ACNielsen More Than Doubles Operating Income, Net Income and Earnings Per Share in 1997; 40% Increase in Fourth-Quarter Net Income Caps Year of Continuous Improvement

Business Wire, Feb 19, 1998

STAMFORD, Conn.--(BUSINESS WIRE)--February 19, 1998--ACNielsen Corporation (NYSE: ART) said today that it more than doubled its operating income, net income and earnings per share in 1997.

The company reported full-year net income of $35.9 million and diluted earnings per share of $0.62, both more than double prior-year levels. Operating income also more than doubled, to $60.8 million, while the company's operating margin increased to 4.4% from 2.1%, both after a negative foreign currency translation impact of almost $11 million. Operating income and operating margin figures are prior to a special charge in the 1997 fourth quarter.

Full-year revenue rose 8.5% in local currency. On a reported basis, revenue increased 2.4%, to $1,391.6 million, after translating foreign currencies to the stronger U.S. dollar.

"In 1997, our first full year as an independent company, ACNielsen delivered," said Nicholas L. Trivisonno, chairman and chief executive officer. "We surpassed each of our operating targets, and we did so despite a substantial negative impact from foreign currency translation.

"I'm particularly pleased with the progress we continue to make in each of our regions," Trivisonno said. "Led by our U.S. business, the Americas achieved strong revenue growth and substantially higher profits. Europe, Middle East & Africa delivered higher revenue and income in local currency, and made excellent progress on its turnaround in Western Europe. Asia Pacific produced strong profit growth, benefiting from a continued focus on client service, a more disciplined approach to customized consumer research, and productivity improvements.

"Given our strong quarter-over-quarter momentum in 1997, and our solid prospects at the start of this year," Trivisonno said, "I am confident that we will continue to deliver strong operating and net income growth in 1998."

Fourth-Quarter Results

Net income in the fourth quarter reached $16 million, up 40% over the prior year, while diluted earnings per share climbed 35%, to $0.27 per share. Each of ACNielsen's operating regions contributed to the overall increase.

During the fourth quarter of 1997, ACNielsen recorded a special, pre-tax charge of $36 million, primarily to accelerate the return to profitability of its business in Japan. The charge was offset by a non-operating, pre-tax gain of $39 million from the sale of non-strategic investments in two companies -- Manugistics Group, Inc. and GeoQuest International Holdings, Inc. On an after-tax basis, the net impact of the charge and gain was neutral.

Excluding the fourth-quarter charge, operating income was $28.2 million, up 36% over the prior year, even after absorbing a $5.4 million negative impact from foreign currency translation. Local currency revenue advanced 7.5%, but reported revenue, at $363.6 million, was slightly lower than the prior year due to the impact of a strong U.S. dollar on Europe and Asia results.

The following discussion of ACNielsen's regional performance refers to full-year operating results, compared with the prior year. References to operating income exclude the impact of a special charge of $36 million in the 1997 fourth quarter.

Americas Region

Full-year revenue advanced 10.5% in local currency. After translation to the U.S. dollar, reported revenue was $514.0 million, up 8.9%. The region's operating income rose 149.9%, to $43.3 million.

In the United States, revenue rose 8.2%, to $310.0 million, reflecting continued strong growth in account-level information and consumer panel services. Operating income reached $19.5 million, a $24.4 million improvement over 1996. The increase was due to higher revenue coupled with lower costs and significant productivity gains.

Combined revenue for Canada and Latin America was $204.0 million, up 10.0%, driven by increased sales of retail measurement and consumer panel services in Canada, and strong retail measurement growth in Brazil, Mexico and Colombia. Operating income rose 6.8%, to $23.8 million, despite a negative $1.7 million impact from foreign currency translation.

Europe, Middle East and Africa Region

Revenue advanced 6.6% in local currency, reflecting nearly 40% growth in Eastern Europe, the addition of new revenue from Turkey, Israel and South Africa, and growth in substantially all countries in the region. Reported revenue of $579.0 million, however, was slightly below 1996 levels due to the impact of the strong U.S. dollar.

Operating income rose 33.9% in local currency, but reported income, at $21.2 million, was essentially flat, after absorbing an $8 million negative impact from currency translation. The increase in local-currency operating income was driven by strong income growth in Eastern Europe, overall cost reductions and improved results in the U.K. and France.

Asia Pacific Region

Local-currency revenue increased 9.4%, reflecting strong demand for ACNielsen's market research services, particularly in Taiwan and Korea, and from growth in the region's multi-country business. Reported revenue, including a negative $13.3 million foreign exchange impact, was $264.7 million, up 4.2%.