Nielsen
Annual Report 2015

Plain-text annual report

TOTAL MEASUREMENT UNLIMITED POSSIBILITIES 2015 ANNUAL REPORT www.nielsen.com/2015ar WE ARE A GLOBAL, INDEPENDENT MEASUREMENT AND DATA COMPANY FOR FAST-MOVING CONSUMER GOODS AND MEDIA. FOR MORE INFORMATION ON OUR COMPANY, INCLUDING BUSINESS SEGMENT DETAILS, CASE STUDIES AND AN IN-DEPTH LOOK AT OUR INITIATIVES AROUND CORPORATE RESPONSIBILIT Y, PLEASE VISIT: www.nielsen.com/2015ar MESSAGE FROM OUR CEO MITCH BARNS CHIEF EXECUTIVE OFFICER Change is constant. Throughout Nielsen’s 92-year history, a key to our success has been our ability to embrace change and continuously renew ourselves to stay current with changing markets. In 2015, our Watch business saw an accelerated pace of change, largely driven by technology and resulting media fragmentation, leading to shifts in consumers’ viewing behavior across screens and platforms. Our Buy business saw continued globalization, the ongoing rise of e-commerce, client consolidation, and the growing strength of smaller players in the fast-moving consumer goods market. While these changes challenged us, they also helped propel our progress. In fact, the ability of our teams to leverage change as a means for progress is a competitive advantage and one of the keys to our steady, consistent business performance. 2015 ANNUAL REPORT 1 AUDIENCES ARE SCREEN, PLATFORM AND DEVICE AGNOSTIC Even while we embrace change, we stay true to who we are: a global, independent measurement company. Measurement is the idea that Arthur Nielsen founded our company on decades ago. It’s often true that a successful company’s biggest idea is the one on which it was originally built. There is power in continually refocusing on that original idea. For us, that original idea is measurement. Now more than ever, our clients rely on us to provide high quality, independent, useful measurement of their performance. They put their trust in us every day, and some of them have been putting their trust in us for more than 80 years. Our clients rely on us not only to measure their performance, but also to help them improve their performance. Measurement tells our clients what happened. But they also want to know why it happened and what next — what they need to do to improve. Our world-class analytics help our clients improve the efficiency and effectiveness of their marketing, advertising, sales, and innovation. To do this with more speed and scale, we’re moving toward a platform-based, system- oriented approach that connects our core measurement data to explanatory and predictive analytics, all focused on our clients’ key business questions. In short, we’re building a performance improvement system that helps them turn “Big Data” into “Smart Data” to make it actionable. OUR OBJECTIVE IS FULL COVERAGE — FULL COVERAGE OF THE “TOTAL AUDIENCE” IN OUR WATCH BUSINESS AND THE “TOTAL CONSUMER” IN OUR BUY BUSINESS. It all starts with high quality, independent measurement of consumers. Our objective is full coverage — full coverage of the “Total Audience” in our Watch business and the “Total Consumer” in our Buy business. In Watch, the market is in the middle of an important transition: Consumers have a growing array of options for viewing their favorite content, and this is fundamentally changing the businesses of television, advertising, and measurement. Nielsen’s Total Audience Measurement system enables media companies and advertisers to make the most of the evolving media landscape, providing them 2 NIELSEN EXECUTION OF NIELSEN TOTAL AUDIENCE GROSSED AND DE-DUPLICATED TOTAL REPORTING ACROSS ALL DEVICES, ACCESS POINTS, AND BUSINESS MODELS TV CONNECTED DEVICE PC TABLET SMARTPHONE R A E N I L H Q A / 7 C / 3 C I C M A N Y D PROGRAMS & ADS CONTENT ADS with a comprehensive view of their audience for both ads and content, in the form of independent, comparable, de-duplicated measurement across all screens and platforms. In parallel, our Buy business is focused on Total Consumer Measurement. Our aim is to measure all consumer purchases as buying behavior continues to fragment across channels and segments. As consumers carve a path for a new way to buy — for instance, e-commerce, mobile devices, and subscription models — we too are carving out new ways to measure the full range of consumer purchasing, connecting our high quality panels with big data to provide the accuracy, granularity, and efficiency that our clients require. While the United States is our largest market, we are a global company. In our Buy business, we cover 106 countries representing more than 90% of the world’s population. This is a significant competitive advantage because only Nielsen is able to provide multinational corporations with a global view of their market share. Local and regional players are also important growth clients, particularly in China and a range of other markets across Asia, Africa, and Latin America. We also have a strong and growing global presence in our Watch business. We now measure media in 47 countries that together represent approximately 80% of global advertising spending. Our digital audience measurement capability is a rapidly growing part of this footprint, and at the end of 2015 our Digital Ad Ratings metric covered 17 countries representing about 85% of global digital advertising spending. Looking ahead, you’ll see us enter additional countries as we extend our Total Audience Measurement system worldwide. Media fragmentation is a global phenomenon; whether in the U.S., Southeast Asia, or elsewhere, media buyers and sellers need a complete picture of the audience across all screens and platforms, and we’ll be there to provide it. WE NOW MEASURE MEDIA IN 47 COUNTRIES THAT TOGETHER REPRESENT APPROXIMATELY 80% OF GLOBAL ADVERTISING SPENDING. 2015 HIGHLIGHTS 2015 was a banner year for Nielsen. On a constant currency basis, we posted another year of mid-single-digit 2015 ANNUAL REPORT 3 A NEED FOR GREATER PRECISION IN ADVERTISING revenue growth, solid margin expansion, and record free cash flow, despite the volatile economic backdrop. Steady, consistent, and resilient: That’s who we are. We continued to leverage our measurement and analytics to help our clients make the important connections that drive their business. Our platform-based, system-oriented approach is nicely in sync with our clients’ evolving needs related to their marketing, advertising, sales, and innovation activities. As a result, it helped drive a number of wins across our Watch and Buy segments in 2015. TOTAL AUDIENCE MEASUREMENT IS PERFECTLY ALIGNED WITH WHAT THE MARKET NEEDS, AND NIELSEN IS THE ONLY COMPANY THAT CAN PROVIDE IT. platforms. Total Audience Measurement is perfectly aligned with what the market needs, and Nielsen is the only company that can provide it. Our Watch segment’s revenues increased nearly 5% on a constant currency basis, including a 6.4% increase in Audience Measurement of video and text as clients continue to adopt our expanded measurement offerings. Our Buy segment continued to strengthen and expand in 2015, with revenues up 5% on a constant currency basis, led by Emerging Markets, which grew 8.5%, despite volatility in a number of economies. While that volatility is real, it doesn’t change our investment thesis, supported by the strong long-term tailwinds of population growth, a growing middle class, and ongoing urbanization. All of these factors drive a need for more measurement coverage and granularity, which, in turn, drive growth for our business. In our Watch segment, the market’s need for a complete view of the consumer is greater than ever. In line with that, our top priority and biggest accomplishment in 2015 was Total Audience Measurement, our comprehensive system that provides independent, comparable, currency-grade ratings for both content and ads, across all screens and In Developed Markets, we continued to win new clients in the relatively faster-growing mid-tier and smaller client segments, adding to our historical strength with the big global players. Our teams also made outstanding progress with retailers, one of our top priorities. Retailers are long-time data partners for Nielsen, but they also have 4 NIELSEN NIELSEN MARKETING CLOUD INTEGRATING NIELSEN SOLUTIONS INTO A COHESIVE BACKBONE ANALYTICS MEASUREMENT DATA MANAGEMENT PLATFORM (DMP) NIELSEN MARKETING CLOUD ATTRIBUTION ROI DIGITAL DATA DATA a growing need for our analytics to help with their advertising, marketing, and merchandising decisions, both offline and online. We’re now working with over 100 e-commerce retailer clients worldwide. Our Marketing Effectiveness practice saw another year of double-digit growth as we integrated our Watch and Buy assets to drive better marketing and advertising ROI. This is important to both buyers and sellers of media, and it appeals to not only our core consumer packaged goods and media clients, but also advertisers in a range of other verticals, including automotive, financial services, telecom, and retailing. In March 2015, we completed the acquisition of eXelate, a leading provider of data and technology to facilitate programmatic advertising, bringing precision, speed, and efficiency to both buyers and sellers. As part of Nielsen, eXelate’s assets and capabilities also play an important role in the Nielsen Marketing Cloud, our enterprise marketing platform that connects and integrates a wide range of datasets, leveraged through apps that help our clients improve the precision and ROI of advertising. We generated record free cash flow of more than $800 million in 2015, up 18% compared to the prior year. Our strong free cash flow enables us to invest consistently in our key growth initiatives while also delivering incremental value for our shareholders via a growing dividend and our ongoing share repurchase program. In total in 2015, we returned approximately $1.1 billion to shareholders. In December 2015, we announced an additional share repurchase authorization of $500 million, bringing the total remaining authorization to more than $850 million as of year-end 2015. IN TOTAL IN 2015, WE RETURNED APPROXIMATELY $1.1 BILLION TO SHAREHOLDERS. 2015 was also an impressive year for innovation all across our company. We were granted a record number of patents, ranking us among the top 300 companies in the United States. Our Nielsen Innovate incubator near Tel Aviv thrived, with 15 technology-based start-ups 2015 ANNUAL REPORT 5 CLIENTS’ INFORMATION AND INSIGHTS NEEDS ARE INCREASING working on promising new capabilities that could become part of our future product portfolio. Our innovation lab in Silicon Valley, created in collaboration with Stanford, showed enviable creativity and resource efficiency; this successful model has now been replicated in Singapore, in partnership with the government there. Our acquisitions of Innerscope and eXelate and our partnerships with leading firms like Adobe, Alibaba, Catalina, Intage, Tencent, and Facebook all added significantly to our innovation resume. And of course, our Nielsen teams innovate impressively every day all around the world on our products, processes, and systems. magazine as one of their “Top 50 Companies for Diversity” — both for the second year in a row. Our technology team won an Emmy Award for their innovative work on the watermarking technology used in our audience measurement system. Our Investor Relations team was rated #1 by Wall Street analysts among 86 companies in the business, education, and professional services segment. And in several markets around the world, Nielsen was recognized as “agency of the year.” Each of these is a remarkable achievement; taken all together, they reflect the overall progress and strength of our company. WE WERE GRANTED A RECORD NUMBER OF PATENTS, RANKING US AMONG THE TOP 300 COMPANIES IN THE U.S. As a result of our ongoing investments in leadership development and the strong engagement and dedication of our teams, we received external recognition from Chief Executive Magazine as one of their “Top 40 Public Companies for Leaders,” as well as from DiversityInc 6 NIELSEN OUR FUTURE As we look to the future, three major trends will guide our investments and drive our growth in 2016 and beyond. The first is the well-known trend of audience fragmentation. We’ll continue to “follow the consumer,” to measure the audience in a comparable manner across all screens and platforms. Our focus in 2016 is on continuing to gain broad marketplace adoption of our Total Audience Measurement system by both buyers and sellers of media, while helping the video market move to an updated, broader definition of the currency. CONNECTED BUY SYSTEM THE END-TO-END MEASUREMENT AND ANALYTICS SOLUTION FOR OUR FAST-MOVING CONSUMER GOODS AND RETAIL CLIENTS, POWERED BY A CLOUD-BASED PLATFORM TOTAL CONSUMER MEASUREMENT CLOUD-BASED DATA EXCHANGE SIMULATION AND ACTIVATION APPS AUTOMATED BUSINESS DRIVERS The second trend is that consumers are reacting to ads and brands differently, and they are buying in new ways and across new channels. Advertisers want to harness the power of big data to enable them to market to those changing consumers with greater precision and with proven ROI on their marketing spend. This is what our Nielsen Marketing Cloud enables. The third trend is that the information and analytics needs of our clients are growing and changing. Clients need answers to the fundamental questions of “What happened, why it happened, and what next.” They want data and systems that answer those questions and help them to act, and they want it all with more precision, speed, and efficiency. This is the basis for our investment in a performance improvement system that aligns and connects the wide array of measurement and analytics data we provide to our clients in the world of fast-moving consumer goods. In all three areas, our platform-oriented, system-based approach provides scalability, flexibility, and speed, especially when our systems connect directly to our clients’ systems. And because we have the essential core data, no one is better positioned than Nielsen. This ties into a common theme that you will hear us talk about more in 2016 and beyond: connected. Driven by the steadily growing role of technology, systems, and platforms in our business, our products will grow more connected to one another. Our systems will grow more connected to our clients’ systems. Our interests will grow ever more connected to the markets and clients we serve, the partners we collaborate with, and the communities we operate in. And our colleagues will continue to grow more connected to each other by a culture of collaboration, innovation, and shared sense of purpose. OUR SYSTEMS WILL GROW MORE CONNECTED TO OUR CLIENTS’ SYSTEMS. OUR INTERESTS WILL GROW EVER MORE CONNECTED TO THE MARKETS AND CLIENTS WE SERVE, THE PARTNERS WE COLLABORATE WITH, AND THE COMMUNITIES WE OPERATE IN. Through our global corporate social responsibility program, Nielsen Cares, we act on our commitment to make an uncommon impact in the communities where we 2015 ANNUAL REPORT 7 UNPRECEDENTED GLOBAL FOOTPRINT WATCH & BUY COVERAGE BUY COVERAGE ONLY live and work. Our associates leverage their talent and experience to create shared value in our communities through skills-based volunteering and in-kind giving projects focused on our priority cause areas of Hunger & Nutrition, Education, Diversity & Inclusion, and Technology. As part of our “Data for Good” initiative, we are connecting with the United Nations Foundation, Salesforce.com, and Accenture to support “Project 8” to help forecast international development needs, and we are connecting our data to academia, via the University of Chicago’s Kilts Center for Marketing, in support of academic and social research. We also take this idea of connection a step further by committing to help our Nielsen colleagues around the world, supported by our newly established Nielsen Global Support Fund. Our employees all over the world are contributing to the fund, which is then available to any employee, anywhere in the world, during times of disaster or personal hardship. We are a company with a clear sense of who we are, where we play, where we are going, and why we do what we do. We are a company connected with purpose and meaning. In 2016, we look forward with confidence that our business will continue its steady and consistent performance, delivering value to our clients and our shareholders. We have an outstanding brand, a rich and storied history, a powerful business model, great data, and world-class talent. We have better technology available to us every day to more fully realize the potential of what we do, continuously making exciting new things possible. In short, the world is aligned in our favor. There has never been a better time to do what we do, and we’ve never been better positioned to do it. Thank you for your investment and trust in our company. • • • • • • • • • 8 NIELSEN MITCH BARNS CHIEF EXECUTIVE OFFICER FINANCIAL HIGHLIGHTS TOTAL REVENUES ADJUSTED EBITDA(a) ADJUSTED NET INCOME(a) FREE CASH FLOW(b) ($ millions) ($ millions) ($ millions) ($ millions) $6,288 $6,172 $5,703 $1,617 $1,837 $1,858 $970 $975 $804 $770 $681 $573 2013 2014 2015 2013 2014 2015 2013 2014 2015 2013 2014 2015 (a) Please refer to the section entitled “Adjusted EBITDA and Adjusted Net Income Reconciliation” on the inside back cover. (b) Please refer to the section entitled “Free Cash Flow Reconciliation” on the inside back cover. ANNUAL SEGMENT REVENUES ($ MILLIONS) BUY WATCH TOTAL 2013 $3,406 $2,297 $5,703 2014 $3,523 $2,765 $6,288 2015 $3,345 $2,827 $6,172 TOTAL RETURN PERFORMANCE The following graph shows a comparison of cumulative total shareholder return since the date of our initial public offering for our common stock, the S&P 500, and the Peer Group. The comparison assumes that $100 was invested in Nielsen Holdings plc common stock and each of the indices as of the close of market on January 26, 2011, the date of our initial public offering, and that dividends were reinvested. 200 150 100 NIELSEN HOLDINGS PLC PEER GROUP(c) S&P 500 1/26/11 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 (c) The Peer Group includes companies in comparable businesses to Nielsen, as well as companies representing the markets we serve. The Peer Group is composed of Accenture plc, The Coca-Cola Company, Colgate-Palmolive Company, The Dun & Bradstreet Corporation, Equifax Inc., Experian plc, FactSet Research Systems Inc., GfK SE, IHS Inc., IMS Health Holdings, Inc., The Interpublic Group of Companies, Inc., McGraw Hill Financial, Inc., Moody's Corporation, MSCI Inc., Omnicom Group Inc., The Procter & Gamble Company, RELX N.V., Thomson Reuters Corporation, Time Warner Inc., Twenty-First Century Fox Inc., Unilever N.V., Viacom Inc., Wolters Kluwer N.V., and WPP plc. LEADERSHIP TEAM FROM LEFT TO RIGHT: ERIC DALE Chief Legal Officer STEVE HASKER Global President and Chief Operating Officer JAMERE JACKSON Chief Financial Officer MITCH BARNS Chief Executive Officer JAMES POWELL Chief Technology Officer MARY LIZ FINN Chief Human Resources Officer RICK KASH Vice Chair JOHN TAVOLIERI Global President, Operations 10 10 NIELSEN NIELSEN UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) (cid:59) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 OR (cid:133) 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 001-35042 Nielsen Holdings plc (Exact name of registrant as specified in its charter) England and Wales (State of incorporation) 85 Broad Street New York, New York 10004 (646) 654-5000 98-1225347 (I.R.S. Employer Identification No.) A C Nielsen House London Road Oxford Oxfordshire, OX3 9RX United Kingdom +1 (646) 654-5000 (Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of each class Ordinary shares, par value €0.07 per share Name of each exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:59) No (cid:133) Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:133) No (cid:59) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 (cid:59) No (cid:133) Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes (cid:59) No (cid:133) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. (cid:133) Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer (cid:59) (cid:133) (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:133) No (cid:59) The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates as of June 30, 2015, the last day of business of our Accelerated filer (cid:133) (cid:133) most recently completed second fiscal quarter, was $16,034 million, based on the closing sale price of the registrant’s common stock as reported on the New York Stock Exchange on such date of $44.77 per share. There were 361,878,969 shares of the registrant’s Common Stock outstanding as of January 31, 2016. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive Proxy Statement of the registrant to be filed pursuant to Regulation 14A of the general rules and regulations under the Securities Exchange Act of 1934, as amended, for the 2016 annual meeting of stockholders of the registrant are incorporated by reference into Part III of this Annual Report on Form 10-K. Table of Contents PART I Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. Business ................................................................................................................................................................. Risk Factors ........................................................................................................................................................... Unresolved Staff Comments .................................................................................................................................. Properties ............................................................................................................................................................... Legal Proceedings .................................................................................................................................................. Mine Safety Disclosures ........................................................................................................................................ PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. Securities ........................................................................................................................................................... Selected Financial Data .......................................................................................................................................... Management’s Discussion and Analysis of Financial Condition and Results of Operations ................................. Quantitative and Qualitative Disclosures About Market Risk ............................................................................... Financial Statements and Supplementary Data ...................................................................................................... Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ................................ Controls and Procedures ........................................................................................................................................ Other Information .................................................................................................................................................. PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance ..................................................................................... Executive Compensation ....................................................................................................................................... Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .............. Certain Relationships and Related Transactions, and Director Independence ....................................................... Principal Accounting Fees and Services ................................................................................................................ PART IV Item 15. Exhibits, Financial Statement Schedules ............................................................................................................... Signatures ................................................................................................................................................................................... PAGE 3 13 21 21 21 21 22 25 26 54 56 123 123 123 124 124 124 124 124 125 126 1 The terms “Company,” “Nielsen,” “we,” “our” or “us,” as used herein, refer to Nielsen Holdings plc (formerly known as Nielsen N.V.) and our consolidated subsidiaries unless otherwise stated or indicated by context. The term “TNC B.V.,” as used herein, refers to The Nielsen Company B.V., the principal subsidiary of Nielsen. CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,” “will,” “believe,” “estimate,” “forecast,” “project” and other words of similar meaning. Such statements are not guarantees of future performance, events or results and involve potential risks and uncertainties. These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. These factors include, but are not limited to the factors discussed in Item 1A. Risk Factors of this Form 10-K. We caution you that the factors discussed in Item 1A. Risk Factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this annual report on Form 10-K may not in fact occur or may prove to be materially different from the expectations expressed or implied by these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. 2 Business. Item 1. Background and Business Overview PART I We are a leading global performance management company. The company provides to clients a comprehensive understanding of what consumers watch and what they buy and how those choices intersect. We deliver critical media and marketing information, analytics and manufacturer and retailer expertise about what and where consumers buy (referred to herein as “Buy”) and what consumers read, watch and listen to (consumer interaction across the television, radio, online and mobile viewing and listening platforms referred to herein as “Watch”) on a local and global basis. Our information, insights and solutions help our clients maintain and strengthen their market positions and identify opportunities for profitable growth. We have a presence in more than 100 countries and our services cover more than 90 percent of the globe’s GDP and population. We have significant investments in resources and associates all over the world, including in many emerging markets, and hold leading market positions in many of our services and geographies. Based on the strength of the Nielsen brand, our scale and the breadth and depth of our solutions, we believe we are the global leader in measuring and analyzing consumer behavior in the segments in which we operate. We help our clients enhance their interactions with consumers and make critical business decisions that we believe positively affect their sales and profitability. Our data and analytics solutions, which have been developed through substantial investment over many decades, are deeply embedded into our clients’ workflow. Our long-term client relationships are made up largely of multi-year contracts and high contract renewal rates. The average length of relationship with our top ten clients, which include The Coca-Cola Company, NBC Universal, Nestle S.A., The Procter & Gamble Company, Twenty-First Century Fox Inc. and the Unilever Group, is more than 30 years. Typically, before the start of each year, more than 70% of our annual revenue has been committed under contracts in our combined Buy and Watch segments. We align our business into two reporting segments, Buy (consumer purchasing measurement and analytics) and Watch (media audience measurement and analytics). Our Buy and Watch segments are built on an extensive foundation of proprietary data assets designed to yield essential insights for our clients to successfully measure, analyze and grow their businesses and manage their performance. The information from our Buy and Watch segments, when brought together, can deliver powerful insights into the effectiveness of branding, advertising and consumer choice by linking media consumption trends with consumer purchasing data to better understand behavior and better manage supply and demand as well as media spend, supply chain issues, and much more. We believe these integrated insights better enable our clients to enhance the return on both long-term and short-term investments. Our Buy segment provides retail transactional measurement data, consumer behavior information and analytics primarily to businesses in the consumer packaged goods industry. According to Deloitte, the aggregate retail revenue of the Top 250 global retailers approached $4.4 trillion in 2013. Our extensive database of retail and consumer information, combined with our advanced analytical capabilities, helps generate strategic insights that influence our clients’ key business decisions. We track billions of sales transactions per month in retail outlets globally and our data is used to measure their sales and market share. We are the only company offering such extensive global coverage for the collection, provision and analysis of this information for consumer packaged goods. Our Buy services also enable our clients to better manage their brands, uncover new sources of demand, manage their supply chain issues, launch and grow new services, analyze their sales, improve their marketing mix and establish more effective consumer relationships. Within our Buy segment, we have two primary geographic groups, developed and emerging markets. Developed markets primarily include the United States, Canada, Western Europe, Japan, South Korea and Australia while emerging markets include Africa, Latin America, Eastern Europe, Russia, China, India and Southeast Asia. Our Buy segment represented approximately 54% of our consolidated revenues in 2015. Our Watch segment provides viewership and listening data and analytics primarily to the media and advertising industries across the television, radio, online and mobile viewing and listening platforms. According to ZenithOptimedia, a leading global media services agency, total global spending on advertising including television, radio, online and mobile platforms is projected to reach $579 billion by end of 2016. Our Watch data is used by our media clients to understand their audiences, establish the value of their advertising inventory and maximize the value of their content, and by our advertising clients to plan and optimize their spending. In our Watch segment, our ratings are the primary metrics used to determine the value of programming and advertising in the U.S. total television advertising marketplace, which was approximately $69 billion in 2014 according to PwC. In addition to the United States, we measure television viewing in 35 other countries. We also measure markets that account for nearly 80% of global TV ad spend and offer mobile measurement and analytic services in 60 countries, including the United States, where we are the market leader. The acquisition of Arbitron Inc. in 2013 provided us with measurement of an additional two hours a day per person of dynamic media consumption. This acquisition allows us to measure unmeasured areas that are important to the industries and clients we serve, like streaming audio, out- 3 of-home measurements for television consumption and deeper measurement of multicultural audiences in the U.S. Our Watch segment represented approximately 46% of our consolidated revenue in 2015. Our Company was founded in 1923 by Arthur C. Nielsen, Sr., who invented an approach to measuring competitive sales results that made the concept of “market share” a practical management tool. For over 90 years, we have advanced the practice of market research and media audience measurement to provide our clients a better understanding of their consumers. Our Company, originally incorporated in the Netherlands, was purchased on May 24, 2006 by a consortium of private equity firms (collectively, the “Sponsors”). In January 2011, our Company consummated an initial public offering of our common stock and our shares started trading on the New York Stock Exchange under the symbol “NLSN”. On August 31, 2015, Nielsen N.V., a Dutch public company listed on the New York Stock Exchange, merged with Nielsen Holdings plc, by way of a cross-border merger under the European Cross-Border Merger Directive, with Nielsen Holdings plc being the surviving company (the “Merger”). The Merger effectively changed the place of incorporation of Nielsen’s publically traded parent holding company from the Netherlands to England and Wales, with no changes made to the business being conducted by Nielsen prior to the Merger. As of December 31, 2015, the Sponsors that held equity interests in Nielsen at the time of the January 2011 initial public offering had disposed of such interests. Services and Solutions What Consumers Buy Our Buy segment provides retail transactional measurement data, consumer behavior information and analytics primarily to businesses in the consumer packaged goods industry. Within our Buy segment, in 2015, 69% of revenues came from Developed markets and 31% came from Emerging markets. For the year ended December 31, 2015, revenues from our Buy segment represented approximately 54% of our consolidated revenues. This segment has historically generated stable revenue streams that are characterized by multi-year contracts and high contract renewal rates. At the beginning of each year, over 60% of the segment’s revenue base for the upcoming year is typically committed under existing agreements. Our top five segment clients represented approximately 20% of our segment revenues for the year ended December 31, 2015 and the average length of relationship with these same clients is over 30 years. No single client accounted for 10% or more of our Buy segment revenues in 2015. Retail Measurement Services We are a global leader in retail measurement services. Our purchasing data provides market share, competitive sales volumes, and insights into such activities as distribution, pricing, merchandising and promotion. By combining this detailed information with our in-house expertise and professional consultative services, we produce valuable insights that help our clients improve their manufacturing, marketing and sales decisions and grow their market share. Depending on the sophistication of each country’s retailer systems, we collect retail sales information from stores using electronic point-of-sale technology and/or teams of local field auditors. Stores within our worldwide retail network include grocery, drug, convenience, discount and eCommerce retailers, who, through various cooperation arrangements, share their sales data with us. The electronic retail sales information collected by stores through checkout scanners is transmitted directly to us. In certain emerging markets where electronic retail sales information is unavailable, we utilize field auditors to collect information through in-store inventory and price checks. For eCommerce retailers where electronic retail sales information is unavailable, we are increasingly using consumer sourced data to collect information by leveraging proven expertise developed in our Consumer Panel business. For all information we collect, our stringent quality control systems validate and confirm the source data. The data is then processed into databases that clients access using our proprietary software that allows them to query the information, conduct customized analysis and generate reports and alerts. Consumer Panel Measurement We conduct consumer panels around the world that help our clients understand consumer purchasing dynamics at the household level. Among other things, this information offers insight into shopper behavior such as trial and repeat purchase for new products and likely substitutes, as well as customer segmentation. In addition, our panel data augments our retail measurement information providing blinded but detailed household demographics and can provide data in circumstances where we do not collect data from certain retailers. Our consumer panels collect data from more than 250,000 household panelists across 26 countries that use in-home scanners to record purchases from each shopping trip. In the United States, for example, approximately 100,000 selected households, constituting a demographically balanced sample, participate in the panels. Data received from household panels undergo a quality control process including UPC verification and validation, before being processed into databases and reports. Clients may access these databases to perform analyses. 4 Analytical Services Utilizing our foundation of consumer purchasing information, we provide a wide and growing selection of consumer intelligence and analytical services that help clients make smarter business decisions throughout their product development and marketing cycles. We draw actionable insights from our retail and consumer panel measurement data sets, our online behavioral information, as well as a variety of other proprietary data sets. We use consumer trends and comprehensive data analysis to advise our clients across their innovation process and apply a demand-driven approach to identify unmet consumer needs so they can develop breakthrough products. We use intelligence from comprehensive retail and consumer data analysis to inform client decisions on marketing spend for media, price, promotion and assortment. We help clients influence purchase decisions that shoppers make whether pre-store, in-store or online, and provide insights on how to market effectively along a shopper’s path to purchase. We also help clients drive profitable growth using demand- driven strategies that close the gap between consumer demand and sales, aligning what people want to what people buy. What Consumers Watch Our Watch segment provides viewership and listening data and analytics primarily to the media and advertising industries across the television, radio, digital and mobile viewing and listening platforms. For the year ended December 31, 2015, revenues from our Watch segment represented approximately 46% of our consolidated revenues. This segment has historically generated stable revenue streams that are characterized by multi-year contracts and high contract renewal rates. At the beginning of each year, over 85% of the segment’s revenue base for the upcoming year is typically committed under existing agreements. Our top five clients represented approximately 24% of segment revenues for the year ended December 31, 2015 and the average length of relationship with these same clients is more than 30 years. No customer accounted for 10% or more of our Watch segment revenues in 2015. Television Audience Measurement Services We are the global leader in television audience measurement. In the United States, which is by far the world’s largest market for television programming, broadcasters and cable networks use our television audience ratings as the primary currency to establish the value of their airtime and more effectively schedule and promote their programming. Advertisers use this information to plan television advertising campaigns, evaluate the effectiveness of their commercial messages and negotiate advertising rates. We provide two principal television ratings services in the United States: measurement of national television audiences and measurement of local television audiences in all 210 designated local television markets. We use various methods to collect the data from households including electronic meters, which provide minute-by-minute viewing information for next day consumption by our clients, and written diaries. These households are meticulously identified using the U.S. Census as a model in order to properly and accurately model our national and local ratings. These methods enable us to collect not only television device viewing data but also the demographics of the audience (i.e., who in the household is watching), from which we calculate statistically reliable and accurate estimates of total television viewership. We have made significant investments over decades to build an infrastructure that can accurately and efficiently track television audience viewing, a process that has become increasingly complex as the industry has converted to digital transmission and integrated new technologies allowing for developments such as time-shifted viewing. Our measurement techniques are constantly evolving to account for new television viewing behavior, increased fragmentation and new media technologies. For example, to help advertisers and programmers understand time-shifted viewing behavior, we created the Average Commercial Minute (ACM) ratings, which is a measure of how many people watch commercials during live and time- shifted viewing, both through 3 days ("C3") and through 7 days ("C7"). The C3 rating has become the primary metric for buying and selling advertising on national broadcast television. We are expanding our television audience measurement to incorporate viewing of video-on-demand and from connected devices such as gaming consoles. We are developing and testing ways to measure how consumers watch video on tablets and other devices, to help advertising and programmers incorporate this viewing behavior into their programming and advertising plans. In the U.S., we utilize a single-source TV and PC panel to provide information to clients about simultaneous usage of more than one screen (e.g., if a consumer uses Facebook while watching a TV program), unduplicated reach (i.e., total audience net of duplication across platforms), cause and effect analysis (e.g., if a TV advertisement spurs a consumer to view a specific website online) and program viewing behavior (e.g., what platforms consumers use to view certain programming). Nielsen has also been working with clients and partners to better measure online and mobile viewers, like asking TV networks to install software in their digital video players, websites, and apps to track their digital audiences, and striking data deals with partners like Facebook to collect the anonymous demographics of the more than 180 million American Facebook users who watch those digital videos or use those websites and apps). 5 We are also working with Twitter to establish a measurement of consumer interaction with television programming and social media to address the growing interest in social TV among advertisers and media players. We measure television viewing in 35 countries outside the United States, including Australia, Indonesia, Italy and South Korea. The international television audience measurement industry operates on a different model than in the United States. In many international markets, a joint industry committee of broadcasters in each individual country selects a single official audience measurement provider, which is designated the “currency” through an organized bidding process that is typically revisited every several years. We have strong relationships in these countries and see a significant opportunity to expand our presence into additional countries around the world. Audio Audience Measurement Services We provide independent measurement and consumer research primarily servicing radio, advertisers and advertising agencies in the audio industry. We estimate the size and composition of radio audiences in local markets and of audiences to network radio programming and commercials in the U.S. We refer to our local and network radio audience ratings services, collectively, as our “syndicated radio ratings services.” We provide our syndicated radio ratings services in local markets in the United States to radio broadcasters, advertising agencies, and advertisers. Our national services estimate the size and demographic composition of national radio audiences and the size and composition of audiences of network radio programs and commercials. Broadcasters use our data primarily to price and sell advertising time, and advertising agencies and advertisers use our data in purchasing advertising time. In addition to the services described above, we also provide qualitative information about consumers, including their lifestyles, shopping patterns, and use of media in local markets and across the United States. Generally referred to as “qualitative services,” we market these services to customers of our syndicated radio ratings services who wish to demonstrate the value of their advertising propositions. We also market our quantitative and qualitative audience and consumer information to customers outside of our traditional base, such as the advertising sales organizations of local cable television companies, national cable and broadcast television networks, and out-of-home media sales organizations. We provide software applications allowing our customers to access our proprietary databases of media and marketing information. These applications enable our customers to analyze this information more effectively for sales, management, and programming purposes. Some of our software applications also allow our customers to access data owned by third-parties, provided the customers have a separate license to use such third-party data. We have developed our electronic Portable People MeterTM (“PPM®”) technology, which we deploy across many of our customer offerings and have licensed to other media information services companies to use in their media audience ratings services in countries outside of the United States. We have commercialized our PPM ratings service in 48 of the largest radio markets in the United States. Digital Audience Measurement Services We are a global provider of digital media and market research, audience analytics and social media measurement. We employ a variety of measurement offerings to provide digital publishers, internet and media companies, marketers and retailers with metrics to better understand the behavior of online audiences. Through a combination of patented panel and census data collection methods, we measure and study the internet surfing, online buying, and video viewing (including television content) of digital audiences. In addition to measuring overall internet usage, Nielsen is the only company that has a Media Ratings Council (“MRC”) accredited age and gender measurement across its U.S. Digital Ad Ratings and U.S. television ratings services. Nielsen’s Digital Ad Ratings are now in 17 countries with 8 more markets planned in 2016. Those 17 current Digital Ad Ratings markets account for about 85% of global digital ad spend. Since 2010, Nielsen has been providing innovative census measurement through third party data enrichment providers such as Facebook. Through such partnerships, Nielsen has privacy-protected and anonymous access to demographic data on over 1.5 billion user profiles. We provide critical advertising metrics such as audience demographics, page and ad views, and time spent. As newer forms of digital media such as video advertising, social media and applications become a greater proportion of consumer behavior, we are transitioning our portfolio of digital services, including discontinuation of certain legacy services in certain markets and the launch of other services, to address the evolving requirements of measuring digital audiences and better serve our clients. Nielsen Social is the leading provider of social TV measurement, analytics and audience engagement solutions for TV networks, agencies and advertisers, helping the industry measure, understand and act on the activity and reach of TV-related conversation on Twitter. Nielsen Social uses Gracenote US TV data as the foundation of its measurement for linear TV. Using Gracenote’s definition of a television network today we measure 15 Broadcast, 184 Cable-National, and 39 Cable – Regional Sports channels. We also measure programming from 6 streaming providers and 8 TV syndication groups. In total that is 252 programming networks. In terms of brands, 6 Nielsen Social manually enters brands into our Brand Tracking System and once entered the Twitter activity around each brand is measured on a 24/7 basis. Currently there are 2,097 brands in our database that are being tracked. Through our exclusive agreement with Twitter we produce Nielsen Twitter TV Ratings, the first-ever measure of the total activity and reach, as well as demographics, of TV-related conversation on Twitter. Along with tracking Twitter TV conversation around linear airtimes, we are also now tracking Twitter TV conversation in the U.S. on a 24/7 basis for over 650 series programs, including linear and over-the-top programming such as Netflix and Hulu. Nielsen Social is also available in Italy, Australia, and Mexico and uses local TV data as the foundation for its measurement (Gracenote in Australia and Mexico and Rovi in Italy). In Australia we measure 19 Free to Air and 82 Subscription TV channels. In Italy we measure 45 Free to Air and 76 Subscription TV channels. In Mexico we measure 11 Free to Air and 85 Subscription TV channels. In total that is 318 TV networks. In terms of brands, each territory uses their own install of the Brand Tracking System. Currently there are 552 brands in Mexico, 563 brands in Italy and 691 brands in Australia. In total that is 1,806 brands. Mobile Measurement Services We provide independent measurement and consumer research for telecom and media companies in the mobile telecommunications industry. Clients, principally mobile carriers and device manufacturers, rely upon our data to make consumer marketing, competitive strategy and resource allocation decisions. In the United States, our metrics are a leading indicator for market share, customer satisfaction, device share, service quality, revenue share, content audience and other key performance indicators. We also benchmark the end-to-end consumer experience to pinpoint problem areas in the service delivery chain, track key performance metrics for mobile devices and identify key market opportunities (e.g., demand tracking for device features and services). To address the rapid growth of mobile internet consumption, we have deployed a combination of panel and census based measurement to capture internet, video and other media on mobile, smartphone, and tablet devices. In the U.S., Nielsen has deployed our mobile software development kit (SDK) to offer a comprehensive mobile advertising and content measurement for our media clients. In addition, our census demographic measurement uses the world's largest mobile demographic data set through our data enrichment providers. We offer mobile measurement and analytic services in 60 countries worldwide, including the United States, where we are a leader in the market for mobile audience measurement, and are focused on expanding our presence in other markets Marketing Effectiveness We provide a range of solutions to major advertisers, whether they are consumer packaged goods manufacturers, retailers, media companies, or other verticals such as automotive, telecom or financial services, to help validate and optimize their advertising spend. We quantify the effectiveness of advertising by reporting behavioral observations, attitudinal changes and actual offline purchase activity. We offer services specific to television, digital and social marketing to determine “resonance” or impact of specific campaigns, by measuring objectives such as breakthrough, brand recall, purchase intent and effect on product and brand loyalty. These services can also help clients determine which elements of their advertising campaigns are more or less effective, including frequency of repetition, length of commercial and context. As part of these efforts, we collect and analyze more than 21 million surveys annually to measure consumer engagement and recall of advertisements across television and online to provide important insights on advertising and content effectiveness. We also combine intelligence on what consumers watch and buy to inform client decisions on their advertising spend. We integrate data from our Buy segment and other third party sources, including our Nielsen Catalina Solutions business, with Watch data on audience exposure to help assess the effect of an advertising campaign on purchase activity. We believe these and other offerings of consumer behavior data and marketing insights can provide value to advertisers as well as media content owners and distributors, and help these clients answer some of their most important marketing questions. Competitive Advantages We are faced with a number of competitors in the markets in which we operate. Some of our competitors in each market may have substantially greater financial, marketing and other resources than we do and may benefit from other competitive advantages. See “Competitive Landscape” and “Risk Factors”. We face competition, which could adversely affect our business, financial condition, results of operations and cash flow. Notwithstanding the challenges presented by the competitive landscape, we believe that we have several competitive advantages, including the following: Global Scale and Brand. We provide a breadth of information and insights about consumers covering approximately 90 percent of all population and GDP globally. In our Buy segment, we track billions of sales transactions per month in retail outlets in more than 100 countries around the world. We also have approximately 250,000 household panelists across 26 countries. In our Watch segment, our ratings are the primary metrics used to determine the value of programming and advertising in the U.S. total television 7 advertising marketplace, which was approximately $69 billion in 2014 according to PwC. We believe our footprint, independence, credibility and leading market positions will continue to contribute to our long-term growth and strong operating margins as the number and role of multinational companies expand. Our scale is supported by our global brand, which is defined by the original Nielsen code created by our founder, Arthur C. Nielsen, Sr.: impartiality, thoroughness, accuracy, integrity, economy, price, delivery and service. Strong, Diversified Client Relationships. Many of the world’s largest brands rely on us as their information and analytics provider to create value for their business. We maintain long-standing relationships and multi-year contracts with high renewal rates due to the value of the services and solutions we provide. In our Buy segment, our clients include the largest consumer packaged goods and merchandising companies in the world such as The Coca-Cola Company, Kraft Foods and The Procter & Gamble Company, as well as leading retail chains such as Carrefour, Kroger, Safeway, Tesco, Walgreens and Wal-Mart Stores. In our Watch segment, our client base includes leading broadcast, radio, cable and internet companies such as CBS, Clear Channel Media, Disney/ABC, Facebook, Google, Microsoft, NBC Universal/Comcast, Twenty-First Century Fox, Inc., Time Warner, Twitter, Univision and Yahoo!; leading advertising agencies such as WPP, IPG, Omnicom, and Publicis; leading telecom companies such as AT&T, Verizon, Vodafone, and Nokia; and leading automotive companies such as Chrysler, Ford and Toyota. The average length of relationship with our top 10 clients across both our Buy and Watch segments is more than 30 years. In addition, due to our growing presence in emerging markets, we have cultivated strong relationships with local market leaders that can benefit from our services as they expand globally. Our strong client relationships provide both a foundation for recurring revenues as well as a platform for growth. Enhanced Data Assets and Measurement Science. Our extensive portfolio of transactional and consumer behavioral data across our Buy and Watch segments enables us to provide critical information to our clients. For decades, we have employed advanced measurement methodologies that yield statistically accurate information about consumer behavior while having due regard for their privacy. Our particular expertise in panel measurement includes a proven methodology to create statistically accurate research insights that are statistically representative of designated audiences. This expertise is a distinct advantage as we extrapolate more precise insights from emerging large-scale census databases to provide greater granularity and segmentation for our clients. We continue to enhance our core competency in measurement science by improving research approaches and investing in new methodologies. We have also invested significantly in our data architecture to enable the integration of distinct large-scale census data sets including those owned by third parties. We believe that our expertise, established standards and increasingly granular and comprehensive data assets provide us with a distinct advantage as we deliver more precise insights to our clients. Innovation. We have focused on innovation to deepen our capabilities, expand in new and emerging forms of measurement, enhance our analytical offerings and capitalize on industry trends. For example, we are investing in Total Audience measurement, bringing together audiences across digital and television platforms for both ad campaigns (Total Ad Ratings) and content (Total Content Ratings). These measurement offerings allow content providers and advertisers to understand their true reach across and among all platforms using a combination of Nielsen's gold standard panels and census-based measurement. We are also working with our clients to help maximize the value of the data we give to them by allowing them to evaluate new distribution options (e.g. the Apple TV, Roku, Game Console breakout) as well as understanding the true impact and audiences of their content when sent to Subscription Video on Demand (“SVOD”). We have also made investments in providing cross platform data aggregation and audience activation via the acquisition of eXelate. Its data management platform and big data infrastructure enabled unified consumer mapping and targeting across multiple media platforms. We have further enhanced our information and analytics delivery platform, Nielsen Answers on Demand, to enable the management of consumer loyalty programs for retailers. The continued expansion of our Nielsen Campaign Ratings service provides “reach” metrics for TV and digital campaign ratings, and can offer advertisers and media companies a unique measurement of unduplicated audiences for their advertising and programming across television and online viewing. Our ability to deliver marketing effectiveness results in "real time" in a more scalable fashion, and with a broader series of data points (demo+) is expected to expand by leveraging the big data infrastructure and data marketplace acquired through the eXelate acquisition. Nielsen has also created the first currency-quality, respondent level planning dataset and software solution for Total Audience media planning, Media Impact. Scalable Operating Model. Our global presence and operating model allow us to scale our services and solutions rapidly and efficiently. We have a long track record of establishing leading services that can be quickly expanded across clients, markets and geographies. Our global operations and technology organization enables us to achieve faster, higher quality outcomes for clients in a cost-efficient manner. Our flexible architecture allows us to incorporate leading third-party technologies as well as data from external sources, and enables our clients to use our technology and solutions on their own technology platforms. In addition, we work with 8 leading technology partners such as IBM, Tata Consultancy Services, Amazon and TIBCO, which allows for greater quality in client offerings and efficiency in our global operations. Industry Trends We believe companies, including our clients, require an increasing amount of data and analytics to set strategy and direct operations. This has resulted in a large market for business information and insight which we believe will continue to grow. Our clients are media, advertising and consumer packaged goods companies in the large and growing markets. We believe that significant economic, technological, demographic and competitive trends facing consumers and our clients will provide a competitive advantage to our business and enable us to capture a greater share of our significant market opportunity. We may not be able to realize these opportunities if these trends do not continue or if we are otherwise unable to execute our strategies. See “Risk Factors – We may be unable to adapt to significant technological change which could adversely affect our business” and “Risk Factors – Our international operations are exposed to risks which could impede growth in the future.” Emerging markets present significant expansion opportunities. Brand marketers are focused on attracting new consumers in emerging countries as a result of the fast-paced population growth of the middle class in these regions. In addition, the retail trade in these markets is quickly evolving from small, local formats toward larger, more modern formats with electronic points of sale, a similar evolution to what occurred in developed markets over the last several decades. We provide established measurement methodologies to help give consumer packaged goods companies, retailers and media companies an accurate understanding of local consumers to allow them to harness growing consumer buying power in markets like Brazil, India and China. Demographic shifts and changes in spending behavior are altering the consumer landscape. Consumer demographics and related trends are constantly evolving globally, leading to changes in consumer preferences and the relative size and buying power of major consumer groups. Shifts in population size, age, racial composition, family size and relative wealth are causing marketers continuously to re-evaluate and reprioritize their consumer marketing strategies. We track and interpret consumer demographics that help enable our clients to engage more effectively with their existing consumers as well as forge new relationships with emerging segments of the population. The media landscape is dynamic and changing. Consumers are rapidly changing their media consumption patterns. The growing availability of the internet, and the proliferation of new formats and channels such as mobile devices, social networks and other forms of user-generated media have led to an increasingly fragmented consumer base that is more difficult to measure and analyze. In addition, simultaneous usage of more than one screen is becoming a regular aspect of daily consumer media consumption. We have effectively measured and tracked media consumption through numerous cycles in the industry’s evolution – from broadcast to cable, from analog to digital, from offline to online and from live to time-shifted and Video On Demand/Subscription Video On Demand. We believe our distinct ability to provide independent audience measurement and metrics across television, radio, online and mobile platforms helps clients better understand, adapt to and profit from the continued transformation of the global media landscape. Consumers are more connected, informed and in control. More than three-quarters of the world’s homes have access to television, there are approximately 3.1 billion internet users around the globe, and mobile penetration rates have reached 96% globally. Advances in technology have given consumers a greater level of control of when, where and how they consume information and interact with media and brands. They can compare products and prices instantaneously and have new avenues to learn about, engage with and purchase products and services. These shifts in behavior create significant complexities for our clients. Our broad portfolio of measurement and analytical services enables our clients to engage consumers with more impact and efficiency, influence consumer purchasing decisions and actively participate in and shape conversations about their brands. Increasing amounts of consumer information are leading to new marketing approaches. The advent of the internet and other digital platforms has created rapid growth in consumer data that is expected to intensify as more entertainment and commerce are delivered across these platforms. As a result, companies are looking for real-time access to more granular levels of data to understand growth opportunities more quickly and more precisely. This presents a significant opportunity for us to work with companies to effectively manage, integrate and analyze large amounts of information and extract meaningful insights that allow marketers to generate profitable growth. Consumers are looking for greater value. Economic and social trends have spurred consumers to seek greater value in what they buy as exemplified by the rising demand for “private label” (store branded) products. This increased focus on value is causing manufacturers, retailers and media companies to re-evaluate brand positioning, pricing and loyalty. We believe companies will increasingly look to our broad range of consumer purchasing insights and analytics to more precisely and effectively measure consumer behavior and target their products and marketing offers at the right place and at the right price. 