NIELSEN 2013 INVESTOR DAY
108
NIELSEN 2013 INVESTOR DAY DECEMBER 12, 2013 #NLSNInvestorDay
Transcript of NIELSEN 2013 INVESTOR DAY
NIELSEN 2013 INVESTOR DAY
DECEMBER 12, 2013 #NLSNInvestorDay
WELCOME & AGENDA
KATE VANEK SVP – Investor Relations
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FORWARD LOOKING STATEMENTS
The following discussion contains forward-looking statements, including those about Nielsen’s outlook and prospects, in the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those which are not historical facts. These and other statements that relate to future results and events are based on Nielsen’s current expectations as of December 12, 2013.
Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties. The risks and uncertainties that we believe are material are outlined in our disclosure filings and materials, which you can find on http://nielsen.com/investors. Please consult these documents for a more complete understanding of these risks and uncertainties. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
Our outlook is provided for the purpose of providing information about current expectations for 2013 and 2014. This information may not be appropriate for other purposes.
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11:45am Lunch & Nielsen Innovation Experience
1:00pm Welcome & Agenda (1) Kate Vanek, SVP Investor Relations
1:10pm Opening Remarks (2) David Calhoun, Executive Chairman Elect
1:30pm Our Global Opportunity — Clients, Markets, Talent (3) Mitch Barns, Chief Executive Officer Elect
BEYOND TV: DIGITAL INNOVATION & BEYOND 1:45pm The Marketplace & Product Roadmap (4) Steve Hasker, President – Global Product Leadership
2:00pm All Things Digital – A Differentiated Approach (5) Megan Clarken, EVP – Global Product Leadership, Watch
2:15pm #Nielsen Social (6) Andrew Somosi, President – SocialGuide
2:25pm Q&A
GLOBAL OPPORTUNITIES & WHERE WATCH MEETS BUY 2:40pm Elevating The Global Growth Game In Buy (7) John Lewis, President – Americas
2:50pm Africa: The Next Emerging Frontier (8) Dwight Watson, Managing Director – Africa
3:00pm Where Watch Meets Buy – Advertiser Solutions (9) Randall Beard, President – Advertiser Solutions
3:10pm Q&A
3:25pm Break
GLOBAL PLATFORM FOR SCALE, INTEGRATION & INNOVATION 3:40pm Our Scalable Platform For Growth & Integration Of Nielsen Audio (10) Mitchell Habib, Chief Operating Officer
FINANCIAL ROADMAP TO 2016 3:55pm Long Term Financial Goals & Context For Future Growth (Book #2) Brian West, Chief Financial Officer
4:10pm Q&A
4:25pm Closing Remarks Mitch Barns
4:30pm Cocktail Hour & Nielsen Innovation Experience (concludes 6:00pm)
AGENDA
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ONGOING & INCREMENTAL SHAREHOLDER VALUE
COMPELLING CAPITAL ALLOCATION FRAMEWORK
EXPANDING GLOBAL FOOTPRINT
POWERFUL BUSINESS MODEL DRIVEN BY PERFORMANCE MANAGEMENT
CONSUMER DRIVEN INNOVATION
FIVE KEY MESSAGES
NIELSEN: A DIFFERENTIATED, GLOBAL GROWTH COMPANY
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ADVERTISER SOLUTIONS WATCH BUY
• Connected TV
• Mobile Measurement
• Online Campaign Ratings
• Cross-Platform Program Ratings
• Twitter TV Ratings
• Audio
• Answers on Demand
• Global Track Complete
• Traditional Trade Advisory & Store Observations
• Cartography
• Brand Effect Suite
• Nielsen Catalina Solutions
• Buyer Insights
• Marketing Mix
• Audience Engagement
• Mynd™ by NeuroFocus
• Segmentation and Market Solutions
INNOVATION EXPERIENCES
A VIEW OF OUR DIFFERENTIATED GLOBAL VALUE PROPOSITION
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DRIVING INNOVATION WITH CLIENTS
HELPING CLIENTS CREATE VALUABLE
GROWTH BUSINESSES
OPENING REMARKS
DAVID CALHOUN Executive Chairman Elect
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COMPREHENSIVE UNDERSTANDING OF WHAT CONSUMERS BUY AND WATCH
FOCUS ON DELIVERING VALUE TO CLIENTS AND SHAREHOLDERS
WHY INVEST IN NIELSEN?
GLOBAL LEADER WITH MARKET PRESENCE IN 100+ COUNTRIES
“MISSION CRITICAL” MEASUREMENT AND ANALYTICS EMBEDDED IN CLIENT WORKFLOWS
SYNDICATED, SCALABLE PRODUCTS AND SERVICES
STRATEGIC INVESTMENTS TO DRIVE GROWTH OPPORTUNITIES
PROVEN TRACK RECORD OF GROWTH AND ECONOMIC RESILIENCE
ACCELERATED EARNINGS GROWTH THROUGH DELEVERAGING
RETURN OF CAPITAL TO SHAREHOLDERS
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“ACADEMY COMPANY” AS A STRATEGIC IMPERATIVE WITH PRIVATE EQUITY SPONSORS
STRONG, DEEP… AND GETTING BETTER
LEADERSHIP DEVELOPMENT: OPEN, SIMPLE, INTEGRATED
EMBEDDED SEMI-ANNUAL HUMAN RESOURCE REVIEWS INTO THE OPERATING FABRIC OF THE COMPANY
ESTABLISHED A CULTURE OF MERITOCRACY… PERFORMANCE EVALUATIONS, RANKINGS, REWARDS
NEW INDUSTRY BENCHMARKS… SIGNIFICANT TALENT INFUSION FROM LEADING COMPANIES
CREATED THE LEADERSHIP LABORATORY… MOVE HIGH POTENTIALS AROUND THE COMPANY & GLOBE
CEO DIRECT ENGAGEMENT OF TOP 200 LEADERS… PROMOTIONS, SUCCESSION, COMPENSATION
INVESTED IN LEADERSHIP DEVELOPMENT PROGRAMS… ENTRY-LEVEL, MID-CAREER, SENIOR EXECUTIVES
