ACNielsen Posts Solid Growth in ThirdQuarter
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Posted: Thursday, October, 19th, 2000
>ACNielsen Posts Solid Growth in Third
Quarter
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By the Business Editors
Business Wire
STAMFORD | Earns 41 Cents A Share Before Operation Leading Edge Charge;
Local-Currency Revenue Up 7%;
Company Confirms Targets for Full Year 2000
ACNielsen Corporation (NYSE: ART) posted higher earnings in the
third quarter, as each of the company's regional businesses
contributed solid local-currency results.
Earnings were $24.5 million, or $0.41 per diluted share,
including a negative impact of $0.02 per share from foreign-currency
translation, compared with $23.4 million, or $0.39 per diluted share,
in the prior year. The 2000 results include a $5.5 million pre-tax
loss from ACNielsen eRatings.com, but exclude a pre-tax charge of
$12.2 million for Operation Leading Edge, the company's plan to
accelerate growth. Including the charge, reported earnings were $17.0
million, or $0.29 per diluted share.
Core operating income - before the charge for Operation Leading
Edge and start-up costs for ACNielsen eRatings.com - rose 26.2% in
local currency. After a negative foreign-currency translation impact
of $2.2 million, core operating income was $44.5 million, up 20.2%
over 1999. On the same basis, net income was $27.9 million, or $0.47
per diluted share. Core EBITDA came in at $66.2 million, up 16.2%.
Revenue in local currency was up 7.0%. However, negative currency
translation impacts of $17.7 million - especially involving the euro,
the British pound and the Australian dollar - held reported growth to
2.4%. As a result, reported revenue came in at $390.9 million.
"ACNielsen's operations delivered another quarter of excellent
growth in both revenue and earnings," said Nicholas L. Trivisonno,
chairman and chief executive officer. "Although weak foreign
currencies continue to have a negative impact on our reported results,
our operations around the world remain strong and growing."
Entering the fourth quarter, the company is on track to deliver
earnings within the range of current analyst estimates for the full
year, which is between $1.38 and $1.42 per diluted share, before
charges for Operation Leading Edge. In addition, ACNielsen said it is
on track to reach its full-year targets of 25% core-earnings-per-share
growth and a 10% core operating margin.
Progress on Operation Leading Edge
During the third quarter, ACNielsen continued to make progress on
Operation Leading Edge, its accelerated-growth program. The company
continued to convert country-level information to a harmonized
regional system, part of a larger effort to redesign its information
processing and content-delivery systems.
Operation Leading Edge will result in a series of pre-tax
charges, spread over three years, totaling approximately $180 million.
For the full year of 2000, the company expects charges totaling $55
million to $60 million, compared with a previous forecast of $70
million, due to timing of expenses.
Under the program, ACNielsen is targeting to double its core
earnings per share and achieve a core operating margin approaching 14%
by 2002, while reducing its annual cost base by $60 million.
ACNielsen eRatings.com Continues Expansion
During the third quarter, ACNielsen eRatings.com began delivering
Internet audience and advertising information in six new countries -
Denmark, Finland, France, Italy, Norway and Sweden. The business now
operates in 12 markets outside the United States and Canada. Through
the first nine months, ACNielsen eRatings.com has signed more than 200
clients to contracts with a total value of $5.4 million - including 74
new clients in the third quarter who signed contracts valued at $2.4
million.
For the quarter, ACNielsen eRatings.com generated revenue of $0.8
million and reported an operating loss of $5.5 million, as it
continues to invest in the ongoing rollout of the Nielsen//NetRatings
service and other activities.
Together with its partner, NetRatings, Inc., ACNielsen
eRatings.com remains on track to establish the Nielsen//NetRatings
service in more than 30 major markets, representing more than 90% of
the world's online population, by the end of 2001.
Nine-Month Results
For the first nine months of 2000, revenue rose 8.8% in local
currency. Reported revenue came in at $1,166.7 million, up 4.5%, after
a negative $47.6 million impact from foreign-currency translation.
