increased 3.2% to
$150,711, from $146,005 in 1998, led by continued growth in the United Kingdom
and the Nordic countries. The emerging markets achieved local currency
double-digit increases in revenue and income, despite sluggish economies.
Excluding the negative impact of foreign currency translation, revenue grew
5.4%, with revenue increases in account-level services, modeling & analytics,
consumer panels and media measurement. EMEA increased its operating income for
the quarter by $769, to $10,468. The improvement was the result of revenue
growth and operating improvements. Local-currency income increased 10.9% for
the quarter.
13
<PAGE>
Asia Pacific's revenue increased slightly to $65,275 from $64,332, due to the
firming of currencies and growth in Korea, the Philippines and Taiwan.
Local-currency revenue was essentially unchanged from the prior year, as growth
in retail measurement was offset by lower revenue in customized research.
Operating income reached $4,369, compared with $1,990 reported last year, as the
region continued to shift toward higher-margin business and improve operating
efficiency.
Six months ended June 30, 1999 compared with Six months ended June 30, 1998
The Company reported net income of $6,695 or $0.11 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 $26,868 or
$0.45 per diluted share, an $8,981 or $0.15 per share improvement over the first
six months of 1998. In the first half of 1999, income included an after-tax
negative currency translation impact of $2,072, or $0.03 per diluted share.
Revenue for the six months ended June 30, 1999 was $734,651, an increase of 9.3%
from the first half 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 10.9% in local
currency.
Operating income was $41,567, an increase of $15,443 over 1998, despite a
negative currency translation impact of $3,453. Strong revenue growth, coupled
with improved operating efficiency across all three of the Company's regions,
drove the substantial increase. Excluding Year 2000 costs, operating income
increased $16,772 over 1998 to $48,933.
Other income-net was $3,214, compared with $4,716 in the first six 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 six months ended
June 30, 1999 and 1998 are set forth in the table below.
<TABLE>
<CAPTION>
Operating Revenue Operating Income
(Loss)
------------------------------ ---------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
United States $227,969 $172,496 $25,000 $15,405
Canada/ Latin America 89,147 94,895 12,095 12,748
-------- -------- ------- -------
Total Americas 317,116 267,391 37,095 28,153
Europe, Middle East & Africa 289,824 277,603 6,518 4,662
Asia Pacific 127,711 127,302 5,320 (654)
-------- ------- ------- -------
Subtotal 734,651 672,296 48,933 32,161
Year 2000 Costs - - (7,366) (6,037)
-------- -------- ------- -------
Total $734,651 $672,296 $41,567 $26,124
======== ======== ======= =======
</TABLE>
14
<PAGE>
The following discusses results on a geographic basis:
Total Americas revenue increased 18.6% to $317,116 from $267,391. Excluding the
negative impact of currency translation of $12,673, which was primarily due to
currency devaluation in Brazil, revenue grew 23.3%, reflecting solid growth in
the U.S. and the addition of ACNielsen BASES. Operating income was $37,095, an
$8,942 or 31.8% improvement over the prior year. Excluding a $3,185 negative
foreign currency translation impact, due to the devaluation of currencies in
Latin America, operating income increased 43.1%.
In the United States, revenue grew 32.2% to $227,969, reflecting an increase in
retail measurement, as account-level sales increased 20%. Consumer Panel revenue
rose 14.4% on higher sales of syndicated products. Excluding ACNielsen BASES,
U.S. revenue grew 10.6%. Operating income was $25,000, an increase of $9,595, or
62.3% over the prior year. The gain reflected strong revenue growth in retail
measurement and consumer panels. Excluding ACNielsen BASES, operating income
increased 54.3%.
Revenue in EMEA increased 4.4% to $289,824, from $277,603 in the first six
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, media measurement and modeling and analytics. Excluding the positive
impact of foreign currency translation, revenue grew 4.3%. Operating income grew
39.8% to $6,518 in 1999 from $4,662 in 1998. The increase was due to revenue
growth throughout the region and continued operating improvements. Local
currency operating income increased 48.9% for the six month period.
Asia Pacific's revenue increased slightly to $127,711 from $127,302, helped by
firming currencies and growth in 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. The region
produced an operating profit of $5,320, an improvement of $5,974 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
Six Months Ended June 30, 1999 and 1998
Net cash provided by operating activities for the six months-ended June 30,1999
totaled $22,764, compared with $20,514 for the comparable period in 1998. The
increase primarily is the result of increased cash income ($8,784) and lower
payments related to special charges ($13,569) partially offset by a change in
other working capital items, including increased tax payments ($6,152).
Net cash used in investing activities decreased to $66,370 for the six months
ended June 30, 1999, compared with $108,704 for the comparable period in 1998.