STRONG, DEEP BENCH ACROSS MULTIPLE DISCIPLINES, THROUGH THE RANKS, AROUND THE GLOBE
JAN. 2007
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PERFORMANCE SCORECARD
$3.8 $4.2
$4.6 $4.6 $4.9
$5.3 $5.4
'06 '07 '08 '09 '10 '11 '12
9.1x
7.9x 7.4x
6.2x 5.8x
4.0x 3.8x
'06 '07 '08 '09 '10 '11 '12
$0.8
$1.0 $1.1 $1.2
$1.3 $1.5 $1.5
'06 '07 '08 '09 '10 '11 '12
$91
$167 $229
$528
$635
'08 '09 '10 '11 '12
$235 $209
$376
$426
'09 '10 '11 '12
REVENUE ($B) ADJUSTED EBITDA ($B) ADJUSTED NET INCOME ($M)
NET DEBT LEVERAGE RATIO FREE CASH FLOW ($M)(a)
6% CAGR 11% CAGR
60% CAGR
Note: Revenue, Adjusted EBITDA and Adjusted Net Income growth rates derived on a constant currency basis; Figures are as reported (a) Excludes impact of 2011 Sponsor Termination Fees ($102M)
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David L. Calhoun Chief Executive Officer
Executive Chairman Elect
Steve Hasker President, Global Product
Leadership
Brian J. West Chief Financial Officer
Mitchell J. Habib Chief Operating Officer
Megan Clarken EVP, Global Product Leadership, Watch
Randall Beard President,
Advertiser Solutions
Dwight Watson Managing Director,
Africa
Andrew Somosi President, SocialGuide
Mitch Barns President, Global Client Svc. Chief Executive Officer Elect
John Lewis President, Americas
Kate Vanek SVP, Investor Relations
TODAY’S PRESENTERS: REFLECTING A DEEP BENCH
OUR GLOBAL OPPORTUNITY
MITCH BARNS Chief Executive Officer Elect
CLIENTS, MARKETS, TALENT
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OUR AUDIENCE MEASUREMENT STRATEGY
STRONG BUSINESS MODEL DRIVING SHAREHOLDER VALUE
KEY THEMES FOR TODAY
THE 3 Rs – REACH, RESONANCE, REACTION
SOCIAL TV
WHERE WATCH MEETS BUY
GLOBAL BUY, WITH A SPOTLIGHT ON AFRICA, LATIN AMERICA, E-COMMERCE
INNOVATION AND OUR DRIVE TO BE MORE “REAL TIME”
INTEGRATION OF NIELSEN AUDIO
PRODUCTIVITY AS A WAY OF LIFE
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OUR GLOBAL BREADTH AND DEPTH
NIELSEN PRESENCE
PAST: West East
FUTURE: West East
CLIENT TRENDS
WELL-POSITIONED TO FULFILL CLIENT NEEDS AROUND THE WORLD
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AUDIENCE MEASUREMENT – AUDIO
RETAIL MEASUREMENT
AUDIENCE MEASUREMENT – VIDEO
AUDIENCE MEASUREMENT – SOCIAL
MARKETING EFFECTIVENESS
NEW PRODUCT INNOVATION
LEADERSHIP POSITIONS
INFORMATION
INSIGHTS
ONLY SCALE PLAYER WITH BROAD CAPABILITIES AND GLOBAL FOOTPRINT
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CLIENT BUSINESS PARTNERS
OUR CLIENTS 20,000+ clients
Top 10 relationships >30 years Long-term contracts: 3-10 years
Biggest client <4% of revenues
PRODUCT LEADERSHIP
GLOBAL BUSINESS SERVICES CLIENT SERVICES
CLIENT FOCUSED MODEL AND BUILT FOR SCALE
GLOBAL ORGANIZATION BUILT AROUND CLIENTS
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DEVELOPING MARKETS
GROWTH OF MIDDLE CLASS DEVELOPING MARKETS REVENUE
1970 2012 2030
WORLD POPULATION
MIDDLE CLASS
3.7B
7.0B
8.3B
2006 2013E
BIGGEST INCREASE EVER ACCELERATION WITH LOCALS
$0.6B
$1.2B
$0.4B LOCALS
$0.8B GLOBAL MNCs
11% CAGR
10-30% Growth
Source: OECD; CAGR represented in constant currency
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NIELSEN’S DEVELOPING MARKETS
TREND EARLY STAGE LATE STAGE
INVESTMENT $$$ $
COVERAGE NATIONAL HYPER-LOCAL, GRANULAR
LOCAL CLIENTELE <50% >50%
MARGINS LOW- TO MID-TEENS (i.e., Africa)
LOW 30’S (i.e., Brazil)
PREDICTABLE, ATTRACTIVE LONG-TERM INVESTMENT
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THE FUTURE OF NIELSEN
CONSISTENT GROWTH, EXPANDING MARGINS AND DELIVERING VALUE
REAL TIME
INTER-CONNECTED AND INTER-OPERABLE
VIDEO AND AUDIO CURRENCY
DOUBLING OUR BUSINESSES IN DEVELOPING MARKETS
EXTENDING OUR LEAD IN E-COMMERCE
WATCH ASSETS DELIVER NEW VERTICALS
THE MARKETPLACE & PRODUCT ROADMAP
STEVE HASKER President – Global Product Leadership
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Media Planning
Campaign Activation
Post-campaign Evaluation
NIELSEN’S UNPARALLELED POSITION IN MEDIA AND MARKETING
CURRENCY FOR $80B+ INDUSTRIES
NIELSEN HAS A LEADING ROLE TO PLAY WHEREVER ADVERTISING LIVES
VIDEO
AUDIO
TEXT
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PREVAILING TRENDS ENHANCE NIELSEN'S POSITION
ONLINE CAMPAIGN & DIGITAL PROGRAM RATINGS
TABLET & SMARTPHONE MEASUREMENT
DIGITAL AUDIO MEASUREMENT
Audience measurement standards for video, audio, text
FRAGMENTATION
BUYER INSIGHTS
TWITTER TV RATINGS
NIELSEN CATALINA SOLUTIONS
MARKETING MIX
MARKETING SPEND ROI Advertising effectiveness, audience engagement and
impact metrics
GLOBAL EXPANSION OF TV RATINGS, AUDIO, ONLINE
CAMPAIGN RATINGS, BRANDEFFECT
GLOBAL World class currency quality
measurement for video & audio
TREND CLIENT NEED NIELSEN’S ANSWER
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WHAT DID IT MOTIVATE THEM TO DO?
• Nielsen Catalina Solutions
• Buyer Insights
• Marketing Mix
REACTION
• Brand Effect TV, Online, Mobile, Audio
• Twitter TV Ratings
• NeuroFocus
RESONANCE WHAT IMPACT DID IT HAVE?
• TV Ratings
• Audio Ratings
• Online Campaign Ratings
• Digital Program Ratings
REACH WHO DID MY CREATIVE REACH?