9 Our Growth Strategy We believe we are well-positioned for growth worldwide and have a multi-faceted strategy that builds upon our brand, strong client relationships and integral role in measuring and analyzing the global consumer. Our growth strategy is also subject to certain risks. For example, we may be unable to adapt to significant technological changes such as changes in the technology used to collect and process data or in methods of television viewing. In addition, consolidation in our customers’ industries may reduce the aggregate demand for our services. See “Risk Factors.” Continue to grow in emerging markets Emerging markets (measured in our Buy segment) comprised approximately 31% of our 2015 Buy segment revenues (17% of our 2015 consolidated revenues) and represent a significant long-term opportunity for us given the growth of the middle class and the rapid evolution and modernization of the retail trade in these regions. Currently, the middle class is expanding significantly each year on a global basis, with Africa, Brazil, Russia, India and China currently contributing nearly half of all global consumption growth. Key elements of our strategy include: (cid:120) (cid:120) (cid:120) Continuing to grow our existing services in local markets while simultaneously introducing into emerging markets new services drawn from our global portfolio; Partnering with existing clients as they expand their businesses into emerging markets and providing the high-quality measurement and insights to which they are accustomed; and Building relationships with local companies that are expanding beyond their home markets by capitalizing on the global credibility and integrity of the Nielsen brand. Continue to develop innovative services We intend to continue emerging our service portfolio to provide our clients with comprehensive and advanced solutions. Key elements of our strategy include: (cid:120) (cid:120) (cid:120) Further developing our analytics offerings across all facets of our client base to provide a more comprehensive offering and help our clients think through their most important challenges; Continuing to grow our leadership in measurement and insight services related to television, radio, digital and mobile and expanding our services in growth areas including social media to help our media clients more effectively reach their target audiences and better understand the value of their content; and Continuing to expand our Marketing Effectiveness offering, which integrates our proprietary data and analytics from both the Buy and Watch segments, by emerging powerful tools to help clients better understand the effectiveness of advertising and the impact of advertising spend on consumer purchasing behavior. Continue to attract new clients and expand existing relationships We believe that substantial opportunities exist to both attract new clients and to increase our revenue from existing clients. Building on our deep knowledge and the embedded position of our Buy and Watch segments, we expect to sell new and innovative solutions to our new and existing clients, increasing our importance to their decision making processes. Continue to pursue strategic acquisitions to complement our leadership positions We have increased our capabilities through investments and acquisitions in the areas of retail measurement, U.S. and international audience measurement, and advertising effectiveness for digital and social media campaigns. Going forward, we will consider select acquisitions of complementary businesses that enhance our product and geographic portfolio and can benefit from our scale, scope and status as a global leader. Technology Infrastructure We operate with an extensive data and technology infrastructure utilizing 9 primary data centers in six countries around the world. We also use AWS from Amazon for cloud based infrastructure. Our global database has the capacity to house approximately 54 petabytes of information, with our Buy segment processing approximately 9.5 billion purchasing data points each month in 2015, our Watch segment processing approximately 200 billion tuning and viewing records (across panel and census data) each month in 2015 and our eXelate platform processing 300 billion events each month in 2015. Our technology infrastructure plays an instrumental role in meeting service commitments to global clients and allows us to quickly scale our services across practice areas and geographies. 10 Our technology platform utilizes an open approach that facilitates integration of distinct data sets, interoperability with client data and technology, and partnerships with leading technology companies such as IBM, Tata Consulting Services, TIBCO and Amazon. Intellectual Property Our patents, trademarks, trade secrets, copyrights and all of our other intellectual property are important assets that afford protection to our business. Our success depends to a degree upon our ability to protect and preserve certain proprietary aspects of our technology and our brand. To ensure that objective, we control access to our proprietary technology. Our employees and consultants enter into confidentiality, non-disclosure and invention assignment agreements with us. We protect our rights to proprietary technology and confidential information in our business arrangements with third parties through confidentiality and other intellectual property and business agreements. We hold a number of third-party patent and intellectual property license agreements that afford us rights to third-party patents, technology and other intellectual property. Such license agreements most often do not preclude either party from licensing our patents and technology to others. Such licenses may involve one-time payments or ongoing royalty obligations, and we cannot ensure that future license agreements can or will be obtained or renewed on acceptable terms, or at all. Employees As of December 31, 2015, we employed approximately 43,000 people worldwide. Approximately 20% of our employees are covered under collective bargaining agreements and an additional 17% are covered under works council agreements in Europe. We may become subject to additional agreements or experience labor disruptions which may result in higher operating costs over time. We actively invest in our employee relations and believe they are solid. Nielsen is committed to treating employees in a way that respects and protects their human rights everywhere we operate around the world. Competitive Landscape There is no single competitor that offers all of the services we offer in all of the markets in which we offer them. We have many competitors worldwide that offer some of the services we provide in selected markets. While we maintain leading positions in many markets in which we operate, our future success will depend on our ability to enhance and expand our suite of services, provide reliable and accurate measurement solutions and related information, drive innovation that anticipates and responds to emerging client needs, strengthen and expand our geographic footprint, and protect consumer privacy. See “Risk Factors – We face competition, which could adversely affect our business, financial condition, results of operations and cash flow.” We believe our global presence and integrated portfolio of services are key assets in our ability to effectively compete in the marketplace. A summary of the competitive landscape for each of our segments is included below: What Consumers Buy While we do not have one global competitor in our Buy segment, we face numerous competitors in various areas of our service in different markets throughout the world. Competition includes companies specializing in marketing research, in-house research departments of manufacturers and advertising agencies, retailers that sell information directly or through brokers, information management and software companies, and consulting and accounting firms. In retail measurement, our principal competitor in the United States is Information Resources, Inc., which is also present in some European and Asia/Pacific markets. Our retail measurement service also faces competition in individual markets from local companies. Our consumer panel services and analytics services have many direct and/or indirect competitors in all markets around the world including in selected cases GfK, Ipsos, Kantar and local companies in individual countries. What Consumers Watch While we do not have one global competitor in our Watch segment, we face numerous competitors in various areas of our operations in different markets throughout the world. We are the clear market leader in U.S. television audience measurement; however, there are many emerging players and technologies that will increase competitive pressure. Numerous companies such as, Rentrak and TiVo are attempting to provide alternative forms of television audience measurement using, inter alia, set-top box data and panel-based measurement. Our principal competitor in television audience measurement outside the United States is Kantar, with companies such as GfK and Ipsos also providing competition in select individual countries. Our primary competitor in the digital audience and campaign measurement solutions in the United States is comScore. Globally (including the United States), we face competition from additional companies that provide digital measurement and analytics services such as Oracle, Google Analytics, Adobe Analytics and IBM Digital Analytics as well as in the small but growing space of social 11 measurement. In 2016 Rentrak merged into a wholly-owned subsidiary of comScore and the combined companies will focus on cross platform measurement. We are the market leader in the U.S. audio audience measurement. Our principal competitors include Triton and Kantar, which are developing technologies similar to our PPM ratings service. Regulation Our operations are subject to and affected by data protection laws in many countries. These laws pertain primarily to personal data (i.e., information relating to an identified or identifiable individual), constrain whether and how we collect personal data, how that data may be used and stored, and whether, to whom and where that data may be transferred. What constitutes “personal data” varies from country to country and region to region and continues to evolve. Data collection methods that may not always be obvious to the data subject, like the use of cookies online, or that present a higher risk of abuse, such as collecting data directly from children, tend also to be more highly regulated, and products that rely on these technologies may require re-engineering to comply with new laws. In addition, these data transfer constraints can impact multinational access to a central database and cross-border data transfers. Some of the personal data we collect may be considered “sensitive” by the laws of many jurisdictions because they may include certain demographic information and consumption preferences. Sensitive personal data typically are more highly regulated than non- sensitive data. Generally, this means that for sensitive data the data subject’s consent should be more explicit and fully informed and security measures surrounding the storage of the data should be more rigorous. The greater constraints that apply to the collection and use of sensitive personal data increase the administrative and operational burdens and costs of panel recruitment and management. The attention privacy and data protection issues attract can offer us a competitive advantage. Because we recognize the importance of privacy to our panelists, our customers, consumers in general, and regulators, we devote dedicated resources to enhancing our privacy and security practices in our product development plans and other areas of operation, and participate in privacy policy organizations and “think tanks.” We do this to improve both our practices and the perception of Nielsen as a leader in this area. Recent Developments On February 18, 2016, our Board declared a cash dividend of $0.28 per share on our common stock. The dividend is payable on March 17, 2016 to stockholders of record at the close of business on March 3, 2016. Financial Information about Segments and Geographic Areas See Note 17 to our consolidated financial statements – “Segments,” for further information regarding our operating segments and our geographic areas. Available Information Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports will be made available free of charge on our website at http://www.nielsen.com as soon as reasonably practicable after we electronically file such reports with, or furnish them to, the Securities and Exchange Commission (“SEC”). Information on our website is not incorporated by reference herein and is not a part of this report. From time to time, Nielsen may use its website and social media outlets as channels of distribution of material company information. Financial and other material information regarding the company is routinely posted and accessible on our website at http://www.nielsen.com/investors, our Twitter account at http://twitter.com/NielsenIR and our iPad App, NielsenIR, available on the App Store. 12 Item 1A. Risk Factors The risks described below are not the only risks facing us. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. Risks Related to Our Business We may be unable to adapt to significant technological change which could adversely affect our business. We operate in businesses that require sophisticated data collection, processing systems, software and other technology. Some of the technologies supporting the industries we serve are changing rapidly. We will be required to adapt to changing technologies, either by developing and marketing new services or by enhancing our existing services, to meet client demand. Moreover, the introduction of new services embodying new technologies and the emergence of new industry standards could render existing services obsolete. Our continued success will depend on our ability to adapt to changing technologies, manage and process ever-increasing amounts of data and information and improve the performance, features and reliability of our existing services in response to changing client and industry demands. We may experience difficulties that could delay or prevent the successful design, development, testing, introduction or marketing of our services. New services, or enhancements to existing services, may not adequately meet the requirements of current and prospective clients or achieve any degree of significant market acceptance. Traditional methods of television viewing continue to change as a result of fragmentation of channels and digital and other new television technologies and devices such as video-on-demand, digital video recorders, game consoles, tablets, other mobile devices and internet viewing. In addition, consumption of consumer packaged goods is growing in new and different channels such as discount stores and e-commerce. If we are unable to continue to successfully adapt our media and consumer measurement systems to new viewing and consumption habits, our business, financial position and results of operations could be adversely affected. Consolidation in the consumer packaged goods, media, entertainment, telecommunications and technology industries could put pressure on the pricing of our services, thereby leading to decreased earnings. Consolidation in the consumer packaged goods, media, entertainment, telecommunications and technology industries could reduce aggregate demand for our services in the future and could limit the amounts we earn for our services. When companies merge, the services they previously purchased separately are often purchased by the combined entity in the aggregate in a lesser quantity than before, leading to volume compression and loss of revenue. While we attempt to mitigate the revenue impact of any consolidation by expanding our range of services, there can be no assurance as to the degree to which we will be able to do so as industry consolidation continues, which could adversely affect our business, financial position and results of operations. Client procurement strategies could put additional pressure on the pricing of our services, thereby leading to decreased earnings. Certain of our clients may continue to seek further price concessions from us. This puts pressure on the pricing of our services, which could limit the amounts we earn. While we attempt to mitigate the revenue impact of any pricing pressure through effective negotiations and by providing services to individual businesses within particular groups, there can be no assurance as to the degree to which we will be able to do so, which could adversely affect our business, financial position and results of operations. Continued adverse market conditions, particularly in the consumer packaged goods, media, entertainment, telecommunications or technology industries, could adversely impact our revenue. A number of adverse financial developments continue to impact the global financial markets. The current economic environment has witnessed continued malaise in consumer confidence and demand, impacting the demand for our customers’ products and services. Those reduced demands could adversely affect the ability of some of our customers to meet their current obligations to us and hinder their ability to incur new obligations until the economy and their businesses strengthen. The inability of our customers to pay us for our services and/or decisions by current or future customers to forego or defer purchases may adversely impact our business, financial condition, results of operations, profitability and cash flows and may continue to present risks for an extended period of time. We cannot predict the impact of economic slowdowns on our future financial performance. We expect that revenues generated from our measurement and analytical services will continue to represent a substantial portion of our overall revenue for the foreseeable future. To the extent the businesses we service, especially our clients in the consumer packaged goods, media, entertainment, telecommunications and technology industries, are subject to the financial pressures of, for example, increased costs or reduced demand for their products, the demand for our services, or the prices our clients are willing to pay for those services, may decline. 13 During challenging economic times, clients, typically advertisers, within our Buy segment may reduce their discretionary advertising expenditures and may be less likely to purchase our analytical services, which would have an adverse effect on our revenue. Clients within our Watch segment derive a significant amount of their revenue from the sale or purchase of advertising. During challenging economic times, advertisers may reduce advertising expenditures and advertising agencies and other media may be less likely to purchase our media information services, which would have an adverse effect on our revenue. Our substantial indebtedness could adversely affect our financial health. We have now and will continue to have a significant amount of indebtedness. As of December 31, 2015, we had total indebtedness of $7,338 million. Our substantial indebtedness could have important consequences. For example, it could: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) increase our vulnerability to general adverse economic and industry conditions; require us to dedicate a substantial portion of our cash flow from operations to interest and principal payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, service development efforts, dividends, share repurchases and other general corporate purposes; limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; expose us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; restrict us from making strategic acquisitions or cause us to make non-strategic divestitures; limit our ability to obtain additional financing for working capital, capital expenditures, service development, debt service requirements, dividends, share repurchases, acquisitions and general corporate or other purposes; limit our ability to adjust to changing market conditions; place us at a competitive disadvantage compared to our competitors that have less debt; and limit our ability to service our dividend and stock repurchases programs. In addition, the indentures governing our outstanding notes and our credit facility contain financial and other restrictive covenants that could limit the ability of our operating subsidiaries to engage in activities that may be in our best interests in the long term. The failure to comply with any of those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt. Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further increase the risks associated with our substantial leverage. We and our subsidiaries may be able to incur substantial additional indebtedness in the future. If new debt is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify. We will require a significant amount of cash as well as continued access to the capital markets to service our indebtedness, fund capital expenditures and meet our other liquidity needs. Our ability to generate cash and our access to the capital markets depend on many factors beyond our control. Our ability to make payments on our indebtedness (both interest and principal) and to fund planned capital expenditures and other liquidity needs will depend on our ability to generate cash in the future and our ability to refinance our indebtedness. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not be able to generate sufficient cash flow from operations to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness, including our senior secured credit facilities, on commercially reasonable terms or at all. See Note 11 to our consolidated financial statements – “Long-term Debt and Other Financing Arrangements,” for a description of our debt maturities. 14 A substantial portion of our indebtedness is at variable rates, and we are exposed to the risk of increased interest rates Our cash interest expense for the years ended December 31, 2015, 2014 and 2013 was $296 million, $294 million and $304 million, respectively. At December 31, 2015, we had $3,496 million of floating-rate debt under our senior secured credit facilities of which $2,325 million (excluding $550 million of forward swaps effective after December 31, 2015) was subject to effective floating- fixed interest rate swaps. A one percent increase in interest rates applied to our floating rate indebtedness would therefore increase annual interest expense by approximately $12 million ($35 million without giving effect to any of our interest rate swaps). We periodically review our fixed/floating debt mix, and the volume, rates and duration of our interest rate hedging portfolio are subject to changes, which could adversely affect our results of operations. The success of our business depends on our ability to recruit sample participants to participate in our research samples. Our business uses scanners and diaries to gather consumer data from sample households as well as Set Meters, People Meters, Active/Passive Meters, PPM’s and diaries to gather television and audio audience measurement data from sample households. It is increasingly difficult and costly to obtain consent from households to participate in the surveys. In addition, it is increasingly difficult and costly to ensure that the selected sample of households mirrors the behaviors and characteristics of the entire population and covers all of the demographic segments requested by our clients. Additionally, as consumers adopt modes of telecommunication other than traditional telephone service, such as mobile, cable and internet calling, it may become more difficult for our services to reach and recruit participants for consumer purchasing and audience measurement services. If we are unsuccessful in our efforts to recruit appropriate participants, maintain the integrity of our panels, maintain adequate participation levels or properly model the sample data, our clients may lose confidence in our ratings services and we could lose the support of the relevant industry groups. If this were to happen, our consumer purchasing and audience measurement services may be materially and adversely affected. Data protection laws and self-regulatory codes may restrict our activities and increase our costs. Various statutes and rules regulate conduct in areas such as privacy and data protection which may affect our collection, use, storage and transfer of information both abroad and in the United States. The definition of “personally identifiable information” and “personal data” continues to evolve and broaden, new laws and regulations are being enacted, and long-established programs, like the EU-US Safe Harbor framework, are being declared invalid, so that this area remains in a state of flux. In addition, some of our online products and services are subject to the self-regulatory programs of several organizations. Compliance with these laws and self- regulatory codes may require us to make certain investments or may dictate that we not offer certain types of services or only offer such services after making necessary modifications. Failure to comply with these laws and self-regulatory codes may result in, among other things, civil and criminal liability, negative publicity, data being blocked from use and/or liability under contractual warranties. In addition, there is an increasing public concern regarding data and consumer protection issues, and the number of jurisdictions with data protection laws has been increasing. There is also the possibility that the scope of existing privacy laws may be expanded. For example, several countries, including the United States, have regulations that restrict telemarketing to individuals who request to be included on a do-not-call list. Typically, these regulations target sales activity and do not apply to survey research. If the laws were extended to include survey research, our ability to recruit research participants could be adversely affected. In addition, the European Union has reached agreement on the General Data Protection Regulation, originally introduced in 2012. The final text of the Regulation is expected to be formally adopted by the European Parliament and Council in the spring of 2016, and this Regulation should become effective in 2018. Interpretations of the Regulation may have a negative impact on some of our services or may require us to revise some of our practices, procedures or products. These or future initiatives may adversely affect our ability to generate or assemble data or to develop or market current or future services, which could negatively impact our business. Our services involve the receipt, storage and transmission of proprietary information. If our security measures are breached and unauthorized access is obtained, our services may be perceived as not being secure and regulators, panelists and survey respondents may hold us liable for disclosure of personal data, and clients and venture partners may hold us liable or reduce their use of our services. We receive, store and transmit large volumes of proprietary information and data that contains personal information about individuals. Security breaches could expose us to a risk of loss of this information, litigation and possible liability and our reputation could be damaged. It may also make it more difficult to recruit panelists and survey respondents. For example, hackers or individuals who attempt to breach our network security could, if successful, misappropriate proprietary information or cause interruptions in our services. If we experience any breaches of our network security or sabotage, we might be required to expend significant capital and resources to protect against or to alleviate problems and to respond to regulators’ inquiries. We may not be able to remedy any problems caused by hackers or saboteurs in a timely manner, or at all. Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target and, as a result, we may be unable to anticipate these techniques or to implement adequate preventive measures. If an actual or perceived breach of our security occurs, the perception of the effectiveness of our security measures could be harmed and we could lose current and potential clients. In addition, we may be subject to investigation and fines by jurisdictions that have data breach notification laws. 15 If we are unable to protect our intellectual property rights, our business could be adversely affected. The success of our business will depend, in part, on: (cid:120) (cid:120) (cid:120) (cid:120) obtaining patent protection for our technology and services; defending our patents, copyrights, trademarks, service marks and other intellectual property; preserving our trade secrets and maintaining the security of our know-how and data; and operating our business without infringing upon intellectual property rights held by third parties. We rely on a combination of contractual provisions, confidentiality procedures and the patent, copyright, trademark and trade secret laws of the United States and other countries to protect our intellectual property. These legal measures afford only limited protection and may not provide sufficient protection to prevent the infringement, misuse or misappropriation of our intellectual property. Intellectual property law in several foreign jurisdictions is subject to considerable uncertainty. There can be no assurances that the protections we have available for our proprietary technology in the United States and other countries will be available to us in all of the places we sell our services. Any infringement or misappropriation of our technology can have a negative impact on our business. The patents we own could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide us with meaningful protection or commercial advantage. The expiration of our patents may lead to increased competition. Although our employees, consultants, clients and collaborators enter into confidentiality agreements with us, our trade secrets, data and know-how could be subject to unauthorized use, misappropriation or unauthorized disclosure. The growing need for global data, along with increased competition and technological advances, puts increasing pressure on us to share our intellectual property for client applications with others, which could result in infringement. Competitors may gain access to our intellectual property and proprietary information. Our trademarks could be challenged, which could force us to rebrand our services, result in a loss of brand recognition and require us to devote resources to advertising and marketing new brands. Furthermore, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets and to determine the validity and scope of our proprietary rights. Given the importance of our intellectual property, we will enforce our rights whenever it is necessary and prudent to do so. Any future litigation, regardless of the outcome, could result in substantial expense and diversion of time and attention of management, may not be resolved in our favor and could adversely affect our business. If third parties claim that we infringe upon their intellectual property rights, our operating profits could be adversely affected. We cannot be certain that we do not and will not infringe the intellectual property rights of others in operating our business. We may be subject to legal proceedings and claims in the ordinary course of our business, including claims that we have infringed third parties’ intellectual property rights. Any such claims of intellectual property infringement, even those without merit, could: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) be expensive and time-consuming to defend; result in our being required to pay possibly significant damages; cause us to cease providing our services that incorporate the challenged intellectual property; require us to redesign or rebrand our services; divert management’s attention and resources; or require us to enter into potentially costly royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property, although royalty or licensing agreements may not be available to us on acceptable terms or at all. Any of the above could have a negative impact on our operating profits and harm our future prospects and financial condition. We generate revenues throughout the world which are subject to exchange rate fluctuations, and our revenues and net income may suffer due to currency translations and repatriation of earnings to the U.S. We operate globally, deriving approximately 40% of revenues for the year ended December 31, 2015 in currencies other than U.S. dollars, with approximately 9% of revenues deriving in Euros. Our U.S. operations earn revenues and incur expenses primarily in U.S. dollars, while our European operations earn revenues and incur expenses primarily in Euros. Outside the United States and the Euro Zone, we generate revenues and expenses predominantly in local currencies. Because of fluctuations (including possible devaluations) in currency exchange rates, we are subject to currency translation exposure on the profits of our operations, in addition to economic exposure. In certain instances, we may not be able to freely convert foreign currencies into U.S. dollars due to limitations placed on such conversions. 16 We have operations in both the Buy and Watch segments in Venezuela. The functional currency for these operations was the Venezuelan Bolivares Fuertes, which has been considered hyperinflationary since January 1, 2010. In February 2013, the Venezuelan government devalued its currency by 32%. The official exchange rate moved from 4.30 to 6.30 and the regulated System of Transactions with Securities in Foreign Currency market was suspended. As a result of this change, we recorded a charge of $12 million in 2013 in foreign currency exchange transaction losses, net in the consolidated statement of operations primarily reflecting the write-down of monetary assets and liabilities. Based on facts and circumstances present at March 31, 2014, we began using the exchange rate determined by periodic auctions for U.S. dollars conducted under Venezuela’s Complementary System of Foreign Currency Administration (“SICAD I”) as the SICAD I exchange rate represented what was the most realistic official exchange rate at which to remeasure the U.S. dollar value of the bolivar-denominated monetary assets and liabilities of our Venezuelan operations at that time. At March 31, 2014, the SICAD I exchange rate was 10.8 bolivars to the U.S. dollar. As a result of this change, we recorded a pre-tax charge of $20 million during the first quarter of 2014. Due to the lack of access to the SICAD I auction system throughout the remainder of 2014, as of December 31, 2014 we decided it was more likely that we would be able to gain access to U.S. dollars through the SICAD II mechanism to settle transactions conducted by the Company in Venezuela as SICAD II was created to provide a more open mechanism that was designed to permit any company to request U.S. dollars for any purpose. At December 31, 2014, the SICAD II exchange rate was 50.0 bolivars to the U.S. dollar. As a result of the changes in exchange rate assumptions, we recorded a pre-tax charge of $32 million for the fourth quarter of 2014 and a total of $52 million for the year ended December 31, 2014. On February 12, 2015, the Venezuelan government replaced SICAD II with a new foreign exchange market mechanism (“SIMADI”). We currently expect to be able to access U.S. dollars through the SIMADI market. SIMADI has significantly higher foreign exchange rates than those available through the other foreign exchange mechanisms. At December 31, 2015, the SIMADI exchange rate was 198.7 bolivars to the U.S. dollar. As a result of this change, we recorded a pre-tax charge of $8 million during the year ended December 31, 2015. As of December 31, 2015, of the $357 million in cash and cash equivalents, approximately $317 million was held in jurisdictions outside the U.S. and as a result there may be tax consequences if such amounts were moved out of these jurisdictions or repatriated to the U.S. We regularly review the amount of cash and cash equivalents held outside of the U.S. to determine the amounts necessary to fund the current operations of our foreign operations and their growth initiatives and amounts needed to service our U.S. indebtedness and related obligations. Our international operations are exposed to risks which could impede growth in the future. We continue to explore opportunities in major international markets around the world, including China, Russia, India and Brazil. International operations expose us to various additional risks, which could adversely affect our business, including: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) costs of customizing services for clients outside of the United States; reduced protection for intellectual property rights in some countries; the burdens of complying with a wide variety of foreign laws; difficulties in managing international operations; longer sales and payment cycles; exposure to foreign currency exchange rate fluctuation; exposure to local economic conditions; limitations on the repatriation of funds from foreign operations; exposure to local political conditions, including adverse tax and other government policies and positions, civil unrest and seizure of assets by a foreign government; and the risks of an outbreak of war, the escalation of hostilities and acts of terrorism in the jurisdictions in which we operate. In countries where there has not been a historical practice of using consumer packaged goods retail information or audience measurement information in the buying and selling of advertising time, it may be difficult for us to maintain subscribers. 17 Criticism of our audience measurement service by various industry groups and market segments could adversely affect our business. Due to the high-profile nature of our services in the media, internet and entertainment information industries, we could become the target of criticism by various industry groups and market segments. We strive to be fair, transparent and impartial in the production of audience measurement services, and the quality of our U.S. ratings services are voluntarily subject to review and accreditation by the Media Rating Council, a voluntary trade organization, whose members include many of our key client constituencies. However, criticism of our business by special interests, and by clients with competing and often conflicting demands on our measurement service, could result in government regulation. While we believe that government regulation is unnecessary, no assurance can be given that legislation will not be enacted in the future that would subject our business to regulation, which could adversely affect our business. A loss of one of our largest clients could adversely impact our results of operations. Our top ten clients accounted for approximately 22% of our total revenues for the year ended December 31, 2015. We cannot assure you that any of our clients will continue to use our services to the same extent, or at all, in the future. A loss of one or more of our largest clients, if not replaced by a new client or an increase in business from existing clients, would adversely affect our prospects, business, financial condition and results of operations. We rely on third parties to provide certain data and services in connection with the provision of our current services. We rely on third parties to provide certain data and services for use in connection with the provision of our current services and our reliance on third-party data providers is growing. For example, our Buy segment enters into agreements with third parties (primarily retailers of fast-moving consumer goods) to obtain the raw data on retail product sales it processes and edits and from which it creates products and services. These suppliers of data may increase restrictions on our use of such data, fail to adhere to our quality control standards or otherwise satisfactorily perform services, increase the price they charge us for this data or refuse altogether to license the data to us. Supplier consolidation could put pressure on our cost structure. In addition, we may need to enter into agreements with third parties to assist with the marketing, technical and financial aspects of expanding our services for other types of media. In the event we are unable to use such third party data and services or if we are unable to enter into agreements with third parties, when necessary, our business and/or our potential growth could be adversely affected. In the event that such data and services are unavailable for our use or the cost of acquiring such data and services increases, our business could be adversely affected. We rely on third parties for the performance of a significant portion of our worldwide information technology and operations functions. A failure to provide these functions in a satisfactory manner could have an adverse effect on our business. We are dependent upon third parties for the performance of a significant portion of our information technology and operations functions worldwide. The success of our business depends in part on maintaining our relationships with these third parties and their continuing ability to perform these functions in a timely and satisfactory manner. If we experience a loss or disruption in the provision of any of these functions, or they are not performed in a satisfactory manner, we may have difficulty in finding alternate providers on terms favorable to us, or at all, and our business could be adversely affected. Long-term disruptions in the mail, telecommunication infrastructure and/or air service could adversely affect our business. Our business is dependent on the use of the mail, telecommunication infrastructure and air service. Long-term disruptions in one or more of these services, which could be caused by events such as natural disasters, the outbreak of war, the escalation of hostilities, civil unrest and/or acts of terrorism, could adversely affect our business, results of operations and financial condition. Hardware and software failures, delays in the operations of our data gathering procedures, our computer and communications systems or the failure to implement system enhancements may harm our business. Our success depends on the efficient and uninterrupted operation of our computer and communications systems and our data gathering procedures. A failure of our network or data gathering procedures could impede the processing of data, delivery of databases and services, client orders and day-to-day management of our business and could result in the corruption or loss of data. While many of our services have appropriate disaster recovery plans in place, we currently do not have full backup facilities everywhere in the world to provide redundant network capacity in the event of a system failure. Despite any precautions we may take, damage from fire, floods, hurricanes, power loss, telecommunications failures, computer viruses, break-ins and similar events at our various computer facilities, or delays in our data gathering operations due to weather or other acts of nature, could result in interruptions in the flow of data to our servers and to our clients. In addition, any failure by our computer environment to provide our required data communications capacity could result in interruptions in our service. In the event of a delay in the delivery of data, we could be 18 required to transfer our data collection operations to an alternative provider. Such a transfer could result in significant delays in our ability to deliver our services to our clients and could be costly to implement. Additionally, significant delays in the planned delivery of system enhancements and improvements, or inadequate performance of the systems once they are completed, could damage our reputation and harm our business. Finally, long-term disruptions in infrastructure caused by events such as natural disasters, the outbreak of war, the escalation of hostilities, civil unrest and/or acts of terrorism (particularly involving cities in which we have offices) could adversely affect our services. Although we carry property and business interruption insurance, our coverage may not be adequate to compensate us for all losses that may occur. The presence of our Global Technology and Information Center in Florida heightens our exposure to hurricanes and tropical storms, which could disrupt our business. The technological data processing functions for certain of our U.S. operations are concentrated at our Global Technology and Information Center (“GTIC”) at a single location in Florida. Our geographic concentration in Florida heightens our exposure to a hurricane or tropical storm. These weather events could cause severe damage to our property and technology and could cause major disruptions to our operations. Although our GTIC was built in anticipation of severe weather events and we have insurance coverage, if we were to experience a catastrophic loss, we may exceed our policy limits and/or we may have difficulty obtaining similar insurance coverage in the future. As such, a hurricane or tropical storm could have an adverse effect on our business. Changes in tax laws and the continuing ability to apply the provisions of various international tax treaties may adversely affect our financial results and increase our tax expense. Changes in tax laws, international treaties, regulations, related interpretations and tax accounting standards in the United States, the United Kingdom, the Netherlands and other countries in which we operate may adversely affect our financial results, particularly our income tax expense. For example, recent legislative proposals to reform U.S. taxation of non-U.S. earnings could have a material adverse effect on our financial results by subjecting a significant portion of our non-U.S. earnings to incremental U.S. taxation and/or by delaying or permanently deferring certain deductions otherwise allowed in calculating our U.S. tax liabilities. Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting (BEPS) action plans issued by the Organisation for Economic Co-operation and Development (OECD) in 2015 as well as interpretations as to the application of EU rules on state aid. The OECD, which represents a coalition of member countries, has recommended changes to numerous long-standing tax principles. These changes, if adopted by countries, could increase tax uncertainty and may adversely affect our provision for income taxes. Finally, governments are increasingly considering changes to tax law regimes as a means to cover budgetary shortfalls resulting from the current economic environment. These changes could result in higher taxation to Nielsen. We face increasing competition, which could adversely affect our business, financial condition, results of operations and cash flow. We are faced with a number of competitors in the markets in which we operate. Some of our competitors in each market may have substantially greater financial, marketing and other resources than we do and may in the future engage in aggressive pricing action to compete with us and provide better technology. Although we believe we are currently able to compete effectively in each of the various markets in which we participate, we may not be able to do so in the future or be capable of maintaining or further increasing our current market share. Our failure to compete successfully in our various markets could adversely affect our business, financial condition, results of operations and cash flow. We may be subject to antitrust litigation or government investigation in the future, which may result in an award of money damages or force us to change the way we do business. In the past, certain of our business practices have been investigated by government antitrust or competition agencies, and we have on several occasions been sued by private parties for alleged violations of the antitrust and competition laws of various jurisdictions. Following some of these actions, we have changed certain of our business practices to reduce the likelihood of future litigation. Although each of these material prior legal actions have been resolved, there is a risk based upon the leading position of certain of our business operations that we could, in the future, be the target of investigations by government entities or actions by private parties challenging the legality of our business practices. Also, in markets where the retail trade is concentrated, regulatory authorities may perceive certain of our retail services as potential vehicles for collusive behavior by retailers or manufacturers. There can be no assurance that any such investigation or challenge will not result in an award of money damages, penalties or some form of order that might require a change in the way that we do business, any of which could adversely affect our revenue stream and/or profitability. 19 Our ability to successfully manage ongoing organizational changes could impact our business results. We recently experienced senior leadership changes, and we continue to execute a number of significant business and organizational changes, including acquisitions, divestitures and workforce optimization projects to support our growth strategies. We expect these types of changes, which may include many staffing adjustments as well as employee departures, to continue for the foreseeable future. Successfully managing these changes, including the identification, development and retention of key employees to provide uninterrupted leadership and direction for our business, is critical to our success. This includes developing organization capabilities in key growth markets where the depth of skilled or experienced employees may be limited and competition for these resources is intense. Finally, our financial targets assume a consistent level of productivity improvement. If we are unable to deliver expected productivity improvements, while continuing to invest in business growth, our financial results could be adversely impacted. If we are unable to attract, retain and motivate employees, we may not be able to compete effectively and will not be able to expand our business. Our success and ability to grow are dependent, in part, on our ability to hire, retain and motivate sufficient numbers of talented people, with the increasingly diverse skills needed to serve clients and expand our business, in many locations around the world. Competition for highly qualified, specialized technical and managerial, and particularly consulting personnel is intense. Recruiting, training and retention costs and benefits place significant demands on our resources. The inability to attract qualified employees in sufficient numbers to meet particular demands or the loss of a significant number of our employees could have an adverse effect on us, including our ability to obtain and successfully complete important client engagements and thus maintain or increase our revenues. We have suffered losses due to goodwill impairment charges in the past and could do so again in the future. Goodwill and indefinite-lived intangible assets are subject to annual review for impairment (or more frequently should indications of impairment arise). In addition, other intangible assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. As of December 31, 2015, we had goodwill and intangible assets of $12,555 million. Any downward revisions in the fair value of our reporting units or our intangible assets could result in impairment charges for goodwill and intangible assets that could materially affect our financial performance. Failure to successfully complete or integrate acquisitions into our existing operations could have an adverse impact on our business, financial condition and results of operations. We regularly evaluate opportunities for strategic growth through tuck-in acquisitions. Potential issues associated with these acquisitions could include, among other things, our ability to realize the full extent of the benefits or cost savings that we expect to realize as a result of the completion of the acquisition within the anticipated time frame, or at all; receipt of necessary consents, clearances and approvals in connection with the acquisition; diversion of management’s attention from base strategies and objectives; and, with respect to acquisitions, our ability to successfully combine our businesses with the business of the acquired company in a manner that permits cost savings to be realized, including sales and administrative support activities and information technology systems among our company and the acquired company, motivating, recruiting and retaining executives and key employees, conforming standards, controls, procedures and policies, business cultures and compensation structures among our company and the acquired company, consolidating and streamlining corporate and administrative infrastructures, consolidating sales and marketing operations, retaining existing customers and attracting new customers, identifying and eliminating redundant and underperforming operations and assets, coordinating geographically dispersed organizations, and managing tax costs or inefficiencies associated with integrating our operations following completion of the acquisitions. In addition, acquisitions outside of the United States increase our exposure to risks associated with foreign operations, including fluctuations in foreign exchange rates and compliance with foreign laws and regulations. If an acquisition is not successfully completed or integrated into our existing operations, our business, financial condition and results of operations could be adversely impacted. Our results of operations and financial condition could be negatively impacted by our U.S. and non-U.S. pension plans: Adverse equity market conditions and volatility in the credit markets may have an unfavorable impact on the value of our pension trust assets and future estimated pension liabilities. As a result, our financial results in any period could be negatively impacted. In addition, in a period of an extended financial market downturn, we could be required to provide incremental pension plan funding with resulting liquidity risk which could negatively impact our financial position. Ineffective internal controls could impact our business and operating results: Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide only 20 reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in its implementation, our business and operating results could be harmed and we could fail to meet our financial reporting obligations. Item 1B. Unresolved Staff Comments Not applicable. Item 2. Properties We lease property in approximately 600 locations worldwide. We also own eight properties worldwide, including our offices in Oxford, United Kingdom, Mexico City, Mexico and Sao Paulo, Brazil. Our leased property includes offices in New York, New York, Oldsmar, Florida and Markham, Canada. In addition, we are subject to certain covenants including the requirement that we meet certain conditions in the event we merge into or convey, lease, transfer or sell our properties or assets as an entirety or substantially as an entirety to, any person or persons, in one or a series of transactions. Item 3. Legal Proceedings Nielsen is subject to litigation and other claims in the ordinary course of business, some of which include claims for substantial sums. Accruals have been recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be determined, the Company does expect that the ultimate disposition of these matters will not have a material adverse effect on its operations or financial condition. However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect the Company’s future results of operations or cash flows in a particular period. Item 4. Mine Safety Disclosures Not Applicable. 21 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange and is traded under the symbol “NLSN.” At the close of business on February 1, 2016, there was 1 stockholder of record. We believe that the number of beneficial owners is substantially greater than the number of record holders because a large portion of our common stock is held in “street name” by brokers. The high and low reported sale prices per share for our common stock for the quarterly periods for the years ended December 31, 2015 and 2014 were as follows: Quarterly Period First ............................................................................. $ Second ......................................................................... $ Third ............................................................................ $ Fourth .......................................................................... $ 2015 2014 High Low High Low 46.71 $ 46.85 $ 49.37 $ 48.78 $ 41.92 $ 44.11 $ 42.76 $ 44.13 $ 47.45 $ 48.67 $ 49.44 $ 45.89 $ 40.88 42.54 43.89 40.56 In January 2013, our Board of Directors (the “Board”) adopted a cash dividend policy with the present intent to pay quarterly cash dividends on our outstanding common stock. Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will be subject to the Board’s continuing determination that the dividend policy and the declaration of dividends thereunder are in the best interests of our shareholders and are in compliance with all laws and agreements to which we are subject. In addition, our ability to pay dividends is limited by covenants in our senior secured credit facilities and in the indentures governing our notes. See the “Liquidity and Capital Resources” section of Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 11 to our consolidated financial statements – “Long-term Debt and Other Financing Arrangements,” for a description of our senior secured credit facilities, debenture loans and these dividend restrictions. The below table summarizes the dividends declared and paid on our common stock for the years ended December 31, 2015 and 2014. Declaration Date Record Date Payment Date Dividend Per Share February 20, 2014 May 1, 2014 July 24, 2014 October 30, 2014 February 19, 2015 April 20, 2015 July 23, 2015 October 29, 2015 March 6, 2014 June 5, 2014 August 28, 2014 November 25, 2014 March 5, 2015 June 4, 2015 August 27, 2015 November 24, 2015 March 20, 2014 $ June 19, 2014 $ September 11, 2014 $ December 9, 2014 $ March 19, 2015 $ June 18, 2015 $ September 10, 2015 $ December 8, 2015 $ 0.20 0.25 0.25 0.25 0.25 0.28 0.28 0.28 On February 18, 2016, our Board declared a cash dividend of $0.28 per share on our common stock. The dividend is payable on March 17, 2016 to stockholders of record at the close of business on March 3, 2016. Our Board has approved a share repurchase program, as included in the below table, for up to $2 billion of our outstanding common stock. The primary purpose of the program is to return value to shareholders and to mitigate dilution associated with our equity compensation plans. Board Approval July 25, 2013 .................................................................................. $ October 23, 2014 ............................................................................ $ December 11, 2015 ........................................................................ $ Total Share Repurchase Authorization ................................................ $ Share Repurchase Authorization ($ in millions) 500 1,000 500 2,000 22 Repurchases under these plans will be made in accordance with applicable securities laws from time to time in the open market or otherwise depending on our evaluation of market conditions and other factors. This program has been executed within the limitations of the existing authority granted at Nielsen’s Annual General Meetings of Shareholders held in 2014 and 2015. During the fourth quarter 2015, we repurchased a total of 3,699,951 shares of our common stock for $174 million at an average price of $47.04 per share. The activity during the fourth quarter of 2015 consisted of open market share repurchases and is summarized in the following table: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares that may yet be Purchased under the Plans or Programs October 1-31 .......................................................... November 1-30 ...................................................... December 1 - 31 ..................................................... Total fourth quarter 2015 ............................................ 