The decrease in cash usage was due to a decrease in payments made for the
acquisition of businesses ($56,903), offset by higher capital expenditures,
reflecting the expansion of consumer panel and television audience measurement
(TAM) services ($9,612), and higher additions to computer software ($5,200).
15
<PAGE>
Net cash provided by financing activities for the six months ended June 30, 1999
totaled $29,924, compared with $6,173 for the comparable period in 1998. The
increase in cash provided of $23,751, primarily reflected the increase in
short-term borrowings ($5,314) and a decrease in the amount of treasury stock
purchases ($15,406).
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.
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
The Company is in the process of 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. The Company currently
believes that it will be able to modify or replace all of its material
Technology Systems in a timely manner and with no significant disruptions to its
operations. 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
material 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. A substantial majority of the testing
of individual components of the Company's Technology Systems that have been
remediated is 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. The Company is currently devoting substantial time and effort to
the execution of this phase. A majority of the work required by this phase has
been completed. Plans for each country and business segment have been developed
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 substantially all of its material (i) clients,
(ii) data suppliers, (iii) data processors, and (iv) third party technology
vendors. The communications phase with respect to all other third parties is
well underway and is expected to continue to the Year 2000. As many third
parties either do not respond to requests for information or provide incomplete
information, the Company does not have sufficient information at the current
time to determine whether all of the third parties whose Year 2000 readiness
could significantly affect the Company will achieve Year 2000 compliance on a
timely basis. The Company will continue its communication efforts with such
parties but 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.
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, and (iii)
non-compliance of clients' Technology Systems such that they are unable to make
normal use of the Company's products and services. 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 between $10,000 and $12,000 for
1999. Costs to acquire new software and computer systems in advance of their
normal replacement schedules are estimated to total between $10,000 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 Six Months Ended Total Through
December 31, 1998 June 30, 1999 June 30,1999
----------------- ------------- ------------
<S> <C> <C> <C>
Incremental Y2K Expense $15,911 $7,366 $23,277
Capital expenditures for
software and systems $5,407 $4,462 $9,869
</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 impact of foreign currency fluctuations since so much of the
Company's earnings are generated abroad; (vii) the degree of acceptance of new
product introductions; (viii) 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 June 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 June 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 $15,693 $1,382 0.8703
Australian dollars 1,041 (27) 1.5791
Canadian dollars 792 (35) 1.5253
Swiss francs 581 57 1.3612
Japanese yen 495 21 114.7064
Danish krone 459 45 6.3902
Other 4,895 (92)
------------------------------ ------------ ----------
Total $23,956 $1,351
------------------------------ ------------ ----------
</TABLE>
21
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of ACNielsen Corporation was held on April
14, 1999. The following nominees for director named in the proxy statement dated
March 12, 1999 were elected at the meeting by the votes indicated.
For Withheld
---------- ----------
Michael P. Connors 53,216,302 77,371
Karen L. Hendricks 53,224,238 69,435
Robert Holland, Jr. 53,222,732 71,008
Robert N. Thurston 53,209,439 84,234
The votes in favor of the election of the nominees represent at least 99.8% of
the shares voted for each of the nominees.
The ratification of the selection of Arthur Andersen LLP as independent public
accountants to audit the Company's consolidated financial statements for 1999
was approved by the following vote:
For Against Abstain
---------- --------- ---------
Number of shares 53,218,988 44,794 29,891
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
June 30, 1999.
22
<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: August 11, 1999 /s/ Robert J. Chrenc
------------------------------------
Robert J. Chrenc
Executive Vice President
and Chief Financial Officer
Date: August 11, 1999 /s/ Michael S. Geltzeiler
------------------------------------
Michael S. Geltzeiler
Senior Vice President and Controller
23
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 83,008
<SECURITIES> 0
<RECEIVABLES> 292,251
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 437,124
<PP&E> 441,217
<DEPRECIATION> 285,410
<TOTAL-ASSETS> 1,095,645
<CURRENT-LIABILITIES> 487,378
<BONDS> 0
0
0
<COMMON> 596
<OTHER-SE> 488,163
<TOTAL-LIABILITY-AND-EQUITY> 1,095,645
<SALES> 0
<TOTAL-REVENUES> 734,651
<CGS> 0
<TOTAL-COSTS> 693,084
<OTHER-EXPENSES> (1,259)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,955)
<INCOME-PRETAX> 44,781
<INCOME-TAX> 17,913
<INCOME-CONTINUING> 26,868
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (20,173)
<NET-INCOME> 6,695
<EPS-BASIC> .12
<EPS-DILUTED> .11
</TABLE>