NIELSEN’S WATCH PRODUCTS
BETTER ROI FOR MARKETING
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THE DIGITAL OPPORTUNITY
Source: PwC Media & Entertainment Outlook 2013, e-Marketer, Nielsen financials; Excludes Display Mobile
Q4’10 • Nielsen/Facebook announcement
Q3’11 • OCR launch… MRC accreditation
Q4’11 • 100 campaigns
Q1’12 • Unilever, Group M announcements
Q2’12 • Publisher guarantees at Upfronts • 1,000 campaigns
Q3’12 • XCR beta period
Q4’12 • XCR launches… TV & Digital
Q1’13 • ABC cross-platform guarantees
Q2’13 • OCR international expansion • Digital Program Ratings
Q3’13 • First testing of mobile OCR complete
Q4’13 • Experian as 2nd data provider • Google tag acceptance • ~8,000 campaigns
$83B
AD SPEND MEASUREMENT SPEND
U.S. INDUSTRY OUTLOOK
$15B ~2%
$18B
<1%
~$300M opportunity
~$200M opportunity
INDUSTRY SIGNIFICANTLY BENEFITS FROM A SINGLE CURRENCY
2017 Digital Video (incl. Mobile) Spend 2017 Digital Display Spend 2013-2017 CAGR: 25% 2013-2017 CAGR: 11%
ONLINE CAMPAIGN RATINGS: KEY MILESTONES
2%
2013 TV/Radio Spend 2013-2017 CAGR: 4%
AD SPEND MEASUREMENT SPEND
AD SPEND MEASUREMENT SPEND
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DIGITAL REVENUE LANDSCAPE
BIGGER BUDGETS WITH NEW AND EXISTING CLIENTS
OCR - Video and Text (tablets/smartphones) $ $$ o $ $
OCR - Audio $ o $$ $ $
Digital Program Ratings $ $ o o o
Social TV $ $ o $ $
MEDIA PUBLISHER NEW AUDIO AGENCY ADVERTISER
CONTENT
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GLOBAL
TV
PC
Over the Top Device
Smartphone
Tablet
OVERNIGHT TO REAL
TIME
REACH RESONANCE REACTION SOCIAL
MARKETS….BIG & GETTING BIGGER PRODUCTS…ROBUST & REAL MOMENTUM
POISED TO CAPITALIZE ON SIGNIFICANT GROWTH OPPORTUNITIES
INDUSTRY ALIGNMENT (BUYERS AND SELLERS) DRIVES PACE
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PATH TO ACCELERATING GROWTH
UNIQUELY POSITIONED TO CAPITALIZE ON AUDIENCE GROWTH
UNPARALLELED POSITION IN MEDIA AND MARKETING
PREVAILING TRENDS ENHANCE OUR POSITION
WATCH PRODUCT LINKAGE TO BUY DRIVES ROI
WATCH REVENUE STEADILY ACCELERATING
ALL THINGS DIGITAL
MEGAN CLARKEN EVP – Global Product Leadership, Watch
A DIFFERENTIATED APPROACH
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NIELSEN’S WATCH MEASUREMENT FRAMEWORK
REACH RESONANCE REACTION
ANSWERING CLIENTS’ BIGGEST QUESTIONS
ALL SCREENS / DEVICES
COMMERCIAL AND PROGRAM
PAID, OWNED, EARNED
GLOBAL
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OUR ADVANTAGE: MULTIPLE LEVELS OF CROSS PLATFORM MEASUREMENT
BY DEVICE TYPE
BY ADVERTISING MODEL
BY CONTENT TYPE
BY DELIVERY TYPE
BY USAGE
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DIGITAL PUBLISHER
TV NETWORK
PC LAPTOP
SMARTPHONE TABLET
APP BROWSER
VIDEO CONSUMPTION ACROSS PLATFORM
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PC LAPTOP
SMARTPHONE TABLET
DIGITAL PUBLISHER
TV NETWORK
Measures a representative
piece
ONE AD TO MANY PEOPLE LINEAR AD MODEL
MANY ADS TO MANY PEOPLE
Measures every piece
AD
AD
DYNAMIC AD MODEL
AD
APP BROWSER
AD
LINEAR VS. DYNAMIC
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3 Days, Same Ad Load Measured by TV Ratings
ONE AD TO MANY PEOPLE LINEAR AD MODEL
MANY ADS TO MANY PEOPLE
Measured using multiple sources including
Nielsen Online Campaign Ratings™ Nielsen Digital Program Ratings
DYNAMIC AD MODEL
AD
AD
AD
AD
CONSISTENCY
AUDIENCE
IMPLEMENTATION
MOBILE
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TWO TYPES OF CONTENT
TV Originated Content
Native Digital Content
ONE ENCODING PROCESS
COMPARABLE OVERNIGHT
RATING TV Ratings
Digital Ratings
Cross
Platform
ONE CLIENT-SIDE IMPLEMENTATION
SOFTWARE METER
BIG DATA ENABLED MEASUREMENT
GOLD STANDARD PROCESS
MRC ACCREDITED
CROSS PLATFORM MEASUREMENT ARCHITECTURE
Nielsen Online Campaign Ratings is accredited by the Media Rating Council (MRC). Featured elements including DMA, verification and viewability are not currently accredited, but are undergoing review by MRC.
UNIVERSAL
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MEASUREMENT FOOTPRINT TODAY
Lin
ear
TV
Dig
ital
D
ynam
ic
AD
MO
DEL
TV SET CONNECTED DEVICES PC TABLET SMARTPHONE
PROGRAMS
ADS
CONTENT
ADS OCR
Not yet covered In currency (C-3) or where comparable Digital Ratings are provided
DEVICE
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MEASUREMENT FOOTPRINT TOMORROW
Lin
ear
TV
Dig
ital
D
ynam
ic
AD
MO
DEL
TV SET CONNECTED DEVICES PC TABLET SMARTPHONE
PROGRAMS Fall 2014 Fall 2014
ADS Fall 2014 Fall 2014
CONTENT 2015 DPR Q2 2014 Q2 2014
ADS 2015 OCR Q3 2014 Q3 2014
In currency (C-3) or where comparable Digital Ratings are provided
DEVICE
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THE NIELSEN ADVANTAGE
COMPARABLE RATINGS
DIGITAL ACCOUNTABILITY
SOLVES FOR TABLETS AND SMARTPHONES
EASE OF USE
GLOBAL CONSISTENCY
ACCRETIVE ECONOMIC MODEL… FOR CLIENTS AND FOR NIELSEN
#NIELSEN SOCIAL
ANDREW SOMOSI President – SocialGuide
THE TWITTER PHENOMENON
Why is Twitter taking off?