1,276,829 $ 1,141,708 $ 1,281,414 $ 3,699,951 $ 46.95 47.75 46.50 47.04 1,276,829 $ 469,601,614 1,141,708 $ 415,084,736 1,281,414 $ 855,495,985 3,699,951 United Kingdom tax consequences for holders of common stock The United Kingdom tax consequences discussed below do not reflect a complete analysis or listing of all the possible United Kingdom tax consequences that may be relevant to holders of our common stock. Furthermore, the statements below only apply to holders of our common stock who are resident for tax purposes outside of the United Kingdom. Investors should consult their own tax advisors in respect of the tax consequences related to receipt, ownership, purchase or sale or other disposition of our common stock. United Kingdom withholding tax Under current law, the Company is not required to make any deduction or withholding for or on account of United Kingdom tax from dividends distributed on our common stock, irrespective of the tax residence or individual circumstances of the recipient shareholder. United Kingdom income tax on dividends A non-United Kingdom tax resident holder of our common stock will not be subject to United Kingdom income taxes on dividend income and similar distributions in respect of our shares, unless the shares are attributable to a permanent establishment or a fixed place of business maintained in the United Kingdom by such non-U.K. holder. Disposition of Nielsen Shares Holders of our common stock who are neither resident for tax purposes in the United Kingdom nor holding the common stock in connection with a trade carried on through a permanent establishment in the United Kingdom will not be subject to any United Kingdom taxes on chargeable gains as a result of any disposals of their common stock. Common stock held outside the facilities of The Depository Trust Company ("DTC") should be treated as UK situs assets for the purpose of U.K. inheritance tax. Stamp duty and stamp duty reserve tax ("SDRT") Stamp duty and/or SDRT are imposed in the United Kingdom on certain transfers of securities (including shares in companies which, like us, are incorporated in the United Kingdom) at a rate of 0.5% of the consideration paid for the transfer. Certain transfers of shares to depositaries or into clearance systems are charged a higher rate of 1.5%. Transfers of interests in shares within a depositary or clearance system, and from a depositary to a clearance system, are generally exempt from stamp duty and SDRT. Transfers of our common stock held in book entry form through the facilities of DTC will not attract a charge to stamp duty or SDRT in the United Kingdom provided no instrument of transfer is entered into (which should not be necessary). 23 Any transfer of, or agreement to transfer, our common stock that occurs outside the DTC system, including repurchases by us, will ordinarily attract stamp duty or SDRT at a rate of 0.5%. This duty must be paid (and where applicable the transfer document stamped by HMRC) before the transfer can be registered in our books. Typically this stamp duty or SDRT would be paid by the purchaser of the common stock. A transfer of title in our common stock from within the DTC system out of the DTC system will not attract stamp duty or SDRT if undertaken for no consideration. If that common stock is redeposited into DTC (which may only be done via a deposit of the common stock first with an appropriate offshore depositary followed by a transfer of the common stock from the offshore depositary into DTC), however, the redeposit will attract stamp duty or SDRT at a rate of 1.5%. Investors should therefore note that the withdrawal of our common stock from the DTC system, or any transfers outside the DTC system, are likely to cause additional costs and delays in disposing of their common stock than would be the case if they hold our common stock in book entry form through the DTC system. 24 Item 6. Selected Financial and Other Data The following table sets forth selected historical consolidated financial data as of the dates and for the periods indicated. The selected consolidated statement of operations data for the years ended December 31, 2015, 2014 and 2013 and selected consolidated balance sheet data as of December 31, 2015 and 2014 have been derived from our audited consolidated financial statements and related notes appearing elsewhere in this Form 10-K. The selected consolidated statement of operations data for the years ended December 31, 2012 and 2011 and selected consolidated balance sheet data as of December 31, 2013, 2012 and 2011 have been derived from our audited consolidated financial statements, which are not included in this annual report on Form 10-K. The results of operations for any period are not necessarily indicative of the results to be expected for any future period. The audited consolidated financial statements, from which the historical financial information for the periods set forth below have been derived, were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The selected historical consolidated financial data set forth below should be read in conjunction with, and are qualified by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes thereto appearing elsewhere in this annual report on Form 10-K. In March 2013, we completed the exit and shut down of one of our legacy online businesses and, in June 2013, we completed the sale of our Expositions business. These businesses are reported as discontinued operations, which requires retrospective restatement of prior periods to classify operating results of these businesses as discontinued operations. See “Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations” for more information. (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Statement of Operations Data: Revenues ........................................................................................... $ Depreciation and amortization(6) ....................................................... Operating income .............................................................................. Interest expense ................................................................................. Income from continuing operations .................................................. Income from discontinued operations ............................................... Income from continuing operations per common share (basic) ........ Income from continuing operations per common share (diluted) ..... Cash dividends declared per common share ..................................... 2015(1) Year Ended December 31, 2013(3) 2012(4) 2014(2) 2011(5) 6,172 $ 574 1,093 311 575 — 1.55 1.54 1.09 6,288 $ 573 1,089 300 381 — 1.01 1.00 0.95 5,703 $ 510 861 309 431 305 1.16 1.14 0.72 5,407 $ 493 880 390 242 30 0.67 0.66 — 5,328 502 726 449 61 26 0.17 0.17 — (IN MILLIONS) Balance Sheet Data: Total assets ........................................................................................ $ Long-term debt including capital leases ........................................... 2015 2014 December 31, 2013(7) 2012(7) 2011(7) 15,303 $ 7,338 15,326 $ 6,812 15,480 $ 14,525 $ 6,519 6,590 14,431 6,689 (1) (2) (3) (4) (5) Income for the year ended December 31, 2015 included $51 million in restructuring charges, a gain of $158 million recorded from the step acquisition of Nielsen Catalina Solutions and an $8 million charge associated with the change to the Venezuelan currency exchange rate mechanism. Income for the year ended December 31, 2014 included $89 million in restructuring charges, $97 million of charges associated with certain debt retirement transactions and a $52 million charge associated with the change to the Venezuelan currency exchange rate mechanism. Income for the year ended December 31, 2013 included $119 million in restructuring charges. Income for the year ended December 31, 2012 included $85 million in restructuring charges and $121 million of charges associated with certain debt retirement transactions. Income for the year ended December 31, 2011 included $83 million in restructuring charges and $333 million of charges associated with the initial public offering of the Company’s common stock and related debt retirement transactions and Sponsor agreement termination payments. (6) Depreciation and amortization expense included charges for the depreciation and amortization of tangible and intangible assets acquired in business combinations of $205 million, $204 million, $162 million, $145 million and $161 million for the years ended December 31, 2015, 2014, 2013, 2012 and 2011, respectively. (7) As of December 31, 2013, 2012 and 2011, we have reclassified $50 million, $60 million and $73 million, respectively, of debt issuance costs between total assets and long-term debt inclusive of capital leases to conform to current year presentation. 25 Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7. Introduction The following discussion and analysis should be read together with the accompanying consolidated financial statements and related notes thereto. Further, this report may contain material that includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, Nielsen’s current views with respect to current events and financial performance. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those described in “Item 1A. Risk Factors.” Statements, other than those based on historical facts, which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to Nielsen’s operations and business environment that may cause actual results to be materially different from any future results, express or implied, by such forward-looking statements. See “Cautionary Statement Regarding Forward Looking Statements” in Part I of this Annual Report on Form 10-K. The terms “Company,” “Nielsen,” “we,” “our” or “us,” as used herein, refer to Nielsen Holdings plc and its consolidated subsidiaries unless otherwise stated or indicated by context. Background and Executive Summary We are a leading global performance management company that provides clients with a comprehensive understanding of consumers and consumer behavior. We deliver critical media and marketing information, analytics and industry expertise about what consumers buy (referred to herein as “Buy”) and what consumers read, watch and listen to (consumer interaction across the television, radio, digital and mobile viewing and listening platforms referred to herein as “Watch”) on a global and local basis. Our measurement and analytical services help our clients maintain and strengthen their market positions and identify opportunities for profitable growth. We have a presence in more than 100 countries, including many emerging markets, and hold leading market positions in many of our services and geographies. On September 30, 2013, we completed the acquisition of Arbitron Inc., an international media and marketing research firm through the purchase of 100% of Arbitron’s outstanding common stock for a total cash purchase price of $1.3 billion. Arbitron has helped us better address client needs in unmeasured areas of media consumption, including streaming audio and out-of-home, and our global distribution footprint has helped expand Arbitron’s capabilities outside of the U.S. With Arbitron’s assets, we have expanded our Watch segment’s audience measurement across screens and forms of listening. Arbitron has been rebranded Nielsen Audio. On February 3, 2014, we completed the acquisition of Harris Interactive, Inc., a leading global market research firm, through the purchase of all outstanding shares of Harris Interactive’s common stock for a total purchase price of $116 million. Harris Interactive has expanded our footprint with important industry verticals including pharmaceutical, automobile and financial services. We believe that important measures of our results of operations include revenue, operating income and Adjusted EBITDA (defined below). Our long-term financial objectives include consistent revenue growth and expanding operating margins. Accordingly, we are focused on geographic market and service offering expansion to drive revenue growth and improving operating efficiencies including effective resource utilization, information technology leverage and overhead cost management. Our business strategy is built upon a model that has traditionally yielded consistent revenue performance. Typically, before the start of each year, more than 70% of our annual revenue has been committed under contracts in our combined Buy and Watch segments, which provides us with a high degree of stability to our revenue and allows us to effectively manage our profitability and cash flows. We continue to look for growth opportunities through global expansion, specifically within emerging markets, as well as through the cross-platform expansion of our analytical services and measurement services. Our restructuring and other productivity initiatives have been focused on a combination of improving operating leverage through targeted cost-reduction programs, business process improvements and portfolio restructuring actions, while at the same time investing in key programs to enhance future growth opportunities. Achieving our business objectives requires us to manage a number of key risk areas. Our growth objective of geographic market and service expansion requires us to maintain the consistency and integrity of our information and underlying processes on a global scale, and to invest effectively our capital in technology and infrastructure to keep pace with our clients’ demands and our competitors. Our operating footprint across more than 100 countries requires disciplined global and local resource management of internal and third party providers to ensure success. In addition, our high level of indebtedness requires active management of our debt profile, with a focus on underlying maturities, interest rate risk, liquidity and operating cash flows. 26 Business Segment Overview We align our business into two reporting segments: what consumers buy (consumer purchasing measurement and analytics), and what consumers watch and listen to (media audience measurement and analytics). Our Buy and Watch segments are built on a foundation of proprietary data assets that are designed to yield essential insights for our clients to successfully measure, analyze and grow their businesses. Our Buy segment provides measurement services, which include our core tracking and scan data (primarily transactional measurement data and consumer behavior information), and analytical services to businesses in the consumer packaged goods industry. Our services also enable our clients to better manage their brands, uncover new sources of demand, launch and grow new products, analyze their sales, improve their marketing mix and establish more effective consumer relationships. Our data is used by our clients to measure their market share, tracking billions of sales transactions per month in retail outlets around the world. Our extensive database of retail and consumer information, combined with our advanced analytical capabilities, helps generate strategic insights that influence our clients’ key business decisions. Within our Buy segment, we have two primary geographic groups, developed and emerging markets. Developed markets primarily include the United States, Canada, Western Europe, Japan, Australia and South Korea while emerging markets include Africa, Latin America, Eastern Europe, Russia, China, India and Southeast Asia. Our Watch segment provides viewership and listening data and analytics primarily to the media and advertising industries for television, radio, digital and mobile viewing and listening platforms. Our Watch data is used by our media clients to understand their audiences, establish the value of their advertising inventory and maximize the value of their content, and by our advertising clients to plan and optimize their spending. In June 2013, we completed the sale of our Expositions reporting segment (see “Discontinued Operations” discussion included in “Factors Affecting Our Financial Results” for more information). Our consolidated statements of operations reflect the Expositions reporting segment as a discontinued operation. Certain corporate costs, other than those described above, including those related to selling, finance, legal, human resources, and information technology systems, are considered operating costs and are allocated to our segments based on either the actual amount of costs incurred or on a basis consistent with the operations of the underlying segment. Critical Accounting Policies The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. The most significant of these policies relate to: revenue recognition; business combinations including purchase price allocations; accruals for pension costs and other post- retirement benefits; accounting for income taxes; and valuation of long-lived assets including goodwill and indefinite-lived intangible assets, computer software and stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the valuation of assets and liabilities that are not readily apparent from other sources. We evaluate these estimates on an ongoing basis. Actual results could vary from these estimates under different assumptions or conditions. For a summary of the significant accounting policies, including critical accounting policies discussed below, see Note 1 – “Description of Business, Basis of Presentation and Significant Accounting Policies” – to our consolidated financial statements. Revenue Recognition We recognize revenues when persuasive evidence of an arrangement exists, services have been rendered or information has been delivered, the fee is fixed or determinable and the collectability of the related revenue is reasonably assured. A significant portion of our revenue is generated from information (primarily retail measurement and consumer panel services) and measurement (primarily from television, radio, internet and mobile audiences) services. We generally recognize revenue from the sale of services as the services are performed and delivered to the consumer, which is usually ratably over the term of the contract(s). Invoiced amounts are recorded as deferred revenue until earned. Substantially all of our customer contracts are non-cancelable and non-refundable. Certain of our revenue arrangements include multiple deliverables and in these arrangements, the individual deliverables within the contract that have stand-alone value to the customer are separated and recognized upon delivery based upon our best estimate of their selling prices. These arrangements are not significant to our results of operations. In certain cases, software is included as part of 27 these arrangements to allow our customers to view delivered information and is provided for the term of the arrangement and is not significant to the marketing effort and is not sold separately. Accordingly, software provided to our customers is considered to be incidental to the arrangements and is not recognized as a separate element. A discussion of our revenue recognition policies, by segment, follows: Buy Revenue from our Buy segment, primarily from retail measurement services and consumer panel services, is recognized over the period during which the services are performed and information is delivered to the customer, primarily on a straight line basis. We also provide insights and solutions to customers through analytical studies that are recognized into revenue as value is delivered to the customer. The pattern of revenue recognition for these contracts varies depending on the terms of the individual contracts, and may be recognized proportionally or deferred until the end of the contract term and recognized when the information has been delivered to the customer. Watch Revenue from our Watch segment is primarily generated from television, radio, digital and mobile measurement services and recognized over the contract period, as the service is delivered to the customer, primarily on a straight-line basis. Stock-Based Compensation Expense Recognition Our stock-based compensation programs are comprised of both stock options and restricted stock units (“RSUs”). We measure the cost of all stock-based payments, including stock options, at fair value on the grant date and recognize such costs within the consolidated statements of operations; however, no expense is recognized for stock-based payments that do not ultimately vest. We recognize expense associated with stock-based payments that vest upon a single date using the straight-line method. For those that vest over time, an accelerated graded vesting is used. We recorded $48 million, $47 million and $47 million of expense associated with stock-based compensation for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, the aggregate grant date fair value of all outstanding vested and unvested options was $49 million and $32 million, respectively. As of December 31, 2015, approximately $38 million of unearned stock-based compensation related to unvested RSUs (net of estimated forfeitures) is expected to be recognized over a weighted average period of 3.4 years. Fair Value Measurement Determining the fair value of stock-based awards at the grant date requires considerable judgment. Stock-based compensation expense for time-based stock options is primarily based on the estimated grant date fair value using the Black-Scholes option pricing model, which considers factors such as estimating the expected term of stock options, expected volatility of our stock, and the number of stock-based awards expected to be forfeited due to future terminations. Some of the critical assumptions used in estimating the grant date fair value are presented in the table below: Expected life (years) ............................................. Risk-free interest rate ............................................ Expected dividend yield........................................ Expected volatility ................................................ Weighted-average volatility .................................. 2015 Year Ended December 31, 2014 4.50-5.25 1.27-1.58% 2.18- 2.45% 23.44-23.70% 23.56% 3.00-5.25 0.87%-1.66% 1.77% - 2.39% 23.50%-25.32% 23.89% 2013 3.50-6.00 0.40%-1.99% 0% - 2.19% 25.40%-27.60 % 25.89% We consider several factors in estimating the expected life of our options granted, including the expected lives used by a peer group of companies and the historical option exercise behavior of our employees, which we believe are representative of future behavior. For 2015, 2014 and 2013, expected volatility was based on our historical volatility. In addition, for stock-based awards where vesting is dependent upon achieving certain operating performance goals, we estimate the likelihood of achieving the performance goals. The total number of performance restricted share units to be earned is subject to achievement of cumulative performance goals for the three year period. Forty percent of the target award will be determined based on the Company’s relative total shareholder return and sixty percent of the target award will be determined based on free cash flow 28 achievements. The maximum payout is 200% of target. The fair value of the target award related to free cash flow was the fair value on the date of the grant, and the fair value of the target awards related to relative shareholder return was based on the Monte Carlo model. Differences between actual results and these estimates could have a material effect on our financial results. The assumptions used in calculating the fair value of stock-based awards represent our best estimates and, although we believe them to be reasonable, these estimates involve inherent uncertainties and the application of management’s judgment. If factors change and we employ different assumptions in the application of our option-pricing model in future periods or if we experience different forfeiture rates, the compensation expense that is derived may differ significantly from what we have recorded in the current year. Accounts Receivable During the year ended December 31, 2015, we sold $50 million of accounts receivables to a third party and recorded an immaterial loss on the sale to interest expense, net in the consolidated statement of operations. The sale was accounted for as a true sale, without recourse. We maintain servicing responsibilities of the receivables, for which the related costs are not significant. The proceeds of $50 million from the sale were reported as a component of the changes in trade and other receivables, net within operating activities in the consolidated statement of cash flows. Goodwill and Indefinite-Lived Intangible Assets Goodwill and other indefinite-lived intangible assets are stated at historical cost less accumulated impairment losses, if any. Goodwill and other indefinite-lived intangible assets, consisting of certain trade names and trademarks, are each tested for impairment on an annual basis and whenever events or circumstances indicate that the carrying amount of such asset may not be recoverable. We have designated October 1st as the date in which the annual assessment is performed as this timing corresponds with the development of our formal budget and business plan review. We review the recoverability of our goodwill by comparing the estimated fair values of reporting units with their respective carrying amounts. We established, and continue to evaluate, our reporting units based on our internal reporting structure and define such reporting units at our operating segment level or one level below. The estimates of fair value of a reporting unit are determined using a combination of valuation techniques, primarily by an income approach using a discounted cash flow analysis and supplemented by a market-based approach. A discounted cash flow analysis requires the use of various assumptions, including expectations of future cash flows, growth rates, discount rates and tax rates in developing the present value of future cash flow projections. Many of the factors used in assessing fair value are outside of the control of management, and these assumptions and estimates can change in future periods. Changes in assumptions or estimates could materially affect the determination of the fair value of a reporting unit, and therefore could affect the amount of potential impairment. The following assumptions are significant to our discounted cash flow analysis: (cid:120) (cid:120) (cid:120) Business projections – expected future cash flows and growth rates are based on assumptions about the level of business activity in the marketplace as well as applicable cost levels that drive our budget and business plans. The budget and business plans are updated at least annually and are frequently reviewed by management and our board of directors. Actual results of operations, cash flows and other factors will likely differ from the estimates used in our valuation, and it is possible that differences and changes could be material. A deterioration in profitability, adverse market conditions and a slower or weaker economic recovery than currently estimated by management could have a significant impact on the estimated fair value of our reporting units and could result in an impairment charge in the future. Should such events or circumstances arise, management would evaluate other options available at that time that, if executed, could result in future profitability. Long-term growth rates – the assumed long-term growth rate representing the expected rate at which a reporting unit’s earnings stream, beyond that of the budget and business plan period, is projected to grow. These rates are used to calculate the terminal value, or value at the end of the future earnings stream, of our reporting units, and are added to the cash flows projected for the budget and business plan period. The long-term growth rate for each reporting unit is influenced by general market conditions as well as factors specific to the reporting unit such as the maturity of the underlying services. The long-term growth rates we used for each of our reporting units in our 2015 evaluation was 3%. Discount rates – the reporting unit’s combined future cash flows are discounted at a rate that is consistent with a weighted-average cost of capital that is likely to be used by market participants. The weighted-average cost of capital is our estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. The discount rate for each reporting unit is influenced by general market conditions as well as factors specific to the reporting unit. The discount rates we used in our 2015 evaluation of our reporting units were between 8.5% and 11.5%. 29 These estimates and assumptions vary between each reporting unit depending on the facts and circumstances specific to that unit. We believe that the estimates and assumptions we made are reasonable, but they are susceptible to change from period to period. We also use a market-based approach in estimating the fair value of our reporting units. The market-based approach utilizes available market comparisons such as indicative industry multiples that are applied to current year revenue and earnings as well as recent comparable transactions. To validate the reasonableness of the reporting unit fair values, we reconcile the aggregate fair values of our reporting units to our enterprise market capitalization. Enterprise market capitalization includes, among other factors, the market value of our common stock and the appropriate redemption values of our debt. We did not have any indicators of impairment during the year ended December 31, 2015 that would require us to perform an interim impairment assessment. Our annual impairment assessment, performed as of October 1, 2015, resulted in no impairment. Further all four reporting units have fair values exceeding carrying values by at least 20% as of the annual impairment assessment date. We perform sensitivity analyses on our assumptions, primarily around both long-term growth rate and discount rate assumptions. Our sensitivity analyses include several combinations of reasonably possible scenarios with regard to these assumptions. However, we consistently test a one percent movement in both our long-term growth rate and discount rate assumptions. When applying these sensitivity analyses, we noted that the fair value was greater than the underlying book value for all of our reporting units. While management believes that these sensitivity analyses provide a reasonable basis on which to evaluate the recovery of our goodwill, other facts or circumstances may arise that could impact the impairment assessment and therefore these analyses should not be used as a sole predictor of impairment. The impairment test for other indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The estimates of fair value of trade names and trademarks are determined using a “relief from royalty” discounted cash flow valuation methodology. Significant assumptions inherent in this methodology include estimates of royalty rates and discount rates. Discount rate assumptions are based on an assessment of the risk inherent in the respective intangible assets. Assumptions about royalty rates are based on the rates at which comparable trade names and trademarks are being licensed in the marketplace. Pension Costs We provide a number of retirement benefits to our employees, including defined benefit pension plans and post-retirement medical plans. Pension costs, in respect of defined benefit pension plans, primarily represent the increase in the actuarial present value of the obligation for pension benefits based on employee service during the year and the interest on this obligation in respect of employee service in previous years, net of the expected return on plan assets. Differences between this expected return and the actual return on these plan assets and actuarial changes are not recognized in the statement of operations, unless the accumulated differences and changes exceed a certain threshold. The excess is amortized and charged to the statement of operations over, at the maximum, the average remaining term of employee service. We recognize obligations for contributions to defined contribution pension plans as expenses in the statement of operations as they are incurred. The determination of benefit obligations and expenses is based on actuarial models. In order to measure benefit costs and obligations using these models, critical assumptions are made with regard to the discount rate, the expected return on plan assets, the assumed rate of compensation increases and longevity changes in the local jurisdictions. We provide retiree medical benefits to a limited number of participants in the U.S. and have ceased to provide retiree health care benefits to certain of our Dutch retirees. Therefore, retiree medical care cost trend rates are not a significant driver of our post retirement costs. Management reviews these critical assumptions at least annually. Other assumptions involve demographic factors such as turnover, retirement and mortality rates. Management reviews these assumptions periodically and updates them as necessary. The discount rate is the rate at which the benefit obligations could be effectively settled. For our U.S. plans, the discount rate is based on a bond portfolio that includes only long-term bonds with an Aa rating, or equivalent, from a major rating agency. For the Dutch and other non-U.S. plans, the discount rate is set by reference to market yields on high-quality corporate bonds. We believe the timing and amount of cash flows related to the bonds in these portfolios are expected to match the estimated payment benefit streams of our plans. To determine the expected long-term rate of return on pension plan assets, we consider, for each country, the structure of the asset portfolio and the expected rates of return for each of the components. For our U.S. plans, a 50 basis point decrease in the 30 expected return on assets would increase pension expense on our principal plans by approximately $1 million per year. A similar 50 basis point decrease in the expected return on assets would increase pension expense on our principal Dutch plans by approximately $3 million per year. We assumed that the weighted-averages of long-term returns on our pension plans were 6.0% for each of the years ended December 31, 2015, 2014 and 2013. We apply the expected long-term rate of return to the fair value of pension plan assets. The actual return on plan assets will vary year to year from this assumption. Although the actual return on plan assets will vary from year to year, we believe it is appropriate to use long-term expected forecasts in selecting our expected return on plan assets. As such, there can be no assurance that our actual return on plan assets will approximate the long-term expected forecasts. Effective January 1, 2016, we intend to change our approach to calculating the discount rate for our retirement benefit pension plans from a weighted-average yield curve approach to a spot-rate approach. Under the spot-rate approach, we will use individual spot rates along the yield curve that correspond with the timing of each future cash outflow for benefit payments in order to calculate interest cost and service cost within net periodic benefit costs. The spot-rate approach will represent a more precise measurement of interest and service cost. The new approach represents a change in accounting estimate that is inseparable from a change in accounting principle and accordingly is accounted for prospectively. Income Taxes We have a presence in more than 100 countries. We have completed many material acquisitions and divestitures which have generated complex tax issues requiring management to use its judgment to make various tax determinations. We try to organize the affairs of our subsidiaries in a tax efficient manner, taking into consideration the jurisdictions in which we operate. Although we are confident that tax returns have been appropriately prepared and filed, there is risk that additional tax may be assessed on certain transactions or that the deductibility of certain expenditures may be disallowed for tax purposes. Our policy is to estimate tax risk to the best of our ability and provide accordingly for those risks and take positions in which a high degree of confidence exists that the tax treatment will be accepted by the tax authorities. The policy with respect to deferred taxation is to provide in full for temporary differences using the liability method. Deferred tax assets and deferred tax liabilities are computed by assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. The carrying value of deferred tax assets is adjusted by a valuation allowance to the extent that these deferred tax assets are not considered to be realized on a more likely than not basis. Realization of deferred tax assets is based, in part, on our judgment and various factors including reversal of deferred tax liabilities, our ability to generate future taxable income in jurisdictions where such assets have arisen and potential tax planning strategies. Valuation allowances are recorded in order to reduce the deferred tax assets to the amount expected to be realized in the future. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Such tax positions are, based solely on their technical merits, more likely than not to be sustained upon examination by taxing authorities and reflect the largest amount of benefit, determined on a cumulative probability basis that is more likely than not to be realized upon settlement with the applicable taxing authority with full knowledge of all relevant information. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Long-Lived Assets We are required to assess whether the value of our long-lived assets, including our buildings, improvements, technical and other equipment, and amortizable intangible assets have been impaired whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. We do not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. Recoverability of assets that are held and used is measured by comparing the sum of the future undiscounted cash flows expected to be derived from an asset (or a group of assets) to their carrying value. If the carrying value of the asset (or the group of assets) exceeds the sum of the future undiscounted cash flows, impairment is considered to exist. If impairment is considered to exist based on undiscounted cash flows, the impairment charge is measured using an estimation of the assets’ fair value, typically using a discounted cash flow method. The identification of impairment indicators, the estimation of future cash flows and the determination of fair values for assets (or groups of assets) requires us to make significant judgments concerning the identification and validation of impairment indicators, expected cash flows and applicable discount rates. These estimates are subject to revision as market conditions and our assessments change. No impairment indicators were noted for the years ended December 31, 2015, 2014 and 2013. We capitalize software development costs with respect to major internal use software initiatives or enhancements. The costs are capitalized from the time that the preliminary project stage is completed, and we consider it probable that the software will be used to perform the function intended until the time the software is placed in service for its intended use. Once the software is placed in 31 service, the capitalized costs are generally amortized over periods of three to seven years. If events or changes in circumstances indicate that the carrying value of software may not be recovered, a recoverability analysis is performed based on estimated undiscounted cash flows to be generated from the software in the future. If the analysis indicates that the carrying value is not recoverable from future cash flows, the software cost is written down to estimated fair value and an impairment is recognized. These estimates are subject to revision as market conditions and as our assessments change. Impairment charges for the year ended December 31, 2015 were insignificant. Factors Affecting Nielsen’s Financial Results Acquisitions, Dispositions and Investments in Affiliates Arbitron Inc. On September 30, 2013, we completed the acquisition of Arbitron, through the purchase of 100% of Arbitron’s outstanding common stock for a total cash purchase price of $1.3 billion. Arbitron has helped us better address client needs in unmeasured areas of media consumption, including streaming audio and out-of-home, and our global distribution footprint has helped expand Arbitron’s capabilities outside of the U.S. With Arbitron’s assets, we have further expanded our Watch segment’s audience measurement across screens and forms of listening. Arbitron has been rebranded Nielsen Audio. As part of the acquisition, we acquired the remaining 49.5% interest in Scarborough Research, a joint venture between us and Arbitron (“Scarborough”) that we historically accounted for under the equity method of accounting. We accounted for this transaction as a step-acquisition and calculated the fair value of the investment immediately before the acquisition to be $75 million. As a result, during the third quarter of 2013, we recorded a $24 million gain on the investment in Scarborough to other income/(expense), net in the consolidated statement of operations. Commencing October 1, 2013, the financial results of Scarborough were included within our consolidated financial statements. The acquisition was accounted for using the acquisition method of accounting which requires, among other things, the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. Since the date of the acquisition occurred on the last day of the third quarter of 2013, the financial results of Arbitron were included within our consolidated financial statements commencing October 1, 2013. Our consolidated statement of operations for the year ended December 31, 2013 includes $134 million of revenues related to the Arbitron acquisition. The purchase price was allocated based upon the fair value of the assets acquired and liabilities assumed at the date of acquisition. The following table summarizes the purchase price allocation: (IN MILLIONS) Fair value of business combination: Cash paid for Arbitron common stock ............................................... $ Accrued payment for directors’ and employees’ equity awards pertaining to pre-merger service ................................................... Accrued dividend payment on Arbitron common stock .................... Fair value of previously held equity interest in Scarborough ............ Total ......................................................................................... $ Identifiable assets acquired and liabilities assumed: Cash ............................................................................................................. $ Other current assets ..................................................................................... Property and equipment ............................................................................... Goodwill ...................................................................................................... Amortizable intangible assets ...................................................................... Other long term assets ................................................................................. Deferred revenue ......................................................................................... Other current liabilities ................................................................................ Deferred tax liabilities ................................................................................. Other long term liabilities ............................................................................ Total ............................................................................................................. $ 1,296 42 3 75 1,416 136 129 32 947 472 2 (47) (53) (184) (18) 1,416 As of the acquisition date, the expected fair value of accounts receivable approximated historical cost. The gross contractual receivable was $64 million, of which $4 million was deemed uncollectible. 32 The allocation of the purchase price to goodwill and identified intangible assets was $947 million and $472 million, respectively. All of the Arbitron related goodwill and intangible assets are attributable to our Watch segment. Intangible assets and their estimated useful lives consist of the following: (IN MILLIONS) Description Customer–related intangibles ....................................... $ Computer software ....................................................... Trade names and trademarks ........................................ Covenants-not-to-compete ........................................... Total ............................................................................. $ Amount Useful Life 10 – 15 years 5 – 10 years 3 - 5 years 1 – 2 years 271 159 31 11 472 Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents expected synergies and the going concern nature of Arbitron. We incurred acquisition-related expenses of $19 million for the year ended December 31, 2013, which primarily consisted of transaction fees, legal, accounting and other professional services that are included in selling, general and administrative expense in the consolidated statement of operations. The following unaudited pro forma information presents the consolidated results of our operations and Arbitron’s for the year ended December 31, 2013, as if the acquisition had occurred on January 1, 2013, with pro forma adjustments to give effect to amortization of intangible assets, an increase in interest expense from acquisition financing, and certain other adjustments: (IN MILLIONS) Revenues ..................................................................................................... $ Income from continuing operations ............................................................ $ 2013 6,058 497 The unaudited pro forma results do not reflect any synergies and are not necessarily indicative of the results that we would have attained had the acquisition of Arbitron been completed as of the beginning of the reporting period. Nielsen Audio’s results of operations are fully reflected in our consolidated results of operations for the year ended December 31, 2015 and 2014. Other Acquisitions For the year ended December 31, 2015, we paid cash consideration of $246 million associated with both current period and previously executed acquisitions, net of cash acquired. Included in this amount is $45 million for an additional 13.5% interest in Nielsen Catalina Solutions, a joint venture between us and Catalina (“NCS”) that we historically accounted for under the equity method of accounting. As part of this transaction we gained control of NCS and, as such accounted for it as a step-acquisition and calculated the fair value of the investment immediately before the acquisition to be $161 million. As a result, during the fourth quarter of 2015, we recorded a $158 million gain on the investment in NCS to other income/(expense), net in the consolidated statement of operations. Commencing October 1, 2015, NCS was reflected as a consolidated subsidiary within our consolidated financial statements. Had these current period’s acquisitions occurred as of January 1, 2015, the impact on our consolidated results of operations would not have been material. For the year ended December 31, 2014, we paid cash consideration of $314 million associated with both current period and previously executed acquisitions (including Harris Interactive, Inc.), net of cash acquired. Had that period’s acquisitions occurred as of January 1, 2014, the impact on our consolidated results of operations would not have been material. For the year ended December 31, 2013, excluding Arbitron, we paid cash consideration of $43 million associated with both current period and previously executed acquisitions, net of cash acquired. Had that period’s acquisitions occurred as of January 1, 2013, the impact on our consolidated results of operations would not have been material. Discontinued Operations and Other Dispositions In November 2015, we completed the sale of the National Research Group, Inc., a leader in providing market research to movie studios within our Watch segment, for total cash consideration of $34 million and recorded an $18 million gain on the sale to other 33 income/(expense), net in the consolidated statement of operations. The disposition did not qualify to be classified as discontinued operations. In February 2014, we completed the acquisition of Harris Interactive, Inc., a leading global market research firm, through the purchase of all outstanding shares of Harris Interactive’s common stock. In June 2014, we completed the sale of Harris Interactive European operations (“Harris Europe”) to ITWP Acquisitions Limited (“ITWP”), the parent company of Toluna, a leading digital market research and technology company in exchange for a minority stake in ITWP. The consolidated statements of operations reflect the operating results of Harris Europe as a discontinued operation. In June 2013, we completed the sale of our Expositions business, which operates one of the largest portfolios of business-to- business trade shows and conference events in the United States, for total cash consideration of $950 million and recorded a gain of $290 million. The consolidated statements of operations reflect the operating results of this business as a discontinued operation. In March 2013, we completed the exit and shut down of one of our legacy online businesses and recorded a net loss of $3 million associated with this divestiture. The consolidated statements of operations reflect the operating results of this business as a discontinued operation. Summarized results of operations for discontinued operations are as follows: (IN MILLIONS) Revenue ................................................................................... $ Operating income ..................................................................... Interest expense (1) ................................................................... Income from operations before income taxes .......................... Provision for income taxes ...................................................... Income from operations ........................................................... Gain on sale, net of tax ........................................................... Net income attributable to noncontrolling interest................... Income from discontinued operations, net of tax ..................... $ 2015 Year Ended December 31, 2014 2013 — $ — — — — — — — — $ $ 15 — — — — — — — — $ 103 35 (8) 27 (12) 15 290 — 305 (1) We allocated a portion of our consolidated interest expense to discontinued operations based upon the ratio of net assets sold as a proportion of consolidated net assets. For the years ended December 31, 2015, 2014 and 2013, interest expense of zero, zero and $8 million, respectively, was allocated to discontinued operations. Following are the major categories of cash flows from discontinued operations, as included in our consolidated statements of cash flows for the years ended December 31, 2015, 2014 and 2013: (IN MILLIONS) Net cash provided by operating activities ................................ $ Net cash used in investing activities ........................................ Net cash used in financing activities ........................................ $ 2015 Year Ended December 31, 2014 2013 — $ — — — $ — $ — — — $ 36 — — 36 Foreign Currency Our financial results are reported in U.S. dollars and are therefore subject to the impact of movements in exchange rates on the translation of the financial information of individual businesses whose functional currencies are other than U.S. dollars. Our principal foreign exchange revenue exposure is spread across several currencies, primarily the Euro. The table below sets forth the profile of our revenue by principal currency. U.S. Dollar ............................................................................... Euro ......................................................................................... Other Currencies ...................................................................... Total ......................................................................................... 60% 9% 31% 100% 56% 11% 33% 100% 52% 12% 36% 100% Year ended December 31, 2015 Year ended December 31, 2014 Year ended December 31, 2013 34 As a result, fluctuations in the value of foreign currencies relative to the U.S. dollar impact our operating results. Impacts associated with fluctuations in foreign currency are discussed in more detail under “Item 7A.—Quantitative and Qualitative Disclosures about Market Risk.” In countries with currencies other than the U.S. dollar, assets and liabilities are translated into U.S. dollars using end-of-period exchange rates; revenues, expenses and cash flows are translated using average rates of exchange. The average U.S. dollar to Euro exchange rate was $1.11 to €1.00, $1.33 to €1.00 and $1.33 to €1.00 for the years ended December 31, 2015, 2014 and 2013, respectively. Constant currency growth rates used in the following discussion of results of operations eliminate the impact of year-over-year foreign currency fluctuations. We have operations in both the Buy and Watch segments in Venezuela and the functional currency for these operations was the Venezuelan Bolivares Fuertes (“bolivars”). Venezuela’s currency has been considered hyperinflationary since January 1, 2010 and, accordingly, the local currency transactions have been denominated in U.S. dollars since January 1, 2010 and will continue to be until Venezuela’s currency is deemed to be non-hyperinflationary. Since early 2013, there have been a number of changes in the foreign exchange regime in Venezuela that have impacted the conversion rates used by us for the conversion of bolivars into U.S. Dollars in its financial statements, resulting in foreign currency exchange transaction losses in the consolidated statement of operations, reflecting the write-down of monetary assets and liabilities in our Venezuelan operations. In February 2013, the official exchange rate was moved from 4.30 to 6.30 bolivars to the U.S. Dollar and the regulated System of Transactions with Securities in Foreign Currency market was suspended. Based on facts and circumstances present at March 31, 2014, we began using the exchange rate determined by periodic auctions for U.S. dollars conducted under Venezuela’s Complementary System of Foreign Currency Administration (“SICAD I”) as the SICAD I exchange rate represented what was the most realistic official exchange rate at which to remeasure the U.S. dollar value of the bolivar-denominated monetary assets and liabilities of our Venezuelan operations at that time. At March 31, 2014, the SICAD I exchange rate was 10.8 bolivars to the U.S. dollar. As a result of this change, we recorded a pre-tax charge of $20 million during the first quarter of 2014. Due to the lack of access to the SICAD I auction system throughout the remainder of 2014, as of December 31, 2014 we decided it was more likely that we would be able to gain access to U.S. dollars through the SICAD II mechanism to settle transactions conducted by the Company in Venezuela as SICAD II was created to provide a more open mechanism that was designed to permit any company to request U.S. dollars for any purpose. At December 31, 2014, the SICAD II exchange rate was 50.0 bolivars to the U.S. dollar. As a result of changes in exchange rate assumptions, we recorded a pre-tax charge of $32 million for the fourth quarter of 2014 and a total of $52 million for the year ended December 31, 2014. On February 12, 2015, the Venezuelan government replaced SICAD II with a new foreign exchange market mechanism (“SIMADI”). We currently expect to be able to access U.S. dollars through the SIMADI market. SIMADI has significantly higher foreign exchange rates than those available through the other foreign exchange mechanisms. At December 31, 2015, the SIMADI exchange rate was 198.7 bolivars to the U.S. dollar. As a result of this change, we recorded a pre-tax charge of $8 million during the year ended December 31, 2015. We will continue to assess the appropriate conversion rate based on events in Venezuela and our specific facts and circumstances. Total net monetary assets in U.S. dollars at the December 31, 2015 SIMADI rate totaled $3 million. 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 financial 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, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company’s 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. This calculation may differ from similarly-titled measures used by others and, accordingly, the constant currency presentation is not meant to be a substitution for recorded amounts presented in conformity with GAAP nor should such amounts be considered in isolation. 35 Results of Operations – Years Ended December 31, 2015, 2014 and 2013 The following table sets forth, for the periods indicated, the amounts included in our consolidated statements of operations: (IN MILLIONS) Revenues .................................................................................. $ Cost of revenues, exclusive of depreciation and amortization 2015 Year Ended December 31, 2014 2013 6,172 $ 6,288 $ 5,703 shown separately below ...................................................... 2,539 2,620 2,398 Selling, general and administrative expenses, exclusive of depreciation and amortization shown separately below ...... Depreciation and amortization ................................................. Restructuring charges .............................................................. Operating income ..................................................................... Interest income......................................................................... Interest expense ....................................................................... Foreign currency exchange transaction losses, net .................. Other income/(expense), net .................................................... Income from continuing operations before income taxes and equity in net (loss)/income of affiliates ............................... Provision for income taxes ...................................................... Equity in net (loss)/income of affiliates ................................... Income from continuing operations ......................................... Income from discontinued operations, net of tax ..................... Net income ............................................................................... Net income/(loss) attributable to noncontrolling interests ....... Net income attributable to Nielsen stockholders ..................... $ 1,915 574 51 1,093 4 (311) (31) 206 961 (383) (3) 575 — 575 5 570 $ 1,917 573 89 1,089 3 (300) (71) (100) 621 (236) (4) 381 — 381 (3) 384 $ 1,815 510 119 861 2 (309) (25) (9) 520 (91) 2 431 305 736 (4) 740 Net Income to Adjusted EBITDA Reconciliation 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 specifically described below. 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 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. In addition to Adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. Adjusted EBITDA should not be considered as an alternative to net income, operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. 36 The below table presents a reconciliation from net income to Adjusted EBITDA for the years ended December 31, 2015, 2014 and 2013: (IN MILLIONS) Net income .............................................................................. $ Income from discontinued operations, net ............................... Interest expense, net ................................................................. Provision for income taxes ...................................................... Depreciation and amortization ................................................. EBITDA................................................................................... Equity in net loss/(income) of affiliates ................................... Other non-operating (income)/expense, net ............................. Restructuring charges .............................................................. Stock-based compensation expense ......................................... Other items(a) ............................................................................ Adjusted EBITDA ................................................................. $ 2015 Year Ended December 31, 2014 2013 575 $ — 307 383 574 1,839 3 (175) 51 48 92 1,858 $ 381 $ — 297 236 573 1,487 4 171 89 47 39 1,837 $ 736 (305) 307 91 510 1,339 (2) 34 119 47 80 1,617 (a) For the years ended December 31, 2015, other items consist of a $36 million donation to the Nielsen Foundation, $14 million charge for the partial settlement of certain U.S. pension plan participants, and other non-recurring costs. For the year ended December 31, 2014, other items primarily consist of non-recurring items. For the year ended December 31, 2013, other items consist primarily of one-time items associated with the acquisition of Arbitron, including non-cash purchase accounting adjustments and transaction-related costs Consolidated Results for the Year Ended December 31, 2015 Compared to the Year Ended December 31, 2014 Revenues Revenues decreased 1.8% to $6,172 million for the year ended December 31, 2015 from $6,288 million for the year ended December 31, 2014, or an increase of 5.0% on a constant currency basis, excluding a 6.8% unfavorable impact of changes in foreign currency exchange rates. Revenues within our Buy segment decreased 5.1%, or an increase of 5.0% on a constant currency basis, excluding a 10.1% unfavorable impact of changes in foreign currency exchange rates. Revenues within our Watch segment increased 2.2%, or 4.9% on a constant currency basis, excluding a 2.7% unfavorable impact of changes in foreign currency exchange rates. Refer to the “Business Segment Results” section for further discussion of our revenue performance. Cost of Revenues, Exclusive of Depreciation and Amortization Cost of revenues decreased 3.1% to $2,539 million for the year ended December 31, 2015 from $2,620 million for the year ended December 31, 2014, or an increase of 3.7% on a constant currency basis, excluding a 6.8% favorable impact of changes in foreign currency exchange rates. Costs within our Buy segment decreased 5.9%, or an increase of 3.5% on a constant currency basis. Excluding a 9.4% favorable impact of changes in foreign currency exchange rates, cost of revenues increased due to the continued global investments in our services. Costs within our Watch segment increased 1.5%, or 4.5% on a constant currency basis. Excluding a 3.0% favorable impact of changes in foreign currency exchange rates, cost of revenues increased due to higher spending on product portfolio management initiatives, including our digital and Marketing Effectiveness product offerings. Selling, General and Administrative Expenses, Exclusive of Depreciation and Amortization Selling, general and administrative expenses decreased 0.1% to $1,915 for the year ended December 31, 2015 from $1,917 million for the year ended December 31, 2014, or an increase of 7.4% on a constant currency basis, excluding a 7.5% favorable impact of changes in foreign currency exchange rates. Costs within our Buy segment decreased 3.7%, or an increase of 5.7% on a constant currency basis. Excluding a 9.4% favorable impact of changes in foreign currency exchange rates, selling, general and administrative expenses increased due to continued global investments associated with our services. 