Excluding charges this year for Operation Leading Edge, as well
as the cumulative effect of an accounting change in last year's first
quarter, earnings for the 2000 period were $53.9 million, or $0.91 per
diluted share, compared with $50.3 million, or $0.84 per diluted
share, in 1999. Including the charges for Operation Leading Edge,
earnings for the first nine months of 2000 were $32.0 million, or
$0.54 per diluted share.
Nine-month core operating income advanced 31.8% in local
currency. After a $3.0 million negative impact from foreign-currency
translation, core operating income was $100.5 million, up 28.0%. Core
net income for the period was $63.3 million, or $1.07 per diluted
share, including a negative foreign-currency-translation impact of
$1.9 million, or $0.03 per diluted share. Core EBITDA rose 19.5%, to
$168.2 million.
The following discussion of ACNielsen's performance refers to
third-quarter operating results compared with the prior year.
References to operating income exclude a pre-tax charge of $12.2
million for Operation Leading Edge in 2000, and the impact of Year
2000 computer software modification costs totaling $2.6 million in
1999.
Americas Region
======================================================================
($ in millions) % Change
-------------------
Local
Q3 '00 Q3 '99 Currency Reported
------ ------ -------- --------
Operating Revenue $ 182.5 $ 170.0 7.8% 7.3%
Operating Income 29.1 25.4 15.2% 14.3%
======================================================================
Revenue increased 7.8% in local currency. Reported revenue, after
foreign-currency translation, was $182.5 million, up 7.3%.
Local-currency operating income climbed 15.2% and reported operating
income rose 14.3%, to $29.1 million.
Revenue and operating income at ACNielsen U.S. grew by 9.3% and
33.0%, respectively, primarily due to rising sales of account-level
retail measurement and consumer panel services. However, lower demand
for the test-marketing services of ACNielsen BASES and ACNielsen
Market Decisions held down reported results for the United States
overall. Total U.S. revenue was up 4.5%, to $130.3 million, while
reported operating income rose 16.2%, to $20.1 million.
Canada and Latin America posted local-currency revenue growth of
16.9%. Reported revenue came in at $52.2 million, up 15.1%.
Local-currency operating income rose 13.1%, while reported operating
income advanced 10.2%, to $9.0 million.
Europe, Middle East and Africa Region
======================================================================
($ in millions) % Change
-------------------
Local
Q3 '00 Q3 '99 Currency Reported
------ ------ -------- --------
Operating Revenue $ 134.1 $ 142.3 4.7% (5.8%)
Operating Income 7.4 7.4 19.6% 0.0%
======================================================================
Local-currency revenue increased 4.7%, led by growth in the
United Kingdom, France, the Nordic countries and the Emerging Markets,
and by the continued expansion of ACNielsen BASES in Europe. Reported
revenue, however, declined 5.8%, to $134.1 million, after a $14.9
million negative impact from foreign-currency translation, primarily
the result of the weak euro and British pound.
Operating income rose 19.6% in local currency, with the United
Kingdom, in particular, delivering a strong quarter. Overall growth
was held down by a decline in Germany, where the company is incurring
additional expenses as it transitions clients to the new MarketTrack
retail measurement service. After a $1.5 million negative impact from
foreign-currency translation, reported operating income was $7.4
million, essentially even with the prior year.
Asia Pacific Region
======================================================================
($ in millions) % Change
-------------------
Local
Q3 '00 Q3 '99 Currency Reported
------ ------ -------- --------
Operating Revenue $ 73.5 $ 69.6 8.5% 5.7%
Operating Income 8.0 6.7 26.1% 19.3%
======================================================================
Revenue, in local currency, advanced 8.5%, as Greater China,
Korea and Southeast Asia produced solid results. Along business lines,
the region saw overall growth in customized research and media
measurement, while retail measurement sales rose in Asia. Including a
negative $2.0 million impact from foreign-currency translation,
reported revenue came in at $73.5 million, up 5.7%. The weak
Australian and New Zealand dollars, in particular, held back reported
growth.
Operating income climbed 26.1% in local currency, while reported
operating income advanced 19.3%, to $8.0 million.