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THE TWITTER PHENOMENON
*As of March 2013
200M+ Active Users
400M+ Tweets Each Day
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560 million
tweets about U.S. TV in H1 2013
(62% annual growth)
32 million
33 percent
people tweeting about U.S. TV
in 2012
of active U.S. Twitter accounts tweet
about TV
PEOPLE LOVE TO TWEET ABOUT LIVE TV
Source: SocialGuide; Nielsen
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OUR MISSION Enable networks, advertisers and
agencies to measure, understand and act on the Twitter activity surrounding TV
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OUR INDUSTRY LEADING SOLUTIONS FOR SOCIAL TV MEASUREMENT
• Comprehensive, Accurate & Real Time
• Synergy with core Nielsen data assets
• Exclusive partnership with Twitter & provider of Nielsen Twitter TV Ratings
Dashboard for real-time analytics and engagement
The first ever reach and demographic metrics
Highly curated content second screen experiences
NETWORK & AGENCY CLIENTS
SOCIALGUIDE INTELLIGENCE NIELSEN TWITTER TV RATINGS TWITTER TV API SUITE
80+
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Authors
Audience
BEYOND THE TIP OF THE TWITTER TV ICEBERG
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50x
SIGNIFICANT AUDIENCE
TWITTER REACH TWITTER ACTIVITY
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Engagement & Loyalty
Inform Ad Sales
Does Twitter Drive Ratings?
NIELSEN TWITTER TV RATINGS HELP NETWORKS
REACH RESONANCE
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VALUE PROPOSITION FOR ADVERTISERS
1:1 Real-Time Engagement
Use Social Data to Measure Ad Effectiveness
Should Advertisers Pay More for a Social Show?
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USING SOCIAL TO IDENTIFY BRAND AFFINITY
RANK BRAND NETWORK AFFINITY SCORE NETWORK RANK
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SOCIAL TV: STRONG INNOVATION / UNIQUE DIFFERENTIATOR
POWERFUL CONSUMER PHENOMENON
NIELSEN IS THE LEADER IN MEASURING SOCIAL TV ACTIVITY
SOCIAL TV MEASUREMENT DELIVERS VALUE FOR NETWORKS & ADVERTISERS
ENHANCES NIELSEN’S CORE ASSETS IN TV
NIELSEN INNOVATION AT WORK
ELEVATING THE GLOBAL GROWTH GAME IN BUY
JOHN LEWIS President, Americas
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LEADERSHIP IN INFORMATION AND INSIGHTS
Retail Market Share
• Metrics for sales, share, distribution
• Tracks brands/packages performance
• Multi-year contracts ranging 3-10 years
Consumer Confidence/Behavior
• Panel-based metrics of penetration, buying rate, frequency, shopping locations
Advanced analytical capabilities and solutions
• Demand strategy
• Product innovation
• Pricing and promotion
• Marketing Effectiveness
INFORMATION INSIGHTS
FROM MEASUREMENT TO PERFORMANCE
Information ~75%
Insights ~25%
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LONG-TERM, BEST-IN-CLASS CLIENTS
Retail Market Share
Insights
Global Footprint
Advanced Technologies
Advertiser Solutions
CONTINUE MARKET SHARE EXPANSION
RETAILERS MANUFACTURERS
CAPABILITIES NIELSEN #2 COMPETITOR
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THE NIELSEN ADVANTAGE
DATA
• RMS in 103 countries
• Panel in 27 countries
• One Global Reference Data System
INSIGHTS
• Pricing & Promotion
• Innovation
• Assortment
DELIVERY PLATFORMS
• Answers on Demand
• Global Track Complete
• Loyalty Solutions
PERFORMANCE MANAGEMENT
• Higher sales
• More effective promotion
• Better packaging
• Successful product launch
• Revenue optimization
4.6% 4.7% 4.3%
Total Information Insights
Buy North America Revenue Growth (2008-2013E CAGR)
DELIVERING GROWTH THROUGH DIFFERENTIATION
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DEVELOPING MARKETS: LATIN AMERICA
Mexico Brazil Colombia Venezuela
~25%
35-40%
Insights
Information
10%
• Expanding OCR in Brazil • TV measurement in Mexico,
Puerto Rico, Venezuela • Expansion into Peru / Chile
EXTENDING OUR GLOBAL FOOTPRINT
LATAM INSIGHTS MEXICO INVESTMENT EBITDA MARGINS
• Increase granularity of traditional trade
• Enable segmentation of consumers
• Increase breadth… 15 additional urban areas
WATCH + BUY
90%
VASTLY
UNDERPENTRATED
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E-COMMERCE: BUY-SIDE OPPORTUNITY
Global FMCG Volume
2-4%
Physical Retail
Online Retail
KEY MARKETS
• US, China, UK, Korea, France ROBUST PROJECTIONS
• Shopper analytics
• Nielsen panels
• Shipping data
• Third party data sources
LEADING CHINESE E-COMMERCE COMPANIES
• Single day broke $6B level
• Bigger than Amazon
• Management in analytics as competitive advantage
AMAZON
• Providing retail analytic expertise
• Advertising solutions for marketing
High Growth
WELL-POSITIONED TO FOLLOW ONLINE CONSUMPTION
EVOLVING OPPORTUNITIES GROWTH POTENTIAL CURRENT CAPABILITIES
$770B+
Note: Global FMCG Volume based on Nielsen estimates
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NIELSEN BUY: STRONG FOUNDATION, CONTINUED GROWTH
UNPARALLED INDUSTRY LEADERSHIP
SIGNIFICANT PRODUCT AND SERVICE INNOVATION
HIGH GROWTH IN DEVELOPING; GOOD GROWTH IN DEVELOPED
MULTIPLE GROWTH ACCELERATORS
EMERGING MARKETS CONTINUES TO PRESENT SUBSTANTIAL OPPORTUNITIES
AFRICA DWIGHT WATSON Managing Director – Africa
THE NEXT EMERGING FRONTIER
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AND GROWING EXPONENTIALLY