37 Costs within our Watch segment decreased 2.8%, or an increase 0.4% on a constant currency basis. Excluding a 3.2% favorable impact of changes in foreign currency exchange rates, selling, general and administrative expenses increased due to increased investment in product development initiatives, partially offset by Arbitron integration activities that occurred in the second half of 2014. Corporate costs increased by $62 million for the year ended December 31, 2015, primarily due to a $36 million donation to the Nielsen Foundation and a $14 million charge for the partial settlement of certain U.S. pension plans. Depreciation and Amortization Depreciation and amortization expense was $574 million for the year ended December 31, 2015 as compared to $573 million for the year ended December 31, 2014. Depreciation and amortization expense associated with tangible and intangibles assets acquired in business combinations increased to $205 million for the year ended December 31, 2015 from $204 million for the year ended December 31, 2014. Restructuring Charges We recorded $51 million in restructuring charges for the year ended December 31, 2015, primarily related to employee severance associated with productivity initiatives. We recorded $89 million in restructuring charges for the year ended December 31, 2014, primarily related to employee severance associated with productivity initiatives. Operating Income Operating income for the year ended December 31, 2015 was $1,093 million compared to operating income of $1,089 million for the year ended December 31, 2014. Operating income within our Buy segment increased to $369 million for the year ended December 31, 2015 from $358 million for the year ended December 31, 2014. Operating income within our Watch segment increased to $880 million for the year ended December 31, 2015 from $836 million for the year ended December 31, 2014. Corporate operating expenses increased to $156 million for the year ended December 31, 2015 from $105 million for the year ended December 31, 2014. Interest Expense Interest expense was $311 million for the year ended December 31, 2015 compared to $300 million for the year ended December 31, 2014. This increase is primarily related to the higher debt balances due to the issuance of $750 million 5.00% Senior Notes in February 2015 partially offset by the partial refinancing of the 7.75% Senior Notes in April 2014 and the refinancing of the remaining 7.75% Senior Notes in July 2014. Foreign Currency Exchange Transaction Losses, Net Foreign currency exchange transaction losses, net, represent the net loss on revaluation of certain cash, external debt, intercompany loans and other receivables and payables. Fluctuations in the value of foreign currencies relative to the U.S. Dollar, particularly the Euro, have a significant effect on our operating results. The average U.S. Dollar to Euro exchange rate was $1.11 to €1.00 and $1.33 to €1.00 for the years ended December 31, 2015 and 2014, respectively. We realized net losses of $31 million for the year ended December 31, 2015, resulting primarily from the revaluation of our U.S. denominated debt and cash held in Euro functional currency entities of $14 million, the devaluation of the Venezuelan bolivars of $8 million as discussed in the “Foreign Currency” section of “Factors Affecting Nielsen’s Financial Results”, as well as the fluctuations in certain foreign currencies associated with intercompany transactions, partially offset by a gain of $2 million associated with foreign currency derivative financial instruments. We incurred $71 million in net foreign currency exchange losses for the year ended December 31, 2014, resulting primarily from changes to the Venezuelan exchange rate mechanisms as discussed in the “Foreign Currency” section of “Factors Affecting Nielsen’s Financial Results” as well as the fluctuation in U.S. dollar to Euro exchange rate associated with our European revolving credit facility and the fluctuations in certain foreign currencies associated with intercompany transactions. 38 Other Income/(Expense), Net Other income, net of $206 million for the year ended December 31, 2015 is primarily related to the gains recorded from the step acquisition of NCS in the amount of $158 million, sale of an equity investment in the amount of $30 million and the disposition of NRG in the amount of $18 million. Other expense, net of $100 million for the year ended December 31, 2014 is primarily related to the “make-whole” premium associated with the redemption of our 7.75% Senior Notes due 2018, as well as the write-off of certain previously capitalized debt financing fees associated with the Class D and E term loans and certain costs incurred in connection with the refinancings. Income from Continuing Operations Before Income Taxes and Equity in Net Income of Affiliates Income was $961 million for the year ended December 31, 2015 compared to $621 million for the year ended December 31, 2014 due primarily to the consolidated results mentioned above. Income Taxes The effective tax rates for the years ended December 31, 2015 and 2014 were 40% and 38%, respectively. The effective tax rate for the year ended December 31, 2015 was higher than the UK statutory rate as a result of the impact of tax rate differences in other jurisdictions where the Company files tax returns, the effect of global licensing activities, withholding and foreign taxes as well as state and local income taxes, offset by the favorable impact of certain financing activities and foreign distributions. The effective tax rate for the year ended December 31, 2014 was higher than the statutory expense rate as a result of the impact of tax rate differences in other jurisdictions where the Company files tax returns, the effect of global licensing activities and foreign distributions, withholding and foreign taxes as well as state and local income taxes offset by the favorable impact of certain financing activities. At December 31, 2015 and 2014, we had gross uncertain tax positions of $461 million and $452 million, respectively. We also have accrued interest and penalties associated with these uncertain tax positions as of December 31, 2015 and 2014 of $34 million and $41 million, respectively. Estimated interest and penalties related to the underpayment of income taxes is classified as a component of our provision or benefit for income taxes. It is reasonably possible that a reduction in a range of $42 million to $74 million of uncertain tax positions may occur within the next twelve months as a result of projected resolutions of worldwide tax disputes. Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where statutory rates are lower and earnings being higher than anticipated in countries where statutory rates are higher, by changes in the valuation of our deferred tax assets, or by changes in tax laws, regulations, accounting principles, or interpretations thereof. Adjusted EBITDA Adjusted EBITDA increased 1.1% to $1,858 million for the year ended December 31, 2015 from $1,837 million for the year ended December 31, 2014, or 7.2% on a constant currency basis, excluding a 6.1% unfavorable impact of changes in foreign currency exchange rates. Our Adjusted EBITDA margin increased to 30.10% for the year ended December 31, 2015 from 29.21% for the year ended December 31, 2014. See “Results of Operations – Years Ended December 31, 2015, 2014 and 2013” for the reconciliation of net income to Adjusted EBITDA. Consolidated Results for the Year Ended December 31, 2014 Compared to the Year Ended December 31, 2013 Revenues Revenues increased 10.3% to $6,288 million for the year ended December 31, 2014 from $5,703 million for the year ended December 31, 2013, or 12.4% on a constant currency basis, which excludes a 2.1% unfavorable impact of changes in foreign currency exchange rates. Excluding the impact of the Arbitron and Harris Interactive acquisitions, revenues increased 2.4% (4.5% on a constant currency basis). Revenues within our Buy segment increased 3.4% (6.3% on a constant currency basis). Excluding the impact from the Harris Interactive acquisition, Buy segment revenues increased 0.8% (3.6% on a constant currency basis). Revenues within our Watch segment increased 20.4% (21.3% on a constant currency basis). Excluding the impact from the Arbitron acquisition, revenues within our Watch segment increased 4.9% (5.8% on a constant currency basis). 39 Cost of Revenues, Exclusive of Depreciation and Amortization Cost of revenues increased 9.3% to $2,620 million for the year ended December 31, 2014 from $2,398 million for the year ended December 31, 2013, or 10.8% on a constant currency basis, excluding a 1.5% favorable impact of changes in foreign currency exchange rates. Costs within our Buy segment increased 7.1% (9.3% on a constant currency basis) due primarily to the Harris Interactive acquisition in February 2014 and the continued global expansion of our services. Costs within our Watch segment increased 11.1% (11.7% on a constant currency basis) primarily due to the impact of the Arbitron acquisition on September 30, 2013 partially offset by the impact of productivity initiatives. Corporate costs increased by approximately $17 million in 2014 as compared to 2013. Selling, General and Administrative Expenses, Exclusive of Depreciation and Amortization Selling, general and administrative expenses increased 5.6% to $1,917 million for the year ended December 31, 2014 from $1,815 million for the year ended December 31, 2013, or an increase of 7.8% on a constant currency basis, excluding a 2.2% favorable impact of changes in foreign currency exchange rates. Costs within our Buy segment increased 0.9 % (3.5% on a constant currency basis) due primarily to the Harris Interactive acquisition in February 2014, as well as other investments associated with the expansion of our services. Costs within our Watch segment increased 21.7% (22.4% on a constant currency basis) primarily due to the impact of the Arbitron acquisition on September 30, 2013, as well as the impact of other investments in product development initiatives. Corporate costs decreased by $10 million due to higher transaction-related costs in 2013. Depreciation and Amortization Depreciation and amortization expense from continuing operations was $573 million for the year ended December 31, 2014 as compared to $510 million for the year ended December 31, 2013. The increase was primarily driven by increases in depreciation and amortization expense associated with the assets acquired in business acquisitions. Depreciation and amortization expense associated with tangible and intangibles assets acquired in business combinations increased to $204 million for the year ended December 31, 2014 from $162 million for the year ended December 31, 2013. Restructuring Charges We recorded $89 million in restructuring charges for the year ended December 31, 2014, primarily related to employee severance associated with productivity initiatives. We recorded $119 million in restructuring charges for the year ended December 31, 2013, primarily related to employee severance associated with productivity initiatives and contract termination costs. Operating Income Operating income for the year ended December 31, 2014 was $1,089 million compared to operating income of $861 million for the year ended December 31, 2013. Operating income within our Buy segment decreased to $358 million for the year ended December 31, 2014 from $399 million for the year ended December 31, 2013. Operating income within our Watch segment increased to $836 million for the year ended December 31, 2014 from $570 million for the year ended December 31, 2013. Corporate operating expenses decreased to $105 million for the year ended December 31, 2014 from $108 million for the year ended December 31, 2013. Interest Expense Interest expense was $300 million for the year ended December 31, 2014 compared to $309 million for the year ended December 31, 2013. The decline primarily related to the refinancing of Term Loan A and B in February 2013, the maturity of the mandatory convertible debt in February 2013, the refinancing of the 11.625% senior notes in October 2013, and the refinancing of the 7.75% senior notes in April and July 2014 partially offset by the increased debt balance in September 2013 related to Arbitron acquisition financing and the interest expense allocated to our discontinued operations in the year ended December 31, 2013 as discussed in the “Discontinued Operations” section in “Factors Affecting Nielsen’s Financial Results” above. Foreign Currency Exchange Transaction Losses, Net Foreign currency exchange transaction losses, net, represent the net loss on revaluation of certain cash, external debt, intercompany loans and other receivables and payables. Fluctuations in the value of foreign currencies relative to the U.S. Dollar, particularly the Euro, have a significant effect on our operating results. The average U.S. Dollar to Euro exchange rate was $1.33 to €1.00 in each of the years ended December 31, 2014 and 2013. 40 We incurred $71 million in net foreign currency exchange losses for the year ended December 31, 2014, resulting primarily from changes to the Venezuelan exchange rate mechanisms as discussed in the “Foreign Currency” section of “Factors Affecting Nielsen’s Financial Results” as well as the fluctuation in U.S. to Euro exchange rate associated with our European revolving credit facility and the fluctuations in certain foreign currencies associated with intercompany transactions. We incurred $25 million in net foreign currency exchange losses for the year ended December 31, 2013, resulting primarily from the devaluation of the Venezuelan bolivars as discussed in the “Foreign Currency” section of “Factors Affecting Nielsen’s Financial Results” as well as the fluctuations in certain foreign currencies associated with intercompany transactions. Other Income/(Expense), Net Other expense, net of $100 million for the year ended December 31, 2014 is primarily related to the “make-whole” premium associated with the redemption of our 7.75% Senior Notes due 2018, as well as the write-off of certain previously capitalized debt financing fees associated with the Class D and E term loans and certain costs incurred in connection with the refinancings. The $9 million of other expense, net for the year ended December 31, 2013 consists primarily of the write-off of debt financing costs and other costs of $12 million associated with the amendment to our Credit Agreement (as defined below), charges of $12 million associated with the unused bridge loan terminated as part of the Arbitron acquisition and charges of approximately $8 million related to the redemption of all of our 11.625% Senior Notes due 2014, partially offset by the gain of $24 million from the step acquisition of Scarborough. Income from Continuing Operations Before Income Taxes and Equity in Net Income of Affiliates Income was $621 million for the year ended December 31, 2014 compared to $520 million for the year ended December 31, 2013 due primarily to the consolidated results mentioned above. Income Taxes The effective tax rates for the years ended December 31, 2014 and 2013 were 38% and 18%, respectively. The effective tax rate for the year ended December 31, 2014 was higher than the Dutch statutory rate as a result of the impact of tax rate differences in other jurisdictions where the Company files tax returns, the effect of global licensing activities and foreign distributions, withholding and foreign taxes as well as state and local income taxes offset by the favorable impact of certain financing activities. The effective tax rate for the year ended December 31, 2013 was lower than the statutory expense rate due to the favorable impact of certain financing activities, release of valuation allowances and favorable impacts of provision to return adjustments. At December 31, 2014 and 2013, we had gross uncertain tax positions of $452 million and $475 million, respectively. We also have accrued interest and penalties associated with these uncertain tax positions as of December 31, 2014 and 2013 of $41 million and $52 million, respectively. Estimated interest and penalties related to the underpayment of income taxes is classified as a component of our provision or benefit for income taxes. It is reasonably possible that a reduction in a range of $23 million to $45 million of uncertain tax positions may occur within the next twelve months as a result of projected resolutions of worldwide tax disputes. Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where statutory rates are lower and earnings being higher than anticipated in countries where statutory rates are higher, by changes in the valuation of our deferred tax assets, or by changes in tax laws, regulations, accounting principles, or interpretations thereof. Adjusted EBITDA Adjusted EBITDA increased 13.6% to $1,837 million for the year ended December 31, 2014 from $1,617 million for the year ended December 31, 2013, or 16.5% on a constant currency basis. Our Adjusted EBITDA margin increased to 29.21% for the year ended December 31, 2014 from 28.35% for the year ended December 31, 2013. See “Results of Operations – Years Ended December 31, 2015, 2014 and 2013)” for the reconciliation of net income to Adjusted EBITDA. 41 Business Segment Results for the Year Ended December 31, 2015 Compared to the Year Ended December 31, 2014 Revenues The table below sets forth our segment revenue performance data for the year ended December 31, 2015 compared to the year ended December 31, 2014, both on an as-reported and constant currency basis. Year Ended December 31, 2015 Year Ended December 31, 2014 % Variance 2015 vs. 2014 Reported Year Ended December 31, 2014 Constant Currency % Variance 2015 vs. 2014 Constant Currency 2,301 1,044 3,345 $ $ 1,840 504 282 201 2,827 6,172 $ $ 2,390 1,133 3,523 1,784 498 239 244 2,765 6,288 (3.7)% $ (7.9)% (5.1)% $ 3.1% $ 1.2% 18.0% (17.6)% 2.2% (1.8)% $ 2,224 962 3,186 1,729 498 233 234 2,694 5,880 3.5% 8.5% 5.0% 6.4% 1.2% 21.0% (14.1)% 4.9% 5.0% (IN MILLIONS) Developed Markets ................................ $ Emerging Markets .................................. Buy Segment ................................ $ Audience Measurement (Video and Text) .................................................. $ Audio ..................................................... Marketing Effectiveness ........................ Other Watch ........................................... Watch Segment ............................ Total ....................................................... $ Buy Segment Revenues Revenues decreased 5.1% to $3,345 million for the year ended December 31, 2015 from $3,523 million for the year ended December 31, 2014, or an increase of 5.0% on a constant currency basis, excluding a 10.1% unfavorable impact of changes in foreign currency exchange rates. Revenues from developed markets decreased 3.7% to $2,301 million, or an increase of 3.5% on a constant currency basis, excluding a 7.2% unfavorable impact of changes in foreign currency exchange rates. Excluding the impact of foreign currency exchange rates, revenue grew as a result of continued investments in products such as advanced analytics, segmentation and innovation as well as growth in our subscription-based products. Revenues from emerging markets decreased 7.9% to $1,044 million, or an increase of 8.5% on a constant currency basis, excluding a 16.4% unfavorable impact of changes in foreign currency exchange rates. Excluding the impact of foreign currency exchange rates, revenue growth was driven by broad-based demand for our services from both our multinational and local client bases with double-digit growth in Latin America, Africa, Middle East and Greater China. Watch Segment Revenues Revenues increased 2.2% to $2,827 million for the year ended December 31, 2015 from $2,765 million for the year ended December 31, 2014 or an increase of 4.9% on a constant currency basis, excluding a 2.7% unfavorable impact of changes in foreign currency exchange rates. Excluding the impact of foreign currency exchange rates, revenue growth was driven by growth in Audience Measurement (video and text), which increased 3.1%, or 6.4% on a constant currency basis, due to the resilience in our core television audience measurement, our investments in eXelate and NCS, as well as our continued investment in digital. Our Marketing Effectiveness offerings grew 18.0%, or 21.0% on a constant currency basis, as we continue to invest in the product portfolio while meeting the market’s growing demand for our Marketing ROI products. However, this gain was partially offset by a decrease of 17.6%, or 14.1% on a constant currency basis, in our Other Watch products as we continue to run off the legacy online rankings product and exit non-core media analytics products. Business Segment Profitability We do not allocate items below operating income/(loss) to our business segments and therefore the tables below set forth a reconciliation of operating income/(loss) at the business segment level for the years ended December 31, 2015 and 2014, adjusting for certain items affecting operating income/(loss), such as restructuring charges, depreciation and amortization, stock-based compensation expense and certain other items described below resulting in a presentation of our non-GAAP business segment profitability. Non-GAAP business segment profitability provides useful supplemental information to management and investors regarding financial and business trends related to our results of operations. When this non-GAAP financial information is viewed with 42 our GAAP financial information, investors are provided with a meaningful understanding of our ongoing operating performance. It is important to note that the non-GAAP business segment profitability corresponds in total to our consolidated Adjusted EBITDA described within our consolidated results of operations above, which our chief operating decision making group and other members of management use to 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. These non- GAAP measures should not be considered as an alternative to net income, operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. These non-GAAP measures may differ from similarly-titled measures used by others and have important limitations as analytical tools. Accordingly, they should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. YEAR ENDED DECEMBER 31, 2015 (IN MILLIONS) Buy ......................................... $ Watch ..................................... Corporate and Eliminations ... Total Nielsen .......................... $ Operating Income/ (Loss) Restructuring Charges Depreciation and Amortization Stock-Based Compensation Expense Other Items(1) Non-GAAP Business Segment Income/(Loss) 369 880 (156) 1,093 $ $ 32 $ 14 5 51 $ 207 $ 363 4 574 $ 15 $ 8 25 48 $ 1 $ 4 87 92 $ 624 1,269 (35) 1,858 YEAR ENDED DECEMBER 31, 2014 (IN MILLIONS) Buy ......................................... $ Watch ..................................... Corporate and Eliminations ... Total Nielsen .......................... $ Operating Income/ (Loss) Restructuring Charges Depreciation and Amortization Stock-Based Compensation Expense Other Items(1) Non-GAAP Business Segment Income/(Loss) 358 836 (105) 1,089 $ $ 64 $ 14 11 89 $ 224 $ 343 6 573 $ 14 $ 10 23 47 $ (2) $ 11 30 39 $ 658 1,214 (35) 1,837 (1) For the years ended December 31, 2015, other items consist of a $36 million donation to the Nielsen Foundation, $14 million charge for the partial settlement of certain U.S. pension plans, and other non-recurring costs. For the year ended December 31, 2014, other items primarily consist of non-recurring items. (IN MILLIONS) Non-GAAP Business Segment Income/(Loss) Year Ended December 31, 2015 Year Ended December 31, 2014 % Variance 2015vs. 2014 Reported Year Ended December 31, 2014 Constant Currency % Variance 2015 vs. 2014 Constant Currency Buy ................................................................. $ Watch ............................................................. Corporate and Eliminations ........................... Total Nielsen .................................................. $ 624 $ 1,269 (35) 1,858 $ 658 1,214 (35) 1,837 (5.2)% $ 4.5% NA 1.1% $ 579 1,190 (35 ) 1,734 7.8% 6.6% NA 7.2% Buy Segment Profitability Operating income was $369 million for the year ended December 31, 2015 as compared to $358 million for the year ended December 31, 2014 as the decrease in revenue mentioned above was more than offset by lower restructuring charges and a decrease in depreciation and amortization expense. Non-GAAP business segment income increased 7.8% on a constant currency basis, excluding a 13.0% unfavorable impact of changes in foreign currency exchange rates. Watch Segment Profitability Operating income was $880 million for the year ended December 31, 2015 as compared to $836 million for the year ended December 31, 2014. The increase was driven by the revenue performance discussed above, as well as a decrease in non-recurring costs, outlined in the table above, partially offset by higher depreciation and amortization expense. Non-GAAP business segment income increased 6.6% on a constant currency basis, excluding a 2.1% unfavorable impact of changes in foreign currency exchange rates. Corporate Expenses and Eliminations Operating expenses were $156 million for the year ended December 31, 2015 as compared to $105 million for the year ended December 31, 2014 primarily due to increases in non-recurring costs outlined in the table above. 43 Business Segment Results for the Year Ended December 31, 2014 Compared to the Year Ended December 31, 2013 Revenues The table below sets forth our segment revenue performance data for the year ended December 31, 2014 compared to the year ended December 31, 2013, both on an as-reported and constant currency basis. (IN MILLIONS) Developed Markets ............................................ $ Emerging Markets .............................................. Buy Segment(a) ......................................... Audience Measurement (Video and Text) ......... $ Audio ................................................................. Marketing Effectiveness .................................... Other Watch ....................................................... Watch Segment(b) ..................................... Total(c) ................................................................ $ Year Ended December 31, 2014 Year Ended December 31, 2013 % Variance 2014 vs. 2013 Reported Year Ended December 31, 2013 Constant Currency % Variance 2014 vs. 2013 Constant Currency 2,390 1,133 3,523 $ 1,784 $ 498 239 244 2,765 6,288 $ 2,292 1,114 3,406 1,694 139 211 253 2,297 5,703 4.3% 1.7% 3.4% $ 5.3% $ 258.3% 13.3% (3.6)% 20.4% 10.3% $ 2,279 1,035 3,314 1,679 139 211 250 2,279 5,593 4.9% 9.5% 6.3% 6.3% 258.3% 13.3% (2.4)% 21.3% 12.4% (a) The Buy segment includes the results of Harris Interactive for the year ended December 31, 2014, commencing on February 3, 2014, the acquisition date. Excluding the impact from the Harris Interactive acquisition, total Buy revenue was $3,434, an increase of 0.8% (3.6% on a constant currency basis). (b) The Watch segment includes the Arbitron (Nielsen Audio) results for the full year 2014 and for the fourth quarter of 2013. Excluding the impact from the Arbitron acquisition, total Watch revenue was $2,269 million, an increase of 4.9% (5.8% on a constant currency basis) (c) Total Nielsen revenue includes both Arbitron (full period) and Harris Interactive (from February 3, 2014) for the year ended December 31, 2014. Excluding the impact from the two acquisitions, total Nielsen revenue for the year ended December 31, 2014 was $5,703 million, an increase of 2.4% (4.5% on a constant currency basis). Buy Segment Revenues Revenues increased 3.4% to $3,523 million for the year ended December 31, 2014 from $3,406 million for the year ended December 31, 2013 (6.3% on a constant currency basis). Excluding the impact of the Harris Interactive acquisition, revenues increased 0.8% (3.6% on a constant currency basis). Revenues from developed markets increased 4.3% to $2,390 million, or an increase of 4.9% on a constant currency basis, excluding a 0.6% unfavorable impact of changes in foreign currency exchange rates. Excluding the impact from the Harris Interactive acquisition, revenues from developed markets increased 0.4% (1.0% on a constant currency basis). Excluding the impact of foreign currency exchange rates, revenue grew as a result of increased demand for our analytical services as well as new clients in developed markets. Revenues from emerging markets increased 1.7% to $1,133 million, or an increase of 9.5% on a constant currency basis, excluding a 7.8% unfavorable impact of changes in foreign currency exchange rates. Excluding the impact of foreign currency exchange rates, revenue growth was driven by our continued commitment to invest in coverage and analytics capabilities, which resulted in broad-based demand for our services within both our multinational and local client bases. For the year ended December 31, 2014, these investments drove double-digit growth in Eastern Europe, Latin America, Africa, Middle East and Greater China. Watch Segment Revenues Revenues increased 20.4% to $2,765 million for the year ended December 31, 2014 from $2,297 million for the year ended December 31, 2013, or 21.3% on a constant currency basis. Excluding the impact from the Arbitron acquisition, revenues increased 4.9% (5.8% on a constant currency basis), driven by the continued strength in Audience Measurement (video and text) which grew 5.3% (6.3% on a constant currency basis). 44 Business Segment Profitability We do not allocate items below operating income/(loss) to our business segments and therefore the tables below set forth a reconciliation of operating income/(loss) at the business segment level for the years ended December 31, 2014 and 2013, adjusting for certain items affecting operating income/(loss), such as restructuring charges, depreciation and amortization, stock-based compensation expense and certain other items described below resulting in a presentation of our non-GAAP business segment profitability. Non-GAAP business segment profitability provides useful supplemental information to management and investors regarding financial and business trends related to our results of operations. When this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with a meaningful understanding of our ongoing operating performance. It is important to note that the non-GAAP business segment profitability corresponds in total to our consolidated Adjusted EBITDA described within our consolidated results of operations above, which our chief operating decision making group and other members of management use to 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. These non- GAAP measures should not be considered as an alternative to net income, operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. These non-GAAP measures may differ from similarly-titled measures used by others and have important limitations as analytical tools. Accordingly, they should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. YEAR ENDED DECEMBER 31, 2014 (IN MILLIONS) Buy ....................................... $ Watch ................................... Corporate and Eliminations .................... Total Nielsen ........................ $ Operating Income/ (Loss) Restructuring Charges Depreciation and Amortization Stock-Based Compensation Expense Other Items(1) Non-GAAP Business Segment Income/(Loss) $ 358 836 (105) 1,089 $ 64 $ 14 11 89 $ 224 $ 343 6 573 $ 14 $ 10 23 47 $ (2) $ 11 30 39 $ 658 1,214 (35) 1,837 YEAR ENDED DECEMBER 31, 2013 (IN MILLIONS) Buy ....................................... $ Watch ................................... Corporate and Eliminations .................... Total Nielsen ........................ $ Operating Income/ (Loss) Restructuring Charges Depreciation and Amortization Stock-Based Compensation Expense Other Items(1) Non-GAAP Business Segment Income/(Loss) $ 399 570 (108) 861 $ 47 $ 55 17 119 $ 199 $ 302 9 510 $ 14 $ 11 22 47 $ 1 $ 51 28 80 $ 660 989 (32) 1,617 (1) For the year ended December 31, 2014, other items consist primarily of non-recurring costs. For the year ended December 31, 2013, other items consist primarily of one-time items associated with the acquisition of Arbitron, including non-cash purchase accounting adjustments and transaction-related costs. (IN MILLIONS) Non-GAAP Business Segment Income/(Loss) Year Ended December 31, 2014 Year Ended December 31, 2013 % Variance 2014 vs. 2013 Reported Year Ended December 31, 2013 Constant Currency % Variance 2014 vs. 2013 Constant Currency Buy ................................................................. $ Watch ............................................................. Corporate and Eliminations ........................... Total Nielsen .................................................. $ 658 $ 1,214 (35) 1,837 $ 660 989 (32) 1,617 (0.3)% $ 22.8% NA 13.6% $ 629 979 (31) 1,577 4.6% 24.0% NA 16.5% Buy Segment Profitability Operating income was $358 million for the year ended December 31, 2014 as compared to $399 million for the year ended December 31, 2013 as the increase in revenue mentioned above was more than offset by investment in the continued global expansion of our services, higher restructuring charges and an increase in depreciation and amortization expense. Non-GAAP business segment income increased 4.6% on a constant currency basis. 45 Watch Segment Profitability Operating income was $836 million for the year ended December 31, 2014 as compared to $570 million for the year ended December 31, 2013. The increase was driven by the revenue performance discussed above, as well as a decrease in restructuring charges and transaction-related costs partially offset by higher depreciation and amortization expense. Non-GAAP business segment income increased 24.0% on a constant currency basis. Corporate Expenses and Eliminations Operating expenses were $105 million for the year ended December 31, 2014 as compared to $108 million for the year ended December 31, 2013 due to decreases in restructuring charges and depreciation and amortization expense. Liquidity and Capital Resources We have consistently generated strong cash flows from operations, providing a source of funds of $1,179, $1,093 million and $901 million during the years ended December 31, 2015, 2014 and 2013, respectively. The increase of $86 million in 2015 is primarily due to our focus on working capital management, partially offset by the $30 million cumulative excess tax benefit from stock-based compensation. In addition to the cumulative excess tax benefit from stock-based compensation being presented as a reduction of operating cash flows, this amount is also reflected as an increase to cash flows from financing activities in the consolidated statements of cash flows and consequently our total cash flow is unchanged as a result of this item. We provide for additional liquidity through several sources including maintaining an adequate cash balance, access to global funding sources and a committed revolving credit facility. The following table provides a summary of the major sources of liquidity for the years ended December 31, 2015, 2014 and 2013: (IN MILLIONS) Net cash from operating activities .......................................... $ Cash and short-term marketable securities ............................. $ Revolving credit facility ......................................................... $ 2015 2014 2013 1,179 $ 357 $ 575 $ 1,093 273 575 $ $ $ 901 564 635 Of the $357 million in cash and cash equivalents, approximately $317 million was held in jurisdictions outside the U.S. and as a result there may be tax consequences if such amounts were moved out of these jurisdictions or repatriated to the U.S. We regularly review the amount of cash and cash equivalents held outside of the U.S. to determine the amounts necessary to fund the current operations of our foreign operations and their growth initiatives and amounts needed to service our U.S. indebtedness and related obligations. The below table illustrates our weighted average interest rate and cash paid for interest over the last three years. Weighted average interest rate ............................................... Cash paid for interest, net of amounts capitalized (in 2015 2014 2013 4.04% 3.79% 4.28% millions) ............................................................................ $ 296 $ 294 $ 304 Our contractual obligations, commitments and debt service requirements over the next several years are significant. We believe we will have available resources to meet both our short-term and long-term liquidity requirements, including our senior secured debt service. We expect the cash flow from our operations, combined with existing cash and amounts available under the revolving credit facility, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, restructuring obligations, dividend payments and capital spending over the next year. In addition we may, from time to time, purchase, repay, redeem or retire any of our outstanding debt securities (including any publicly issued debt securities) in privately negotiated or open market transactions, by tender offer or otherwise. 46 Long-term borrowings The Financial Accounting Standards Board issued guidance that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than an asset as has been previous guidance. These costs will continue to be amortized as interest expense using the effective interest method. We have early adopted this ASU and it is reflected in our consolidated financial statements. The following table provides a summary of our outstanding long-term borrowings as of December 31, 2015: Weighted Interest Rate Carrying Amount $ (IN MILLIONS) $1,580 million Senior secured term loan (LIBOR based variable rate of 2.29% ) due 2019 ........................................ $500 million Senior secured term loan (LIBOR based variable rate of 2.54% ) due 2017 ...................................................... $1,100 million Senior secured term loan (LIBOR based variable rate of 3.29% ) due 2021......................................... €286 million Senior secured term loan (Euro LIBOR based variable rate of 2.82%) due 2021.......................................... $575 million senior secured revolving credit facility (Euro LIBOR or LIBOR based variable rate) due 2019 ................. Total senior secured credit facilities (with weighted average interest rate) .......................................................... 2.78% $ $800 million 4.50% senior debenture loan due 2020 ................ $625 million 5.50% senior debenture loan due 2021 ................ $2,300 million 5.00% senior debenture loan due 2022 ............. Total debenture loans (with weighted average interest rate) ...................................................................................... Other loans ................................................................................ Total long-term debt ............................................................... Capital lease and other financing obligations ............................ Total debt and other financing arrangements ...................... Less: Current portion of long-term debt, capital lease and other financing obligations and other short-term borrowings ............................................................................ Non-current portion of long-term debt and capital lease and other financing obligations......................................... 5.22% $ 4.04% $ $ $ 1,455 492 1,080 305 164 3,496 792 617 2,284 3,693 7 7,196 142 7,338 310 7,028 Term Loan Facilities In August 2006, certain of our subsidiaries entered into the Senior Secured Credit Agreement that was amended and restated in June 2009, February 2012, February 2013 and April 2014 in the current form of the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”). The Senior Secured Credit Agreement provides for term loan facilities as shown in the table above. Obligations under the Credit Agreement are guaranteed by TNC B.V., substantially all of the wholly-owned U.S. subsidiaries of TNC B.V. and certain of the non-U.S. wholly-owned subsidiaries of TNC B.V., and are secured by substantially all of the existing and future property and assets of the U.S. subsidiaries of TNC B.V. and by a pledge of substantially all of the capital stock of the guarantors, the capital stock of substantially all of the U.S. subsidiaries of TNC B.V., and up to 65% of the capital stock of certain of the non-U.S. subsidiaries of TNC B.V. Under a separate security agreement, substantially all of the assets of TNC B.V. are pledged as collateral for amounts outstanding under the Credit Agreement. Covenants The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of Nielsen Holding and Finance B.V. and its restricted subsidiaries (which together constitute most of our subsidiaries) to incur additional indebtedness or guarantees, incur liens and engage in sale and leaseback transactions, make certain loans and investments, declare dividends, make payments or redeem or repurchase capital stock, engage in certain mergers, acquisitions and other business 47 combinations, prepay, redeem or purchase certain indebtedness, amend or otherwise alter terms of certain indebtedness, sell certain assets, transact with affiliates, enter into agreements limiting subsidiary distributions and alter the business they conduct. These entities are restricted, subject to certain exceptions, in their ability to transfer their net assets to us. Such restricted net assets amounted to approximately $5.2 billion at December 31, 2015. In addition, these entities are required to maintain a maximum total leverage ratio. The leverage ratio requires that we not permit the ratio of total net debt (as defined in the Credit Agreement) at the end of any calendar quarter to Covenant EBITDA (as defined in the Credit Agreement) for the four quarters then ended to exceed a specified threshold. The maximum permitted ratio is 5.50 to 1.00. Neither we nor TNC B.V. is currently bound by any financial or negative covenants contained in the Credit Agreement. The Credit Agreement also contains certain customary affirmative covenants and events of default. Certain significant financial covenants are described further below. Failure to comply with this financial covenant would result in an event of default under our Fourth Amended and Restated Credit Agreement unless waived by our senior credit lenders. An event of default under our Fourth Amended and Restated Credit Agreement can result in the acceleration of our indebtedness under the facilities, which in turn would result in an event of default and possible acceleration of indebtedness under the agreements governing our debt securities as well. As our failure to comply with the financial covenant described above can cause us to go into default under the agreements governing our indebtedness, management believes that our Fourth Amended and Restated Credit Agreement and this covenant are material to us. As of December 31, 2015, we were in full compliance with the financial covenant described above. Pursuant to our Credit Agreement, we are subject to making mandatory prepayments on the term loans within our Credit Agreement to the extent in any full calendar year we generate Excess Cash Flow (“ECF”), as defined in the Credit Agreement. The percentage of ECF that must be applied as a repayment is a function of several factors, including our ratio of total net debt to Covenant EBITDA, as well other adjustments, including any voluntary term loan repayments made in the course of the calendar year. To the extent any mandatory repayment is required pursuant to this ECF clause; such payment must generally occur on or around the time of the delivery of the annual consolidated financial statements to the lenders. At December 31, 2015, our ratio of total net debt to Covenant EBITDA was less than 5.00 to 1.00 and therefore no mandatory repayment was required. Our next ECF measurement date will occur upon completion of the 2015 results, and although we do not expect to be required to issue any mandatory repayments in 2016 or beyond, it is uncertain at this time if any such payments will be required in future periods. Revolving Credit Facility The Credit Agreement, also contains a senior secured revolving credit facility under which Nielsen Finance LLC, TNC (US) Holdings, Inc., and Nielsen Holding and Finance B.V. can borrow revolving loans. The revolving credit facility can also be used for letters of credit, guarantees and swingline loans. The existing revolving credit facility has commitments of $575 million with a final maturity of April 2019. The senior secured revolving credit facility is provided under the Credit Agreement and so contains covenants and restrictions as noted under the “Term loan facilities” section above. Obligations under the revolving credit facility are guaranteed by the same entities that guarantee obligations under the Credit Agreement and Senior Secured Loan Agreement. As of December 31, 2015, we had $164 million of borrowings outstanding and outstanding letters of credit of $7 million. As of December 31, 2014, we had $280 million of borrowings outstanding and outstanding letters of credit of $6 million. As of December 31, 2015, we had $404 million available for borrowing under the revolving credit facility. Debenture Loans The indentures governing certain of our debenture loans limit the majority of our subsidiaries’ ability to incur additional indebtedness, pay dividends or make other distributions or repurchase our capital stock, make certain investments, enter into certain types of transactions with affiliates, use assets as security in other transactions and sell certain assets or merge with or into other companies subject to certain exceptions. Upon a change in control, we are required to make an offer to redeem all of the Senior Notes at a redemption price equal to the 101% of the aggregate accreted principal amount plus accrued and unpaid interest. The Senior Notes are jointly and severally guaranteed by Nielsen Holdings plc, substantially all of the wholly owned U.S. subsidiaries of Nielsen Holdings plc, and certain of the non-U.S. wholly-owned subsidiaries of Nielsen Holdings plc. In February 2015, we completed the issuance of $750 million in aggregate principal amount of 5.00% Senior Notes due 2022. The notes are traded interchangeably with the $750 million and the $800 million aggregate principal amount of 5.00% Senior Notes due 2022 issued in April 2014 and July 2014, respectively. The proceeds from the issuance are being used to make repurchases of our outstanding common stock from time to time, in the open market or otherwise, pursuant to our existing share repurchase program, to reduce outstanding amounts under our revolving credit facility, to pay related fees and expenses, and for general corporate purposes. 48 Dividends and Share Repurchase Program We remain committed to driving shareholder value as evidenced in 2013 with the adoption of a quarterly cash dividend policy by our board of directors, under which we have paid $408 million and $356 million in cash dividends during the years ended December 31, 2015 and 2014, respectively. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will be subject to the board’s continuing determination that the dividend policy and the declaration of dividends thereunder are in the best interests of our shareholders, and are in compliance with all laws and agreements to which we are subject. The below table summarizes the dividends declared on our common stock during 2014 and 2015. Declaration Date Record Date Payment Date Dividend Per Share February 20, 2014 May 1, 2014 July 24, 2014 October 30, 2014 February 19, 2015 April 20, 2015 July 23, 2015 October 29, 2015 March 6, 2014 June 5, 2014 August 28, 2014 November 25, 2014 March 5, 2015 June 4, 2015 August 27, 2015 November 24, 2015 March 20, 2014 $ June 19, 2014 $ September 11, 2014 $ December 9, 2014 $ March 19, 2015 $ June 18, 2015 $ September 10, 2015 $ December 8, 2015 $ 0.20 0.25 0.25 0.25 0.25 0.28 0.28 0.28 On February 18, 2016, our Board declared a cash dividend of $0.28 per share on our common stock. The dividend is payable on March 17, 2016 to stockholders of record at the close of business on March 3, 2016. Our Board approved a share repurchase program, as included in the below table, for up to $2 billion of our outstanding common stock. The primary purpose of the program is to return value to shareholders and to mitigate dilution associated with our equity compensation plans. Board Approval July 25, 2013 .......................................................................................... $ October 23, 2014 .................................................................................... December 11, 2015 ................................................................................ Total Share Repurchase Authorization ........................................................ $ Share Repurchase Authorization ($ in millions) 500 1,000 500 2,000 Repurchases under these plans are made in accordance with applicable securities laws from time to time in the open market or otherwise depending on our evaluation of market conditions and other factors. This program has been executed within the limitations of the existing authority granted at our Annual General Meeting of Shareholders held in 2014 and 2015. As of December 31, 2015, there have been 25,762,411 shares of our common stock purchased at an average price of $44.43 per share (total consideration of approximately $1,144 million) under this program. 49 The following table provides a summary of share repurchase program activity through December 31, 2015. Period As of December 31, 2014 .............................................. 2015 Activity Total Number of Shares Purchased 11,182,983 $ Average Price Paid per Share 42.67 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 11,182,983 $ 1,022,830,101 Dollar Value of Shares that may yet be Purchased under the Plans or Programs January 1- 31 ............................................................ February 1- 28 .......................................................... March 1- 31 .............................................................. April 1-30 ................................................................. May 1-31 .................................................................. June 1-30 .................................................................. July 1-31 .................................................................. August 1-31 .............................................................. September 1-30 ........................................................ October 1-31 ............................................................ November 1-30 ........................................................ December 1-31 ......................................................... Total .............................................................................. 1,611,203 814,753 $ 772,189 $ 1,440,798 $ 1,222,800 $ 1,300,836 $ 1,310,000 $ 1,853,142 $ 553,756 $ 1,276,829 $ 1,141,708 $ 1,281,414 $ 25,762,411 $ 44.09 43.90 43.76 45.30 45.37 45.14 45.37 47.25 47.39 46.95 47.75 46.50 44.43 1,611,203 $ 814,753 $ 772,189 $ 1,440,798 $ 1,222,800 $ 1,300,836 $ 1,310,000 $ 1,853,142 $ 553,756 $ 1,276,829 $ 1,141,708 $ 1,281,414 $ 25,762,411 951,797,780 916,031,448 882,241,498 816,973,014 761,496,406 702,774,965 643,345,777 555,793,238 529,551,668 469,601,614 415,084,736 855,495,985 Cash Flows 2015 versus 2014 Operating activities. Net cash provided by operating activities was $1,179 million for the year ended December 31, 2015, compared to $1,093 million for the year ended December 31, 2014. This increase was driven by the Adjusted EBITDA performance described above, and improved working capital performance on the timing of customer and vendor payments. Our key collections performance measure, days billing outstanding (DBO), was flat for the year ended December 31, 2015 compared to a 1 day increase for the year ended December 31, 2014. Investing activities. Net cash used in investing activities was $581 million for the year ended December 31, 2015, compared to $732 million for the year ended December 31, 2014. The primary driver for the decrease was driven by decreased acquisition payments during the year ended December 31, 2015, as compared to the same period as 2014 and, proceeds received from the sale of an equity investment and a subsidiary during the year ended December 31, 2015. Financing activities. Net cash used in financing activities was $462 million for the year ended December 31, 2015, compared to $585 million for the year ended December 31, 2014. The decrease in cash used in financing activities is primarily due to decreased net proceeds from the issuance and repayment of debt during the year ended December 31, 2015 as compared to the same period of 2014, partially offset by the higher share repurchasing and dividend payments, as described in the “Dividends and Share Repurchase Program” section above, during the year ended December 31, 2015 as compared to the same period of 2014. Cash Flows 2014 versus 2013 Operating activities. Net cash provided by operating activities was $1,093 million for the year ended December 31, 2014, compared to $901 million for the year ended December 31, 2013. This increase was driven by the Adjusted EBITDA performance described above and by the timing of vendor payments. Our key collections performance measure, days billing outstanding (DBO), increased by 1 day for the year ended December 31, 2014 compared to a 1 day decrease for the year ended December 31, 2013. Investing activities. Net cash used in investing activities was $732 million for the year ended December 31, 2014, compared to $687 million for the year ended December 31, 2013. The primary driver for the increased usage of cash from investing activities was the increase in capital expenditures for the year ended December 31, 2014 as compared to the same period of 2013. Financing activities. Net cash used in financing activities was $585 million for the year ended December 31, 2014, compared to net cash provided by of $83 million for the year ended December 31, 2013. The increase in cash used in financing activities is primarily due to the higher share repurchasing and dividend payments, as described in the “Dividends and Share Repurchase Program” section above, during the year ended December 31, 2014 as compared to the same period of 2013. 50 Capital Expenditures Investments in property, plant, equipment, software and other assets totaled $408 million, $412 million and $374 million in 2015, 2014 and 2013, respectively. In addition, the Company received $7 million of proceeds from the sale of certain property, plant and equipment. Commitments and Contingencies Outsourced Services Agreements In February 2013, we amended our Amended and Restated Master Services Agreement (the “MSA”), dated as of October 1, 2007 with Tata America International Corporation and Tata Consultancy Services Limited (jointly, “TCS”). The term of the MSA has been extended for an additional three years, so as to expire on December 31, 2020, with a one-year renewal option granted to Nielsen. In addition, we have increased our commitment to purchase services from TCS (the “Minimum Commitment”) from $1.0 billion to $2.5 billion over the life of the contract (from October 1, 2007), including a commitment to purchase at least $100 million in services per year (the “Annual Commitment”) until the Minimum Commitment is met. TCS’ charges under the separate Global Infrastructure Services Agreement between the parties will be credited against the Minimum Commitment and the Annual Commitment. TCS will globally provide us with professional services relating to information technology (including application development and maintenance), business process outsourcing, client service knowledge process outsourcing, management sciences, analytics, and financial planning and analytics. As we order specific services under the Agreement, the parties will execute Statements Of Work (“SOWs”) describing the specific scope of the services to be performed by TCS. The amount of the Minimum Commitment and the Annual Commitment may be reduced on the occurrence of certain events, some of which also provide us with the right to terminate the Agreement or SOWs, as applicable. Cyprus Agreement On March 25, 2013, Cyprus and certain members of the European Union reached an agreement on measures intended to restore the viability of the financial sector of Cyprus. As part of these measures Cyprus has agreed to downsize its local financial sector including: (1) The immediate dissolution of Cyprus Popular Bank under which equity shareholders, bondholders and uninsured depositors (defined as those with deposits in excess of €100 thousand) will contribute to make up the losses of the bank; and (2) The recapitalization of the Bank of Cyprus (“BoC”) through a deposit/equity conversion of uninsured deposits, with full contribution of equity shareholders and bondholders. Currently 37.5% of uninsured deposits of BoC have been converted into Class A shares with voting and dividend rights. An additional 22.5% have been “frozen” and may also be partially or fully used to issue new Class A shares, as necessary. As a result of this agreement, during the year ended December 31, 2013, we recorded a charge of $4 million in selling, general and administrative expenses in the consolidated statement of operations representing the uninsured deposits either contributed to make up losses of Cyprus Popular Bank or converted into Class A shares of BoC, as described above. We do not expect this agreement to significantly impact future operating results. Other Contractual Obligations Our other contractual obligations include capital lease obligations (including interest portion), facility leases, leases of certain computer and other equipment, agreements to purchase data and telecommunication services, the payment of principal and interest on debt and pension fund obligations. 51 At December 31, 2015, the minimum annual payments under these agreements and other contracts that had initial or remaining non-cancelable terms in excess of one year are as listed in the following table. Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits at December 31, 2015, we are unable to make reasonably reliable estimates of the timing of any potential cash settlements with the respective taxing authorities. Therefore, $495 million of unrecognized tax benefits (which includes interest and penalties of $34 million) have been excluded from the contractual obligations table below. See Note 14 – “Income Taxes” – to the consolidated financial statements for a discussion on income taxes. Total 2016 Payments due by period 2018 2017 2019 (IN MILLIONS) Capital lease obligations(a) ..................... $ Operating leases(b) .................................. Other contractual obligations(c) .............. Long-term debt, including current portion(a) ............................................ Interest(d) ................................................ Pension fund obligations(e) ..................... Total ....................................................... $ 181 $ 321 521 38 $ 84 358 36 $ 69 94 7,196 1,523 27 9,769 $ 277 296 27 1,080 $ 632 275 — 1,106 $ 29 $ 55 48 202 262 — 596 $ 19 $ 40 13 2020 Thereafter 46 48 1 13 $ 25 7 1,033 239 — 1,344 $ 806 228 — 1,079 $ 4,246 223 — 4,564 (a) Our short-term and long-term debt obligations, including capital lease and other financing obligations, are described in Note 11 – “Long-Term Debt and Other Financing Arrangements” – to our consolidated financial statements. (b) Our operating lease obligations are described in Note 16 – “Commitments and Contingencies” – to our consolidated financial statements. (c) Other contractual obligations represent obligations under agreement, which are not unilaterally cancelable by us, are legally enforceable and specify fixed or minimum amounts or quantities of goods or services at fixed or minimum prices. We generally require purchase orders for vendor and third party spending. The amounts presented above represent the minimum future annual services covered by purchase obligations including data processing, building maintenance, equipment purchasing, photocopiers, land and mobile telephone service, computer software and hardware maintenance, and outsourcing. Our remaining commitments as of December 31, 2015 under the outsourced services agreements with TCS have been included above on an estimated basis over the years within the contractual period in which we expect to satisfy our obligations. As of December 31, 2015, the remaining TCS commitment was approximately $168 million. Interest payments consist of interest on both fixed-rate and variable-rate debt based on LIBOR as of December 31, 2015. (d) (e) Our contributions to pension and other post-retirement defined benefit plans were $25 million, $35 million and $51 million during 2015, 2014 and 2013, respectively. Future minimum pension and other post-retirement benefits contributions are not determinable for time periods after 2016. See Note 10 – “Pensions and Other Post-Retirement Benefits” – to our consolidated financial statements for a discussion on plan obligations. Guarantees and Other Contingent Commitments At December 31, 2015, we were committed under the following significant guarantee arrangements: Sub-lease guarantees. We provide sub-lease guarantees in accordance with certain agreements pursuant to which we guarantee all rental payments upon default of rental payment by the sub-lessee. To date, we have not been required to perform under such arrangements, and do not anticipate making any significant payments related to such guarantees and, accordingly, no amounts have been recorded. Letters of credit. Letters of credit issued and outstanding amount to $7 million at December 31, 2015. Nielsen Foundation, Inc. In November 2015, we established the Nielsen Foundation, Inc. (the “Foundation”) for charitable, educational, scientific, and literary purposes including the making of distributions to organizations that qualify as tax exempt organizations under section 501(c)(3) of the Internal Revenue Code. The assets and transactions of the Foundation are not included in our consolidated financial statements. Donations to the Foundation are expensed when committed by us. In December 2015, our board of directors approved an unconditional donation of $36 million to the Foundation, which was recorded in selling, general and administrative expenses in the consolidated statement of operations. 