ACNielsen, with 1999 revenue of $1.5 billion, is the world's
leading market research firm, offering measurement and analysis of
marketplace dynamics, consumer attitudes and behavior, and new and
traditional media in more than 100 countries. Clients include leading
consumer product manufacturers and retailers, service firms, media and
entertainment companies and the Internet community.
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," "designed," "intend," "could," "should," "planned,"
"estimated," "potential," "target," "aim," "objective" and "goal,"
among others. 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 Euro plans on a timely basis; (vi)
the likely incurrence of significant losses by ACNielsen eRatings.com
while its business is being developed, the difficulty of forecasting
its future revenues and costs and uncertainties associated with the
international development of an Internet ratings service; (vii) the
Company's ability to successfully implement Operation Leading Edge
(its announced plan to enhance its products and services, address
changing client needs, improve efficiency and reduce its cost
structure) and to achieve the estimated levels of revenue and profit
growth therefrom; (viii) the impact of foreign exchange rate
fluctuations since so much of the Company's earnings are generated
abroad; (ix) the degree of acceptance of new product introductions;
(x) the uncertainties of litigation, including the IRI lawsuit; as
well as other risks and uncertainties detailed from time to time in
the Company's Securities and Exchange Commission filings. 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.
Note to Editors: Look for this earnings release and other
ACNielsen news on the Internet at http://acnielsen.com.
ACNielsen Webcast: ACNielsen's third-quarter conference call will
be Webcast at 3:00 p.m. U.S. Eastern Time today, Wednesday, October
18, 2000. The Webcast can be accessed at http://acnielsen.com.
ACNielsen Corporation
Condensed Statements of Earnings
(in millions, except per share amounts)
(unaudited)
For the Quarters Ended September 30,
-----------------------------------
2000 1999
---- ----
Operating Revenue $ 390.9 $ 381.9
Operating Costs 195.9 188.8
Selling & Administrative Expenses 134.0 133.5
Depreciation & Amortization 22.0 20.1
Operation Leading Edge Costs 12.2 --
Year 2000 Expenses -- 2.6
---------- ----------
Operating Income 26.8 36.9
Other Income, Net 0.6 2.1
---------- ----------
Income Before Income
Tax Provision 27.4 39.0
Income Tax Provision 10.4 15.6
---------- ----------
Net Income $ 17.0 $ 23.4
========== ==========
Net Income Per Share of Common Stock
Basic $ 0.29 $ 0.40
========== ==========
Diluted $ 0.29 $ 0.39
========== ==========
Weighted Average Number of
Shares Outstanding
Basic 57.8 58.0
Diluted 59.5 60.1
ACNielsen Corporation
Condensed Statements of Earnings
(in millions, except per share amounts)
(unaudited)
For the Nine Months Ended September 30,
--------------------------------------
2000 1999
---- ----
Operating Revenue $ 1,166.7 $ 1,116.6
Operating Costs 599.3 557.7
Selling & Administrative Expenses 413.9 408.3
Depreciation & Amortization 68.1 62.2
Operation Leading Edge Costs 35.3 --
Year 2000 Expenses -- 9.9
---------- ----------
Operating Income 50.1 78.5
Other Income, Net 1.5 5.3
---------- ----------
Income Before Income Tax Provision
and Cumulative Effect of Change
in Accounting Principle 51.6 83.8
Income Tax Provision 19.6 33.5
---------- ----------
Income Before Cumulative Effect
of Change in Accounting Principle 32.0 50.3
Cumulative Effect to January 1, 1999,
of Change in Accounting for Costs
of Start-Up Activities, Net of
Income Tax Benefit of $10.3 -- (20.2)
---------- ----------