AFRICAN MIDDLE CLASS
300-500M PEOPLE or
China India
Brazil Russia
AN ENORMOUS OPPORTUNITY FOR OUR CLIENTS
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WHY NOW? TIPPING POINT
INFORMATION
AFRICA IS THE LARGEST UNTAPPED MARKET IN THE WORLD
• Population size • Economic growth • Growing stability • Natural resources • Innovation | mobile • First time buyers
• Low per capita income • Political unrest • Corruption
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UNIQUE ASPECTS OF DOING BUSINESS IN AFRICA
• TRANSPORT • POWER
• PRODUCT VS. BRAND • LATENT (YOUTH)
• COMMUNICATION • TRANSACTING
INFRASTRUCTURE
CONSUMER DEMAND
TECHNOLOGY
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UNIQUE ASPECTS…FRAGMENTED DISTRIBUTION
Going from 8 to 2 touch points creates 40% cost savings for clients
NIELSEN UNIQUELY POSITIONED TO CREATE VALUE
TODAY TOMORROW
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GROCERS/DUKAS IN GHANA KIOSKS IN UGANDA
PHARMACIES IN KENYA TABLE TOPS IN NIGERIA
UNIQUE ASPECTS…COMPLEX POINTS OF SALE/COMMERCE
• Emerging mobile payment systems
• Transactions in Kenya alone now exceed Western Union global money transfers
• Significant opportunity for Nielsen
WE VISITED 2 MILLION OUTLETS IN THE LAST YEAR SPANNING 34 DIFFERENT CHANNELS
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NIELSEN’S EXTENSIVE COVERAGE OF AFRICA'S CONSUMERS
• Grown from 16 to 40 countries in 2 years, representing 750 million consumers
• Visited 2 million retail outlets
• Covering ~98% of retail outlets across the continent
• Talking point in every C-suite conversation
ENABLING CLIENTS TO MOVE FROM “OPPORTUNITY” TO “POSSIBILITY”
NIELSEN PRESENCE
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CONSUMER SEGMENTATION STUDY EVER
AFFLUENCE HIGH LOW
Trendy Aspirants Balanced
Seniors
Evolving Juniors
Bachelors
Struggling Traditionals
Progressive Affluents
8%
20% 19% 11%
21% 12% 9%
Female Conservatives
REPRESENTING 600M
CONSUMERS IN 15 COUNTRIES
1 IN 5 WORLDWIDE TEENAGERS
LIVE IN AFRICA
CONSUMER CONFIDENCE AVAILABLE IN SUB-SAHARAN AFRICA FOR THE FIRST TIME
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INNOVATION
MOBILE TECHNOLOGY TRADITIONAL TRADE ADVISEMENT
NGO ALLIANCES
DIGITAL MAPS & SATELLITE IMAGERY
MOBILE TRANSACTIONS
TALENT DEVELOPMENT
REACHING UNTAPPED AUDIENCES
LEVERAGING OUR EXPERIENCE ACROSS THE CONTINENT OF AFRICA
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AFRICA: SIGNIFICANT GROWTH OPPORTUNITY
CONTINUATION OF NIELSEN FIRST MOVER ADVANTAGE
SUBSTANTIAL MARKET OPPORTUNITY WITH RAPIDLY GROWING MIDDLE CLASS
NO COMPANY HAS THE SAME PRESENCE, SCALE OR EXPERTISE
PRODUCTS AND SOLUTIONS MISSION CRITICAL FOR CLIENTS…SOLE SOURCE
LEVERAGING INNOVATION & NEW TECHNOLOGY TO BRING NEW INSIGHTS
AFRICA IS A LONG-TERM EXPANSION & GROWTH OPPORTUNITY FOR NIELSEN
WHERE WATCH MEETS BUY
RANDALL BEARD President – Advertiser Solutions
ADVERTISER SOLUTIONS
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NIELSEN MEASURES WHAT CONSUMERS WATCH & BUY
AUDIENCES & ADVERTISING CONSUMER PURCHASE
IMPROVING OUR CLIENTS’ ADVERTISING AND ROI
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NIELSEN’S 3R FRAMEWORK TO IMPROVE ADVERTISING ROI
REACH THE RIGHT PEOPLE
REACH RESONANCE INFLUENCE THEIR OPINION IMPACT THEIR BEHAVIOR
REACTION
ANSWERING CLIENTS’ BIGGEST QUESTIONS
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REACHING THE RIGHT CONSUMERS THRU “SINGLE SOURCE”
Nielsen Media TV, Online
Loyalty Card Credit, Debit Card
SINGLE SOURCE
HOUSEHOLDS
WATCH DATA BUY DATA
MATCHING WATCH & BUY DATA TO CREATE UNIQUE INSIGHTS
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REACHING THE RIGHT CONSUMERS THRU NIELSEN BUYER INSIGHTS
Heavy Buyer Index on Top Advertising Networks Among Car Rental Advertising
117 113 111 110
106 104 103 102
98
93 92 90 88
83 79
ESPN NFL TBS CBS FOX GOLF NBC ABC MSNBC HISTORY NBC SPORTS
TNT CNBC FOX NEWS
TRAVEL
Increase Decrease
Hea
vy c
ateg
ory
bu
yer
ind
ex v
A1
8-4
9
+33% IMPRESSIONS DELIVERED TO TARGET AUDIENCE
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REACHING THE RIGHT CONSUMERS IN-FLIGHT WITH ONLINE CAMPAIGN RATINGS
IMPROVED PERFORMANCE >2x
Daily Online Campaign Impressions
80% on target
DAY 1 DAY 30
40% on target
In-flight Optimization for Major Beverage Company
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IMPROVING RESONANCE IN-FLIGHT WITH BRAND EFFECT
U.S. based example, Nielsen TV Brand Effect, 5/1/11 – 7/31/11, Hispanic A18+
Original Ad
Optimized Ad
Ad Cumulative Performance
Hispanic A18+
22% IMPROVEMENT 39%
IMPROVEMENT
OPTIMIZATION INCREASED BRAND RECALL BY 39%
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IMPROVING REACTION THRU NIELSEN CATALINA SOLUTIONS
+33% Sales Lift
PLAN MEDIA AGAINST SEGMENT 2, EXECUTE & MEASURE IMPACT 2
Avg. Sales / Household
Control Exposed
$0.18
$0.24
MATCHING TARGET CONSUMERS WITH PROGRAMS WATCHED = SALES LIFT
IDENTIFY MOST RESPONSIVE CONSUMER SEGMENT 1
% Campaign Sales
Response
Segment 1 Segment 2
13%
64%
% Campaign Sales
Response
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ADVERTISER SOLUTIONS…IMPROVING MARKETING EFFECTIVENESS
LINKING AUDIENCE ASSETS TO NEW VERTICALS
<$50M
$220M
2007 TODAY
10-20% GROWER
DRIVES REVENUE OPPORTUNITY
• Automotive
• CPG
• Media
• QSR
• Travel & Leisure
• Retail
• Financial Svcs.