52 Legal Proceedings and Contingencies We are subject to litigation and other claims in the ordinary course of business, some of which include claims for substantial sums. Accruals have been recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be determined, we expect that the ultimate disposition of these matters will not have a material adverse effect on our operations or financial condition. However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect our future results of operations or cash flows in a particular period. Off-Balance Sheet Arrangements Except as disclosed above, we have no off-balance sheet arrangements that currently have or are reasonably likely to have a material effect on our consolidated financial condition, changes in financial condition, results of operations, liquidity, capital expenditure or capital resources. Summary of Recent Accounting Pronouncements Consolidation In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”. The new standard is intended to improve targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The amendments in the ASU affect the consolidation evaluation for reporting organizations. In addition, the amendments in this ASU simplify and improve current GAAP by reducing the number of consolidation models. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015; however, early adoption is permitted. We are currently assessing the impact of the adoption of this ASU will have on our consolidated financial statements. Debt Issuance Costs In April 2015, the FASB issued an ASU, “Simplifying the Presentation of Debt Issuance Costs”. The new standard changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. This guidance will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015; however, early adoption is permitted. We have early adopted this ASU and retrospectively adjusted prior period amounts to conform to the current year presentation. The retrospective application of this ASU resulted in a reclassification of $8 million from prepaid expenses and other current assets and $42 million from other non-current assets to current portion of long-term debt, capital lease obligations and short-term borrowings and long-term debt and capital lease obligations in our consolidated balance sheet for the year ended December 31, 2014. Revenue Recognition In May 2014, the FASB issued an ASU, “Revenue from Contracts with Customers”. The new revenue recognition standard provides a five step analysis of transactions to determine when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services and shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The FASB has approved a one year deferral of this standard and is now effective for annual periods beginning after December 15, 2017. We are currently assessing the impact of the adoption of this ASU will have on our consolidated financial statements. Income Taxes In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. The classification change for all deferred taxes as noncurrent simplifies entities’ processes as it eliminates the need to separately identify the net current and net noncurrent deferred tax asset or liability in each jurisdiction and allocate valuation allowances. We elected to prospectively adopt the accounting standard as of December 31, 2015, resulting in a reclassification of our current deferred tax assets and liabilities to the non-current deferred tax assets and liabilities in our consolidated balance sheet. Prior periods in our consolidated financial statements were not retrospectively adjusted. 53 Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market risk is the potential loss arising from adverse changes in market rates and market prices such as interest rates, foreign currency exchange rates, and changes in the market value of equity instruments. We are exposed to market risk, primarily related to foreign exchange and interest rates. We actively monitor these exposures. Historically, in order to manage the volatility relating to these exposures, we entered into a variety of derivative financial instruments, mainly interest rate swaps, cross-currency swaps and forward rate agreements. Currently we only employ basic contracts, that is, without options, embedded or otherwise. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings, cash flows and the value of our net investments in subsidiaries resulting from changes in interest rates and foreign currency rates. It is our policy not to trade in financial instruments. Foreign Currency Exchange Rate Risk We operate globally and we predominantly generate revenues and expenses in local currencies. Because of fluctuations (including possible devaluations) in currency exchange rates or the imposition of limitations on conversion of foreign currencies into our reporting currency, we are subject to currency translation exposure on the profits of our operations, in addition to transaction exposure. Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating foreign entities’ statements of earnings and balance sheets from functional currency to our reporting currency (the U.S. Dollar) for consolidation purposes. Translation risk exposure is managed by creating “natural hedges” in our financing or by using derivative financial instruments aimed at offsetting certain exposures in the statement of earnings or the balance sheet. For the years ended December 31, 2015 and 2014, we recorded a net gain of $2 million and zero, respectively, associated with foreign currency derivative financial instruments within foreign currency exchange transactions losses, net in our consolidated statements of operations. We had foreign currency derivative financial instruments outstanding with an immaterial fair value as of December 31, 2015 and no foreign currency derivative instruments outstanding as of December 31, 2014. The table below details the percentage of revenues and expenses by currency for the years ended December 31, 2015 and 2014: U.S. Dollars Euro Other Currencies Year ended December 31, 2015 Revenues ........................................................................... Operating costs ................................................................. Year ended December 31, 2014 Revenues ........................................................................... Operating costs ................................................................. 60% 57% 56% 53% 9% 10% 11% 11% 31% 33% 33% 36% Based on the year ended December 31, 2015, a one cent change in the U.S. dollar/Euro exchange rate would have impacted revenues by approximately $5 million annually, with an immaterial impact on operating income. We have operations in both the Buy and Watch segments in Venezuela and the functional currency for these operations was the Venezuelan bolivars. Venezuela’s currency has been considered hyperinflationary since January 1, 2010 and, accordingly, the local currency transactions have been denominated in U.S. dollars since January 1, 2010 and will continue to be until Venezuela’s currency is deemed to be non-hyperinflationary. Since early 2013, there have been a number of changes in the foreign exchange regime in Venezuela that have impacted the conversion rates used by us for the conversion of Venezuelan bolivars into U.S. Dollars in its financial statements, resulting in foreign currency exchange transaction losses in the consolidated statement of operations, reflecting the write-down of monetary assets and liabilities in our Venezuelan operations. In February 2013, the official exchange rate was moved from 4.30 to 6.30 bolivars to U.S. dollars and the regulated System of Transactions with Securities in Foreign Currency market was suspended. Based on facts and circumstances present at March 31, 2014, we began using the exchange rate determined by periodic auctions for U.S. dollars conducted under Venezuela’s Complementary System of Foreign Currency Administration (“SICAD I”) as the SICAD I exchange rate represented what was the most realistic official exchange rate at which to remeasure the U.S. dollar value of the bolivar-denominated monetary assets and liabilities of our Venezuelan operations at that time. At March 31, 2014, the SICAD I exchange rate was 10.8 bolivars to the U.S. dollar. As a result of this change, we recorded a pre-tax charge of $20 million during the first quarter of 2014. Due to the lack of access to the SICAD I auction system throughout the remainder of 2014, as of December 31, 2014 we decided it was more likely that we would be able to gain access to U.S. dollars through the SICAD II mechanism to settle transactions conducted by the Company in Venezuela as SICAD II was created to provide a more open mechanism that was designed to permit any 54 company to request U.S. dollars for any purpose. At December 31, 2014, the SICAD II exchange rate was 50.0 bolivars to the U.S. dollar. As a result of the changes in exchange rate assumptions, we recorded a pre-tax charge of $32 million for the fourth quarter of 2014 and a total of $52 million for the year ended December 31, 2014. On February 12, 2015, the Venezuelan government replaced SICAD II with a new foreign exchange market mechanism (“SIMADI”). We currently expect to be able to access U.S. dollars through the SIMADI market. SIMADI has significantly higher foreign exchange rates than those available through the other foreign exchange mechanisms. At December 31, 2015, the SIMADI exchange rate was 198.7 bolivars to the U.S. dollar. As a result of this change, we recorded a pre-tax charge of $8 million during the year ended December 31, 2015. We will continue to assess the appropriate conversion rate based on events in Venezuela and our specific facts and circumstances. Total net monetary assets in U.S. dollars at the December 31, 2015 SIMADI rate totaled $3 million. Interest Rate Risk We continually review our fixed and variable rate debt along with related hedging opportunities in order to ensure our portfolio is appropriately balanced as part of our overall interest rate risk management strategy and through this process we consider both short- term and long-term considerations in the U.S. and global financial markets in making adjustments to our tolerable exposures to interest rate risk. At December 31, 2015, we had $3,496 million of floating-rate debt under our senior secured credit facilities, of which $2,325 million (excluding $550 million of forward interest swaps effective after December 31, 2015) was subject to effective floating-fixed interest rate swaps. A one percent increase in interest rates applied to our floating rate indebtedness would therefore increase annual interest expense by approximately $12 million ($35 million without giving effect to any of our interest rate swaps). In July 2015, we entered into a $150 million in notional amount of three-year forward interest rate swap agreement with a starting date in July 2016. This agreement fixes the LIBOR-related portion of the interest rates of a corresponding amount of our variable-rate debt at an average rate of 1.62%. This derivative instrument has been designated as an interest rate cash flow hedge. In April 2015, we entered into a $150 million in notional amount of three-year forward interest rate swap agreement with a starting date in April 2016. This agreement fixes the LIBOR-related portion of the interest rates of a corresponding amount of our variable-rate debt at an average rate of 1.40%. This derivative instrument has been designated as an interest rate cash flow hedge. In November 2014, we entered into a $250 million in notional amount of two-year forward interest swap agreement with a starting date in May 2016. This agreement fixes the LIBOR-related portion of the interest rate of a corresponding amount of the Company’s variable-rate debt at an average rate of 1.78%. This derivative instrument has been designated as interest rate cash flow hedge. In November 2014, we entered into a $250 million in notional amount of two-year forward interest swap agreement with a starting date in September 2015. This agreement fixes the LIBOR-related portion of the interest rate of a corresponding amount of the Company’s variable-rate debt at an average rate of 1.26%. This derivative instrument has been designated as interest rate cash flow hedge. In October and November 2013, we entered into $1,000 million in aggregate notional amount of three-year interest rate swap agreements with starting dates in November 2013. These agreements fix the LIBOR related portion of interest rates of a corresponding amount of our variable-rate debt at a weighted average rate of 0.46%. The commencement date of these interest rate swaps coincided with the $1,000 million aggregate notional amount of interest rate swaps that matured in November 2013. These derivative instruments have been designated as interest rate cash flow hedges. In July 2013, we entered into $575 million in aggregate notional amount of three-year interest swap agreements with starting dates in July 2013. These agreements fix the LIBOR-related portion of interest rates of a corresponding amount of the Company’s variable-rate debt at an average rate of 0.67%. These derivative instruments have been designated as interest rate cash flow hedges. In November 2012, we entered into $500 million in aggregate notional amount of four-year interest rate swap agreements with starting dates in November 2012. These agreements fix the LIBOR related portion of interest rates of a corresponding amount of our variable-rate debt at a weighted average rate of 0.57%. The commencement date of these interest rate swaps coincided with the $500 million aggregate notional amount of interest rate swaps that matured in November 2012. These derivative instruments have been designated as interest rate cash flow hedges. Derivative instruments involve, to varying degrees, elements of non-performance, or credit risk. We do not believe that we currently face a significant risk of loss in the event of non-performance by the counterparties associated with these instruments, as these transactions were executed with a diversified group of major financial institutions with a minimum investment-grade or better credit rating. Our credit risk exposure is managed through the continuous monitoring of our exposures to such counterparties. 55 Item 8. Financial Statements and Supplementary Data Nielsen Holdings plc Index to Consolidated Financial Statements Management’s Annual Report on Internal Controls Over Financial Reporting ................................................................................ Reports of Independent Registered Public Accounting Firm ............................................................................................................ Consolidated Statements of Operations ............................................................................................................................................ Consolidated Statements of Comprehensive Income/(Loss) ............................................................................................................. Consolidated Balance Sheets ............................................................................................................................................................ Consolidated Statements of Cash Flows ........................................................................................................................................... Consolidated Statements of Changes in Equity ................................................................................................................................ Notes to Consolidated Financial Statements ..................................................................................................................................... Schedule I – Consolidated Financial Information of Registrant ....................................................................................................... Schedule II – Valuation and Qualifying Accounts ............................................................................................................................ 57 58 60 61 62 63 64 67 118 122 56 Management’s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has performed an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2015, based on the framework and criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this evaluation, management has concluded that our internal controls over financial reporting were effective as of December 31, 2015. Ernst & Young LLP, independent registered public accounting firm, has provided an attestation report on the Company’s internal control over financial reporting. The Company’s financial statements included in this annual report on Form 10-K also have been audited by Ernst & Young LLP. Their reports follow. /s/ Dwight M. Barns Dwight M. Barns Chief Executive Officer February 19, 2016 /s/ Jamere Jackson Jamere Jackson Chief Financial Officer 57 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting The Board and Stockholders of Nielsen Holdings plc We have audited Nielsen Holdings plc’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Nielsen Holdings plc’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on Nielsen Holdings plc’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, Nielsen Holding plc maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Nielsen Holding plc as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income/(loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2015 of Nielsen Holdings plc and our report dated February 19, 2016, expressed an unqualified opinion thereon. /s/ Ernst & Young LLP New York, New York February 19, 2016 58 Report of Independent Registered Public Accounting Firm The Board and Stockholders of Nielsen Holdings plc We have audited the accompanying consolidated balance sheets of Nielsen Holdings plc as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income/(loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2015. Our audits also included the financial statement schedules listed in the Index at Item 8. These financial statements and schedules are the responsibility of Nielsen Holdings plc’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Nielsen Holdings plc at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Nielsen Holdings plc’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 19, 2016 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP New York, New York February 19, 2016 59 Nielsen Holdings plc Consolidated Statements of Operations (IN MILLIONS EXCEPT SHARE AND PER SHARE DATA) Revenues ................................................................................................................... $ Cost of revenues, exclusive of depreciation and amortization shown separately 2015 Year Ended December 31, 2014 2013 6,172 $ 6,288 $ 5,703 below .................................................................................................................... 2,539 2,620 Selling, general and administrative expenses, exclusive of depreciation and amortization shown separately below .................................................................. Depreciation and amortization .................................................................................. Restructuring charges ................................................................................................ Operating income ...................................................................................................... Interest income .......................................................................................................... Interest expense ......................................................................................................... Foreign currency exchange transaction losses, net ................................................... Other income/(expense), net ..................................................................................... Income from continuing operations before income taxes and equity in net (loss)/income of affiliates ..................................................................................... Provision for income taxes ........................................................................................ Equity in net (loss)/income of affiliates .................................................................... Income from continuing operations .......................................................................... Income from discontinued operations, net of tax ...................................................... Net income ................................................................................................................ Net income/(loss) attributable to noncontrolling interests ........................................ Net income attributable to Nielsen stockholders ....................................................... $ Net income per share of common stock, basic Income from continuing operations ................................................................. $ Discontinued operations, net of tax ................................................................. Net income attributable to Nielsen stockholders ............................................. $ Net income per share of common stock, diluted Income from continuing operations ................................................................. $ Discontinued operations, net of tax ................................................................. Net income attributable to Nielsen stockholders ............................................. $ 1,915 574 51 1,093 4 (311 ) (31 ) 206 961 (383 ) (3 ) 575 — 575 5 570 $ 1.55 $ — 1.55 $ 1.54 $ — 1.54 $ 1,917 573 89 1,089 3 (300) (71) (100) 621 (236) (4) 381 — 381 (3) 384 $ 1.01 $ — 1.01 $ 1.00 $ — 1.00 $ Weighted-average shares of common stock outstanding, basic ................................ 366,996,788 379,333,037 Dilutive shares of common stock .............................................................................. 5,038,415 Weighted-average shares of common stock outstanding, diluted ............................. 370,957,804 384,371,452 0.95 $ Dividends declared per common share ..................................................................... $ 3,961,016 1.09 $ 2,398 1,815 510 119 861 2 (309) (25) (9) 520 (91) 2 431 305 736 (4) 740 1.16 0.81 1.97 1.14 0.80 1.94 375,797,629 5,130,337 380,927,966 0.72 The accompanying notes are an integral part of these consolidated financial statements. 60 Nielsen Holdings plc Consolidated Statements of Comprehensive Income/(Loss) (IN MILLIONS) Net income .................................................................................................................................... $ Other comprehensive (loss)/income, net of tax Year Ended December 31, 2014 2013 2015 575 $ 381 $ 736 Foreign currency translation adjustments ................................................................. Available for sale securities (1) ................................................................................... Changes in the fair value of cash flow hedges (2) ....................................................... Defined benefit pension plan adjustments (3) .............................................................. Total other comprehensive loss ........................................................................................... Total comprehensive income/(loss) .............................................................................................. Less: comprehensive loss attributable to noncontrolling interests ................................................ Total comprehensive income/(loss) attributable to Nielsen stockholders ..................................... $ (357 ) (19 ) (1 ) 87 (290 ) 285 (3 ) 288 $ (301) 10 3 (109) (397) (16) (10) (6) $ (99) 9 8 30 (52) 684 (2) 686 (1) Net of tax of $13 million, $(7) million and $6 million for the year ended December 31, 2015, 2014 and 2013 respectively. (2) Net of tax of $1 million, $(2) million and $5 million for the year ended December 31, 2015, 2014 and 2013 respectively. (3) Net of tax of $(10) million, $32 million and $18 million for the year ended December 31, 2015, 2014 and 2013 respectively. The accompanying notes are an integral part of these consolidated financial statements 61 Nielsen Holdings plc Consolidated Balance Sheets (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) Assets: Current assets Cash and cash equivalents ........................................................................................... $ Trade and other receivables, net of allowances for doubtful accounts and sales returns of $26 and $29 as of December 31, 2015 and 2014, respectively ............... Prepaid expenses and other current assets ................................................................... Total current assets ............................................................................................................. Non-current assets Property, plant and equipment, net .............................................................................. Goodwill ...................................................................................................................... Other intangible assets, net .......................................................................................... Deferred tax assets ...................................................................................................... Other non-current assets .............................................................................................. $ Total assets ........................................................................................................................... Liabilities and equity: Current liabilities Accounts payable and other current liabilities ............................................................ $ Deferred revenues ....................................................................................................... Income tax liabilities ................................................................................................... Current portion of long-term debt, capital lease obligations and short-term borrowings .............................................................................................................. Total current liabilities ....................................................................................................... Non-current liabilities— Long-term debt and capital lease obligations .............................................................. Deferred tax liabilities ................................................................................................. Other non-current liabilities ........................................................................................ Total liabilities ..................................................................................................................... Commitments and contingencies (Note 16) Equity: Nielsen stockholders’ equity Common stock, €0.07 par value, 1,185,800,000 and 1,185,800,000 shares authorized; 362,338,369 and 382,622,922 shares issued and 362,338,369 and 372,757,598 shares outstanding at December 31, 2015 and 2014, respectively ................................................................................................... Additional paid-in capital .................................................................................. Treasury stock, at cost ....................................................................................... Retained earnings/(accumulated deficit) ........................................................... Accumulated other comprehensive loss, net of income taxes............................ Total Nielsen stockholders’ equity ................................................................. Noncontrolling interests ............................................................................................ Total equity .......................................................................................................................... Total liabilities and equity .................................................................................................. $ December 31, 2015 2014 357 $ 1,235 316 1,908 490 7,783 4,772 78 272 15,303 $ 1,013 $ 322 42 310 1,687 7,028 1,074 887 10,676 32 5,119 — 341 (1,059 ) 4,433 194 4,627 15,303 $ 273 1,241 497 2,011 533 7,671 4,715 83 313 15,326 1,035 304 62 393 1,794 6,419 1,025 955 10,193 32 6,344 (415) (128) (777) 5,056 77 5,133 15,326 The accompanying notes are an integral part of these consolidated financial statements. 62 Nielsen Holdings plc Consolidated Statements of Cash Flows (IN MILLIONS) Operating Activities Net income ....................................................................................................................... $ Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation expense ................................................................................. Excess tax benefits from stock-based compensation........................................................ Gain on sale of discontinued operations .......................................................................... Deferred income taxes ..................................................................................................... Currency exchange rate differences on financial transactions and other (gains)/losses ... Equity in net loss/(income) of affiliates, net of dividends received ................................. Depreciation and amortization ......................................................................................... Changes in operating assets and liabilities, net of effect of businesses acquired and divested: Trade and other receivables, net ............................................................................. Prepaid expenses and other current assets .............................................................. Accounts payable and other current liabilities and deferred revenues ................... Other non-current liabilities ................................................................................... Interest payable ...................................................................................................... Income taxes ........................................................................................................... Net cash provided by operating activities ........................................................................ Investing Activities Acquisition of subsidiaries and affiliates, net of cash acquired .............................. Proceeds from the sale of subsidiaries and affiliates, net ....................................... Additions to property, plant and equipment and other assets ................................. Additions to intangible assets ................................................................................. Proceeds from the sale of property, plant and equipment and other assets ............ Other investing activities ........................................................................................ Net cash used in investing activities ................................................................................ Financing Activities Net (payments)/borrowings under revolving credit facility ................................... Proceeds from issuances of debt, net of issuance costs .......................................... Repayment of debt ................................................................................................. Decrease in other short-term borrowings ............................................................... Cash dividends paid to stockholders ...................................................................... Repurchase of common stock ................................................................................. Proceeds from exercise of stock options ................................................................ Excess tax benefits from stock-based compensation .............................................. Other financing activities ....................................................................................... Net cash (used in)/provided by financing activities ......................................................... Effect of exchange-rate changes on cash and cash equivalents........................................ Net increase/(decrease) in cash and cash equivalents ...................................................... Cash and cash equivalents at beginning of period ........................................................... Cash and cash equivalents at end of period ...................................................................... $ Supplemental Cash Flow Information Year Ended December 31, 2014 2013 2015 575 $ 381 $ 736 48 (30 ) — 213 (167 ) 4 574 (35 ) (63 ) 36 (2 ) 15 11 1,179 (246 ) 30 (134 ) (274 ) 7 36 (581 ) (116 ) 746 (98 ) — (408 ) (667 ) 72 30 (21 ) (462 ) (52 ) 84 273 357 $ 47 — — 105 174 5 573 (93) (76) (4) (2) 6 (23) 1,093 (314) (6) (163) (249) — — (732) 280 4,544 (4,598) — (356) (466) 103 — (92) (585) (67) (291) 564 273 $ 47 — (290) (107) 40 2 521 (84) 21 (55) (6) 13 63 901 (1,249) 935 (130) (244) — 1 (687) — 2,485 (2,171) (5) (265) (11) 85 — (35) 83 (21) 276 288 564 Cash paid for income taxes .................................................................................... $ Cash paid for interest, net of amounts capitalized .................................................. $ (159 ) $ (296 ) $ (154) $ (294) $ (147) (304) The accompanying notes are an integral part of these consolidated financial statements. 63 e m o c n I e v i s n e h e r p m o C r e h t O d e t a l u m u c c A t e N , ) s s o L ( c l p s g n i d l o H n e s l e i N y t i u q E n i s e g n a h C f o s t n e m e t a t S d e t a d i l o s n o C ) 9 9 ( 6 3 7 0 3 9 8 2 1 ) 1 7 2 ( 3 6 8 ) 1 1 ( 7 4 l a t o T y t i u q E 8 7 9 , 4 $ 8 8 2 7 0 8 , 5 $ g n i l l o r t n o c n o N ’ s r e d l o h k c o t S t n e m y o l p m E l a t o T n e s l e i N t s o P h s a C w o l F e l b a l i a v A e l a S r o f y c n e r r u C n o i t a l s n a r T d e t a l u m u c c A s t s e r e t n I y t i u q E s t i f e n e B s e g d e H s e i t i r u c e S s t n e m t s u j d A t i c i f e D l a n o i t i d d A n i - d i a P l a t i p a C y r u s a e r T n o m m o C k c o t S k c o t S ) S N O I L L I M N I ( ) 4 ( 8 4 2 — — — 1 3 1 — — — — — — 8 7 0 4 7 ) 1 0 1 ( 0 3 9 8 ) 9 2 ( — ) 1 7 2 ( 3 6 8 ) 1 1 ( 7 4 8 8 2 — — 0 3 — — — — — — — — — — — — — 8 — — — — — — — — — $ 0 3 9 , 4 $ ) 7 9 2 ( $ ) 3 1 ( $ $ 9 2 7 , 5 $ ) 7 6 2 ( $ ) 5 ( $ — — — — 9 — — — — — — — — 9 — $ ) 3 2 ( $ ) 2 5 2 , 1 ( $ 9 8 4 , 6 $ ) 4 ( $ — ) 1 0 1 ( — 0 4 7 — — — — — — — — — — — — — — — — — — — — — — — — — — — ) 9 2 ( — ) 1 7 2 ( 1 5 8 — 7 4 7 8 2 — — — — — — — — 2 — ) 1 1 ( — — ) 4 2 1 ( $ ) 2 1 5 ( $ 9 0 6 , 6 $ ) 3 1 ( $ 0 3 — — — — — — — — — 1 — — 1 2 3 $ . . . . . . . . . . . . . 2 1 0 2 , 1 3 r e b m e c e D , e c n a l a B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e m o c n i t e N . . . . . s t n e m t s u j d a n o i t a l s n a r t y c n e r r u C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1 $ f o x a t f o t e n , y t i l i b a i l n o i s n e p n o s s o l d e z i l a e r n U . . . . . . . . . . . . . . . . . . . . . . . . . 6 $ f o t e n , s e i t i r u c e s e l a s r o f e l b a l i a v a n o s s o l d e z i l a e r n U . . . . 5 $ f o x a t f o t e n , s e g d e h w o l f h s a C . . . . . . . . . . . . . . . . . . . y r a i d i s b u s d e t a d i l o s n o c . . . . . . . . . . . . . . . . . . . y r a i d i s b u s d e t a d i l o s n o c . . . . . . . . . . . . . . . . . s r e d l o h k c o t s o t s d n e d i v i D y l w e n a n i t s e r e t n i g n i l l o r t n o c n o N . . . . . . . . . . . . . . . . . . . . s n o i t a n i b m o c s s e n i s u b . . . . . . . . . . . . . . . . . . . s n o i t p o k c o t s f o e s i c r e x E . . . . . . . . . . . . k c o t s n o m m o c f o e s a h c r u p e R . . . . e s n e p x e n o i t a s n e p m o c d e s a b - k c o t S n i d e u s s i k c o t s n o m m o c f o s e r a h S a n i t s e r e t n i n a f o e r u t i t s e v i D . . . . . . . . . . . . . s e r a h s o t s d n o b e l b i t r e v n o c $ . . . . . . . . . . . . . 3 1 0 2 , 1 3 r e b m e c e D , e c n a l a B y l i r o t a d n a m f o n o i s r e v n o C 64 e m o c n I e v i s n e h e r p m o C r e h t O d e t a l u m u c c A t e N , ) s s o L ( l a t o T y t i u q E g n i l l o r t n o c n o N ’ s r e d l o h k c o t S t n e m y o l p m E l a t o T n e s l e i N t s o P h s a C w o l F e l b a l i a v A e l a S r o f y c n e r r u C n o i t a l s n a r T d e t a l u m u c c A s t s e r e t n I y t i u q E s t i f e n e B s e g d e H s e i t i r u c e S s t n e m t s u j d A t i c i f e D l a n o i t i d d A n i - d i a P l a t i p a C y r u s a e r T n o m m o C k c o t S k c o t S ) S N O I L L I M N I ( 7 0 8 , 5 $ 8 7 $ 9 2 7 , 5 $ ) 7 6 2 ( $ ) 5 ( $ 9 1 8 3 ) 1 0 3 ( ) 9 0 1 ( 3 0 1 ) 1 ( 1 1 ) 0 6 3 ( 3 8 0 1 ) 6 6 4 ( 7 4 3 3 1 , 5 $ ) 3 ( ) 7 ( — — — ) 1 ( ) 1 ( 1 1 — — — — 7 7 4 8 3 ) 4 9 2 ( ) 9 0 1 ( 3 0 1 — — ) 9 5 3 ( 3 8 0 1 ) 6 6 4 ( 7 4 — — ) 9 0 1 ( — — — — — — — — — — — — — 3 — — — — — — — $ 6 5 0 , 5 $ ) 6 7 3 ( $ ) 2 ( $ — — — 0 1 — — — — — — — — 9 1 ) 4 2 1 ( — ) 4 9 2 ( — — — — — — — — — — $ ) 2 1 5 ( $ 9 0 6 , 6 $ ) 3 1 ( $ — 4 8 3 — — — — — — — — — — — — — — — — — ) 9 5 3 ( 2 5 4 — 7 4 — — — — — — — — 1 3 6 — ) 6 6 4 ( $ ) 8 1 4 ( $ ) 8 2 1 ( $ 4 4 3 , 6 $ ) 5 1 4 ( $ 2 3 — — — — — — — — — — — — 2 3 $ . . . . . . . . . . . . . 3 1 0 2 , 1 3 r e b m e c e D , e c n a l a B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e m o c n i t e N . . . . . . s t n e m t s u j d a n o i t a l s n a r t y c n e r r u C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 $ f o x a t f o t e n , y t i l i b a i l n o i s n e p n o s s o l d e z i l a e r n U . . . . . . . . . . . . ) 7 ( $ f o x a t f o t e n , s e i t i r u c e s e l a s r o f e l b a l i a v a n o n i a g d e z i l a e r n U . . . ) 2 ( $ f o x a t f o t e n , s e g d e h w o l f h s a C . . . . . . . . . . . . . . . . . . y r a i d i s b u s d e t a d i l o s n o c . . . . . . . . . . . . . . . . . . y r a i d i s b u s d e t a d i l o s n o c . . . . . . . . . . . . . . . . . s r e d l o h k c o t s o t s d n e d i v i D y l w e n a n i t s e r e t n i g n i l l o r t n o c n o N . . . . . . . . . . . . . . . . . . . . s n o i t a n i b m o c s s e n i s u b . . . . . . . . . . . . . . . . . . . s n o i t p o k c o t s f o e s i c r e x E . . . . . . . . . . . . k c o t s n o m m o c f o e s a h c r u p e R . . . . e s n e p x e n o i t a s n e p m o c d e s a b - k c o t S n i d e u s s i k c o t s n o m m o c f o s e r a h S a n i t s e r e t n i n a f o e r u t i t s e v i D $ . . . . . . . . . . . . . 4 1 0 2 , 1 3 r e b m e c e D , e c n a l a B 65 e m o c n I e v i s n e h e r p m o C r e h t O d e t a l u m u c c A t e N , ) s s o L ( l a t o T y t i u q E g n i l l o r t n o c n o N ’ s r e d l o h k c o t S t n e m y o l p m E l a t o T n e s l e i N t s o P h s a C w o l F e l b a l i a v A e l a S r o f y c n e r r u C d e n i a t e R s g n i n r a E n o i t a l s n a r T d e t a l u m u c c A ( s t s e r e t n I y t i u q E s t i f e n e B s e g d e H s e i t i r u c e S s t n e m t s u j d A ) t i c i f e D l a n o i t i d d A n i - d i a P l a t i p a C y r u s a e r T n o m m o C k c o t S k c o t S ) S N O I L L I M N I ( 3 3 1 , 5 $ 7 7 $ 6 5 0 , 5 $ ) 6 7 3 ( $ ) 2 ( $ 5 7 5 ) 7 5 3 ( 7 8 ) 1 ( ) 9 1 ( 3 6 1 1 ) 8 9 3 ( 2 5 7 0 3 ) 7 6 6 ( — 8 4 5 ) 8 ( — — — 3 — 7 1 1 — — — — — — 0 7 5 ) 9 4 3 ( 7 8 ) 1 ( ) 9 1 ( — ) 1 ( ) 8 9 3 ( 2 5 7 0 3 — 8 4 ) 7 6 6 ( — — 7 8 — — — — — — — — — — — — — — ) 1 ( — — — — — — — — — — 7 2 6 , 4 $ 4 9 1 $ 3 3 4 , 4 $ ) 9 8 2 ( $ ) 3 ( $ 9 1 — — — ) 9 1 ( — — — — — — — — — — — $ ) 8 1 4 ( $ ) 8 2 1 ( $ 4 4 3 , 6 $ ) 5 1 4 ( $ — ) 9 4 3 ( — — — — — — — — — — — — — 0 7 5 — — — — — ) 1 0 1 ( — — — — — — — — — — — — ) 1 ( ) 7 9 2 ( 2 ) 3 ( 0 3 ) 0 0 2 ( ) 4 0 8 ( 8 4 $ ) 7 6 7 ( $ 1 4 3 $ 9 1 1 , 5 $ — — — — — — — — — 8 7 — ) 7 6 4 ( 4 0 8 — — $ 2 3 — — — — — — — — — — — — 2 3 $ . . . . . . . . . . . . . 4 1 0 2 , 1 3 r e b m e c e D , e c n a l a B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e m o c n i t e N . . . . . . s t n e m t s u j d a n o i t a l s n a r t y c n e r r u C . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 0 1 ( $ f o x a t f o t e n , y t i l i b a i l n o i s n e p n o s s o l d e z i l a e r n U . . . . . . . . . . . . 3 1 $ f o x a t f o t e n , s e i t i r u c e s . . . . 1 $ f o x a t f o t e n , s e g d e h w o l f h s a C e l a s r o f e l b a l i a v a n o n i a g d e z i l a e R . . . . . . . . . . . . . . . . . . . . . . . . . . r e n t r a p g n i l l o r t n o c - n o n y b n o i t u b i r t n o c l a t i p a C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . y r a i d i s b u s . . . . . . . . . . . . . . . . . s r e d l o h k c o t s o t s d n e d i v i D . . . . . . . . . . . . . . . . . . . . s n o i t a n i b m o c s s e n i s u b . . . . . . . . . . . . . . . . . . . s n o i t p o k c o t s f o e s i c r e x E n i d e u s s i k c o t s n o m m o c f o s e r a h S . . . . . . . . . . . . . . . . . . . . . . . . n o i t a s n e p m o c d e s a b . . . . . . . . . . . . k c o t s n o m m o c f o e s a h c r u p e R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . n o i s r e v n o c y t i u q E . . . . e s n e p x e n o i t a s n e p m o c d e s a b - k c o t S k c o t s m o r f t i f e n e b x a t s s e c x E n a f o n o i t i s i u q c a / ) e r u t i t s e v i D ( d e t a d i l o s n o c a n i t s e r e t n i $ . . . . . . . . . . . . . 5 1 0 2 , 1 3 r e b m e c e D , e c n a l a B 66 . s t n e m e t a t s l a i c n a n i f d e t a d i l o s n o c e s e h t f o t r a p l a r g e t n i n a e r a s e t o n g n i y n a p m o c c a e h T Nielsen Holding plc Notes to Consolidated Financial Statements 1. Description of Business, Basis of Presentation and Significant Accounting Policies On May 17, 2006, Nielsen Holdings plc (the “Company” or “Nielsen”), formerly known as Nielsen N.V., Nielsen Holdings N.V., Valcon Acquisition Holding B.V. and Nielsen Holdings B.V., was purchased by a consortium of private equity firms (collectively, the “Sponsors”), as a subsidiary of Valcon Acquisition Holding (Luxembourg) S.à.r.l. (“Luxco”). On May 24, 2006, the Nielsen Company B.V. (“TNC B.V.”) (formerly VNU Group B.V. and VNU N.V.) was acquired through a tender offer to stockholders by Valcon Acquisition B.V. (“Valcon”), a wholly owned subsidiary of the Company (herein referred to as the “Valcon Acquisition”). On January 31, 2011, Nielsen completed an initial public offering of 82,142,858 shares of its €0.07 par value common stock at a price of $23.00 per share. Nielsen’s common stock is listed on the New York Stock Exchange and is traded under the symbol “NLSN.” As of December 31, 2015, the Sponsors that held equity interests in Nielsen at the time of the January 2011 initial public offering had disposed of such interests. On August 31, 2015, Nielsen N.V., a Dutch public company listed on the New York Stock Exchange, merged with Nielsen Holdings plc, by way of a cross-border merger under the European Cross-Border Merger Directive, with Nielsen Holdings plc being the surviving company (the “Merger”). The Merger effectively changed the place of incorporation of Nielsen’s publically traded parent holding company from the Netherlands to England and Wales, with no changes made to the business being conducted by Nielsen prior to the Merger. Due to the fact that the Merger was a business combination between entities under common control, the exchange of assets and liabilities were made at carrying value. Therefore, there were no direct accounting implications in the Company’s consolidated financial statements. Nielsen, together with its subsidiaries, is a leading global information and measurement company that provides clients with a comprehensive understanding of consumers and consumer behavior. Nielsen is aligned into two reportable segments: what consumers buy (“Buy”), what consumers watch and listen to (“Watch”). Nielsen has a presence in more than 100 countries, with its headquarters located in Oxford, the United Kingdom and New York, USA. See Note 17 – “Segments” for a discussion of the Company’s reportable segments. The accompanying consolidated financial statements are presented in conformity with U.S. generally accepted accounting principles (“GAAP”). All amounts are presented in U.S. Dollars (“$”), except for share and per share data or where expressly stated as being in other currencies, e.g., Euros (“€”). The consolidated financial statements include the accounts of Nielsen and all subsidiaries and other controlled entities. Supplemental cash flows from discontinued operations are presented in Note 4 to the consolidated financial statements “Discontinued Operations.” The Company has evaluated events occurring subsequent to December 31, 2015 for potential recognition or disclosure in the consolidated financial statements and concluded there were no subsequent events that required recognition or disclosure other than those provided. Consolidation The consolidated financial statements include the accounts of Nielsen and all subsidiaries and other controlled entities. Noncontrolling interests in subsidiaries are reported as a component of equity in the consolidated financial statements with disclosure on the face of the consolidated statements of operations of the amounts of consolidated net income attributable to Nielsen stockholders and to the noncontrolling interests. The equity method of accounting is used for investments in affiliates and joint ventures where Nielsen has significant influence but not control, usually supported by a shareholding of between 20% and 50% of the voting rights. Investments in which Nielsen owns less than 20% and does not have significant influence are accounted for either as available-for-sale securities if the shares are publicly traded or as cost method investments. Intercompany accounts and transactions between consolidated companies have been eliminated in consolidation. Foreign Currency Translation Nielsen has significant investments outside the United States, primarily in the Euro-zone, Canada and the United Kingdom. Therefore, changes in the value of foreign currencies affect the consolidated financial statements when translated into U.S. Dollars. The functional currency for substantially all subsidiaries outside the U.S. is the local currency. Financial statements for these subsidiaries are translated into U.S. Dollars at period-end exchange rates as to the assets and liabilities and monthly average exchange rates as to revenues, expenses and cash flows. For these countries, currency translation adjustments are recognized in stockholders’ equity as a component of accumulated other comprehensive income/(loss), net, whereas transaction gains and losses are recognized in foreign exchange transaction (losses)/gains, net in the consolidated statement of operations. 67 Nielsen has operations in both the Buy and Watch segments in Venezuela and the functional currency for these operations was the Venezuelan Bolivares Fuertes (“bolivars”). Venezuela’s currency has been considered hyperinflationary since January 1, 2010 and, accordingly, the local currency transactions have been denominated in U.S. dollars since January 1, 2010 and will continue to be until Venezuela’s currency is deemed to be non-hyperinflationary. Since early 2013, there have been a number of changes in the foreign exchange regime in Venezuela that have impacted the conversion rates used by the Company for the conversion of Venezuelan bolivars into U.S. Dollars in its financial statements, resulting in foreign currency exchange transaction losses in the consolidated statement of operations, reflecting the write-down of monetary assets and liabilities in our Venezuelan operations. In February 2013, the official exchange rate was moved from 4.30 to 6.30 bolivars to the U.S. dollar and the regulated System of Transactions with Securities in Foreign Currency market was suspended. Based on facts and circumstances present at March 31, 2014, Nielsen began using the exchange rate determined by periodic auctions for U.S. dollars conducted under Venezuela’s Complementary System of Foreign Currency Administration (“SICAD I”) as the SICAD I exchange rate represented what was the most realistic official exchange rate at which to remeasure the U.S. dollar value of the bolivar-denominated monetary assets and liabilities of Nielsen’s Venezuelan operations at that time. At March 31, 2014, the SICAD I exchange rate was 10.8 bolivars to the U.S. dollar. As a result of this change, Nielsen recorded a pre-tax charge of $20 million during the first quarter of 2014. Due to the lack of access to the SICAD I auction system throughout the remainder of 2014, as of December 31, 2014 the Company decided it was more likely that it would be able to gain access to U.S. dollars through the SICAD II mechanism to settle transactions conducted by the Company in Venezuela as SICAD II was created to provide a more open mechanism that was designed to permit any company to request U.S. dollars for any purpose. At December 31, 2014, the SICAD II exchange rate was 50.0 bolivars to the U.S. dollar. As a result of the changes in exchange rate assumptions, Nielsen recorded a pre-tax charge of $32 million for the fourth quarter 2014 and a total of $52 million for the year ended December 31, 2014. On February 12, 2015, the Venezuelan government replaced SICAD II with a new foreign exchange market mechanism (“SIMADI”). Nielsen currently expects to be able to access U.S. dollars through the SIMADI market. SIMADI has significantly higher foreign exchange rates than those available through the other foreign exchange mechanisms. At December 31, 2015, the SIMADI exchange rate was 198.7 bolivars to the U.S. dollar. As a result of this change, Nielsen has recorded a pre-tax charge of $8 million during the year ended December 31, 2015. The Company will continue to assess the appropriate conversion rate based on events in Venezuela and the Company’s specific facts and circumstances. Total net monetary assets in U.S. dollars at the December 31, 2015 SIMADI rate totaled $3 million. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Research and Development Costs Research and development costs, which were not material for any periods presented, are expensed as incurred. Revenue Recognition Nielsen recognizes revenues when persuasive evidence of an arrangement exists, services have been rendered or information has been delivered, the fee is fixed or determinable and the collectability of the related revenue is reasonably assured. A significant portion of the Company’s revenue is generated from information (primarily retail measurement and consumer panel services) and measurement (primarily from television, radio, online and mobile audiences) services. The Company generally recognizes revenue from the sale of services as the services are performed, which is usually ratably over the term of the contract(s). Invoiced amounts are recorded as deferred revenue until earned. Substantially all of the Company’s customer contracts are non- cancellable and non-refundable. 68 Certain of the Company’s revenue arrangements include multiple deliverables and in these arrangements, the individual deliverables within the contract that have stand-alone value to the customer are separated and recognized upon delivery based upon the Company’s best estimate of their selling prices. These arrangements are not significant to the Company’s results of operations. In certain cases, software is included as part of these arrangements to allow Nielsen’s customers to view delivered information and is provided for the term of the arrangement and is not significant to the marketing effort and is not sold separately. Accordingly, software provided to Nielsen’s customers is considered to be incidental to the arrangements and is not recognized as a separate element. A discussion of Nielsen’s revenue recognition policies, by segment, follows: Buy Revenue from the Buy segment, primarily from retail measurement services and consumer panel services is recognized over the period during which the services are performed and information is delivered to the customer, primarily on a straight-line basis. The Company provides insights and solutions to customers through analytical studies that are recognized into revenue as value is delivered to the customer. The pattern of revenue recognition for these contracts varies depending on the terms of the individual contracts, and may be recognized proportionally or deferred until the end of the contract term and recognized when the information has been delivered to the customer. Watch Revenue from the Watch segment is primarily generated from television, radio, online and mobile measurement services and recognized over the contract period, as the service is delivered to the customer, primarily on a straight-line basis. Deferred Costs Incremental direct costs incurred related to establishing or significantly expanding a panel in a designated market and costs incurred to build the infrastructure to service new clients, are deferred at the point when Nielsen determines them to be recoverable. Prior to this point, these cost are expensed as incurred. These deferred costs are typically amortized through cost of revenues over the original contract period beginning when the panel or infrastructure to service new clients is ready for its intended use. Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred and are reflected as selling, general and administrative expenses in the consolidated statements of operations. These costs include all brand advertising, telemarketing, direct mail and other sales promotion associated with marketing/media research services. Advertising and marketing costs totaled $19 million, for each of the years ended December 31, 2015, 2014 and 2013. Computation of Net Income per Share Basic net income per share is computed using the weighted-average number of common stock outstanding during the period. Diluted net income per share is computed using the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common stock primarily consist of employee stock options and restricted stock. Employee stock options, restricted stock and similar equity instruments granted by the Company are treated as potential common stock outstanding in computing diluted earnings per share. Diluted stock outstanding include restricted stock units and the dilutive effect of in-the-money options which is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of benefits that would be recorded in additional paid-in capital when the award becomes deductible for tax purposes are assumed to be used to repurchase stock. The two-class method is an earnings allocation method for computing earnings/(loss) per share when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines earnings/(loss) per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings. The two-class method did not have a significant impact on the calculation or presentation of earnings per share for any of the periods presented. 69 The effect of 1,593,807, 2,437,100 and 2,433,400 shares of common stock equivalents under stock compensation plans were excluded from the calculation of diluted earnings per share for the years ended December 31, 2015, 2014 and 2013, respectively, as such shares would have been anti-dilutive. Comprehensive Income/(Loss) Comprehensive income/(loss) is reported in the accompanying consolidated statements of comprehensive income/(loss) and consists of net income and other gains and losses, net of tax affecting equity that are excluded from net income. Accounts Receivable During the year ended December 31, 2015, the Company sold $50 million of accounts receivables to a third party and recorded an immaterial loss on the sale to interest expense, net in the consolidated statement of operations. The sale was accounted for as a true sale, without recourse. We maintain servicing responsibilities of the receivables, for which the related costs are not significant. The proceeds of $50 million from the sale were reported as a component of the changes in trade and other receivables, net within operating activities in the consolidated statement of cash flows. Other Significant Accounting Policies The following table includes other significant accounting policies that are described in other notes to the financial statements, including the related note: Significant Accounting Policy Investments .................................................................................................. Financial Instruments .................................................................................. Derivative Financial Instruments ................................................................. Goodwill and Other Intangible Assets ......................................................... Property, Plant and Equipment .................................................................... Impairment of Long-Lived Assets ............................................................... Pensions and Other Post Retirement Benefits.............................................. Stock-Based Compensation ......................................................................... Income Taxes ............................................................................................... Note 8 8 8 5 7 5&7 10 13 14 2. Summary of Recent Accounting Pronouncements Consolidation In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”. The new standard is intended to improve targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The amendments in the ASU affect the consolidation evaluation for reporting organizations. In addition, the amendments in this ASU simplify and improve current GAAP by reducing the number of consolidation models. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015; however, early adoption is permitted. Nielsen is currently assessing the impact of the adoption of this ASU will have on the Company’s consolidated financial statements. Debt Issuance Costs In April 2015, the FASB issued an ASU, “Simplifying the Presentation of Debt Issuance Costs”. The new standard changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. This guidance will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015; however, early adoption is permitted. The Company elected to early adopt this ASU and retrospectively adjusted prior period amounts to conform to the current year presentation. The retrospective application of this ASU resulted in a reclassification of $8 million from prepaid expenses and other current assets and $42 million from other non-current assets to current portion of long-term debt, capital lease obligations and short-term borrowings and long-term debt and capital lease obligations in the consolidated balance sheet for the year ended December 31, 2014. 70 Income Taxes In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. The classification change for all deferred taxes as noncurrent simplifies entities’ processes as it eliminates the need to separately identify the net current and net noncurrent deferred tax asset or liability in each jurisdiction and allocate valuation allowances. Nielsen elected to prospectively adopt the accounting standard as of December 31, 2015, resulting in a reclassification of Nielsen’s current deferred tax assets and liabilities to the non-current deferred tax assets and liabilities in Nielsen’s consolidated balance sheet. Prior periods in Nielsen’s consolidated financial statements were not retrospectively adjusted. Revenue Recognition In May 2014, the FASB issued an ASU, “Revenue from Contracts with Customers”. The new revenue recognition standard provides a five step analysis of transactions to determine when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services and shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The FASB has approved a one year deferral of this standard and is now effective for annual periods beginning after December 15, 2017. Nielsen is currently assessing the impact of the adoption of this ASU will have on our consolidated financial statements. 3. Business Acquisitions Arbitron Inc. On September 30, 2013 (the “Acquisition Date”), Nielsen completed the acquisition of Arbitron Inc., an international media and marketing research firm (“Arbitron”), through the purchase of 100% of Arbitron’s outstanding common stock for a total cash purchase price of $1.3 billion (the “Acquisition”). Arbitron has helped Nielsen better address client needs in unmeasured areas of media consumption, including streaming audio and out-of-home and Nielsen’s global distribution footprint has helped expand Arbitron’s capabilities outside of the U.S. With Arbitron’s assets, Nielsen has further expanded its Watch segment’s audience measurement across screens and forms of listening. Arbitron has been rebranded Nielsen Audio. As a part of the Acquisition, Nielsen acquired the remaining 49.5% interest in Scarborough Research, a joint venture between Nielsen and Arbitron (“Scarborough”) that Nielsen historically accounted for under the equity method of accounting. Nielsen accounted for this transaction as a step-acquisition and calculated the fair value of its investment immediately before the acquisition to be $75 million. As a result, during the third quarter of 2013, Nielsen recorded a $24 million gain on its investment in Scarborough to other income/(expense), net in the consolidated statement of operations. As of October 1, 2013, the financial results of Scarborough were included within the consolidated financial statements of Nielsen. The Acquisition was accounted for using the acquisition method of accounting which requires, among other things, the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. Since the date of the acquisition occurred on the last day of the quarter, the results of Arbitron were included within Company’s consolidated financial statements commencing October 1, 2013. The Company’s consolidated statement of operations for the year ended December 31, 2013 includes $134 million of revenues related to the Arbitron acquisition. 