Net Income $ 32.0 $ 30.1
========== ==========
Basic Earnings Per Share:
Income Before Cumulative Effect of
Change in Accounting $ 0.55 $ 0.87
Cumulative Effect of Change
in Accounting -- (0.35)
---------- ----------
Net Income $ 0.55 $ 0.52
========== ==========
Diluted Earnings Per Share:
Income Before Cumulative Effect of
Change in Accounting $ 0.54 $ 0.84
Cumulative Effect of Change
in Accounting -- (0.34)
---------- ----------
Net Income $ 0.54 $ 0.50
========== ==========
Weighted Average Number of
Shares Outstanding
Basic 57.7 57.8
Diluted 59.2 60.2
ACNielsen Corporation
Results by Business Unit
(in millions)
(unaudited)
For the Quarters Ended September 30,
-----------------------------------
Revenue Operating Income (Loss)
------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
United States $ 130.3 $ 124.7 $ 20.1 $ 17.3
Canada/Latin America 52.2 45.3 9.0 8.1
--------- --------- --------- ---------
Total Americas 182.5 170.0 29.1 25.4
Europe, Middle East
& Africa 134.1 142.3 7.4 7.4
Asia Pacific 73.5 69.6 8.0 6.7
Year 2000 Costs -- -- -- (2.6)
--------- --------- --------- ---------
Subtotal - Regions 390.1 381.9 44.5 36.9
ACNielsen eRatings 0.8 -- (5.5) --
--------- --------- --------- ---------
Subtotal 390.9 381.9 39.0 36.9
Operation Leading Edge (1) -- -- (12.2) --
--------- --------- --------- ---------
Total $ 390.9 $ 381.9 $ 26.8 $ 36.9
========= ========= ========= =========
For the Nine Months Ended September 30,
--------------------------------------
Revenue Operating Income (Loss)
------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
United States $ 385.3 $ 352.6 $ 50.8 $ 42.8
Canada/Latin America 151.5 134.5 22.1 19.9
--------- --------- --------- ---------
Total Americas 536.8 487.1 72.9 62.7
Europe, Middle East
& Africa 415.5 432.1 12.6 13.9
Asia Pacific 213.1 197.4 15.0 11.8
Year 2000 Costs -- -- -- (9.9)
--------- --------- --------- ---------
Subtotal - Regions 1,165.4 1,116.6 100.5 78.5
ACNielsen eRatings 1.3 -- (15.1) --
--------- --------- --------- ---------
Subtotal 1,166.7 1,116.6 85.4 78.5
Operation Leading Edge (1) -- -- (35.3) --
--------- --------- --------- ---------
Total $ 1,166.7 $ 1,116.6 $ 50.1 $ 78.5
========= ========= ========= =========
(1) Represents the charge for Operation Leading Edge in the quarter
totaling $12.2 ($3.9 in the U.S., $0.7 in Canada/Latin America,
$6.1 in Europe, Middle East & Africa, and $1.5 in Asia Pacific)
and in the nine months totaling $35.3 ($6.8 in the U.S., $2.1 in
Canada/Latin America, $18.5 in Europe, Middle East & Africa, and
$7.9 in Asia Pacific).
ACNielsen Corporation
Condensed Consolidated Balance Sheets
(in millions)
September 30, December 31,
2000 1999
(unaudited)
------------ -----------
Assets
Current Assets
Cash and Cash Equivalents $ 125.5 $ 135.2
Accounts Receivable - Net 296.5 294.3
Other Current Assets 71.9 62.0
---------- ----------
Total Current Assets 493.9 491.5
Notes Receivable and
Other Investments 60.5 35.8
Property, Plant & Equipment - Net 147.4 159.1
Other Assets - Net 529.0 541.5
---------- ----------
TOTAL ASSETS $ 1,230.8 $ 1,227.9
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Debt $ 123.9 $ 109.2
Other Current Liabilities 431.0 457.4
---------- ----------
Total Current Liabilities 554.9 566.6
Long-Term Liabilities 131.1 139.5
---------- ----------
TOTAL LIABILITIES 686.0 706.1
Commitments and Contingencies
Shareholders' Equity 544.8 521.8
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,230.8 $ 1,227.9
========== ==========
--30--lp/ny*
CONTACT: ACNielsen Corporation, Stamford
Media Contact:
Will Thoretz, 203/961-3337
Investor Contact:
Darial Sneed, 203/961-3345
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