• Technology
• Telecom
• Entertainment
VERTICAL/MEDIA EXPANSION
TV Audio Digital
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AD SOLUTIONS: SIGNIFICANT ADVANTAGE AND GROWTH OPPORTUNITY
UNIQUE SOLUTIONS TO HELP CLIENTS IMPROVE ADVERTISING EFFECTIVENESS
NEW CLIENT VERTICALS…NEW AUDIENCE LINKAGE
CLEAR COMPETITIVE ADVANTAGE
PERFORMING WELL WITH SIGNIFICANT ROOM FOR FUTURE GROWTH
ACHIEVING SCALE… ACCRETIVE MARGINS… ROOM TO GROW
OUR SCALABLE PLATFORM FOR GROWTH
MITCHELL HABIB Chief Operating Officer
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THE MOST COMPLETE VIEW OF CONSUMERS
PANEL HOUSEHOLDS
6.7 BILLION STORE TRANSACTIONS EACH MONTH 34 MILLION
RETAIL ITEMS
1.7 MILLION STORE VISITS EACH MONTH
BUYER
250K
TV ONLINE
MEANINGFUL PARTNERSHIPS
1.6 TRILLION IMPRESSIONS PER YR
294 MILLION
U.S. TV VIEWERS
24X7 MONITORING OF 9,000 STATIONS AT 900 U.S. SITES
1.7 BILLION VIEWING RECORDS EACH MONTH
MOBILE
SURVEYS FROM
500,000+ MOBILE USERS
7 MILLION WEB EVENTS DAILY FROM MOBILE DEVICES
DIFFERENTIATING TECHNOLOGY WE HAVE
BUILT SINCE 2007:
ONE GLOBAL REFERENCE DATA SYSTEM
ANSWERS ON DEMAND
MEDIA 3.0 PLATFORM
ENTERPRISE SAP
PROPRIETARY CONTENT TAGS
CLIENT DELIVERY 3.0
GLOBAL TV AUDIENCE METERING PLATFORM
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UNMATCHED GLOBAL BREADTH & DEPTH
COUNTRIES CONSUMERS 103 5.9 BILLION
STORE VISITS 25 MILLION NIELSEN
NIELSEN PRESENCE
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GLOBAL TRACK COMPLETE EMPOWERS THE C-SUITE
Only Nielsen has the geographic footprint and tools that equip clients to make globally strategic decisions TIMELY AND ACCURATE INFORMATION
• Access rich data visualizations on web, tablet or phone
• Analyze market share, pricing, promotion, in-store placement
• Integrate third-party data (GDP, financials, shipments, etc.)
• Compare performance across regions and currencies with globally harmonized product references
• Continued efforts to decrease cycle time
PERFORMANCE M A N A G E M E N T
A S S E T ALLOCATION
COMPETITIVE
ANALYSIS R E V E N U E OPPORTUNITIES
OUR FOOTPRINT AND TOOLS HELP CLIENTS MAKE BETTER GLOBAL DECISIONS
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DIFFERENTIATED SOLUTIONS
ENABLED BY NIELSEN VALUES: SIMPLE + OPEN + INTEGRATED
Fewer manual touch points, faster cycle time and automated quality control
INDIAN INSTITUTE OF TECH. Innovation labs: sociology + technology in emerging markets
MASS. INSTITUTE OF TECH. Early stage big data research
TIBCO Nielsen Marketplace – cloud environment for Nielsen data
TATA CONSULTANCY SVCS. Satellite identification of emerging market populations & stores
STORE SURVEY Pen & Paper Mobile Phone Paper Maps GPS Mapping
RETAIL AUDIT Pen & Paper Digital Devices
CONSUMER SURVEY Pen & Paper PC & Tablet 70% of surveys now electronic
SATELLITE CARTOGRAPHY Costly, In-person Digital ID open markets, stalls, kiosks
ISRAELI DEVELOPMENT FUND Venture capital fund focusing on early marketing technology opportunities in the U.S. and Israel
GAME-CHANGERS IN DATA ACQUISITION STRATEGIC ALLIANCES
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1980s 1990s 2000-2006 2007-2013
INTELLECTUAL PROPERTY TO ACCELERATE INNOVATION
PATENT FILING TREND 271% INCREASE OVER THE LAST 7 YEARS
U.S. PATENTS GRANTED
U.S. PATENTS FILED
TOTAL ~630 U.S. patents granted & pending 1,500+ worldwide patents
598
161
59 20
INTELLECTUAL PROPERTY GROWTH ENTRENCHES COMPETITIVE ADVANTAGES
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COST SYNERGIES • Corporate Overhead
• Real estate and procurement
• Operations
• Platform consolidation
NIELSEN AUDIO UPDATE
STRATEGY • Transition all measurement to
Nielsen platforms
• Eliminate duplicate functions and layers
• Cultivate the best talent
INVESTMENTS • Quality Enhancements
• Digital Audio (Streaming) Audience Measurement
• Audio Sales Effect - ROI
• Global expansion
$45MM NET BENEFIT
UNDISPUTED LEADER IN
AUDIO ENCODING TECH + FOOTPRINT + TALENT
BETTER THAN EXPECTED
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OUR PRODUCTIVITY PLAYBOOK
STRATEGIC ALLIANCES
INFRASTRUCTURE SIMPLIFICATION
WORKFORCE OPTIMIZATION
BUSINESS PROCESS IMPROVEMENT
A REPEATABLE PROCESS TO DELIVER ONGOING PRODUCTIVITY
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RUNWAY FOR FUTURE PRODUCTIVITY
4,000 applications
3,000
applications
2,000 applications
50% revenue generated by
electronic data collection
SHARED SERVICES for 45% of operations
SHARED SERVICES for 9% of operations
SHARED SERVICES for 60% of operations
75% revenue generated by
electronic data collection
95% revenue generated by
electronic data collection
OPPORTUNITY FOR CONTINUED MARGIN IMPROVEMENT
2007 2013 2020
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OUR VISION: ENABLE REAL-TIME BUSINESS MODELS
Platform allowing clients to seamlessly integrate Nielsen insights into their workflow, leverage predictive insights
and manage the pulse of performance and growth
OPEN COLLABORATION
IN THE CLOUD
MASSIVE DISAGGREGATED
DATA SETS
UNIVERSAL CONTENT
IDENTIFICATION
POWERFUL, AUTOMATED
ANALYTICS
LONG TERM FINANCIAL GOALS & CONTEXT FOR FUTURE GROWTH BRIAN WEST Chief Financial Officer
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COMPELLING BUSINESS MODEL
• 5% revenue CAGR from ‘08 to ’13
• 29 quarters of consecutive growth
• Investing in key growth opportunities
• More than 400bps of margin expansion ‘08 to‘13
• Significant market/product reinvestment
• Sustainable operating efficiencies
• 8x increase in Adj. Net Income ‘08-’13 • Reduced Int. expense by more than $300M since ‘08 • Cash Tax rate down 50% ’08-’13 to ~16%
• De-levered from 9.1x to ~3.6xPF between ’06 to ’13
• Capital return through Dividend…~40% Payout ratio • $500M stock buy-back program announced
WELL POSITIONED TO DELIVER CONSISTENT RESULTS
ADJ. NET INCOME GROWTH
CAPITAL EFFICIENCY
CONSISTENT REVENUE GROWTH
OPERATING LEVERAGE
FRAMEWORK RESULTS
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COMPETITIVE PERSPECTIVE…ORGANIC GROWTH Total Market ($ billions)
(a) Organic and constant currency as reported by ESOMAR and company filings
2006
$3.8
$12.0
$8.2
2012
$14.7
$5.4
$9.3 2%
6%
‘06 –’12 CAGR(a)
$1.6
~60% Share of Growth
$1.1
NIELSEN…DRIVING MARKET GROWTH
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2013 GUIDANCE (Amounts in constant currency except adjusted net income per share)
a) Proforma as if Arbitron had been acquired on 12/31/12
b) Excludes certain one-time Audio deal-related costs
CONSISTENT WITH OCTOBER 2013 EARNINGS CALL
Total Revenue ~6%
Revenue (ex Audio) 3.75% - 4.0%
Adj. EBITDA margin growth 60-70bps
Adj. Net Income ~22%
Adj. Net Income Per Share
~$2.00
Deleveraging (a) ~0.3x
Free Cash Flow (b)
$530M - $580M
Capital Expenditures $370M - $380M
Depreciation & Amortization
$500M - $510M
Net book interest
$305M - $310M
Cash taxes $140M - $145M
Cash restructuring $75M - $85M
Est. wtd. avg. diluted shares outstanding for FY 2013 382M
OTHER FINANCIAL METRICS
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2008 2009 2010 2011 2012 2013E*
STRONG CONSISTENT FINANCIAL PERFORMANCE
* 2013E includes 4Q of Audio; CAGR excludes Audio. Figures are as reported, CAGR represented in constant currency.