71 The purchase price was allocated based upon the fair value of the assets acquired and liabilities assumed at the date of acquisition. The following table summarizes the purchase price allocation: (IN MILLIONS) Fair value of business combination: Cash paid for Arbitron common stock .............................................. $ Accrued payment for directors’ and employees’ equity awards pertaining to pre-merger service .................................................. Accrued dividend payment on Arbitron common stock ................... Fair value of previously held equity interest in Scarborough ........... Total ........................................................................................ $ Identifiable assets acquired and liabilities assumed: Cash ............................................................................................................ $ Other current assets .................................................................................... Property and equipment .............................................................................. Goodwill ..................................................................................................... Amortizable intangible assets ..................................................................... Other long term assets ................................................................................ Deferred revenue ........................................................................................ Other current liabilities ............................................................................... Deferred tax liabilities ................................................................................ Other long term liabilities ........................................................................... Total ............................................................................................................ $ 1,296 42 3 75 1,416 136 129 32 947 472 2 (47) (53) (184) (18) 1,416 As of the Acquisition Date, the expected fair value of accounts receivable approximated historical cost. The gross contractual receivable was $64 million, of which $4 million was deemed uncollectible. The allocation of the purchase price to goodwill and identified intangible assets was $947 million and $472 million, respectively. All of the Arbitron related goodwill and intangible assets are attributable to the Nielsen’s Watch segment. Intangible assets and their estimated useful lives consist of the following: (IN MILLIONS) Description Customer –related intangibles .................................... $ Computer software ..................................................... Trade names and trademarks ...................................... Covenants-not-to-compete ......................................... Total ........................................................................... $ Amount Useful Life 10 – 15 years 5 – 10 years 3 – 5 years 1 – 2 years 271 159 31 11 472 Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents expected synergies and the going concern nature of Arbitron. The Company incurred acquisition related expenses of $19 million and $9 million for the years ended December 31, 2013 and 2012, respectively, which primarily consisted of transaction fees, legal, accounting and other professional services that are included in selling, general and administrative expense in the consolidated statement of operations. The following unaudited pro forma information presents the consolidated results of operations of the Company and Arbitron for the year ended December 31, 2013 as if the acquisition had occurred on January 1, 2013, with pro forma adjustments to give effect to amortization of intangible assets, an increase in interest expense from acquisition financing, and certain other adjustments: (IN MILLIONS) Revenues..................................................................................................... $ Income from continuing operations ............................................................ $ 2013 6,058 497 The unaudited pro forma results do not reflect any synergies and are not necessarily indicative of the results that the Company would have attained had the acquisition of Arbitron been completed as of the beginning of the reporting period. 72 Other Acquisitions For the year ended December 31, 2015, Nielsen paid cash consideration of $246 million associated with both current period and previously executed acquisitions, net of cash acquired. Included in this amount is $45 million for an additional 13.5% interest in Nielsen Catalina Solutions (“NCS”), a joint venture between us and Catalina that we historically accounted for under the equity method of accounting. As part of this transaction Nielsen gained control of NCS and, as such accounted for it as a step-acquisition and calculated the fair value of the investment immediately before the acquisition to be $161 million. The fair value of the investment was calculated by an income approach using a discounted cash flow analysis, which requires the use of various assumptions, including expectations of future cash flows, growth rates, discount rates and tax rates in developing the present value of future cash flows. As a result, during the fourth quarter of 2015, Nielsen recorded a $158 million gain on the investment in NCS to other income, net in the consolidated statement of operations. Commencing October 1, 2015, NCS was reflected as a consolidated subsidiary within Nielsen’s consolidated financial statements. Had these current period’s acquisitions occurred as of January 1, 2015, the impact on Nielsen’s consolidated results of operations would not have been material. For the year ended December 31, 2014, Nielsen paid cash consideration of $314 million associated with both current period and previously executed acquisitions, net of cash acquired. Had that period’s acquisitions occurred as of January 1, 2014, the impact on Nielsen’s consolidated results of operations would not have been material. For the year ended December 31, 2013, excluding Arbitron, Nielsen paid cash consideration of $43 million associated with both current period and previously executed acquisitions, net of cash acquired. Had that period’s acquisitions occurred as of January 1, 2013, the impact on Nielsen’s consolidated results of operations would not have been material. 4. Discontinued Operations and Other Dispositions In November 2015, Nielsen completed the sale of the National Research Group, Inc., a leader in providing market research to movie studios within our Watch segment, for total cash consideration of $34 million and recorded an $18 million gain on the sale to other income/(expense), net in the consolidated statement of operations. The disposition did not qualify to be classified as discontinued operations. In February 2014, Nielsen completed the acquisition of Harris Interactive, Inc., a leading global market research firm, through the purchase of all outstanding shares of Harris Interactive’s common stock for $2.04 per share. In June 2014, the Company completed the sale of Harris Interactive European operations (“Harris Europe”) to ITWP Acquisitions Limited (“ITWP”), the parent company of Toluna, a leading digital market research and technology company in exchange for a minority stake in ITWP. The consolidated statements of operations reflect the operating results of Harris Europe as a discontinued operation. In June 2013, the Company completed the sale of its Expositions business, which operates one of the largest portfolios of business-to-business trade shows and conference events in the United States, for total cash consideration of $950 million and recorded a gain of $290 million, net of tax. The consolidated statements of operations reflect the operating results of this business as a discontinued operation. In March 2013, Nielsen completed the exit and shut down of one of its legacy online businesses and recorded a net loss of $3 million associated with this exit. The consolidated statements of operations reflect the operating results of this business as a discontinued operation. Summarized results of operations for discontinued operations for the years ended December 31, 2015, 2014 and 2013 are as follows: (IN MILLIONS) Revenue ................................................................................ $ Operating income .................................................................. Interest expense .................................................................... Income from operations before income taxes ....................... Provision for income taxes ................................................... Income from operations ........................................................ Net income/(loss) attributable to noncontrolling interests .... Gain on sale, net of tax ......................................................... Income from discontinued operations ................................... $ 2015 2014 2013 — $ — — — — — — — — $ 15 $ — — — — — — — — $ 103 35 (8) 27 (12) 15 — 290 305 73 Nielsen allocated a portion of its consolidated interest expense to discontinued operations based upon the ratio of net assets sold as a proportion of consolidated net assets. For the years ended December 31, 2015, 2014 and 2013, interest expense of zero, zero and $8 million, respectively was allocated to discontinued operations. Following are the major categories of cash flows from discontinued operations, as included in Nielsen’s consolidated statements of cash flows for the years ended December 31, 2015, 2014 and 2013: (IN MILLIONS) Net cash provided by operating activities ............................. $ Net cash provided by investing activities ............................. Net cash provided by financing activities ............................. $ 2015 2014 2013 — $ — — — $ — $ — — — $ 36 — — 36 5. Goodwill and Other Intangible Assets Goodwill Goodwill and other indefinite-lived intangible assets, consisting of certain trade names and trademarks, are each tested for impairment on an annual basis and whenever events or circumstances indicate that the carrying amount of such asset may not be recoverable. Nielsen has designated October 1st as the date in which the annual assessment is performed as this timing corresponds with the development of the Company’s formal budget and business plan review. Nielsen reviews the recoverability of its goodwill by comparing the estimated fair values of reporting units with their respective carrying amounts. The Company established, and continues to evaluate, its reporting units based on its internal reporting structure and defines such reporting units at its operating segment level or one level below. The estimates of fair value of a reporting unit are determined using a combination of valuation techniques, primarily an income approach using a discounted cash flow analysis supplemented by a market-based approach. A discounted cash flow analysis requires the use of various assumptions, including expectations of future cash flows, growth rates, discount rates and tax rates in developing the present value of future cash flow projections. The market-based approach utilizes available market comparisons such as indicative industry multiples that are applied to current year revenue and earnings as well as recent comparable transactions. The impairment test for other indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The estimates of fair value of trade names and trademarks are determined using a “relief from royalty” discounted cash flow valuation methodology. Significant assumptions inherent in this methodology include estimates of royalty rates and discount rates. Discount rate assumptions are based on an assessment of the risk inherent in the respective intangible assets. Assumptions about royalty rates are based on the rates at which comparable trade names and trademarks are being licensed in the marketplace. There was no impairment noted in any period presented with respect to the Company’s indefinite-lived intangible assets. Nielsen is required to assess whether the value of the Company’s amortizable intangible assets have been impaired whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Nielsen does not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. Recoverability of assets that are held and used is measured by comparing the sum of the future undiscounted cash flows expected to be derived from an asset (or a group of assets) to their carrying value. If the carrying value of the asset (or the group of assets) exceeds the sum of the future undiscounted cash flows, impairment is considered to exist. If impairment is considered to exist based on undiscounted cash flows, the impairment charge is measured using an estimation of the assets’ fair value, typically using a discounted cash flow method. The identification of impairment indicators, the estimation of future cash flows and the determination of fair values for assets (or groups of assets) requires Nielsen to make significant judgments concerning the identification and validation of impairment indicators, expected cash flows and applicable discount rates. These estimates are subject to revision as market conditions and our assessments change. There was no impairment noted in any period presented with respect to the Company’s amortizable intangible assets. Goodwill and other indefinite-lived intangible assets are stated at historical cost less accumulated impairments losses, if any. 74 The table below summarizes the changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2015 and 2014, respectively. (IN MILLIONS) Balance, December 31, 2013 ................................................. $ Acquisitions, divestitures and other adjustments ................... Effect of foreign currency translation .................................... Balance, December 31, 2014 ................................................. $ Acquisitions, divestitures and other adjustments ................... Effect of foreign currency translation .................................... Balance, December 31, 2015 ................................................. $ Cumulative Impairments........................................................ $ Buy Watch Total 3,005 $ 202 (193) 3,014 $ 4 (229) 2,789 $ — $ 4,679 $ 4 (26 ) 4,657 $ 361 (24 ) 4,994 $ 376 $ 7,684 206 (219) 7,671 365 (253) 7,783 376 At December 31, 2015, $62 million of goodwill is expected to be deductible for income tax purposes. Other Intangible Assets Intangible assets with finite lives are stated at historical cost, less accumulated amortization and impairment losses. These intangible assets are amortized on a straight-line basis over the following estimated useful lives, which are reviewed annually. Nielsen has purchased and internally developed software to facilitate its global information processing, financial reporting and client access needs. Costs that are related to the conceptual formulation and design of software programs are expensed as incurred. Costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset and are amortized over the estimated useful life. If events or changes in circumstances indicate that the carrying value of software may not be recovered, a recoverability analysis is performed based on estimated undiscounted cash flows to be generated from the software in the future. If the analysis indicates that the carrying value is not recoverable from the future cash flows, the software cost is written down to estimate fair value and an impairment is recognized. These estimates are subject to revision as market conditions and as our assessments change. The table below summarizes the carrying value of such intangible assets and their estimated useful lives: (IN MILLIONS) Indefinite-lived intangibles: Estimated Useful Lives Weighted Average December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Gross Amounts Accumulated Amortization Trade names and trademarks ......... Amortized intangibles: Trade names and trademarks ......... Customer-related intangibles ......... Covenants-not-to-compete ............ Computer software ........................ Patents and other ........................... Total .................................................... $ 1,921 $ 1,921 $ — $ — 5-20 years 6-25 years 1-7 years 3-10 years 3-10 years 14 years 21 years 3 years 5 years 6 years $ 167 3,013 37 1,919 168 5,304 $ 166 2,938 36 1,935 105 5,180 $ (84) (1,193) (35) (1,055) (86) (2,453) $ (68) (1,054) (30) (1,157) (77) (2,386) The amortization expense for the years ended December 31, 2015, 2014 and 2013 was $408 million, $404 million and $324 million, respectively. These amounts include amortization expense associated with computer software of $219 million, $217 million and $171 million for the years ended December 31, 2015, 2014 and 2013, respectively. Certain of the trade names associated with Nielsen are deemed indefinite-lived intangible assets, as their associated Nielsen brand awareness and recognition has existed for over 50 years and the Company intends to continue to utilize these trade names. There are also no legal, regulatory, contractual, competitive, economic or other factors that may limit their estimated useful lives. Nielsen reconsiders the remaining estimated useful life of indefinite-lived intangible assets each reporting period. The Company’s 2015, 2014 and 2013 annual assessments did not result in an impairment for any of its underlying reporting units or indefinite-lived intangible assets. 75 All other intangible assets are subject to amortization. Future amortization expense is estimated to be as follows: (IN MILLIONS) For the year ending December 31: 2016 .............................................................................................................. $ 2017 .............................................................................................................. 2018 .............................................................................................................. 2019 .............................................................................................................. 2020 .............................................................................................................. Thereafter...................................................................................................... Total .............................................................................................................. $ 429 397 353 269 238 1,165 2,851 6. Changes in and Reclassification out of Accumulated Other Comprehensive Loss by Component The table below summarizes the changes in accumulated other comprehensive loss, net of tax, by component for the years ended December 31, 2015 and 2014, respectively. (IN MILLIONS) Balance December 31, 2014 ............................ $ Other comprehensive (loss)/income before Currency Translation Adjustments Available- for-Sale Securities Cash Flow Hedges Benefits Total Post Employment (418) $ 19 $ (2 ) $ (376) $ reclassifications...................................... (357) Amounts reclassified from accumulated other comprehensive (loss)/income ....... — — (19) Net current period other comprehensive (loss)/income ......................................... (357) (19) (8 ) 7 (1 ) 60 27 87 Net current period other comprehensive loss attributable to noncontrolling interest ................................................... Net current period other comprehensive (loss)/income attributable to Nielsen stockholders ........................................... Balance December 31, 2015 ............................ $ (8) — — — (8) (349) (767) $ (19) — $ (1 ) (3 ) $ 87 (289) $ (282) (1,059) (777) (305) 15 (290) Currency Translation Adjustments Available- for-Sale Securities Cash Flow Hedges Benefits Total Post Employment (124) $ 9 $ (5 ) $ (267) $ (IN MILLIONS) Balance December 31, 2013 ............................ $ Other comprehensive (loss)/income before reclassifications...................................... (301) Amounts reclassified from accumulated other comprehensive (loss)/income ....... — Net current period other comprehensive (loss)/income ......................................... (301) 10 — 10 (387) (420) 23 (6 ) (123) 9 3 14 (109) (397) Net current period other comprehensive loss attributable to noncontrolling interest ................................................... Net current period other comprehensive (loss)/income attributable to Nielsen stockholders ........................................... Balance December 31, 2014 ............................ $ (7) — — — (7) (294) (418) $ 10 19 $ 3 (2 ) $ (109) (376) $ (390) (777) 76 The table below summarizes the reclassification of accumulated other comprehensive loss by component for the years ended December 31, 2015 and 2014, respectively. (IN MILLIONS) Details about Accumulated Other Comprehensive Income components Available for sale securities Amount Reclassified from Accumulated Other Comprehensive Loss Year Ended December 31, Affected Line Item in the Consolidated 2015 2014 Statement of Operations $ $ (32) $ — Other income 13 (19) $ Provision for income taxes — — Total, net of tax Cash flow hedges Interest rate contracts .......................................................... $ 12 $ 15 Interest expense $ (5) 7 $ Benefit for income taxes (6 ) 9 Total, net of tax Amortization of Post-Employment Benefits Actuarial loss ...................................................................... $ 37 $ 19 (a) $ Total reclassification for the period ......................................... $ (10) 27 $ 15 $ Benefit for income taxes (5 ) 14 Total, net of tax 23 Net of tax (a) This accumulated other comprehensive loss component is included in the computation of net periodic pension cost. 7. Property, Plant and Equipment Property, plant and equipment are carried at historical cost less accumulated depreciation and impairment losses. Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives. Nielsen is required to assess whether the value of our long-lived assets, including the Company’s buildings, improvements, technical and other equipment have been impaired whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Nielsen does not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. Recoverability of assets that are held and used is measured by comparing the sum of the future undiscounted cash flows expected to be derived from an asset (or a group of assets) to their carrying value. If the carrying value of the asset (or the group of assets) exceeds the sum of the future undiscounted cash flows, impairment is considered to exist. If impairment is considered to exist based on undiscounted cash flows, the impairment charge is measured using an estimation of the assets’ fair value, typically using a discounted cash flow method. The identification of impairment indicators, the estimation of future cash flows and the determination of fair values for assets (or groups of assets) requires Nielsen to make significant judgments concerning the identification and validation of impairment indicators, expected cash flows and applicable discount rates. These estimates are subject to revision as market conditions and our assessments change. There was no impairment noted in any period presented with respect to the Company’s finite long-lived assets. 77 The following tables summaries the carrying value of our property, plant and equipment including the associated useful lives: (IN MILLIONS) Land and buildings ..................................................................... 25-50 years $ 3-10 years Information and communication equipment .............................. 3-10 years Furniture, equipment and other .................................................. Estimated Useful Life Less accumulated depreciation and amortization....................... $ December 31, 2015 December 31, 2014 337 $ 825 108 1,270 (780 ) 490 $ 352 908 119 1,379 (846) 533 Depreciation and amortization expense from continuing operations related to property, plant and equipment was $160 million, $162 million and $169 million for the years ended December 31, 2015, 2014 and 2013, respectively. The above amounts include amortization expense on assets under capital leases and other financing obligations of $23 million, $10 million and $7 million for the years ended December 31, 2015, 2014 and 2013, respectively. The net book value of assets under capital leases and other financing obligations was $166 million and $147 million as of December 31, 2015 and 2014, respectively. Capital leases and other financing obligations are comprised primarily of buildings and computer equipment. Gross and net book value of assets under capital leases were as follows: (IN MILLIONS) Gross Book Value December 31, 2015 Accumulated Depreciation Net Book Value Land and buildings ................................................... $ Information and communication equipment ............ $ 170 $ 100 270 $ (63 ) $ (41 ) (104 ) $ 107 59 166 Land and buildings ................................................... $ Information and communication equipment ............ $ 172 $ 56 228 $ (60 ) $ (21 ) (81 ) $ 112 35 147 Gross Book Value December 31, 2014 Accumulated Depreciation Net Book Value 8. Fair Value Measurements Nielsen’s financial instruments include cash and cash equivalents, investments, long-term debt and derivative financial instruments. These financial instruments potentially subject Nielsen to concentrations of credit risk. To minimize the risk of credit loss, these financial instruments are primarily held with acknowledged financial institutions. The carrying value of Nielsen’s financial instruments approximate fair value, except for differences with respect to long-term, fixed and variable-rate debt and certain differences relating to investments accounted for at cost. The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques. Cash equivalents have original maturities of three months or less. In addition, the Company has accounts receivable that are not collateralized. The Buy and Watch segments service high quality clients dispersed across many geographic areas. The Company analyzes the aging of accounts receivable, historical bad debts, customer creditworthiness and current economic trends in determining the allowance for doubtful accounts. Investments include available-for-sale securities carried at fair value, or at cost if not publicly traded, investments in affiliates, and a trading asset portfolio maintained to generate returns to offset changes in certain liabilities related to deferred compensation arrangements. For the available-for-sale securities, any unrealized holding gains and losses, net of deferred income taxes, are excluded from operating results and are recognized in stockholders’ equity as a component of accumulated other comprehensive income/(loss) net, until realized. Nielsen assesses declines in the value of individual investments to determine whether such decline is other than temporary and thus the investment is impaired by considering available evidence. No impairment charge was recorded for the years ended December 31, 2015, 2014 and 2013. 78 Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. There are three levels of inputs that may be used to measure fair value: Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3: Pricing inputs that are generally unobservable and may not be corroborated by market data. Financial Assets and Liabilities Measured on a Recurring Basis The Company’s financial assets and liabilities are measured and recorded at fair value, except for equity method investments, cost method investments, and long-term debt. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The following table summarizes the valuation of the Company’s material financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 and 2014: (IN MILLIONS) Assets: Plan assets for deferred compensation (2) ........... Investment in mutual funds (3) ............................ Total ............................................................. $ Liabilities: Interest rate swap arrangements (4) ..................... $ Deferred compensation liabilities (5) .................. $ Total ............................................................. December 31, 2015 Level 1 Level 2 Level 3 30 2 $ 32 6 30 $ 36 30 2 32 $ — $ 30 30 $ — — — 6 — 6 December 31, 2014 Level 1 Level 2 Level 3 Assets: Investments in equity securities (1) ...................... $ Plan assets for deferred compensation (2) ........... Investment in mutual funds (3) ........................ Interest rate swap arrangements (4) ...................... Total ........................................................... $ Liabilities: Interest rate swap arrangements (4) ...................... $ Deferred compensation liabilities (5) ................... Total ........................................................... $ 45 $ 28 2 1 76 $ 6 28 34 $ 45 28 2 — 75 — $ 28 28 $ — — — 1 1 6 — 6 — — — — — — — — — — — — — — (1) Investments in equity securities are carried at fair value, which is based on the quoted market price at period end in an active market. These investments are classified as available-for-sale with any unrealized gains or losses resulting from changes in fair value recorded, net of tax, as a component of accumulated other comprehensive income/(loss) until realized. Nielsen assesses declines in the value of individual investments to determine whether such decline is other than temporary and thus the investment is impaired by considering available evidence. No impairment charge was recorded for these available-for-sale securities during the years ended December 31, 2015 or 2014. During the year ended December 31, 2015, the Company sold its investment in equity securities for total cash proceeds of $44 million and recorded a gain of $30 million in other income/(expense), net in the consolidated statement of operations. 79 (2) Plan assets are comprised of investments in mutual funds, which are intended to fund liabilities arising from deferred compensation plans. These investments are carried at fair value, which is based on quoted market prices at period end in active markets. These investments are classified as trading securities with any gains or losses resulting from changes in fair value recorded in other income/(expense), net in the consolidated statements of operations. Investments in mutual funds are money-market accounts held with the intention of funding certain specific retirement plans. (3) (4) Derivative financial instruments include interest rate swap arrangements recorded at fair value based on externally-developed valuation models that use readily observable market parameters and the consideration of counterparty risk. (5) The Company offers certain employees the opportunity to participate in a deferred compensation plan. A participant’s deferrals are invested in a variety of participant directed stock and bond mutual funds and are classified as trading securities. Changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation. Derivative Financial Instruments Nielsen uses interest rate swap derivative instruments principally to manage the risk that changes in interest rates will affect the cash flows of its underlying debt obligations. To qualify for hedge accounting, the hedging relationship must meet several conditions with respect to documentation, probability of occurrence, hedge effectiveness and reliability of measurement. Nielsen documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions as well as the hedge effectiveness assessment, both at the hedge inception and on an ongoing basis. Nielsen recognizes all derivatives at fair value either as assets or liabilities in the consolidated balance sheets and changes in the fair values of such instruments are recognized currently in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, Nielsen recognizes the changes in fair value of these instruments in accumulated other comprehensive income/(loss). Nielsen manages exposure to possible defaults on derivative financial instruments by monitoring the concentration of risk that Nielsen has with any individual bank and through the use of minimum credit quality standards for all counterparties. Nielsen does not require collateral or other security in relation to derivative financial instruments. A derivative contract entered into between Nielsen or certain of its subsidiaries and a counterparty that was also a lender under Nielsen’s senior secured credit facilities at the time the derivative contract was entered into is guaranteed under the senior secured credit facilities by Nielsen and certain of its subsidiaries (see Note 11 - Long-term Debt and Other Financing Arrangements for more information). Since it is Nielsen’s policy to only enter into derivative contracts with banks of internationally acknowledged standing, Nielsen considers the counterparty risk to be remote. It is Nielsen’s policy to have an International Swaps and Derivatives Association (“ISDA”) Master Agreement established with every bank with which it has entered into any derivative contract. Under each of these ISDA Master Agreements, Nielsen agrees to settle only the net amount of the combined market values of all derivative contracts outstanding with any one counterparty should that counterparty default. Certain of the ISDA Master Agreements contain cross-default provisions where if the Company either defaults in payment obligations under its credit facility or if such obligations are accelerated by the lenders, then the Company could also be declared in default on its derivative obligations. At December 31, 2015, Nielsen had no material exposure to potential economic losses due to counterparty credit default risk or cross-default risk on its derivative financial instruments. Interest Rate Risk Nielsen is exposed to cash flow interest rate risk on the floating-rate U.S. Dollar and Euro Term Loans, and uses floating-to- fixed interest rate swaps to hedge this exposure. For these derivatives, Nielsen reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive income/(loss) and reclassifies it into earnings in the same period or periods in which the hedged transaction affects earnings, and within the same income statement line item as the impact of the hedged transaction. In July 2015, the Company entered into a $150 million in notional amount of three-year forward interest rate swap agreement with a starting date in July 2016. This agreement fixes the LIBOR-related portion of the interest rates of a corresponding amount of the Company’s variable-rate debt at an average rate of 1.62%. This derivative instrument has been designated as an interest rate cash flow hedge. In April 2015, the Company entered into a $150 million in notional amount of three-year forward interest rate swap agreement with a starting date in April 2016. This agreement fixes the LIBOR-related portion of the interest rates of a corresponding amount of 80 the Company’s variable-rate debt at an average rate of 1.40%. This derivative instrument has been designated as an interest rate cash flow hedge. In November 2014, the Company entered into a $250 million in notional amount of two-year forward interest swap agreement with a starting date in May 2016. This agreement fixes the LIBOR-related portion of the interest rate of a corresponding amount of the Company’s variable-rate debt at an average rate of 1.78%. This derivative instrument has been designated as interest rate cash flow hedge. In November 2014, the Company entered into a $250 million in notional amount of two-year forward interest swap agreement with a starting date in September 2015. This agreement fixes the LIBOR-related portion of the interest rate of a corresponding amount of the Company’s variable-rate debt at an average rate of 1.26%. This derivative instrument has been designated as interest rate cash flow hedge. In October and November 2013, the Company entered into $1,000 million in aggregate notional amount of three-year interest rate swap agreements with starting dates in November 2013. These agreements fix the LIBOR related portion of interest rates of a corresponding amount of our variable-rate debt at a weighted average rate of 0.46%. The commencement date of these interest rate swaps coincided with the $1,000 million aggregate notional amount of interest rate swaps that matured in November 2013. These derivative instruments have been designated as interest rate cash flow hedges. In July 2013, the Company entered into $575 million in aggregate notional amount of three-year interest swap agreements with starting dates in July 2013. These agreements fix the LIBOR-related portion of interest rates of a corresponding amount of the Company’s variable-rate debt at an average rate of 0.67%. These derivative instruments have been designated as interest rate cash flow hedges. In November 2012, the Company entered into $500 million in aggregate notional amount of four-year interest rate swap agreements with starting dates in November 2012. These agreements fix the LIBOR related portion of interest rates of a corresponding amount of our variable-rate debt at a weighted average rate of 0.57%. The commencement date of these interest rate swaps coincided with the $500 million aggregate notional amount of interest rate swaps that matured in November 2012. These derivative instruments have been designated as interest rate cash flow hedges. Nielsen expects to recognize approximately $4 million of net pre-tax losses from accumulated other comprehensive loss to interest expense in the next 12 months associated with its interest-related derivative financial instruments. As of December 31, 2015 the Company had the following outstanding interest rate swaps utilized in the management of its interest rate risk: Notional Amount Maturity Date Currency Interest rate swaps designated as hedging instruments US Dollar term loan floating-to-fixed rate swaps ................ $1,575,000,000 May 2016 US Dollar term loan floating-to-fixed rate swaps ................ $ 500,000,000 November 2016 US Dollar term loan floating-to-fixed rate swaps ................ $ 250,000,000 September 2017 May 2018 US Dollar term loan floating-to-fixed rate swaps ................ $ 250,000,000 April 2019 US Dollar term loan floating-to-fixed rate swaps ................ $ 150,000,000 July 2019 US Dollar term loan floating-to-fixed rate swaps ................ $ 150,000,000 US Dollar US Dollar US Dollar US Dollar US Dollar US Dollar Foreign Currency Exchange Risk Nielsen has managed its exposure to changes in foreign currency exchange rates attributable to certain of its long-term debt through the use of foreign currency swap derivative instruments. When the derivative financial instrument is deemed to be highly effective in offsetting variability in the hedged item, changes in its fair value are recorded in accumulated other comprehensive loss and recognized contemporaneously with the earnings effects of the hedged item. During the years ended December 31, 2015 and 2014, Nielsen recorded a net gain of $2 million and zero respectively, associated with foreign currency derivative financial instruments within foreign currency exchange transactions losses, net in Nielsen’s consolidated statements of operations. Nielsen had foreign currency derivative financial instruments outstanding with an immaterial fair value as of December 31, 2015 and no foreign currency derivative instruments outstanding as of December 31, 2014. See Note 11 – “Long-term Debt and Other Financing Arrangements” for more information on the long-term debt transactions referenced in this note. 81 Fair Values of Derivative Instruments in the Consolidated Balance Sheets The fair values of the Company’s derivative instruments as of December 31, 2015 and December 31, 2014 were as follows: Derivatives Designated as Hedging Instruments (IN MILLIONS) Interest rate swaps ................................... $ Accounts Payable and Other Current Liabilities December 31, 2015 Other Non- Current Liabilities Other Non- Current Assets December 31, 2014 Accounts Payable and Other Current Liabilities Other Non- Current Liabilities 1 $ 5 $ 1 $ 4 $ 2 Derivatives in Cash Flow Hedging Relationships The pre-tax effect of derivative instruments in cash flow hedging relationships for the years ended December 31, 2015, 2014 and 2013 was as follows (amounts in millions): Derivatives in Cash Flow Hedging Relationships (IN MILLIONS) Interest rate swaps ............ $ Amount of Loss Recognized in OCI on Derivatives (Effective Portion) December 31, Location of Loss Reclassified from OCI into Income (Effective Portion) 2015 2014 2013 2015 Amount of Loss Reclassified from OCI into Income (Effective Portion) December 31, 2014 2013 14 $ 10 $ 4 Interest expense ........ $ 12 $ 15 $ 16 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The Company is required, on a nonrecurring basis, to adjust the carrying value for certain assets using fair value measurements. The Company’s equity method investments, cost method investments, and non-financial assets, such as goodwill, intangible assets, and property, plant and equipment, are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized. The Company did not measure any material non-financial assets or liabilities at fair value during the years ended December 31, 2015 or 2014. 9. Restructuring Activities Restructuring charges primarily relate to employee separation packages. The amounts are calculated based on salary levels and past service periods. Severance costs are generally charged to earnings when the employee is notified of the offer. A summary of the changes in the liabilities for restructuring activities is provided below: (IN MILLIONS) Balance at December 31, 2012 ................................................................... $ Charges ....................................................................................................... Non cash charges and other adjustments .................................................... Payments ..................................................................................................... Balance at December 31, 2013 ................................................................... Charges ....................................................................................................... Non cash charges and other adjustments .................................................... Payments ..................................................................................................... Balance at December 31, 2014 ................................................................... Charges ....................................................................................................... Non cash charges and other adjustments .................................................... Payments ..................................................................................................... Balance at December 30, 2015 ................................................................... $ Total Initiatives 64 119 (4 ) (80 ) 99 89 (3 ) (113 ) 72 51 (8 ) (77 ) 38 82 Of the $38 million in remaining liabilities for restructuring actions, $29 million is expected to be paid within one year and is classified as a current liability within the consolidated financial statements as of December 31, 2015. Productivity Initiatives The Company recorded $51 million and $89 million in restructuring charges primarily relating to employee severance associated with productivity initiatives during the years ended December 31, 2015 and 2014, respectively. The Company recorded $119 million in restructuring charges associated with productivity initiatives during the year ended December 31, 2013. The charges primarily related to employee severance associated with productivity initiatives and contract termination costs. 10. Pensions and Other Post-Retirement Benefits Nielsen sponsors both funded and unfunded defined benefit pension plans (the “Pension Plans”) and post-retirement medical plans for some if its employees in the Netherlands, the United States and other international locations. Pension costs, in respect of defined benefit pension plans, primarily represent the increase in the actuarial present value of the obligation for pension benefits based on employee service during the year and the interest on this obligation in respect of employee service in previous years, net of the expected return on plan assets. Differences between this expected return and the actual return on these plan assets and actuarial changes are not recognized in the statement of operations, unless the accumulated differences and changes exceed a certain threshold. Nielsen recognizes obligations for contributions to defined contribution pension plans as expenses in the statement of operations as they are incurred. The determination of benefit obligations and expenses is based on actuarial models. In order to measure benefit costs and obligations using these models, critical assumptions are made with regard to the discount rate, the expected return on plan assets and the assumed rate of compensation increases. Nielsen provides retiree medical benefits to a limited number of participants in the U.S. Therefore, retiree medical care cost trend rates are not a significant driver of our post retirement costs. Management reviews these critical assumptions at least annually. Other assumptions involve demographic factors such as turnover, retirement and mortality rates. Management reviews these assumptions periodically and updates them as necessary. The discount rate is the rate at which the benefit obligations could be effectively settled. For our U.S. plans, the discount rate is based on a bond portfolio that includes only long-term bonds with an Aa rating, or equivalent, from a major rating agency. For the Dutch and other non-U.S. plans, the discount rate is set by reference to market yields on high-quality corporate bonds. Nielsen believes the timing and amount of cash flows related to the bonds in these portfolios are expected to match the estimated payment benefit streams of our plans. To determine the expected long-term rate of return on pension plan assets, we consider, for each country, the structure of the asset portfolio and the expected rates of return for each of the components. For Nielsen’s U.S. plans, a 50 basis point decrease in the expected return on assets would increase pension expense on our principal plans by approximately $1 million per year. A similar 50 basis point decrease in the expected return on assets would increase pension expense on our principal Dutch plans by approximately $2 million per year. The Company assumed that the weighted-averages of long-term returns on our pension plans was 6.0% for each of the years ended December 31, 2015, 2014 and 2013. The expected long-term rate of return is applied to the fair value of pension plan assets. The actual return on plan assets will vary year to year from this assumption. Although the actual return on plan assets will vary from year to year, Nielsen believes it is appropriate to use long-term expected forecasts in selecting our expected return on plan assets. As such, there can be no assurance that the Company’s actual return on plan assets will approximate the long-term expected forecasts. Effective January 1, 2016, the Company intends to change its approach to calculating the discount rate for its retirement benefit pension plans from a weighted-average yield curve approach to a spot-rate approach. Under the spot-rate approach, the Company will use individual spot rates along the yield curve that correspond with the timing of each future cash outflow for benefit payments in order to calculate interest cost and service cost within net periodic benefit costs. The spot-rate approach will represent a more precise measurement of interest and service cost. The new approach represents a change in accounting estimate that is inseparable from a change in accounting principle and accordingly is accounted for prospectively. 83 A summary of the activity for the Pension Plans follows: (IN MILLIONS) Change in projected benefit obligation Benefit obligation at beginning of period ................... $ Service cost................................................................. Interest cost................................................................. Plan participants’ contributions .................................. Actuarial gains ............................................................ Benefits paid ............................................................... Expenses paid ............................................................. Premiums paid ............................................................ Curtailments ............................................................... Settlements ................................................................. Effect of foreign currency translation ......................... Benefit obligation at end of period ............................. Change in plan assets Fair value of plan assets at beginning of period ......... Actual return on plan assets ........................................ Employer contributions .............................................. Plan participants’ contributions .................................. Benefits paid ............................................................... Expenses paid ............................................................. Premiums paid ............................................................ Settlements ................................................................. Effect of foreign currency translation ......................... Fair value of plan assets at end of period ................... Funded status .............................................................. $ Amounts recognized in the Consolidated Balance Sheets Pension assets included in other non-current assets ... Current liabilities ........................................................ Accrued benefit liability included in other non- current liabilities .................................................... Net amount recognized ............................................... $ Amounts recognized in Accumulated Other Comprehensive Income/(Loss), before tax Net loss/(gain) ............................................................ $ Amortization of prior service costs ............................ Settlement loss ............................................................ Amortization of net loss ............................................. Total recognized in other comprehensive Year Ended December 31, 2015 The Netherlands United States Other Total 784 $ 4 14 1 (53) (29) (2) — — — (80) 639 711 9 5 1 (29) (2) — — (73) 622 (17) $ — — (17) (17) $ (54) $ — — (8) 380 $ — 16 — (4 ) (12) — — — (46) — 334 301 (13) 1 — (12) — — (46) — 231 (103) $ — (1) (102) (103) $ 30 $ — (14) (7) 698 $ 13 20 1 (31 ) (21 ) (2 ) (1 ) (3 ) (6 ) (52 ) 616 562 22 19 1 (21 ) (2 ) (1 ) (6 ) (43 ) 531 (85 ) $ 22 (2 ) (105 ) (85 ) $ (36 ) $ 1 (1 ) (8 ) 1,862 17 50 2 (88) (62) (4) (1) (3) (52) (132) 1,589 1,574 18 25 2 (62) (4) (1) (52) (116) 1,384 (205) 22 (3) (224) (205) (60) 1 (15) (23) (97) income/(loss) ......................................................... $ (62) $ 9 $ (44 ) $ Amounts not yet reflected in net periodic benefit cost and included in Accumulated Other Comprehensive Income/(Loss), before tax Unrecognized losses ................................................... $ 161 $ 105 $ 100 $ 366 84 (IN MILLIONS) Change in projected benefit obligation Benefit obligation at beginning of period ..................... $ Service cost................................................................... Interest cost................................................................... Plan participants’ contributions .................................... Actuarial losses ............................................................. Benefits paid ................................................................. Expenses paid ............................................................... Premiums paid .............................................................. Amendments ................................................................. Curtailments ................................................................. Settlements ................................................................... Effect of foreign currency translation ........................... Benefit obligation at end of period ............................... Change in plan assets Fair value of plan assets at beginning of period ........... Actual return on plan assets .......................................... Employer contributions ................................................ Plan participants’ contributions .................................... Benefits paid ................................................................. Expenses paid ............................................................... Premiums paid .............................................................. Settlements ................................................................... Acquisition ................................................................... Effect of foreign currency translation ........................... Fair value of plan assets at end of period ..................... Funded status ................................................................ $ Amounts recognized in the Consolidated Balance Sheets Pension assets included in other non-current assets ..... Current liabilities .......................................................... Accrued benefit liability included in other non- current liabilities ...................................................... Net amount recognized ................................................. $ Amounts recognized in Accumulated Other Comprehensive Income/(Loss), before tax Net loss/(gain) .............................................................. $ Settlement loss .............................................................. Amortization of net loss ............................................... Total recognized in other comprehensive income/(loss) ........................................................... Amounts not yet reflected in net periodic benefit cost $ and included in Accumulated Other Comprehensive Income/(Loss), before tax Year Ended December 31, 2014 The Netherlands United States Other Total 761 $ 4 25 — 137 (35) (2) — (4) — — (102) 784 736 90 11 — (35) (2) — — 6 (95) 711 (73) $ — — (73) (73) $ 45 $ — (5) 40 $ 336 $ 1 16 — 52 (12) — — — (1) (12) — 380 298 26 1 — (12) — — (12) — — 301 (79) $ — (1) (78) (79) $ 46 $ (1) (4) 41 $ 643 $ 14 26 2 131 (22 ) (3 ) (1 ) — — (29 ) (63 ) 698 554 86 23 2 (22 ) (3 ) (1 ) (29 ) — (48 ) 562 (136 ) $ 35 (2 ) (169 ) (136 ) $ 65 $ (6 ) (3 ) 56 $ 1,740 19 67 2 320 (69) (5) (1) (4) (1) (41) (165) 1,862 1,588 202 35 2 (69) (5) (1) (41) 6 (143) 1,574 (288) 35 (3) (320) (288) 156 (7) (12) 137 Unrecognized losses ..................................................... $ 223 $ 96 $ 144 $ 463 The total accumulated benefit obligation and minimum liability changes for the Pension Plans were as follows: (IN MILLIONS) Accumulated benefit obligation. ............................................ $ 2015 2014 2013 1,548 $ 1,803 $ 1,683 Year Ended December 31, Year Ended December 31, Year Ended December 31, 85 (IN MILLIONS) Projected benefit obligation ........................................ $ Accumulated benefit obligation.................................. Fair value of plan assets ............................................. (IN MILLIONS) Projected benefit obligation ........................................ $ Accumulated benefit obligation.................................. Fair value of plan assets ............................................. (IN MILLIONS) Projected benefit obligation ........................................ $ Accumulated benefit obligation.................................. Fair value of plan assets ............................................. (IN MILLIONS) Projected benefit obligation ........................................ $ Accumulated benefit obligation.................................. Fair value of plan assets ............................................. Pension Plans with Accumulated Benefit Obligation in Excess of Plan Assets at December 31, 2015 United States Other The Netherlands 578 $ 577 560 334 $ 334 231 509 $ 470 402 Pension Plans with Projected Benefit Obligation in Excess of Plan Assets at December 31, 2015 United States Other The Netherlands 578 $ 577 560 334 $ 334 231 509 $ 470 402 Pension Plans with Accumulated Benefit Obligation in Excess of Plan Assets at December 31, 2014 United States Other The Netherlands 784 $ 783 711 380 $ 380 301 590 $ 537 419 Pension Plans with Projected Benefit Obligation in Excess of Plan Assets at December 31, 2014 United States Other The Netherlands 784 $ 783 711 380 $ 380 301 590 $ 537 419 Total 1,421 1,381 1,193 Total 1,421 1,381 1,193 Total 1,754 1,700 1,431 Total 1,754 1,700 1,431 86 Net periodic benefit cost for the years ended December 31, 2015, 2014 and 2013, respectively, includes the following components: (IN MILLIONS) Year ended December 31, 2015 Service cost................................................................. $ Interest cost................................................................. Expected return on plan assets.................................... Settlement loss recognized ......................................... Amortization of prior service costs ............................ Amortization of net loss ............................................. Net periodic pension cost ........................................... $ Year ended December 31, 2014 Service cost................................................................ $ Interest cost................................................................ Expected return on plan assets................................... Settlement loss recognized ........................................ Amortization of net loss ............................................ Net periodic pension cost .......................................... $ Year ended December 31, 2013 Service cost................................................................. $ Interest cost................................................................. Expected return on plan assets.................................... Amortization of net loss ............................................. Net periodic pension cost ........................................... $ The Netherlands Net Periodic Pension Costs United States Other Total 4 $ 14 (30) — — 8 (4) $ 4 $ 25 (35) — 5 (1) 4 $ 25 (34) 6 1 $ — $ 16 (21) 14 — 7 16 $ 1 $ 16 (21) 1 4 1 — $ 13 (18) 5 — $ 13 $ 20 (31 ) 1 (1 ) 8 10 $ 14 $ 26 (35 ) 6 3 14 15 $ 24 (31 ) 6 14 $ 17 50 (82) 15 (1) 23 22 19 67 (91) 7 12 14 19 62 (83) 17 15 The settlement losses of $15 million in 2015 resulted primarily from lump- sum payments to deferred vested participants in the U.S. who elected to cash out their accrued benefit during a special offer. The settlement losses of $7 million in 2014 resulted from annuity purchases for existing retirees in Canada of $5 million, and restructuring actions in Mexico and the U.S. of $1 million, respectively. The deferred loss included as a component of accumulated other comprehensive income/(loss) that is expected to be recognized as a component of net periodic benefit cost during 2016 is as follows: Net actuarial loss .......................................................... $ (7) $ (5) $ (5) $ (17) The Netherlands United States Other Total Actuarial gains and losses are amortized over the average remaining service lives for plans with active participants, and over the average remaining lives for legacy plans with no active participants. The weighted average assumptions underlying the pension computations were as follows: (IN MILLIONS) Pension benefit obligation: —discount rate ................................................................ —rate of compensation increase ..................................... Net periodic pension costs: —discount rate ................................................................ —rate of compensation increase ..................................... —expected long-term return on plan assets .................... 2015 Year Ended December 31, 2014 2013 3.2 % 1.7 % 2.8 % 2.0 % 6.0 % 2.8 % 2.0 % 4.1 % 2.1 % 6.0 % 4.1 % 2.1 % 3.8 % 2.1 % 6.0 % 87 The assumptions for the expected return on plan assets for the Pension Plans were based on a review of the historical returns of the asset classes in which the assets of the Pension Plans are invested and long-term economic forecast for the type of investments held by the plans. The historical returns on these asset classes were weighted based on the expected long-term allocation of the assets of the Pension Plans. Nielsen’s pension plans’ weighted average asset allocations by asset category are as follows: The Netherlands United States Other Total At December 31, 2015 Equity securities ................................................. Fixed income securities ...................................... Other ................................................................... Total ................................................................... At December 31, 2014 Equity securities ................................................. Fixed income securities ...................................... Other ................................................................... Total ................................................................... No Nielsen shares are held by the Pension Plans. 