26.6% 26.8% 27.2% 27.8% ~28.4% CC % Margins
$4.6
$5.7
23.9%
REVENUE ($B) ADJUSTED EBITDA ($B)
2008 2009 2010 2011 2012 2013E*
$4.9 $5.3 $5.4
5% CAGR
$1.2 $1.3
$1.5
$1.1
$1.5 $1.6
8% CAGR
$4.6
5.3% 6.2% 5.5% 4.0% 3.75 - 4.0% 6.6%
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FREE CASH FLOW AND ANI PER SHARE GROWTH
2008 2009 2010 2011 2012 2013E
($54)
$235 $209
$376 $426
$530-$580
2008 2009 2010 2011 2012 2013E
$0.40 $0.61
$0.82
$1.69
~$2.00
$1.44
38% CAGR
FREE CASH FLOW ($M)(a) ANI PER SHARE
5X ANI PER SHARE GROWTH & $600M OF FCF GROWTH SINCE 2008
24% CAGR
2008 2013E
CASH TAX RATE
(a) Free cash flow excludes impact of 2011 Sponsor Termination Fees ($102M) and certain Audio deal-related costs ($28M); CAGR excludes 2008
34%
~16%
2013E FREE CASH FLOW WALK
Adjusted EBITDA ~$1.6B
CAPEX (370-380)
Cash Taxes (140-145)
Cash Interest (300-305)
Cash Restructuring (75-85)
Working Capital/Other ~(135-155)
Estimated FCF $530M-$580M
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2008 2009 2010 2011 2012 2013E*
2008 2009 2010 2011 2012 2013E*
SEGMENT REVENUE ($ billions)
• Steady growth businesses
• Growth through recessionary periods – W. Europe drag of 1-2pts – Lower discretionary spend from MNC’s
• Solid developing markets growth
• Reacceleration as markets recover
• Higher growth…fueled by global and Ad Solutions
• Positioned to measure changing audience
• Leader in social media measurement
$1.5
BUY
WATCH
* 2013E includes 4Q of Audio; CAGR excludes Audio. Figures are as reported, CAGR represented in constant currency.
$1.7 $1.8 $1.9 $2.0 ~$2.1
6% CAGR
4% CAGR
$3.0 $2.9 $3.1
$3.4 $3.4 ~$3.5
WATCH DIGITAL TAILWIND…BUY RE-ACCELERATION
CC % 14.1% 4.0% 3.7% 4.5% ~5.0% 11.9%
CC % 0.6% 7.5% 6.6% 3.8% ~3.0% 3.9%
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2014 REVENUE RANGE (Percentages reflected as constant currency)
• Macro economic tailwind
• Improved discretionary environment
• Local client expansion
• Tablets, Smartphones, Social, OCR
• New verticals, new products
• Non-core legacy product performance
Audience Measurement 5.0-5.5% 5.5-6.0%
Ad Solutions 10-15% ~20%
Watch 5.0 – 5.5% 6.0 – 6.5%
Other (2%) 0-2%
Nielsen (ex Audio) 4.0% 6.0%
TOTAL NIELSEN GROWING 10-12%
Watch (ex Audio)
Buy
~$2.1B +~5%
~$3.5B +~3%
$5.6B
Europe (1%) 1%
Insights 4-6% ~10%
7-8% ~10% Developing
3.0 – 3.5% 5.0 – 5.5% Buy
RANGE DRIVERS HIGH LOW
2014E RANGE 2013E
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2014 GUIDANCE (Amounts in constant currency except adjusted net income per share)
CONTINUED EXECUTION IN LINE WITH LONG TERM FINANCIAL FRAMEWORK
Total Revenue 10.0% - 12.0%
Revenue (ex Audio) 4.0% - 6.0%
Adj. EBITDA margin rate 29.0% - 30.0%
Adj. Net Income 22.0% - 27.0%
Adj. Net Income Per Share
$2.45 - $2.55
Deleveraging
~0.3x
Free Cash Flow
~$700M
Capital Expenditures $400M - $410M
Depreciation & Amortization
$575M - $600M
Net book interest
$300M - $310M
Cash taxes $170M - $180M
Cash restructuring $110M - $130M
Est. wtd. avg. diluted shares outstanding for FY 2014 386M
OTHER FINANCIAL METRICS
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PROACTIVE BALANCE SHEET MANAGEMENT
1. Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis including Arbitron proforma Adjusted EBITDA. Excludes $288M of mandatory convertible subordinated debt due 2013, but includes all other debt, including capital leases; Proforma as if Arbitron had been acquired 12/31/12
2. Reflects 9/30/13 proforma debt balances; Figures exclude capital leases and bank overdrafts.
9.1x 7.9x 7.4x
6.2x 5.8x
4.0x 3.6xPF
2006 2007 2008 2009 2010 2011 2012 2013E
3.9xPF
141 151
2,989
733 1,083
0
800 625
2014 2015 2016 2017 2018 2019 2020 2021
($ MILLIONS)
• Executing on strategy to de-risk and de-lever the balance sheet
• No immediate financing needs and ~80% of debt is fixed
• Consistent access to capital markets over the last seven years
• Weighted average interest rate of 4.28%... Opportunities to drive even lower
• Tracking to net debt ratio target of 2.75x - 3.0x
DELEVERAGING PROGRESS (1)
DEBT MATURITY PROFILE (2)
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LONG TERM FINANCIAL FRAMEWORK
Note: All measures represented on constant currency basis.