25% 59 16 100% 24% 61 15 100% 54% 45 1 100% 58% 33 9 100% 42 % 41 17 100 % 44 % 49 7 100 % 36% 50 14 100% 37% 51 12 100% Nielsen’s primary objective with regard to the investment of the Pension Plans’ assets is to ensure that in each individual plan, sufficient funds are available to satisfy future benefit obligations. For this purpose, asset and liability management studies are made periodically at each pension fund. For each of the Pension Plans, an appropriate mix is determined on the basis of the outcome of these studies, taking into account the national rules and regulations. The overall target asset allocation among all plans for 2015 was 38% equity securities and 46% long-term interest-earning investments (debt or fixed income securities), and 16% other investments. Equity securities primarily include investments in U.S. and non U.S. companies. Fixed income securities include corporate bonds of companies from diversified industries and mortgage-backed securities. Other types of investments are primarily insurance contracts. Assets at fair value (See Note 8 – “Fair Value Measurements” for additional information on fair value measurement and the underlying fair value hierarchy) as of December 31, 2015 and 2014 are as follows: (IN MILLIONS) Asset Category Cash and equivalents ......................... $ Equity securities – U.S. ..................... Equity securities – Global. ................ Equity securities – non-U.S............... Real estate ......................................... Corporate bonds ................................ Debt issued by national, state or local Level 1 December 31, 2015 December 31, 2014 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 8 $ — $ 67 25 214 5 169 23 — — 410 104 — $ — — — 33 — 8 $ 92 219 192 33 514 37 $ 80 4 29 — 111 1 $ — $ — 13 — 292 — 171 39 — — 413 38 93 296 200 39 524 government ................................... Other ................................................. Total Assets at Fair Value ................. $ 128 54 — 14 219 $ 1,002 $ 182 — 130 144 163 $ 1,384 55 — 316 225 16 1,131 $ — 88 280 104 127 $ 1,574 88 The following is a summary of changes in the fair value of the Pension Plans’ Level 3 assets for the years ended December 31, 2015 and 2014: (IN MILLIONS) Balance, end of year December 31, 2013 .............................. $ Actual return on plan assets: Investments .................................................................. Unrealized gains ........................................................... Effect of foreign currency translation .......................... Balance, end of year December 31, 2014 .............................. $ Actual return on plan assets: (Sales)/investments ...................................................... Unrealized gains ........................................................... Effect of foreign currency translation .......................... Balance, end of year December 31, 2015 .............................. $ Real Estate Other Total 39 $ 4 — (4) 39 $ (5) 3 (4) 33 $ 81 $ — 17 (10 ) 88 $ 50 1 (9 ) 130 $ 120 4 17 (14) 127 45 4 (13) 163 Real estate investment valuations require significant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. These assets are initially valued at cost and are reviewed periodically utilizing available and relevant market data to determine if the carrying value of these assets should be adjusted. The valuation methodology is applied consistently from period to period. Other types of investments categorized as Level 3 are primarily insurance contracts and are valued based on contractual terms. Contributions to the Pension Plans in 2016 are expected to be approximately $7 million for the Dutch plan, $1 million for the U.S. plan and $19 million for other plans. Estimated future benefit payments are as follows: (IN MILLIONS) For the years ending December 31, The Netherlands United States Other Total 2016 ................................................................... $ 2017 ................................................................... 2018 ................................................................... 2019 ................................................................... 2020 ................................................................... 2021-2025 .......................................................... 29 $ 29 30 30 30 149 14 $ 14 15 15 16 92 24 $ 19 19 20 22 127 67 62 64 65 68 368 Defined Contribution Plans Nielsen also offers defined contribution plans to certain participants, primarily in the United States. Nielsen’s expense related to these plans was $47 million, $45 million and $39 million for the years ended December 31, 2015, 2014 and 2013, respectively. In the United States, Nielsen contributes cash to each employee’s account in an amount up to 3% of compensation (subject to IRS limitations). No contributions are made in shares of the Company’s common stock. 11. Long-term Debt and Other Financing Arrangements The Financial Accounting Standards Board issued guidance that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than an asset as per the previous guidance. These costs will continue to be amortized as interest expense using the effective interest method Prior period results have been adjusted to reflect this presentation. Nielsen has early adopted this ASU and it is reflected in the Company’s consolidated financial statements. This resulted in a reclassification of $8 million from current assets and $42 million from non-current assets to short-term and long-term debt obligations for the year ended December 31, 2014. 89 Unless otherwise stated, interest rates are as of December 31, 2015. December 31, 2015 December 31, 2014 Weighted Interest Rate Carrying Amount Fair Value Weighted Interest Rate Carrying Amount Fair Value $ 1,455 $ 1,454 $ 1,532 $ 1,533 (IN MILLIONS) $1,580 million Senior secured term loan (LIBOR based variable rate of 2.29% ) due 2019 ................................ $500 million Senior secured term loan (LIBOR based variable rate of 2.54% ) due 2017 ................................ $1,100 million Senior secured term loan (LIBOR based variable rate of 3.29% ) due 2021 ................................ €286 million Senior secured term loan (Euro LIBOR based variable rate of 2.82%) due 2021 ....................... $575 million senior secured revolving credit facility (Euro LIBOR or LIBOR based variable rate) due 2019 .............................................................................. 492 492 1,080 1,082 305 306 164 163 Total senior secured credit facilities (with weighted- average interest rate) ................................................. $800 million 4.50% senior debenture loan due 2020 ........ $1,550 million 5.00% senior debenture loan due 2022 ..... $625 million 5.50% senior debenture loan due 2021 ........ $2,300 million 5.00% senior debenture loan due 2022 ..... Total debenture loans (with weighted-average interest rate) ................................................................ Other loans ........................................................................ Total long-term debt ....................................................... Capital lease and other financing obligations ................... Total debt and other financing arrangements .............. Less: Current portion of long-term debt, capital lease and other financing obligations and other short-term borrowings ................................................................... Non-current portion of long-term debt and capital 2.78% 5.22% 4.04% 3,496 792 — 617 2,284 3,693 7 7,196 142 7,338 310 3,497 808 — 640 2,270 3,718 7 7,222 2.65 % 5.23 % 3.79 % 493 1,088 343 274 3,731 801 1,554 633 — 2,988 8 6,727 497 1,090 343 280 3,742 791 1,537 616 — 2,944 8 6,694 118 6,812 393 lease and other financing obligations ........................ $ 7,028 $ 6,419 The fair value of the Company’s long-term debt instruments was based on the yield on public debt where available or current borrowing rates available for financings with similar terms and maturities and such fair value measurements are considered Level 1 or Level 2 in nature, respectively. The carrying value of Nielsen’s long-term debt are denominated in the following currencies: (IN MILLIONS) U.S. Dollars ...................................................................................... $ Euro .................................................................................................. $ 2015 2014 6,891 $ 305 7,196 $ 6,351 343 6,694 December 31, December 31, 90 Annual maturities of Nielsen’s long-term debt are as follows: (IN MILLIONS) 2016 ............................................................................................................. $ 2017 ............................................................................................................. $ 2018 ............................................................................................................. $ 2019 ............................................................................................................. $ 2020 ............................................................................................................. $ Thereafter..................................................................................................... $ $ 277 632 202 1,033 806 4,246 7,196 Senior Secured Credit Facilities Term Loan Facilities In August 2006, certain of Nielsen’s subsidiaries entered into the Senior Secured Credit Agreement that was amended and restated in June 2009, February 2012, February 2013 and April 2014. The Senior Secured Credit Agreement provides for term loan facilities as shown in the table above. In February 2012, the Senior Secured Credit Agreement was amended and restated to provide for a new five-year amortizing term loan facility in an aggregate principal amount of $1,222 million, the proceeds from which were used to repay a corresponding amount of the existing senior secured term loans due 2013. Borrowings under this new term loan facility bear interest at a rate as determined by the type of borrowing, equal to either the “base rate” or LIBOR rate, plus, in each case, an applicable margin. The applicable margin on base rate loans under this new term loan facility ranges from 0.75% to 1.50% based on a total leverage ratio. The applicable margin on LIBOR loans under this new term loan facility ranges from 1.75% to 2.50% based on the total leverage ratio. Loans under this new term loan facility mature in full in February 2017, but the maturity date shall be January 2016 if at such time there is more than $750 million in the aggregate of existing other term loans under the Senior Secured Credit Agreement with a maturity of May 2016. The loans under this new term loan facility are required to be repaid in an amount equal to 5% of the original principal amount in the first year after the closing date, 5% in the second year, 10% in the third year, 10% in the fourth year and 70% in the fifth year (with payments in each year being made in equal quarterly installments other than the fifth year, in which payments shall be equal to 3.33% of the original principal amount of loans in each of the first three quarters and the remaining principal balance due in February 2017 (unless repayment is required in January 2016 as indicated above)). Loans under this new term loan facility are secured on a pari passu basis with the Company’s existing obligations under the Senior Secured Credit Agreement and Senior Secured Loan Agreement. In February 2013, the Second Amended and Restated Senior Secured Credit Agreement was amended and restated to provide for a new class of term loans (the “Class E Term Loans”) in an aggregate principal amount of $2,532 million and €289 million, the proceeds of which were used to repay or replace in full a like amount of the Company’s existing Class A Term Loans maturing August 9, 2013, Class B Term Loans maturing May 1, 2016 and Class C Term Loans maturing May 1, 2016. As a result of this transaction, the Company recorded a charge of $12 million primarily related to the write-off of previously capitalized debt financing fees associated with the Class A, B and C term loans to other income/(expense), net in the consolidated statement of operations. In April 2014, the Company entered into an amendment agreement to amend and restate the Third Amended and Restated Senior Secured Credit Agreement in the form of the Fourth Amended and Restated Credit Agreement which provides for three new classes of term loans, Class A Term Loans, Class B-1 Term Loans and Class B-2 Term Loans, in a combined principal amount of $3,180 million and €286 million, the proceeds of which, when combined with the net proceeds from the $750 million 5.0% Senior Notes (see “Debenture Loans” below), were used to repay and replace the Company’s existing Class D Term Loans maturing in February 2017 and the Class E Term Loans maturing in May 2016. Further in May 2014, the Company completed the redemption of $280 million in principal amount of the then currently outstanding $1,080 million aggregate principal amount of 7.75% Senior Notes due 2018 at a redemption price of 100% of the principal amount thereof plus an applicable “make-whole” premium. As a result of these transactions, the Company recorded a pre-tax charge of $45 million during 2014 to other income/(expense), net in the consolidated statement of operations primarily related to the “make-whole” premium associated with the note redemption, as well as the write-off of certain previously capitalized debt financing fees associated with the Class D and E term loans and certain costs incurred in connection with the refinancings. The Class A Term Loans were issued with an aggregate principal balance of $1,580 million, maturing in full in April 2019. The Class A Term Loans shall be required to be repaid in an amount equal to 5% of the original principal amount in the first year after the closing date, 5% in the second year, 7.5% in the third year, 10% in the fourth year, and 72.5% in the fifth year (with payments in each 91 year being made in equal quarterly installments other than the fifth year, in which payments shall be equal to 3.75% of the original principal amount in each of the first three quarters, with the balance repayable on the maturity date). Class A Term Loans bear interest equal to, at our election, a base rate or eurocurrency rate, in each case plus an applicable margin which ranges from 0.50% to 1.25% (in the case of base rate loans) or 1.50% to 2.25% (in the case of eurocurrency rate loans). The specific applicable margin is determined by the Company’s total leverage ratio (as defined in the credit agreement). The Class B-1 Term Loans were issued with an aggregate principal balance of $500 million, maturing in full in May 2017 and are required to be repaid in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of Class B-1 Term Loans, with the balance payable in May 2017. Class B-1 Term Loans bear interest equal to, at our election, a base rate or eurocurrency rate, in each case plus an applicable margin, which is equal to 1.25% (in the case of base rate loans) and 2.25% (in the case of eurocurrency rate loans). The Class B-2 Term Loans were issued with an aggregate principal balance of $1,100 million and €286 million, maturing in full in April 2021 and are required to be repaid in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of Class B-2 Term Loans, with the balance payable in April 2021. Class B-2 Term Loans denominated in dollars bear interest equal to, at our election, a base rate or eurocurrency rate, in each case plus an applicable margin, which is equal to 2.00% (in the case of base rate loans) and 3.00% (in the case of eurocurrency rate loans). Class B-2 Term Loan denominated in Euros bear interest equal to the eurocurrency rate plus an applicable margin of 3.00%. The Senior Secured Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of Nielsen Holding and Finance B.V. and its restricted subsidiaries (which together constitute most of our subsidiaries) to incur additional indebtedness or guarantees, incur liens and engage in sale and leaseback transactions, make certain loans and investments, declare dividends, make payments or redeem or repurchase capital stock, engage in certain mergers, acquisitions and other business combinations, prepay, redeem or purchase certain indebtedness, amend or otherwise alter terms of certain indebtedness, sell certain assets, transact with affiliates, enter into agreements limiting subsidiary distributions and alter the business they conduct. These entities are restricted, subject to certain exceptions, in their ability to transfer their net assets to Nielsen. Such restricted net assets amounted to approximately $5.2 billion at December 31, 2015. In addition, these entities are required to maintain a maximum total leverage ratio. Neither Nielsen nor TNC B.V. is currently bound by any financial or negative covenants contained in the credit agreement. The Senior Secured Credit Agreement also contain certain customary affirmative covenants and events of default. The Fourth Amended and Restated Senior Secured Credit Agreement contains substantially the same affirmative covenants as the Third Amended and Restated Senior Secured Credit Agreement. However, certain negative covenants, including the limitation on the ability of Nielsen and certain of its subsidiaries to make investments and restricted payments and incur debt and liens have been amended, and the financial covenant requiring compliance with certain total leverage ratios has been revised and the covenant in respect of interest coverage ratios has been eliminated Obligations under the Senior Secured Credit Agreement are guaranteed by TNC B.V., substantially all of the wholly owned U.S. subsidiaries of TNC B.V. and certain of the non-U.S. wholly-owned subsidiaries of TNC B.V., and are secured by substantially all of the existing and future property and assets of the U.S. subsidiaries of TNC B.V. and by a pledge of substantially all of the capital stock of the guarantors, the capital stock of substantially all of the U.S. subsidiaries of TNC B.V., and up to 65% of the capital stock of certain of the non-U.S. subsidiaries of TNC B.V. Under a separate security agreement, substantially all of the assets of TNC B.V. are pledged as collateral for amounts outstanding under the senior secured credit facilities. Revolving Credit Facility The Senior Secured Credit Agreement also contains a senior secured revolving credit facility under which Nielsen Finance LLC, TNC (US) Holdings, Inc., and Nielsen Holding and Finance B.V. can borrow revolving loans. The revolving credit facility can also be used for letters of credit, guarantees and swingline loans. In March 2011, the Company amended the Senior Secured Credit Agreement to provide for the termination of the existing revolving credit commitments totaling $688 million, which had a final maturity date of August 2012, and their replacement with new revolving credit commitments totaling $635 million with a final maturity date of April 2016. In May 2014, the existing $635 million revolving credit facility with a final maturity in April 2016 was replaced with new aggregate revolving credit commitments of $575 million with a final maturity of April 2019. The senior secured revolving credit facility is provided under the Senior Secured Credit Agreement and so contains covenants and restrictions as noted above with respect to the Senior Secured Credit Agreement under the “Term loan facilities” section above. Obligations under the revolving credit facility are guaranteed by the same entities that guarantee obligations under the Senior Secured Credit Agreement and Senior Secured Loan Agreement. 92 As of December 31, 2015 and 2014, the Company had $164 million and $280 million borrowings outstanding respectively, and had outstanding letters of credit of $7 million and $6 million, respectively. As of December 31, 2015, the Company had $404 million available for borrowing under the revolving credit facility. Debenture Loans The indentures governing the Senior Notes limit the majority of Nielsen’s subsidiaries’ ability to incur additional indebtedness, pay dividends or make other distributions or repurchase its capital stock, make certain investments, enter into certain types of transactions with affiliates, use assets as security in other transactions and sell certain assets or merge with or into other companies subject to certain exceptions. Upon a change in control, Nielsen is required to make an offer to redeem all of the Senior Notes at a redemption price equal to the 101% of the aggregate accreted principal amount plus accrued and unpaid interest. The Senior Notes are jointly and severally guaranteed by Nielsen, substantially all of the wholly owned U.S. subsidiaries of Nielsen, and certain of the non- U.S. wholly-owned subsidiaries of Nielsen. In February 2015, Nielsen completed the issuance of $750 million aggregate principal amount of their 5.0% Senior Notes due 2022. The notes are traded interchangeably with the $750 million and the $800 million aggregate principal amount of 5.00% Senior Notes due 2022 issued in April 2014 and July 2014, respectively. The proceeds from the issuances have been used to make repurchases of Nielsen’s outstanding common stock from time to time, in the open market or otherwise, pursuant to Nielsen’s existing share repurchase program, to reduce outstanding amounts under its revolving credit facility, to pay related fees and expenses, and for general corporate purposes. In April 2014, Nielsen completed the issuance of $750 million in aggregate principal amount of 5.0% Senior Notes due 2022 at par. In May 2014, the Company completed the redemption of $280 million in principal amount of the then currently outstanding $1,080 million aggregate principal amount of 7.75% Senior Notes due 2018 at a redemption price of 100% of the principal amount thereof plus an applicable “make-whole” premium. In July 2014, Nielsen completed the issuance of an additional $800 million aggregate principal amount of 5.0% Senior Notes due 2022. The notes are traded interchangeably with the $750 million aggregate principal amount of 5.00% Senior Notes due 2022 issued in April 2014. In addition, in July 2014, the Company redeemed the remaining $800 million of outstanding 7.75% Senior Notes due 2018 at a redemption price of 100% of the principal amount thereof plus an applicable “make-whole” premium. As a result of these transactions, the Company recorded a pre-tax charge of $51 million during 2014 to other income/(expense), net in the consolidated statement of operations primarily related to the “make-whole” premium associated with the note redemption, as well as the write-off of certain previously capitalized debt financing fees associated with the 7.75% Senior Notes. In September 2013, the Company issued $625 million aggregate principal amount of 5.50% Senior Notes due 2021 at par, receiving cash proceeds of approximately $616 million, net of fees and expenses. Concurrent with this issuance the Company called for redemption of all of its 11.625% Senior Notes due 2014 effective October 23, 2013, at a redemption price equal to 100% of the principal amount of such 2014 notes redeemed plus accrued and unpaid interest to the redemption date and an “applicable premium” as described in the indenture related to the 2014 note. The redemption of the 11.625% Senior Notes due 2014 resulted in a pre-tax charge of $8 million in other income/(expense), net in the consolidated statements of operations in the fourth quarter of 2013. Other Transactions Effective July 1, 2010, the Company designated its Euro denominated variable rate senior secured term loans as non-derivative hedges of its net investment in a European subsidiary. Gains or losses attributable to fluctuations in the Euro as compared to the U.S. Dollar associated with this debenture were recorded to the cumulative translation adjustment within stockholders’ equity, net of income tax. Debt-Issuance Costs The costs related to the issuance of debt are presented as a deduction from the corresponding debt liability and amortized to interest expense using the effective interest method over the life of the related debt. Related Party Lenders A portion of the borrowings under the senior secured credit facility, as well as certain of the Company’s senior debenture loans, was purchased by certain of the former Sponsors in market transactions not involving the Company. Amounts held by the former 93 Sponsors were $222 million as of December 31, 2014. Interest expense associated with amounts held by the former Sponsors approximated $6 million and $12 million during the years ended December 31, 2014 and 2013, respectively. Capital Lease and Other Obligations Nielsen finances certain computer equipment, software, buildings and automobiles under capital leases and related transactions. These arrangements do not include terms of renewal, purchase options, or escalation clauses. Assets under capital lease are recorded within property, plant and equipment. See Note 7 – “Property, Plant and Equipment.” Future minimum capital lease payments under non-cancelable capital leases at December 31, 2015 are as follows: (IN MILLIONS) 2016 ............................................................................................................. $ 2017 ............................................................................................................. 2018 ............................................................................................................. 2019 ............................................................................................................. 2020 ............................................................................................................. Thereafter..................................................................................................... Total ............................................................................................................. Less: amount representing interest............................................................... Present value of minimum lease payments .................................................. $ Current portion ............................................................................................ $ Total non-current portion ............................................................................. Present value of minimum lease payments .................................................. $ 38 36 29 19 13 46 181 39 142 31 111 142 Capital leases and other financing transactions have effective interest rates primarily ranging from 8% to 10%. Interest expense recorded related to capital leases and other financing transactions during the years ended December 31, 2015, 2014 and 2013 was $8 million, $8 million and $9 million, respectively. Nielsen recognizes rental income from non-cancelable subleases. The total aggregate future rental income proceeds to be received under the non-cancelable subleases are $3 million. 12. Stockholders’ Equity Common stock activity is as follows: 2015 Year Ended December 31, 2014 2013 Actual number of shares of common stock outstanding Beginning of period ............................................................... 372,757,598 Shares of common stock converted from Mandatory Convertible Subordinated Bonds due February 2013 ....... — Shares of common stock issued through business 378,635,464 362,519,883 — 10,416,700 combinations ..................................................................... 52,698 75,083 101,899 Shares of common stock issued through compensation 4,107,501 plans .................................................................................. Repurchases of common stock ............................................... (14,579,428) End of period ......................................................................... 362,338,369 4,940,195 (10,893,144 ) 5,886,821 (289,839) 372,757,598 378,635,464 As a result of the Merger, the consideration paid for Nielsen shares, including any incremental directly attributable costs, is recorded as a deduction from shareholders’ equity. When such shares are sold, any consideration received, net of any directly attributable costs, is recorded within shareholders’ equity. Thus, all cumulative shares of Nielsen treasury stock have been cancelled and included within Nielsen’s share capital. 94 On January 31, 2013, the Company’s board of directors (the “Board”) adopted a cash dividend policy to pay quarterly cash dividends on its outstanding common stock. The following table represents the cash dividends declared by the Board and paid for the years ended December 31, 2014 and 2015, respectively. Declaration Date Record Date Payment Date Dividend Per Share February 20, 2014 May 1, 2014 July 24, 2014 October 30, 2014 February 19, 2015 April 20, 2015 July 23, 2015 October 29, 2015 March 6, 2014 June 5, 2014 August 28, 2014 November 25, 2014 March 5, 2015 June 4, 2015 August 27, 2015 November 24, 2015 March 20, 2014 $ June 19, 2014 $ September 11, 2014 $ December 9, 2014 $ March 19, 2015 $ June 18, 2015 $ September 10, 2015 $ December 8, 2015 $ 0.20 0.25 0.25 0.25 0.25 0.28 0.28 0.28 The dividend policy and payment of future cash dividends are subject to the discretion of the Board. Nielsen’s Board approved a share repurchase program, as included in the below table, for up to $2 billion of our outstanding common stock. The primary purpose of the program is to return value to shareholders and to mitigate dilution associated with our equity compensation plans. Board Approval July 25, 2013 .................................................................................. $ October 23, 2014 ............................................................................ $ December 11, 2015 ........................................................................ $ Total Share Repurchase Authorization ................................................ $ Share Repurchase Authorization ($ in millions) 500 1,000 500 2,000 Repurchases under these plans will be made in accordance with applicable securities laws from time to time in the open market or otherwise depending on our evaluation of market conditions and other factors. This program has been executed within the limitations of the existing authority granted at Nielsen’s Annual General Meeting of Shareholders held in 2014 and 2015. As of December 31, 2015, there have been 25,762,411 shares of our common stock purchased at an average price of $44.43 per share (total consideration of approximately $1,144 million) under this program. 95 The activity for the year ended December 31, 2015 consisted of open market share repurchases and is summarized in the following table: Period As of December 31, 2014 ................ 2015 Activity January 1- 31 .............................. February 1- 28 ............................ March 1- 31 ................................ April 1-30 ................................... May 1-31 .................................... June 1-30 .................................... July 1-31 .................................... August 1-31 ................................ September 1-30 .......................... October 1-31 .............................. November 1-30 .......................... December 1-31 ........................... Total ................................................ Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares that may yet be Purchased under the Plans or Programs 11,182,983 $ 42.67 11,182,983 $ 1,022,830,101 1,611,203 $ 814,753 $ 772,189 $ 1,440,798 $ 1,222,800 $ 1,300,836 $ 1,310,000 $ 1,853,142 $ 553,756 $ 1,276,829 $ 1,141,708 $ 1,281,414 $ 25,762,411 $ 44.09 43.90 43.76 45.30 45.37 45.14 45.37 47.25 47.39 46.95 47.75 46.50 44.43 1,611,203 $ 814,753 $ 772,189 $ 1,440,798 $ 1,222,800 $ 1,300,836 $ 1,310,000 $ 1,853,142 $ 553,756 $ 1,276,829 $ 1,141,708 $ 1,281,414 $ 25,762,411 951,797,780 916,031,448 882,241,498 816,973,014 761,496,406 702,774,965 643,345,777 555,793,238 529,551,668 469,601,614 415,084,736 855,495,985 Subsequent Event On February 18, 2016, the Board declared a cash dividend of $0.28 per share on the Company’s common stock. The dividend is payable on March 17, 2016 to stockholders of record at the close of business on March 3, 2016. 13. Stock-Based Compensation Nielsen measures the cost of all stock-based payments, including stock options, at fair value on the grant date and recognizes such costs within the consolidated statements of operations; however, no expense is recognized for stock-based payments that do not ultimately vest. Nielsen recognizes the expense of its options that cliff vest using the straight-line method. For those that vest over time, an accelerated graded vesting is used. The Company recorded $48 million, $47 million and $47 million of expense associated with stock-based compensation for the years ended December 31, 2015, 2014 and 2013, respectively. In connection with the Valcon Acquisition, Nielsen implemented an equity-based, management compensation plan (“Equity Participation Plan” or “EPP”) to align compensation for certain key executives with the performance of the Company. Under this plan, certain of the Company’s executives may be granted stock options, stock appreciation rights, restricted stock and dividend equivalent rights in the shares of the Company or purchase its shares. In connection with the completion of Nielsen’s initial public offering of common stock on January 31, 2011 (and further amended), the Company implemented the Nielsen 2010 Stock Incentive Plan (the “Stock Incentive Plan”) and suspended further grants under the EPP. The Stock Incentive Plan is the source of new equity-based awards permitting the Company to grant to its key employees, directors and other service providers the following types of awards: incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other awards valued in whole or in part by reference to shares of Nielsen’s common stock and performance-based awards denominated in shares or cash. Under the Stock Incentive Plan, Nielsen granted 1,609,170 and 2,448,100 time-based stock options to purchase shares during the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015, the total number of shares authorized for award of options or other equity-based awards was 44,095,000 under the Stock Incentive Plan. The 2015, 2014 and 2013 time-based awards become exercisable over a four-year vesting period at a rate of 25% per year on the anniversary day of the award, and are tied to the executives’ continuing employment. The majority of the 2010 time-based awards become exercisable ratably on the first three anniversaries of the grant date of the award, contingent on continuing employment on each vesting date. In addition, time-based awards granted in 2010 become exercisable over a four-year vesting period tied to the executives’ continuing employment and were fully vested as of December 31, 2013. The 2009, 2008 and 2007 time-based awards became exercisable over a four-year, four-year and five-year vesting period, respectively, and were fully vested as of December 31, 2012. The 2010, 2009 and 2008 performance options are tied to the executives’ continued employment and become vested and exercisable based on the achievement of certain 96 annual EBITDA targets over a four-year vesting period. The 2007 and 2006 performance options are tied to the executives’ targets over a five-year vesting period. If the annual EBITDA targets are achieved on a cumulative basis for any current year and prior years, the options become vested as to a pro-rata portion for any prior year installments which were not vested because of failure to achieve the applicable annual EBITDA target. Both option tranches expire ten years from date of grant. Upon a change in control, any then- unvested time options will fully vest and any then-unvested performance options can vest, subject to certain conditions. The fair values of the granted time-based awards granted during 2015, 2014 and 2013 were estimated using the Black-Scholes option pricing model with the expected volatility based on the Company’s historical volatility. The following assumptions were used during 2015, 2014 and 2013: Expected life (years) ............................................................ Risk-free interest rate ............................................................ Expected dividend yield........................................................ Expected volatility ................................................................ Weighted average volatility .................................................. 2015 4.50-5.25 1.27-1.58% 2.18- 2.45% Year Ended December 31, 2014 3.00-5.25 0.87-1.66% 1.77- 2.39% 2013 3.50-6.00 0.40-1.99% 0 - 2.19% 23.44-23.70 % 23.50-25.32 % 25.40-27.60% 25.89% 23.99% 23.56% The Company recorded stock-based compensation expense of $48 million, $47 million and $47 million for the years ended December 31, 2015, 2014 and 2013, respectively. The tax benefit related to the stock compensation expense was $13 million, $15 million and $17 million, for the respective periods. Nielsen’s stock option plan activity is summarized below: Stock Option Plan activity Outstanding at December 31, 2012 .......................... Granted ..................................................................... Forfeited ................................................................... Exercised .................................................................. Outstanding at December 31, 2013 .......................... Granted ..................................................................... Forfeited ................................................................... Exercised .................................................................. Outstanding at December 31, 2014 .......................... Granted ..................................................................... Forfeited ................................................................... Exercised .................................................................. Outstanding at December 31, 2015 .......................... Exercisable at December 31, 2015 ........................... Number of Options (Time Based and Performance Based) Weighted- Average Exercise Price 19,687,838 $ 2,459,900 (383,163) (4,667,814) 17,096,761 2,448,100 (798,279) (4,219,122) 14,527,460 $ 1,609,170 (1,808,315) (3,779,137) 10,549,178 $ 6,111,083 $ 22.80 36.65 (23.35) (19.11) 25.78 42.01 (29.57) (24.08) 28.80 48.24 (30.59) (21.84) 33.96 29.15 Weighted- Average Remaining Contractual Term in Years Aggregate Intrinsic Value in Millions 5.16 $ 156 4.61 $ 344 4.29 $ 231 4.16 $ 3.16 $ 136 107 As of December 31, 2015, 2014 and 2013, the weighted-average grant date fair value of the options granted was $8.13, $7.13 and $6.63, respectively, and the aggregate fair value of options vested was $21 million, $21 million and $27 million, respectively. At December 31, 2015, there is approximately $18 million of unearned stock-based compensation related to stock options which the Company expects to record as stock-based compensation expense over the next four years. The compensation expense related to the time-based awards is amortized over the term of the award using the graded vesting method. The intrinsic value of the options exercised during the years ended December 31, 2015, 2014 and 2013 was $94 million, $94 million and $79 million, respectively. For the year ended December 31, 2015, cash proceeds from the exercise of options was $82 million. 97 Activity of Nielsen’s restricted stock units (RSUs) that are ultimately payable in shares of common stock granted under the Stock Incentive Plan is summarized below: Number of RSUs Weighted-Average Grant Date Fair Value RSU activity Nonvested at December 31, 2012 ............................................ Granted .................................................................................... Forfeited .................................................................................. Vested ...................................................................................... Nonvested at December 31, 2013 ........................................... Granted .................................................................................... Forfeited .................................................................................. Vested ...................................................................................... Nonvested at December 31, 2014 ............................................ Granted .................................................................................... Forfeited .................................................................................. Vested ...................................................................................... Nonvested at December 31, 2015 ............................................ 845,308 $ 955,531 (230,500) (262,446) 1,307,893 $ 526,857 (113,903) (412,845) 1,308,002 $ 851,088 (200,217) (452,106) 1,506,767 $ 28.40 34.86 32.56 24.96 30.53 42.74 30.55 28.53 35.90 47.29 37.20 34.19 42.48 The awards vest at a rate of 25% per year over four years on the anniversary day of the award. On September 30, 2013, Nielsen completed the acquisition of Nielsen Audio and concurrently provided 95,599 replacement restricted stock units under Nielsen’s existing Stock Incentive Plan. The exchange was accounted for as a modification in accordance with ASC 718. The aggregate fair value of the replacement awards granted on September 30, 2013, was $3 million, of which $2 million was attributed to post merger service and $1 million was included in purchase price consideration. As of December 31, 2015, approximately $38 million of unearned stock-based compensation related to unvested RSUs (net of estimated forfeitures) is expected to be recognized over a weighted average period of 3.4 years. During the years ended December 31, 2015 and 2014, the Company granted 381,576 and 333,700 performance restricted stock units, respectively, representing the target number of performance restricted stock subject to the award. During the year ended December 31, 2013, the Company granted 510,280 shares of performance restricted stock, representing the target number of performance restricted stock subject to the award. The weighted average grant date fair value of the awards in 2015, 2014 and 2013 were $45.37, $50.50 and $34.02 per share. For the performance restricted stock units granted in 2015, the total number of performance restricted stock units to be earned is subject to achievement of cumulative performance goals for the three year period ending December 31, 2017. For the performance restricted stock units granted in 2014, the total number of performance restricted stock units to be earned is subject to achievement of cumulative performance goals for the three year period ending December 31, 2016. For the performance restricted stock granted in 2013, the total number of performance restricted stock units to be earned is subject to achievement of cumulative performance goals for the three year period ending December 31, 2015. Forty percent of the target award will be determined based on the Company’s relative total shareholder return and sixty percent of the target award will be determined based on free cash flow achievements. The maximum payout is 200% of target. The fair value of the target award related to free cash flow was the fair value on the date of the grant, and the fair value of the target awards related to relative shareholder return was based on the Monte Carlo model. As of December 31, 2015, there is approximately $15 million of unearned stock-based compensation related to unvested performance restricted stock (net of estimated forfeitures). The compensation expense is amortized over the term of the award, which is 3 years after the grant date. During the year ended December 31, 2015 and 2014, the Company granted 96,282 and 117,520 bonus restricted share units in lieu of a portion of the cash bonus due to certain executives. During the year ended December 31, 2013, the Company granted 171,792 bonus restricted shares in lieu of a portion of the cash bonus due to certain executives. The awards vest at 50% on the first and second anniversary day of the award. The weighted average grant date fair value of the awards in 2015, 2014 and 2013 was $45.28, $45.13 and $32.25 per share. As of December 31, 2015, there is approximately $3 million of unearned stock-based compensation expense related to unvested bonus restricted share units (net of estimated forfeitures). The compensation expense is amortized over the requisite service periods of two and three years. 98 14. Income Taxes Nielsen provides for income taxes utilizing the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. If it is determined that it is more likely than not that future tax benefits associated with a deferred tax asset will not be realized, a valuation allowance is provided. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in the consolidated statements of operations as an adjustment to income tax expense in the period that includes the enactment date. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Such tax positions are, based solely on their technical merits, more likely than not to be sustained upon examination by taxing authorities and reflect the largest amount of benefit, determined on a cumulative probability basis that is more likely than not to be realized upon settlement with the applicable taxing authority with full knowledge of all relevant information. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The components of income from continuing operations before income taxes and equity in net income of affiliates, were: (IN MILLIONS) UK (2015), Dutch (2014-2013) .............................................. $ Non-UK (2015), Non-Dutch (2014-2013) .............................. Income from continuing operations before income taxes and 2015 Year Ended December 31, 2014 2013 16 $ 945 17 $ 604 equity in net income of affiliates ........................................ $ 961 $ 621 $ 19 501 520 The above amounts for UK and non-UK or Dutch and non-Dutch activities were determined based on the location of the taxing authorities. The provision for income taxes attributable to the income from continuing operations before income taxes and equity in net income of affiliates consisted of: (IN MILLIONS) Current: 2015 Year Ended December 31, 2014 2013 UK (2015), Dutch (2014-2013) ..................................... $ Non-UK (2015), Non-Dutch (2014-2013). ................... Deferred: UK (2015), Dutch (2014-2013) ..................................... Non-UK (2015), Non-Dutch (2014-2013) .................... Total ........................................................................................ $ (6) $ 176 170 (1) 214 213 383 $ 4 $ 127 131 1 104 105 236 $ 4 194 198 3 (110 ) (107 ) 91 99 The Company’s provision for income taxes for the years ended December 31, 2015, 2014 and 2013 was different from the amount computed by applying the statutory UK or Dutch federal income tax rates to the underlying income from continuing operations before income taxes and equity in net income of affiliates as a result of the following: (IN MILLIONS) Income from continuing operations before income taxes and equity in net income of affiliates ............................ $ UK (2015), Dutch (2014-2013) statutory tax rate .............. Provision for income taxes at the UK (2015), Dutch (2014-2013) statutory rate ............................................ $ Tax impact on distributions from foreign subsidiaries ...... Effect of operations in non-UK jurisdictions ..................... Tax impact of global licensing arrangements .................... U.S. state and local taxation ............................................... Withholding and other taxation ......................................... Effect of global financing activities ................................... Changes in estimates for uncertain tax positions ............... Changes in valuation allowances ....................................... Effect of change in deferred tax rates ................................ Other, net ........................................................................... Total provision for income taxes ....................................... $ Effective tax rate ................................................................ Year Ended December 31, 2014 2013 2015 $ 961 20.25% 195 $ (5) 74 80 40 37 (82) 8 17 3 16 $ 383 39.8% 621 $ 25.0% $ 155 4 19 84 21 38 (84) (1) (21) 2 19 236 $ 38.0% 520 25.0% 130 (38) 16 14 9 35 (60) 47 (69) 3 4 91 17.5% The components of current and non-current deferred income tax assets/(liabilities) were: (IN MILLIONS) Deferred tax assets (on balance): Net operating loss carryforwards .................................................. $ Interest expense limitation ............................................................ Employee benefits ........................................................................ Tax credit carryforwards .............................................................. Share-based payments .................................................................. Accrued expenses ......................................................................... Financial instruments.................................................................... Other assets................................................................................... Valuation allowances ............................................................................. Deferred tax assets, net of valuation allowances .................................... Deferred tax liabilities (on balance): Intangible assets ........................................................................... Fixed asset depreciation ............................................................... Computer software ....................................................................... Deferred revenues/costs ................................................................ Financial instruments.................................................................... Unrealized gain on investments .................................................... Other liabilities ............................................................................. Net deferred tax liability ........................................................................ $ Recognized as: Deferred income taxes, current ..................................................... $ Deferred income taxes, non-current ............................................. Total ....................................................................................................... $ December 31, 2015 December 31, 2014 181 $ 734 72 142 41 39 — 55 1,264 (144) 1,120 (1,640) (49) (280) (10) (6) (73) (58) (2,116) (996) $ — $ (996) (996) $ 175 783 93 198 43 21 10 84 1,407 (147) 1,260 (1,692) (25) (185) (13) — — (62) (1,977) (717) 226 (943) (717) In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. The classification 100 change for all deferred taxes as noncurrent simplifies entities’ processes as it eliminates the need to separately identify the net current and net noncurrent deferred tax asset or liability in each jurisdiction and allocate valuation allowances. Nielsen elected to prospectively adopt the accounting standard as of December 31, 2015, resulting in a reclassification of current deferred tax assets and liabilities to the non-current deferred tax assets and liabilities in Nielsen’s consolidated balance sheet. Prior periods in the Company’s consolidated financial statements were not retrospectively adjusted. At December 31, 2015 and 2014 the Company had net operating loss carryforwards of approximately $807 million and $785 million, respectively, which began to expire in 2016. In addition, the Company had tax credit carryforwards of approximately $157 million and $198 million at December 31, 2015 and 2014, respectively, which begin to expire in 2016. Included within the net operating loss carryforwards, the Company has approximately $120 million of windfall tax benefits from previous stock option exercises that have not been recognized as of December 31, 2015. This amount will not be recognized until the deduction would reduce our income taxes payable. At such time, the amount will be recorded as an increase to paid-in-capital. The Company applies the “with and without” approach when utilizing certain tax attributes whereby windfall tax benefits are used last to offset taxable income. In certain jurisdictions, the Company has operating losses and other tax attributes that, due to the uncertainty of achieving sufficient profits to utilize these operating loss carryforwards and tax credit carryforwards, the Company currently believes it is more likely than not that a portion of these losses will not be realized. Therefore, the Company has a valuation allowance of approximately $124 million and $120 million at December 31, 2015 and 2014, respectively, related to these net operating loss carryforwards and tax credit carryforwards. In addition, the Company has valuation allowances of $20 million and $27 million at December 31, 2015 and 2014, respectively, on deferred tax assets related to other temporary differences, which the Company currently believes will not be realized. As a consequence of the significant restructuring of the ownership of the Nielsen non-U.S. subsidiaries in 2007 and 2008 the Company has determined that as of December 31, 2015 no income taxes are required to be provided for on the approximately $3.1 billion, which is the excess of the book value of its investment in non-U.S. subsidiaries over the corresponding tax basis. Certain of these differences can be eliminated at a future date. At December 31, 2015 and 2014, the Company had gross uncertain tax positions of $461 million and $452 million, respectively. The Company has also accrued interest and penalties associated with these unrecognized tax benefits as of December 31, 2015 and 2014 of $34 million and $41 million, respectively. Estimated interest and penalties related to the underpayment of income taxes is classified as a component of benefit (provision) for income taxes in the Consolidated Statement of Operations. It is reasonably possible that a reduction in a range of $42 million to $74 million of uncertain tax positions may occur within the next twelve months as a result of projected resolutions of worldwide tax disputes and expirations of statute of limitations in various jurisdictions. A reconciliation of the beginning and ending amount of gross uncertain tax positions is as follows: (IN MILLIONS) Balance as of the beginning of period ................................................ $ Additions for current year tax positions ............................................. Additions for tax positions of prior years .......................................... Reductions for lapses of statute of limitations ................................... Reductions for tax positions of prior years ........................................ Balance as of the end of the period .................................................... $ December 31, 2015 December 31, 2014 December 31, 2013 452 $ 24 14 (15) (14) 461 $ 475 $ 14 12 (12) (37) 452 $ 409 41 42 (8) (9) 475 If the balance of the Company’s uncertain tax positions is sustained by the taxing authorities in the Company’s favor, the reversal of the entire balance would reduce the Company’s effective tax rate in future periods. The Company files numerous consolidated and separate income tax returns in the U.S. Federal jurisdiction and in many state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal income tax examinations for 2006 and prior periods. In addition, the Company has subsidiaries in various states, provinces and countries that are currently under audit for years ranging from 2003 through 2015. 101 15. Investments in Affiliates and Related Party Transactions Related Party Transactions with Affiliates As of December 31, 2015 and 2014, Nielsen had investments in affiliates of $13 million and $18 million, respectively. One of Nielsen’s investments as of December 31, 2012, was its 50.5% non-controlling ownership interest in Scarborough, a joint venture between Nielsen and Arbitron. As a part of the Arbitron Acquisition in September 2013, Nielsen acquired the remaining 49.5% interest in Scarborough that was historically accounted for under the equity method of accounting. Nielsen accounted for this transaction as a step-acquisition and calculated the fair value of its investment immediately before the acquisition to be $75 million. As a result, for the year ended December 31, 2013, Nielsen recorded a $24 million gain on its investment in Scarborough to other income/(expense), net in the consolidated statement of operations. Commencing October 1, 2013, the financial results of Scarborough were included within the consolidated financial statements of Nielsen. Prior to the Arbitron acquisition, Nielsen and Scarborough entered into various related party transactions in the ordinary course of business, including Nielsen providing certain general and administrative services to Scarborough. Nielsen paid royalties to Scarborough for the right to include Scarborough data in Nielsen services sold directly to Nielsen customers. Additionally, Nielsen sold various Scarborough services directly to its clients, for which it received a commission from Scarborough. As a result of these transactions, Nielsen received net payments from Scarborough of $3 million through September 30, 2013. Obligations between Nielsen and its affiliates are regularly settled in cash in the ordinary course of business. Nielsen had net receivables from its affiliates of approximately $3 million and $9 million for the year ending December 31, 2015 and 2014, respectively. On October 1, 2015, Nielsen acquired an additional 13.5% of NCS, a joint venture between Nielsen and Catalina for $40 million, net of cash acquired. The joint venture was historically accounted for under the equity method of accounting. As part of this transaction we gained control of NCS, as such accounted for it as a step-acquisition and calculated the fair value of the investment immediately before the acquisition to be $161 million. As a result, during the fourth quarter of 2015, we recorded a $158 million gain on the investment in NCS to other income/(expense), net in the consolidated statement of operations. Commencing October 1, 2015, NCS was included as a consolidated subsidiary within our consolidated financial statements. Equity Healthcare LLC Effective in January 2009, Nielsen entered into an employer health program arrangement with Equity Healthcare LLC (“Equity Healthcare”). Equity Healthcare negotiates with providers of standard administrative services for health benefit plans and other related services for cost discounts, quality of service monitoring, data services and clinical consulting and oversight by Equity Healthcare. Because of the combined purchasing power of its client participants, Equity Healthcare is able to negotiate pricing terms from providers that are believed to be more favorable than the companies could obtain for themselves on an individual basis. Equity Healthcare is an affiliate of The Blackstone Group, one of the Sponsors. In consideration for Equity Healthcare’s provision of access to these favorable arrangements and its monitoring of the contracted third parties’ delivery of contracted services to Nielsen, the Company pays Equity Healthcare a fee of $2.80 per participating employee per month (“PEPM Fee”). As of December 31, 2015, Nielsen had approximately 7,608 employees enrolled in its self-insured health benefit plans in the United States. Equity Healthcare may also receive a fee (“Health Plan Fees”) from one or more of the health plans with whom Equity Healthcare has contractual arrangements if the total number of employees joining such health plans from participating companies exceeds specified thresholds. TIBCO On July 26, 2012, Vivek Y. Ranadivé was elected as a member of the unitary Board of Directors of Nielsen Holdings plc and The Nielsen Company B.V. Mr. Ranadivé has been the Chief Executive Officer and Chairman of the Board of Directors of TIBCO Software Inc. (“TIBCO”) since its inception in 1997 until December 2014 when he sold his interest in the company. The Company has an ongoing contractual relationship with TIBCO. The Board of Directors of the Company affirmatively determined that Mr. Ranadivé is independent for purposes of the New York Stock Exchange listing rules and the Company’s Corporate Governance Guidelines. For the years ended December 31, 2015 and 2014, Nielsen purchased $12 million and $10 million respectively, of software licenses and related IT support services and training from TIBCO. 