REVENUE GROWTH MID-SINGLE DIGIT
ADJUSTED EBITDA GROWTH 1X - 2X REVENUE
DEVELOPING MARKET GROWTH DOUBLE DIGIT
ADJUSTED NET INCOME GROWTH MID-TEENS
CASH TAX RATE MID-TEENS TO LOW 20’S
TARGET LEVERAGE 2.75 - 3.0X
DIVIDEND GROWTH IN LINE WITH EARNINGS GROWTH
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CAPITAL ALLOCATION…MEDIUM TERM (2015 & 2016)
Free Cash Flow
~$1B/YR
Dividend ~45%
Mandatory Debt ~20%
Buyback / Tuck-in BD
~35%
CAPITAL RETURN…TOP PRIORITY
CLOSING REMARKS
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ONGOING & INCREMENTAL SHAREHOLDER VALUE
COMPELLING CAPITAL ALLOCATION FRAMEWORK
EXPANDING GLOBAL FOOTPRINT
POWERFUL BUSINESS MODEL DRIVEN BY PERFORMANCE MANAGEMENT
CONSUMER DRIVEN INNOVATION
FIVE KEY MESSAGES
NIELSEN: A DIFFERENTIATED, GLOBAL GROWTH COMPANY
APPENDIX
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CERTAIN NON-GAAP MEASURES
Overview of Non-GAAP Presentations
We consistently use the below non-GAAP financial measures to evaluate the results of our operations. We believe that the presentation of these
non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations and that
when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with a more meaningful
understanding of our ongoing operating performance. None of the non-GAAP measures presented should be considered as an alternative to net
income or loss, operating income or loss, cash flows from operating activities or any other performance measures of operating performance or
liquidity derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered
in isolation or as substitutes for an analysis of our results as reported under GAAP.
Constant Currency Presentation
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-
GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides
valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate constant
currency percentages by converting our prior-period local currency financial results using the current period exchange rates and comparing these
adjusted amounts to our current period reported results.
Net Debt and Net Debt Leverage Ratio
The net debt leverage ratio is defined as net debt as of the balance sheet date divided by Adjusted EBITDA for the twelve months then ended. Net
debt and the net debt leverage ratio are not presentations made in accordance with GAAP, and our use of these terms may vary from the use of
similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items
subject to interpretation.
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CERTAIN NON-GAAP MEASURES (continued)
Adjusted EBITDA
We define Adjusted EBITDA as net income or loss from our consolidated statements of operations before interest income and expense, income taxes,
depreciation and amortization, restructuring charges, goodwill and intangible asset impairment charges, stock-based compensation expense and other
non-operating items from our consolidated statements of operations as well as certain other items considered unusual or non-recurring in nature.
Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from the use of similarly-
titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to
interpretation. We use Adjusted EBITDA to consistently measure our performance from period to period both at the consolidated level as well as
within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors.
Adjusted Net Income
We define Adjusted Net Income as net income or loss from our consolidated statements of operations before income taxes, depreciation and
amortization associated with acquired tangible and intangible assets, restructuring charges, goodwill and intangible asset impairment charges, other
non-operating items from our consolidated statements of operations and certain other items considered unusual or non-recurring in nature, reduced
by cash paid for income taxes. Also excluded from Adjusted Net Income is interest expense attributable to the mandatory convertible subordinated
bonds converted on February 1, 2013.
Free Cash Flow
We define free cash flow as net cash provided by operating activities less capital expenditures. We believe providing free cash flow information
provides valuable supplemental information regarding our ability to generate cash without additional external financing. Free cash flow is not a
presentation made in accordance with GAAP.
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ADJUSTED NET INCOME RECONCILIATION ($ in millions except per share amounts. Year ended December 31 for all years.)
(a) Other items primarily consist of transaction-related fees.
Net income $272 $87 $133 $(489) $(589) $(354) $(419) (Income)/ loss from discontinued operations, net of tax (30) (26) 13 132 257 (104) (114)
Interest expense, net 386 443 614 598 633 661 675 Provision / (benefit) for income taxes 122 6 (54) (152) 26 12 (114)
Depreciation and amortization 493 502 530 519 462 451 423 EBITDA 1,243 1,012 1,236 608 789 666 451
Impairment of goodwill and intangible – – – 402 95 – – Equity in net (income)/ loss of affiliates (5) (3) (5) 22 7 1 (12) Other non-operating loss/(income), net 135 219 (28) 84 6 69 48
Restructuring charges 85 83 59 60 118 133 70 Stock-based compensation expense 34 27 18 14 18 52 34
Other items (a) 12 112 44 36 54 69 166
Adjusted EBITDA 1,504 1,450 1,324 1,226 1,087 990 757 Interest expense, net (386) (443) (614) (598) (633)
Depreciation and amortization (493) (502) (530) (519) (462) Depreciation and amortization of acquisition-related
tangible and intangible assets 145 161 196 211 208
Cash paid for income taxes (124) (132) (129) (139) (91) Stock-based compensation expense (34) (27) (18) (14) (18)
Interest expense attributable to mandatory convertible bonds 23 21 – – –
Adjusted net income 635 528 229 167 91 Adjusted net income per share of common stock, diluted $1.69 $1.44 $0.82 $0.61 $0.40
2012 2011 2010 2009 2008 2007 2006
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Weighted-average shares of common stock outstanding as of December 31, basic 361,787,868 352,469,181 276,499,073 273,905,810 226,674,754
Dilutive shares of common stock from stock compensation plans 4,523,116 5,032,773 3,153,513 – –
Shares of common stock convertible associated with the mandatory convertible bonds 10,416,700 9,531,994 – – –
Shares of common stock convertible associated with the mandatory convertible bonds 376,727,684 367,033,948 279,652,586 273,905,810 226,674,754
2008
ADJUSTED NET INCOME RECONCILIATION
2012 2010 2009 2011
($ in millions except per share amounts. Year ended December 31 for all years.) (continued)
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FREE CASH FLOW RECONCILIATION ($ in millions. Year ended December 31 for all years.)
Net cash provided by operating activities $784 $641 $543 $517 $318
Sponsor termination fee – 102 – – –
Capital expenditures (358) (367) (334) (282) (370)
Free Cash Flow $426 $376 $209 $235 $(53)
2008 2012 2010 2009 2011