16. Commitments and Contingencies Leases and Other Contractual Arrangements In February 2013, the Company amended its Amended and Restated Master Services Agreement (the “MSA”), dated as of October 1, 2007 with Tata America International Corporation and Tata Consultancy Services Limited (jointly, “TCS”). The term of 102 the MSA has been extended for an additional three years, so as to expire on December 31, 2020, with a one-year renewal option granted to Nielsen. In addition, the Company has increased its commitment to purchase services from TCS (the “Minimum Commitment”) from $1.0 billion to $2.5 billion over the life of the contract (from October 1, 2007), including a commitment to purchase at least $100 million in services per year (the “Annual Commitment”) until the Minimum Commitment is met. TCS’ charges under the separate Global Infrastructure Services Agreement between the parties will be credited against the Minimum Commitment and the Annual Commitment. TCS will continue to globally provide the Company with professional services relating to information technology (including application development and maintenance), business process outsourcing, client service knowledge process outsourcing, management sciences, analytics, and financial planning and analytics. As Nielsen orders specific services under the Agreement, the parties will execute Statements of Work (“SOWs”) describing the specific scope of the services to be performed by TCS. The amount of the Minimum Commitment and the Annual Commitment may be reduced on the occurrence of certain events, some of which also provide the Company with the right to terminate the Agreement or SOWs, as applicable. As of December 31, 2015, the remaining TCS commitment was approximately $168 million. Nielsen has also entered into operating leases and other contractual obligations to secure real estate facilities, agreements to purchase data processing services and leases of computers and other equipment used in the ordinary course of business and various outsourcing contracts. These agreements are not unilaterally cancelable by Nielsen, are legally enforceable and specify fixed or minimum amounts or quantities of goods or services at fixed or minimum prices. The amounts presented below represent the minimum annual payments under Nielsen’s purchase obligations that have initial or remaining non-cancelable terms in excess of one year. These purchase obligations include data processing, building maintenance, equipment purchasing, photocopiers, land and mobile telephone service, computer software and hardware maintenance, and outsourcing. (IN MILLIONS) Operating leases ......................... $ Other contractual obligations(a) .. Total ........................................... $ 2016 2017 2018 2019 2020 Thereafter Total 84 $ 358 442 $ 69 $ 94 163 $ 55 $ 48 103 $ 40 $ 13 53 $ 25 $ 7 32 $ 48 $ 1 49 $ 321 521 842 For the Years Ending December 31, (a) Other contractual obligations represent obligations under agreement, which are not unilaterally cancelable by Nielsen, are legally enforceable and specify fixed or minimum amounts or quantities of goods or services at fixed or minimum prices. Nielsen generally requires purchase orders for vendor and third party spending. The amounts presented above represent the minimum future annual services covered by purchase obligations including data processing, building maintenance, equipment purchasing, photocopiers, land and mobile telephone service, computer software and hardware maintenance, and outsourcing. Nielsen’s remaining commitments as of December 31, 2015 under the outsourced services agreements with TCS have been included above on an estimated basis over the years within the contractual period in which we expect to satisfy its obligations. As of December 31, 2015, the remaining TCS commitment was approximately $168 million. Total expenses incurred under operating leases were $76 million, $81 million and $81 million for the years ended December 31, 2015, 2014 and 2013, respectively. Nielsen recognized rental income received under subleases of $9 million, $11 million and $11 million for the years ended December 31, 2015, 2014 and 2013, respectively. At December 31, 2015, Nielsen had aggregate future proceeds to be received under non-cancelable subleases of $25 million. Nielsen also has minimum commitments under non-cancelable capital leases. See Note 11 “Long-term Debt and Other Financing Arrangements” for further discussion. Nielsen Foundation, Inc. In November 2015, Nielsen established the Nielsen Foundation, Inc. (the “Foundation”) for charitable, educational, scientific, and literary purposes including the making of distributions to organizations that qualify as tax exempt organizations under section 501(c)(3) of the Internal Revenue Code. The assets and transactions of the Foundation are not included in Nielsen’s consolidated financial statements. Donations to the Foundation are expensed when committed by the Company. In December 2015, the Company’s board of directors approved an unconditional donation of $36 million to the Foundation, which was recorded in selling, general and administrative expenses in the consolidated statement of operations. 103 Guarantees and Other Contingent Commitments At December 31, 2015, Nielsen was committed under the following significant guarantee arrangements: Sub-lease guarantees Nielsen provides sub-lease guarantees in accordance with certain agreements pursuant to which Nielsen guarantees all rental payments upon default of rental payment by the sub-lessee. To date, the Company has not been required to perform under such arrangements, does not anticipate making any significant payments related to such guarantees and, accordingly, no amounts have been recorded. Letters of credit Letters of credit issued and outstanding amount to $7 million and $6 million at December 31, 2015 and 2014, respectively. Legal Proceedings and Contingencies Nielsen is subject to litigation and other claims in the ordinary course of business, some of which include claims for substantial sums. Accruals have been recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be determined, the Company does expect that the ultimate disposition of these matters will not have a material adverse effect on its operations or financial condition. However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect the Company’s future results of operations or cash flows in a particular period. 17. Segments The Company aligns its operating segments in order to conform to management’s internal reporting structure, which is reflective of service offerings by industry. Management aggregates such operating segments into two reporting segments: what consumers buy, consisting principally of market research information and analytical services and what consumers watch and listen to, consisting principally of television, radio, online and mobile audience and advertising measurement services and corresponding analytics. In March 2013, Nielsen completed the exit and shut down of one of its legacy online businesses and in June 2013, Nielsen completed the sale of its expositions business. These divestitures were reported as discontinued operations, which require retrospective restatement of prior periods to classify operating results of these businesses as discontinued operations. (See Note 4 “Discontinued Operations”, for more information). The consolidated statements of operations reflect the operating results of these businesses as discontinued operations. During the fourth quarter of 2013, to conform to a change in management reporting, Nielsen reclassified two products from the Buy segment to the Watch segment. The business segment results have been reclassified for comparison purposes for all periods presented in the consolidated financial statements. Corporate consists principally of unallocated items such as certain facilities and infrastructure costs as well as intersegment eliminations. Certain corporate costs, other than those described in Item 7 “Management Discussion and Analysis”, including those related to selling, finance, legal, human resources, and information technology systems, are considered operating costs and are allocated to the Company’s segments based on either the actual amount of costs incurred or on a basis consistent with the operations of the underlying segment. Information with respect to the operations of each of Nielsen’s business segments is set forth below based on the nature of the services offered and geographic areas of operations. 104 Business Segment Information (IN MILLIONS) Revenues Buy .......................................................................................... $ Watch ...................................................................................... Total ........................................................................................ $ 2015 Year Ended December 31, 2014 2013 3,345 $ 2,827 6,172 $ 3,523 $ 2,765 6,288 $ 3,406 2,297 5,703 (IN MILLIONS) Business segment income/(loss)(1) Buy ......................................................................................... $ Watch ..................................................................................... Corporate and eliminations .................................................... Total ....................................................................................... $ (IN MILLIONS) Depreciation and amortization Buy ......................................................................................... $ Watch ..................................................................................... Corporate and eliminations .................................................... Total ....................................................................................... $ (IN MILLIONS) Restructuring charges Buy ......................................................................................... $ Watch ..................................................................................... Corporate and eliminations .................................................... Total ....................................................................................... $ (IN MILLIONS) Stock-based compensation expense Buy ......................................................................................... $ Watch ..................................................................................... Corporate and eliminations .................................................... Total ....................................................................................... $ (IN MILLIONS) Other items(2) Buy ......................................................................................... $ Watch ..................................................................................... Corporate and eliminations .................................................... Total ....................................................................................... $ 2015 Year Ended December 31, 2014 2013 624 $ 1,269 (35) 1,858 $ 658 $ 1,214 (35 ) 1,837 $ 660 989 (32) 1,617 2015 Year Ended December 31, 2014 2013 207 $ 363 4 574 $ 224 $ 343 6 573 $ 2015 Year Ended December 31, 2014 2013 32 $ 14 5 51 $ 64 $ 14 11 89 $ 2015 Year Ended December 31, 2014 2013 15 $ 8 25 48 $ 14 $ 10 23 47 $ 2015 Year Ended December 31, 2014 2013 1 $ 4 87 92 $ (2 ) $ 11 30 39 $ 199 302 9 510 47 55 17 119 14 11 22 47 1 51 28 80 (IN MILLIONS) Operating income/(loss) Buy ......................................................................................... $ Watch ..................................................................................... Corporate and eliminations .................................................... Total ....................................................................................... $ 2015 Year Ended December 31, 2014 2013 369 $ 880 (156) 1,093 $ 358 $ 836 (105 ) 1,089 $ 399 570 (108) 861 105 (IN MILLIONS) Total assets Buy .................................................................................................... $ Watch ................................................................................................ Corporate and eliminations ............................................................... Total .................................................................................................. $ December 31, 2015 December 31, 2014 6,537 $ 8,650 116 15,303 $ 6,869 8,156 301 15,326 (1) The Company’s chief operating decision maker uses business segment income/(loss) to measure performance from period to period both at the consolidated level as well as within its operating segments. (2) For the year ended December 31, 2015, other items consist of a $36 million donation to the Nielsen Foundation, $14 million charge for a vested cash out of certain U.S. pension plan participants, and other non-recurring costs. For the year ended December 31, 2014, other items primarily consist of non-recurring costs. (IN MILLIONS) Capital expenditures Buy .......................................................................................... $ Watch ...................................................................................... Corporate and eliminations ..................................................... Total ........................................................................................ $ 2015 Year ended December 31, 2014 2013 159 $ 244 5 408 $ 206 $ 198 8 412 $ 171 197 6 374 106 Geographic Segment Information (IN MILLIONS) 2015 United States .................................................................... $ North and South America, excluding the United States ..... United Kingdom .............................................................. Other Europe, Middle East & Africa ............................... Asia Pacific ...................................................................... Total ................................................................................. $ Revenues(1) Operating Income/ (Loss) Long- lived Assets(2) 3,606 $ 567 226 1,030 743 6,172 $ 761 $ 131 (6 ) 120 87 1,093 $ 10,683 944 240 843 335 13,045 (IN MILLIONS) 2014 United States .................................................................... $ North and South America, excluding the United States ..... United Kingdom .............................................................. Other Europe, Middle East & Africa ............................... Asia Pacific ...................................................................... Total ................................................................................. $ Revenues(1) Operating Income/ (Loss) Long- lived Assets(2) 3,415 $ 670 217 1,215 771 6,288 $ 700 $ 161 (25 ) 160 93 1,089 $ 10,255 1,150 207 922 385 12,919 (IN MILLIONS) 2013 United States .................................................................... $ North and South America, excluding the United States ..... United Kingdom .............................................................. Other Europe, Middle East & Africa ............................... Asia Pacific ...................................................................... Total ................................................................................. $ Revenues(1) Operating Income/ (Loss) 2,857 $ 660 193 1,234 759 5,703 $ 414 167 (11 ) 202 89 861 (1) Revenues are attributed to geographic areas based on the location of customers. (2) Long-lived assets include property, plant and equipment, goodwill and other intangible assets. 18. Additional Financial Information Prepaid expenses and other current assets (IN MILLIONS) Deferred tax assets ........................................................................... $ Prepaid expenses and other current assets(1) ..................................... Total prepaid expenses and other current assets ............................... $ 2015 2014 — $ 316 316 $ 241 256 497 December 31, December 31, 107 Accounts payable and other current liabilities (IN MILLIONS) Trade payables ................................................................................. $ Personnel costs ................................................................................. Current portion of restructuring liabilities ........................................ Data and professional services ......................................................... Interest payable ................................................................................ Other current liabilities(1) .............................................................................. Total accounts payable and other current liabilities ......................... $ December 31, 2015 December 31, 2014 216 $ 276 29 214 48 230 1,013 $ 223 283 60 196 41 232 1,035 (1) Other includes multiple items, none of which is individually significant. 19. Guarantor Financial Information The following supplemental financial information is being provided for purposes of compliance with reporting covenants contained in certain debt obligations of Nielsen and its subsidiaries. The financial information sets forth for Nielsen, its subsidiaries that have issued certain debt securities (the “Issuers”) and its guarantor and non-guarantor subsidiaries, the consolidating balance sheet as of December 31, 2015 and December 31, 2014 and consolidating statements of operations and cash flows for the periods ended December 31, 2015, 2014 and 2013. During the three months ended September 30, 2015, the Company re-designated certain subsidiaries between guarantor and non-guarantor. As a result, the Company adjusted prior periods to reflect the current year structure. The issued debt securities are jointly and severally guaranteed on a full and unconditional basis by Nielsen and subject to certain exceptions, each of the direct and indirect 100% owned subsidiaries of Nielsen, in each case to the extent that such entities provide a guarantee under the senior secured credit facilities. The issuers are also 100% owned indirect subsidiaries of Nielsen: Nielsen Finance LLC and Nielsen Finance Co. for certain series of debt obligations, and The Nielsen Company (Luxembourg) S.ar.l., for the other series of debt obligations. Each issuer is a guarantor of the debt obligations not issued by it. Nielsen is a holding company and does not have any material assets or operations other than ownership of the capital stock of its direct and indirect subsidiaries. All of Nielsen’s operations are conducted through its subsidiaries, and, therefore, Nielsen is expected to continue to be dependent upon the cash flows of its subsidiaries to meet its obligations. The senior secured credit facilities contain certain limitations on the ability of Nielsen to receive the cash flows of its subsidiaries. While all subsidiary guarantees of the issued debt securities are full and unconditional, these guarantees contain customary release provisions including when (i) the subsidiary is sold or sells all of its assets, (ii) the subsidiary is declared “unrestricted” for covenant purposes, (iii) the subsidiary’s guarantee under the senior secured credit facilities is released and (iv) the requirements for discharge of the indenture have been satisfied. 108 Nielsen Holdings plc Consolidating Statement of Comprehensive Income For the year ended December 31, 2015 Non- (IN MILLIONS) Revenues ........................................................ $ Cost of revenues, exclusive of depreciation and amortization shown separately below ........................................ Selling, general and administrative expenses, exclusive of depreciation and amortization shown separately below ....... Depreciation and amortization ....................... Restructuring charges..................................... Operating (loss)/income ................................. Interest income ............................................... Interest expense .............................................. Foreign currency exchange transaction losses, net .................................................. Other income/(expense), net .......................... (Loss)/income from continuing operations before income taxes and equity in net loss of affiliates ......................................... Provision for income taxes ............................. Equity in net income of subsidiaries .............. Equity in net loss of affiliates ........................ Net income ..................................................... Less: net income attributable to Parent Issuers Guarantor — $ — $ 3,585 $ Guarantor Elimination Consolidated 6,172 2,587 $ — $ — — 1,279 1,260 — 2,539 4 — — (4) — — — — (4) (1) 575 — 570 — — — — 864 (291) — — 573 (127) 297 — 743 1,048 465 32 761 37 (881) (10) 252 159 (175) 593 (2) 575 863 109 19 336 5 (41) (21) (46) 233 (80) — (1) 152 — — — — (902) 902 — — — — (1,465) — (1,465) 1,915 574 51 1,093 4 (311) (31) 206 961 (383) — (3) 575 noncontrolling interests ............................. — — — 5 — 5 Net income attributable to controlling interests ..................................................... Total other comprehensive loss ...................... Total other comprehensive loss attributable 570 (282) 743 (280) 575 (282) 147 (282) (1,465) 836 570 (290) to noncontrolling interests ......................... — — — (8) — (8) Total other comprehensive loss attributable to controlling interests ............................... Total comprehensive income/(loss) ............... Total comprehensive loss attributable to (282) 288 (280) 463 (282) 293 (274) (130) 836 (629) (282) 285 noncontrolling interests ............................. — — — (3) — (3) Total comprehensive income/(loss) attributable to controlling interests ............ $ 288 $ 463 $ 293 $ (127) $ (629) $ 288 109 Nielsen Holdings plc Consolidating Statement of Comprehensive Income For the year ended December 31, 2014 Non- (IN MILLIONS) Revenues ........................................................ $ Cost of revenues, exclusive of depreciation and amortization shown separately below ........................................ Selling, general and administrative expenses, exclusive of depreciation and amortization shown separately below ....... Depreciation and amortization ....................... Restructuring charges..................................... Operating (loss)/income ................................. Interest income ............................................... Interest expense .............................................. Foreign currency exchange transaction losses, net .................................................. Other income/(expense), net .......................... (Loss)/income from continuing operations before income taxes and equity in net loss of affiliates ......................................... Benefit/(provision) for income taxes ............. Equity in net income/(loss) of subsidiaries .... Equity in net loss of affiliates ........................ Net income ..................................................... Less: net loss attributable to noncontrolling Parent Issuers Guarantor — $ — $ 3,414 $ Guarantor Elimination Consolidated 6,288 2,874 $ — $ — — 1,269 1,351 — 2,620 4 — — (4) — — — — (4) 7 381 — 384 — — — — 856 (283) — 553 1,126 (94) (521) — 511 955 448 43 699 44 (874) (2) 4 (129) (98) 611 (3) 381 958 125 46 394 8 (48) (69) (8) 277 (51) — (1) 225 — — — — (905) 905 — (649) (649) — (471) — (1,120) 1,917 573 89 1,089 3 (300) (71) (100) 621 (236) — (4) 381 interests ..................................................... — — — (3) — (3) Net income attributable to controlling interests ..................................................... Total other comprehensive (loss)/income ...... Total other comprehensive loss attributable 384 (390) 511 805 381 (390) 228 (490) (1,120) 68 384 (397) to noncontrolling interests ......................... — — — (7) — (7) Total other comprehensive (loss)/income attributable to controlling interests ............ Total comprehensive (loss)/income ............... Total comprehensive loss attributable to (390) (6) 805 1,316 (390) (9) (483) (265) 68 (1,052) noncontrolling interests ............................. — — — (10) — Total comprehensive (loss)/income attributable to controlling interests ............ $ (6) $ 1,316 $ (9) $ (255) $ (1,052) $ (390) (16) (10) (6) 110 Nielsen Holdings plc Consolidating Statement of Comprehensive Income For the year ended December 31, 2013 Non- Parent Issuers Guarantor — $ — $ 2,859 $ Guarantor Elimination Consolidated 5,703 2,844 $ — $ — — 1,087 1,311 — 2,398 (IN MILLIONS) Revenues ......................................................... $ Cost of revenues, exclusive of depreciation and amortization shown separately below ......................................... Selling, general and administrative expenses, exclusive of depreciation and amortization shown separately below ........ Depreciation and amortization ........................ Restructuring charges...................................... Operating (loss)/income .................................. Interest income ................................................ Interest expense ............................................... Foreign currency exchange transaction gains/(losses), net ....................................... Other (expense)/income, net ........................... (Loss)/income from continuing operations before income taxes and equity in net (loss)/income of affiliates ........................... (Provision)/benefit for income taxes ............... Equity in net income of subsidiaries ............... Equity in net (loss)/income of affiliates .......... Income from continuing operations ................ Income/(loss) from discontinued operations, net of tax .................................. Net income ...................................................... Less: net loss attributable to noncontrolling 4 — — (4) 1 (2) — — (5) (1) 746 — 740 — 740 — — — — 743 (300) — (21) 422 (95) 419 — 746 — 746 889 386 67 430 58 (772) 1 118 (165) 82 522 (1) 438 308 746 922 124 52 435 15 (50) (26) (106) 268 (77) — 3 194 (3) 191 — — — — (815) 815 0 0 — — (1,687) — (1,687) — (1,687) interests ...................................................... — — — (4) — Net income attributable to controlling interests ...................................................... Total other comprehensive (loss)/income ....... Total other comprehensive income 740 (54) 746 (37) 746 (54) 195 32 (1,687) 61 attributable to noncontrolling interests ....... — — — 2 — Total other comprehensive (loss)/income attributable to controlling interests ............. Total comprehensive income .......................... Total comprehensive loss attributable to (54) 686 (37) 709 (54) 692 30 223 61 (1,626) noncontrolling interests .............................. — — — (2) — Total comprehensive income attributable to controlling interests .................................... $ 686 $ 709 $ 692 $ 225 $ (1,626) $ 686 111 1,815 510 119 861 2 (309) (25) (9) 520 (91) — 2 431 305 736 (4) 740 (52) 2 (54) 684 (2) (IN MILLIONS) Assets: Current assets Cash and cash equivalents ........................................ $ Trade and other receivables, net ............................... Prepaid expenses and other current assets ................ Intercompany receivables ......................................... Total current assets ................................................. Non-current assets .................................................. Property, plant and equipment, net ........................... Goodwill ................................................................... Other intangible assets, net ....................................... Deferred tax assets .................................................... Other non-current assets ........................................... Equity investment in subsidiaries ............................. Intercompany receivables ......................................... Total assets............................................................... $ Liabilities and equity Current liabilities Accounts payable and other current liabilities .......... $ Deferred revenues ..................................................... Income tax liabilities ................................................. Current portion of long-term debt, capital lease obligations and short-term borrowings................. Intercompany payables ............................................. Total current liabilities ........................................... Non-current liabilities Long-term debt and capital lease obligations ............ Deferred tax liabilities............................................... Intercompany loans ................................................... Other non-current liabilities ...................................... Total liabilities ......................................................... Total stockholders’ equity ...................................... Noncontrolling interests ............................................ Total equity .............................................................. Total liabilities and equity ...................................... $ Nielsen Holdings plc Consolidating Balance Sheet December 31, 2015 Parent Issuers Guarantor Guarantor Elimination Consolidated Non- 1 $ 3 — — 4 — — — — 1 — 4,793 — 4,798 $ — $ — — 595 595 7 $ 550 195 224 976 349 $ 682 121 178 1,330 — $ — — (997) (997) 357 1,235 316 — 1,908 — — — — — 1,441 10,763 12,799 $ 324 5,774 4,314 51 175 3,696 3,692 19,002 $ 166 2,009 458 26 97 — 158 — — — — — (9,930) (14,613) 4,244 $ (25,540) $ 1 $ — — — 21 22 48 $ — — 450 $ 182 — 114 3 165 195 753 1,580 514 $ 140 42 1 220 917 — $ — — — (997) (997) — — 341 2 365 4,433 — 4,433 4,798 $ 6,911 74 2,985 6 10,141 2,658 — 2,658 12,799 $ 102 977 10,921 629 14,209 4,793 — 4,793 19,002 $ — 15 — 23 (14,613) 366 — 250 (15,610) 1,571 (9,930) 2,479 — 194 2,673 (9,930) 4,244 $ (25,540) $ 112 490 7,783 4,772 78 272 — — 15,303 1,013 322 42 310 — 1,687 7,028 1,074 — 887 10,676 4,433 194 4,627 15,303 Nielsen Holdings plc Consolidating Balance Sheet December 31, 2014 (IN MILLIONS) Assets: Current assets Cash and cash equivalents ........................................ $ Trade and other receivables, net ............................... Prepaid expenses and other current assets ................ Intercompany receivables ......................................... Total current assets ................................................. Non-current assets .................................................. Property, plant and equipment, net ........................... Goodwill ................................................................... Other intangible assets, net ....................................... Deferred tax assets .................................................... Other non-current assets ........................................... Equity investment in subsidiaries ............................. Intercompany receivables ......................................... Total assets............................................................... $ Liabilities and equity Current liabilities Accounts payable and other current liabilities .......... $ Deferred revenues ..................................................... Income tax liabilities ................................................. Current portion of long-term debt, capital lease obligations and short-term borrowings ........ Intercompany payables ............................................. Total current liabilities ........................................... Non-current liabilities Long-term debt and capital lease obligations ............ Deferred tax liabilities............................................... Intercompany loans ................................................... Other non-current liabilities ...................................... Total liabilities ......................................................... Total stockholders’ equity ...................................... Noncontrolling interests ............................................ Total equity .............................................................. Total liabilities and equity ...................................... $ Parent Issuers Guarantor Guarantor Elimination Consolidated Non- 49 $ 1 — 1 51 — — — — 1 — 5,017 — 5,069 $ 1 $ — — 227 228 — — — — 1 1,125 10,494 11,848 $ (51) $ 526 339 234 1,048 335 5,588 4,318 25 172 6,596 492 18,574 $ 274 $ 714 158 190 1,336 — $ — — (652) (652) 198 2,083 397 57 140 — 191 — — — — — (12,738) (11,177) 4,402 $ (24,567) $ 10 $ — 1 — — 11 44 $ — — 418 $ 159 19 94 — 138 298 429 1,323 563 $ 145 42 1 223 974 — $ — — — (652) (652) — — — 2 13 5,056 — 5,056 5,069 $ 6,312 74 61 2 6,587 5,261 — 5,261 11,848 $ 87 895 10,685 567 13,557 5,017 — 5,017 18,574 $ — 20 — 56 (11,177) 431 — 384 (11,829) 1,865 (12,738) 2,460 — 77 2,537 (12,738) 4,402 $ (24,567) $ 273 1,241 497 — 2,011 533 7,671 4,715 83 313 — — 15,326 1,035 304 62 393 — 1,794 6,419 1,025 — 955 10,193 5,056 77 5,133 15,326 113 Nielsen Holdings plc Consolidating Statement of Cash Flows For the year ended December 31, 2015 Non- Parent Issuers Guarantor — $ 255 $ 637 $ Guarantor Consolidated 1,179 287 $ — — — — — — — — — — (408) (667) 79 — 948 (48) — (48) 49 1 $ — — — — — — — — 746 (98) — — — — (904) (256) — (1) 1 — $ (246) 30 (82) (237) — 36 (499) (116) — — — — (7) 30 16 (77) (3) 58 (51) 7 $ — — (52) (37) 7 — (82) — — — — — — — (81) (81) (49) 75 274 349 $ (246) 30 (134) (274) 7 36 (581) (116) 746 (98) (408) (667) 72 30 (21) (462) (52) 84 273 357 (IN MILLIONS) Net cash provided by operating activities .................................. $ Investing activities: Acquisition of subsidiaries and affiliates, net of cash acquired ..... Proceeds from sale of subsidiaries and affiliates, net ..................... Additions to property, plant and equipment and other assets ......... Additions to intangible assets ........................................................ Proceeds from the sale of property, plant and equipment .............. Other investing activities ............................................................... Net cash used in investing activities ............................................ Financing activities: Net borrowings under revolving credit facility .............................. Proceeds from issuances of debt, net of issuance costs .................. Repayments of debt ....................................................................... Cash dividends paid to stockholders .............................................. Repurchase of common stock ........................................................ Proceeds from exercise of stock options ........................................ Excess tax benefits from stock-based compensation ..................... Other financing activities ............................................................... Net cash used in financing activities ........................................... Effect of exchange-rate changes on cash and cash equivalents ..... Net (decrease)/increase in cash and cash equivalents ............... Cash and cash equivalents at beginning of period .................... Cash and cash equivalents at end of period ............................... $ 114 Nielsen Holdings plc Consolidating Statement of Cash Flows For the year ended December 31, 2014 Non- Parent Issuers Guarantor (4) $ 523 $ — — — — — — — — — (356) (466) 112 751 41 — 37 12 49 $ — — — — — — — 4,544 (4,597) — — (469) (522) — 1 — 1 $ Guarantor Consolidated 1,093 201 $ 373 $ (201) — (109) (222) (1) (533) 280 — — — (6) (370) (96) — (256) 205 (51) $ (113) (6) (54) (27) 1 (199) — — (1) — (3) (4) (8) (67) (73) 347 274 $ (314) (6) (163) (249) — (732) 280 4,544 (4,598) (356) (466) 103 (92) (585) (67) (291) 564 273 (IN MILLIONS) Net cash (used in)/provided by operating activities .................. $ Investing activities: Acquisition of subsidiaries and affiliates, net of cash acquired ..... Proceeds from sale of subsidiaries and affiliates, net ..................... Additions to property, plant and equipment and other assets ......... Additions to intangible assets ........................................................ Other investing activities ............................................................... Net cash used in investing activities ............................................ Financing activities: Net borrowings under revolving credit facility .............................. Proceeds from issuances of debt, net of issuance costs .................. Repayments of debt ....................................................................... Cash dividends paid to stockholders .............................................. Repurchase of common stock ........................................................ Proceeds from exercise of stock options ........................................ Other financing activities ............................................................... Net cash provided by/(used in) financing activities................... Effect of exchange-rate changes on cash and cash equivalents ..... Net increase/(decrease) in cash and cash equivalents ............... Cash and cash equivalents at beginning of period .................... Cash and cash equivalents at end of period ............................... $ 115 Nielsen Holdings plc Consolidating Statement of Cash Flows For the year ended December 31, 2013 Non- Parent Issuers Guarantor 1 $ 539 $ Guarantor Consolidated 901 321 $ 40 $ — — — — — — — — (1,242) 935 (56) (218) — — (581) — — — (265) (11) 95 191 10 — 11 1 12 $ 2,481 (2,171) — — — — (849) (539) — — — — $ — — — — — (3) 727 724 (2) 181 24 205 $ (7) — (74) (26) 1 (106) 4 — (5) — — (7) (104) (112) (19) 84 263 347 $ (1,249) 935 (130) (244) 1 (687) 2,485 (2,171) (5) (265) (11) 85 (35) 83 (21) 276 288 564 (IN MILLIONS) Net cash provided by operating activities ................................... $ Investing activities: Acquisition of subsidiaries and affiliates, net of cash acquired ...... Proceeds from sale of subsidiaries and affiliates, net ...................... Additions to property, plant and equipment and other assets .......... Additions to intangible assets ......................................................... Other investing activities ................................................................ Net cash used in investing activities ............................................. Financing activities: Proceeds from issuances of debt, net of issuance costs ................... Repayments of debt ........................................................................ Decrease in other short-term borrowings ........................................ Cash dividends paid to shareholders ............................................... Repurchase of common stock ........................................................ Proceeds from exercise of stock options ......................................... Other financing activities ................................................................ Net cash provided by/(used in) financing activities.................... Effect of exchange-rate changes on cash and cash equivalents ...... Net increase in cash and cash equivalents ................................... Cash and cash equivalents at beginning of period ..................... Cash and cash equivalents at end of period ................................ $ 116 20. Quarterly Financial Data (unaudited) (IN MILLIONS, EXCEPT PER SHARE DATA) 2015 Revenues ........................................................................ $ Operating income ........................................................... $ Income from continuing operations before income taxes and equity in net income of affiliates ............... $ Net income attributable to Nielsen stockholders ............ $ Net income per share of common stock, basic Income from continuing operations .......................... $ Net income attributable to Nielsen stockholders ....... $ Net income per share of common stock, diluted Income from continuing operations .......................... $ Net income attributable to Nielsen stockholders ....... $ (IN MILLIONS, EXCEPT PER SHARE DATA) 2014 Revenues ........................................................................ $ Operating income ........................................................... $ Income from continuing operations before income taxes and equity in net income of affiliates ............... $ Income from discontinued operations, net of tax ........... $ Net income attributable to Nielsen stockholders Net income per share of common stock, basic ............... $ Income from continuing operations .......................... $ Net income attributable to Nielsen stockholders Net income per share of common stock, diluted ............ $ Income from continuing operations .......................... $ First Quarter Second Quarter Third Quarter Fourth Quarter 1,458 $ 199 $ 1,559 $ 286 $ 1,531 $ 298 $ 1,624 310 101 $ 63 $ 0.17 $ 0.17 $ 0.17 $ 0.17 $ 202 $ 114 $ 0.31 $ 0.31 $ 0.31 $ 0.31 $ 225 $ 142 $ 0.39 $ 0.39 $ 0.38 $ 0.38 $ 433 251 0.69 0.69 0.68 0.68 First Quarter Second Quarter Third Quarter Fourth Quarter 1,489 $ 193 $ 1,594 $ 277 $ 1,572 $ 311 $ 1,633 308 87 $ 58 $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 149 $ 74 $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 187 $ 91 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 198 161 0.43 0.43 0.42 0.42 117 Schedule I—Condensed Financial Information of Registrant Nielsen Holdings plc Parent Company Only Statements of Operations (IN MILLIONS) Selling, general and administrative expenses .................................... $ Operating loss .................................................................................... Interest income................................................................................... Interest expense ................................................................................. Foreign currency exchange transaction losses, net ............................ Loss from continuing operations before income taxes and equity in net income of subsidiaries ............................................................. (Provision)/benefit for income taxes .................................................. Equity in net income of subsidiaries .................................................. Net income ......................................................................................... $ Year Ended December 31, 2014 2013 2015 4 $ (4) — — — (4) (1) 575 570 $ 4 $ (4) — — — (4) 7 381 384 $ 4 (4) 1 (2) — (5) (1) 746 740 Nielsen Holdings plc Parent Company Only Balance Sheets (IN MILLIONS) Assets: Current assets Cash and cash equivalents .................................................... $ Amounts receivable from subsidiary .................................... Loan receivable from subsidiary .......................................... Total current assets ...................................................................... Investment in subsidiaries .................................................... Other non-current assets ....................................................... Total assets .................................................................................... $ Liabilities and equity: Current liabilities Accounts payable and other current liabilities ...................... Intercompany payables ......................................................... Income tax liability ............................................................... Total current liabilities ................................................................ Loans outstanding from subsidiary ....................................... Other non-current liabilities.................................................. Total liabilities .............................................................................. Total equity ................................................................................... Total liabilities and equity ........................................................... $ December 31, 2015 2014 1 $ 3 — 4 4,793 1 4,798 $ 1 21 — 22 341 2 365 4,433 4,798 $ 49 1 1 51 5,017 1 5,069 10 — 1 11 — 2 13 5,056 5,069 118 Nielsen Holdings plc Parent Company Only Statements of Cash Flows (IN MILLIONS) Net cash provided by/(used in) operating activities ....................... $ Financing Activities: Cash dividends paid to stockholders ......................................... Repurchase of common stock ................................................... Activity under stock plans ......................................................... Other financing activities .......................................................... Net cash (used in)/provided by financing activities ............................ Net (decrease)/increase in cash and cash equivalents ......................... Cash and cash equivalents, beginning of period ................................. Cash and cash equivalents, end of period ........................................... $ Year Ended December 31, 2014 2013 2015 — $ (4) $ 1 (408) (667) 79 948 (48) (48) 49 1 $ (356) (466) 112 751 41 37 12 49 $ (265) (11) 95 191 10 11 1 12 The notes to the consolidated financial statements of Nielsen Holdings plc (the “Company”) are an integral part of these nonconsolidated financial statements. Notes to Schedule I 1. Basis of Presentation The Company has accounted for the earnings of its subsidiaries under the equity method in these financial statements. 2. Commitments and Contingencies The debenture loans are jointly and severally guaranteed on an unconditional basis by the Company and subject to certain exceptions, each of the direct and indirect wholly-owned subsidiaries of the Company, including VNU Intermediate Holding B.V., Nielsen Holding and Finance B.V., VNU International B.V., TNC (US) Holdings, Inc., VNU Marketing Information, Inc. and ACN Holdings, Inc., and the wholly-owned subsidiaries thereof, including the wholly-owned U.S. subsidiaries of ACN Holdings, Inc., in each case to the extent that such entities provide a guarantee under the senior secured credit facilities. The issuers are Nielsen Finance LLC and Nielsen Finance Co., both wholly-owned subsidiaries of ACN Holdings, Inc. and subsidiary guarantors and The Nielsen Company (Luxembourg) S ar l., a wholly owned subsidiary of Nielsen Holding and Finance B.V. The historical financial information has been updated to reflect The Nielsen Company (Luxembourg) S.ar.l. as an issuer. The Company had no material commitments or contingencies during the reported periods. 3. Related Party Transactions The Company enters into certain transactions with its subsidiaries through the normal course of operations and periodically settles these transactions in cash. On December 31, 2015, the Company had a $362 million liability to subsidiaries associated with financing transactions. During the year ended December 31, 2014, the Company received a net cash payment of $4 million associated with the sale of shares of common stock in conjunction with acquisitions made by its subsidiaries, net of reimbursements of fees paid on behalf of the Company by its subsidiaries. 119 4. Common Stock and Related Transactions On January 31, 2013, the Company’s board of directors (the “Board”) adopted a cash dividend policy to pay quarterly cash dividends on its outstanding common stock. The following table represents the cash dividends paid for the years ended December 31, 2014 and 2015, respectively. Declaration Date February 20, 2014 May 1, 2014 July 24, 2014 October 30, 2014 February 19, 2015 April 20, 2015 July 23, 2015 October 29, 2015 Record Date Payment Date Dividend Per Share March 6, 2014 June 5, 2014 August 28, 2014 November 25, 2014 March 5, 2015 June 4, 2015 August 27, 2015 November 24, 2015 March 20, 2014 $ June 19, 2014 $ September 11, 2014 $ December 9, 2014 $ March 19, 2015 $ June 18, 2015 $ September 10, 2015 $ December 8, 2015 $ 0.20 0.25 0.25 0.25 0.25 0.28 0.28 0.28 The dividend policy and payment of future cash dividends are subject to the discretion of the Board. Nielsen’s Board approved a share repurchase program, as included in the below table, for up to $2 billion of our outstanding common stock. The primary purpose of the program is to return value to shareholders and to mitigate dilution associated with our equity compensation plans. Board Approval Share Repurchase Authorization ($ in millions) July 25, 2013 .................................................................................. $ October 23, 2014 ............................................................................ $ December 11, 2015 ........................................................................ $ Total Share Repurchase Authorization ................................................ $ 500 1,000 500 2,000 Repurchases under these plans will be made in accordance with applicable securities laws from time to time in the open market or otherwise depending on our evaluation of market conditions and other factors. This program has been executed within the limitations of the existing authority granted at Nielsen’s Annual General Meeting of Shareholders held in 2014 and 2015. As of December 31, 2015, there have been 25,762,411 shares of our common stock purchased at an average price of $44.43 per share (total consideration of approximately $1,144 million) under this program. Period As of December 31, 2014 ....... 2015 Activity January 1- 31 ..................... February 1- 28 ................... March 1- 31 ....................... April 1-30 .......................... May 1-31 ........................... June 1-30 ........................... July 1-31 ........................... August 1-31 ....................... September 1-30 ................. October 1-31 ..................... November 1-30 ................. December 1-31 .................. Total ....................................... Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares that may yet be Purchased under the Plans or Programs 11,182,983 $ 42.67 11,182,983 $ 1,022,830,101 1,611,203 814,753 $ 772,189 $ 1,440,798 $ 1,222,800 $ 1,300,836 $ 1,310,000 $ 1,853,142 $ 553,756 $ 1,276,829 $ 1,141,708 $ 1,281,414 $ 25,762,411 $ 44.09 43.90 43.76 45.30 45.37 45.14 45.37 47.25 47.39 46.95 47.75 46.50 44.43 120 1,611,203 $ 814,753 $ 772,189 $ 1,440,798 $ 1,222,800 $ 1,300,836 $ 1,310,000 $ 1,853,142 $ 553,756 $ 1,276,829 $ 1,141,708 $ 1,281,414 $ 25,762,411 951,797,780 916,031,448 882,241,498 816,973,014 761,496,406 702,774,965 643,345,777 555,793,238 529,551,668 469,601,614 415,084,736 855,495,985 Subsequent Event On February 18, 2016, the Board declared a cash dividend of $0.28 per share on the Company’s common stock. The dividend is payable on March 17, 2016 to stockholders of record at the close of business on March 3, 2016. 121 Schedule II—Valuation and Qualifying Accounts For the Years ended December 31, 2015, 2014 and 2013 (IN MILLIONS) Allowance for accounts receivable and sales returns Balance Beginning of Period Charges to Expense Acquisitions and Divestitures Deductions Effect of Foreign Currency Translation Balance at End of Period For the year ended December 31, 2013.......... $ For the year ended December 31, 2014.......... $ For the year ended December 31, 2015.......... $ 38 $ 39 $ 29 $ 3 $ 4 $ 6 $ — $ — $ — $ (2 ) $ (11 ) $ (7 ) $ 0 $ (3) $ (2) $ 39 29 26 (IN MILLIONS) Valuation allowance for deferred taxes For the year ended December 31, 2013.................................. $ For the year ended December 31, 2014.................................. $ For the year ended December 31, 2015.................................. $ Balance Beginning of Period Charges/ (Credits) to Expense Charged to Other Accounts Effect of Foreign Currency Translation Balance at End of Period 232 $ 150 $ 147 $ (69) $ (21) $ 17 $ (5 ) $ 16 $ (8 ) $ (8) $ 2 $ (12) $ 150 147 144 122 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. Controls and Procedures Item 9A. (a) Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits to the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Company’s disclosure controls and procedures are designed to do. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2015 (the “Evaluation Date”). Based on such evaluation and subject to the foregoing, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) Management’s Annual Report on Internal Control Over Financial Reporting Management’s Annual Report on Internal Control Over Financial Reporting appears in Part II, Item 8. “Financial Statements and Supplementary Data” of this annual report on Form 10-K. (c) Attestation Report of the Registered Public Accounting Firm The Company’s financial statements included in this annual report on Form 10-K have been audited by Ernst & Young LLP, independent registered public accounting firm. Ernst & Young LLP has also provided an attestation report on the Company’s internal control over financial reporting. Their reports appear in Part II, Item 8. “Financial Statements and Supplementary Data” of this annual report on Form 10-K. (d) Changes in Internal Control over Financial Reporting There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. Other Information None. 123 PART III Item 10. Directors, Executive Officers, and Corporate Governance The information required by this Item is incorporated by reference to the following sections of our definitive Proxy Statement related to the 2016 Annual Meeting of Stockholders to be filed with the SEC (the “2016 Proxy Statement”): “Proposal No. 1 – Election of Directors”, “The Board of Directors and Certain Governance Matters” and “Section 16(a) Beneficial Ownership Reporting Compliance”. Item 11. Executive Compensation The information required by this Item is incorporated by reference to the following sections of the 2016 Proxy Statement: “Executive Compensation” and “Director Compensation”. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item is incorporated by reference to the following sections of the 2016 Proxy Statement: “Equity Compensation Plan Information” and “Ownership of Securities”. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item is incorporated by reference to the following sections of the 2016 Proxy Statement: “Certain Relationships and Related Party Transactions” and “The Board of Directors and Certain Governance Matters”. Item 14. Principal Accounting Fees and Services The information required by this Item is incorporated by reference to the following section of the 2016 Proxy Statement: “Proposal No. 2 – Ratification of Independent Registered Public Accounting Firm”. 124 Item 15. Exhibits, Financial Statement Schedules (a)(1) Financial Statements PART IV The Financial Statements listed in the Index to Financial Statements in Item 8 are filed as part of this Annual Report on Form 10-K. (a)(2) Financial Statement Schedules The Financial Statement Schedules listed in the Index to Financial Statements in Item 8 are filed as part of this Annual Report on Form 10-K. (a)(3) Exhibits The exhibit index attached hereto is incorporated herein by reference. 125 Pursuant to the requirements of Section 13 or 15(d) 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. SIGNATURES Date: February 19, 2016 Nielsen Holdings plc (Registrant) /S/ JEFFREY R. CHARLTON JEFFREY R. CHARLTON Senior Vice President and Corporate Controller (Duly Authorized Officer and Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature /s/ JAMERE JACKSON Jamere Jackson /s/ JEFFREY R. CHARLTON Jeffrey R. Charlton /s/ DWIGHT M. BARNS Dwight M. Barns /s/ JAMES ATTWOOD James Attwood /s/ DAVID CALHOUN David Calhoun /s/ JAMES KILTS James Kilts /s/ KAREN HOGUET Karen Hoguet /s/ HARISH MANWANI Harish Manwani /s/ KATHRYN V. MARINELLO Kathryn V. Marinello /s/ ROBERT POZEN Robert Pozen /s/ VIVEK RANADIVÉ Vivek Ranadivé /s/ JAVIER TERUEL Javier Teruel Title Date Chief Financial Officer (Principal Financial Officer) February 19, 2016 Senior Vice President and Corporate Controller February 19, 2016 (Principal Accounting Officer) Chief Executive Officer (Principal Executive Officer) February 19, 2016 and Director Chairman of the Board February 19, 2016 February 19, 2016 February 19, 2016 February 19, 2016 February 19, 2016 February 19, 2016 February 19, 2016 February 19, 2016 February 19, 2016 Director Director Director Director Director Director Director Director 126 EXHIBIT INDEX The agreements and other documents filed as exhibits to this annual report on Form 10-K are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by the registrant in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time. Exhibit No. Description 2.1 3.1 4.1(a) 4.1(b) 4.1(c) 4.1(d) 4.1(e) 4.1(f) 4.1(g) Merger Proposal by the boards of directors of Nielsen N.V. and Nielsen Holdings Limited (now Nielsen Holdings plc) (incorporated by reference to Annex A to the registration statement on Form S-4/A (File No. 333- 202313) filed by Nielsen Holdings Limited (now Nielsen Holdings plc) on May 21, 2015) Articles of Association of Nielsen Holdings plc (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K file by the registrant on August 31, 2015 (File No. 001-35042)) Second Amended and Restated Credit Agreement, dated August 9, 2006 and amended and restated as of June 23, 2009, and further amended and restated as of February 2, 2012 among Nielsen Finance LLC, as a U.S. Borrower, TNC (US) Holdings Inc., as a U.S. Borrower, Nielsen Holding and Finance B.V., as Dutch Borrower, the Guarantors party thereto from time to time, Citibank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, ABN AMRO Bank N.V., as Swing Line Lender, the other Lenders party thereto from time to time, Deutsche Bank Securities Inc., as Syndication Agent and JPMorgan Chase Bank, N.A., ABN AMRO Bank N.V. and ING Bank N.V., as Co- Documentation Agents (incorporated herein by reference to Exhibit 4.2 to the Form 8-K of Nielsen Holdings N.V. filed on February 6, 2012 (File No. 001-35042)) Amended and Restated Security Agreement, dated as of August 9, 2006 and amended and restated as of June 23, 2009, among Nielsen Finance LLC, the other Grantors identified therein, and Citibank, N.A., as Collateral Agent (incorporated herein by reference to Exhibit 4.1(j) to Amendment No. 2 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on July 30, 2010 (File No. 333-167271)) Intellectual Property Security Agreement, dated as of August 9, 2006, among Nielsen Finance LLC, the other Grantors identified therein and Citibank, N.A. as Collateral Agent (incorporated herein by reference to Exhibit 4.1(c) to Amendment No. 2 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on July 30, 2010 (File No. 333-167271)) Senior Secured Loan Agreement, dated June 8, 2009, by and among Nielsen Finance LLC, the Guarantors party thereto from time to time, Goldman Sachs Lending Partners LLC and the other Lenders party thereto from time to time (incorporated herein by reference to Exhibit 4.1(g) to Amendment No. 2 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on July 30, 2010 (File No. 333-167271)) First Lien Intercreditor Agreement, dated as of June 23, 2009, among Citibank, N.A., as Collateral Agent and Authorized Representative under the Credit Agreement, Goldman Sachs Lending Partners LLC, as the Initial Additional Authorized Representative, and each additional Authorized Representative from time to time party thereto (incorporated herein by reference to Exhibit 4.1(c) to the Form 8-K/A of The Nielsen Company B.V. filed on June 26, 2009 (File No. 333- 142546-29)) Amendment No. 1, dated as of August 13, 2010, to the Amended and Restated Credit Agreement, dated August 9, 2006 and amended and restated as of June 23, 2009, among Nielsen Finance LLC, as a U.S. Borrower, TNC (US) Holdings Inc., as a U.S. Borrower, Nielsen Holding and Finance B.V., as Dutch Borrower, the Guarantors party thereto from time to time, Citibank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, ABN AMRO Bank N.V., as Swing Line Lender, the other Lenders party thereto from time to time, Deutsche Bank Securities Inc., as Syndication Agent and JPMorgan Chase Bank, N.A., ABN AMRO Bank N.V. and ING Bank N.V., as Co-Documentation Agents (incorporated herein by reference to Exhibit 4.1 to the Form 8-K of The Nielsen Company B.V. filed on August 16, 2010 (File No. 333-142546-29)) Amendment No. 2, dated as of March 23, 2011, to the Amended and Restated Credit Agreement, dated August 9, 2006 and amended and restated as of June 23, 2009, among Nielsen Finance LLC, the other borrowers and guarantors party thereto, the lenders and other parties from time to time party thereto, and Citibank, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 to the Form 10-Q of Nielsen Holdings N.V. filed on April 28, 2011 (File No. 001-35042)) 127 Exhibit No. Description 4.1(h) Amendment Agreement, dated February 2, 2012, by and among Nielsen Finance LLC, the other borrowers party thereto, the guarantors party thereto, Citibank, N.A., as administrative agent and collateral agent, and certain of the lenders (incorporated herein by reference to Exhibit 4.1 to the Form 8-K of Nielsen Holdings N.V. filed on February 6, 2012 (File No. 001-35042)) 4.1(i) 4.1(j) 4.1(k) 4.1(l) 4.2(a) 4.2(b) 4.2(c) 4.2(d) 4.2(e) 4.2(f) 4.2(g) 4.2(h) 4.2(i) 4.2(j) 4.2(k) Amendment Agreement, dated February 28, 2013, by and among Nielsen Finance LLC, the other borrowers party thereto, the guarantors party thereto, Citibank, N.A., as administrative agent, and certain of the lenders ((incorporated herein by reference to Exhibit 4.1 to the Form 8-K of Nielsen Holdings N.V. filed on March 4, 2013 (File No. 001-35042)) Form of Third Amended and Restated Credit Agreement (incorporated herein by reference to Exhibit 4.2 to the Form 8- K of Nielsen Holdings N.V. filed on March 4, 2013 (File No. 001-35042)) Amendment Agreement, dated April 22, 2014, among Nielsen Finance LLC, the other borrowers party thereto, the guarantors party thereto, Citibank, N.A., as administrative agent, and certain of the lenders (incorporated herein by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q of Nielsen Holdings N.V. filed on April 24, 2014 (File No. 001- 35042)) Form of Fourth Amended and Restated Credit Agreement (incorporated herein by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q of Nielsen Holdings N.V. filed on April 24, 2014 (File No. 001-35042)) Indenture, dated as of October 2, 2012, among Nielsen Finance LLC, Nielsen Finance Co., the Guarantors (as defined therein) and Law Debenture Trust Company of New York, as Trustee (incorporated herein by reference to Exhibit 4.1 (a) to the Form 8-K of Nielsen Holdings N.V. filed on October 4, 2012 (File No. 001-35042)) First Supplemental Indenture, dated as of December 12, 2012, among Vizu Corporation, Nielsen Finance Co. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.1(b) to the Registration Statement on Form S-4 filed by The Nielsen Company B.V. on June 19, 2013 (File No. 333-189456)) Second Supplemental Indenture, dated as of June 17, 2013, among G4 Analytics, Inc., Nielsen Finance Co. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.1(c) to Registration Statement on Form S-4 filed by The Nielsen Company B.V. on June 19, 2013 (File No. 333-189456)) Third Supplemental Indenture, dated as of December 31, 2013, between Nielsen Audio, Inc. and Nielsen Finance Co., and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.3(d) to the Annual Report on Form 10-K of Nielsen Holdings N.V. filed on February 21, 2014 (File No. 001-35042)) Fourth Supplemental Indenture, dated as of December 31, 2013, between Cardinal North LLC and Nielsen Finance Co., and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.3(e) to the Annual Report on Form 10-K of Nielsen Holdings N.V. filed on February 21, 2014 (File No. 001-35042)) Fifth Supplemental Indenture, dated as of December 31, 2013, between Nielsen International Holdings, Inc. and Nielsen Finance Co., and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.3(f) to the Annual Report on Form 10-K of Nielsen Holdings N.V. filed on February 21, 2014 (File No. 001-35042)) Sixth Supplemental Indenture, dated as of May 23, 2014, between Nielsen Consumer Insights, Inc. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q of Nielsen N.V. filed July 29, 2014 (File No. 001-35042)) Seventh Supplemental Indenture, dated as of December 23, 2014, between Scarborough Research and the Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.2(h) to the Annual Report on Form 10-K of Nielsen N.V. filed on February 20, 2015 (File No. 001-35042)) Eighth Supplemental Indenture, dated as of December 23, 2014, between Nielsen N.V. and the Law Debenture Trust company of New York, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of Nielsen N.V. filed on December 29, 2014 (File No. 001-35042)) Ninth Supplemental Indenture, dated as of January 23, 2015, between Valcon Acquisition B.V. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.2(j) to the Annual Report on Form 10-K of Nielsen N.V. filed on February 20, 2015 (File No. 001-35042)) Tenth Supplemental Indenture, dated as of July 7, 2015, between eXelate, Inc. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q filed on July 28, 2015 (File No. 001-35042)) 128 Exhibit No. Description 4.2(l) Eleventh Supplemental Indenture, dated as of August 17, 2015, between Affinnova, Inc. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q filed on October 21, 2015 (File No. 001-35042)) 4.3(a) 4.3(b) 4.3(c) 4.3(d) 4.3(e) 4.3(f) 4.3(g) 4.3(h) 4.3(i) 4.3(j) 4.4 4.4(a) 4.4(b) 4.4(c) 4.4(d) Indenture, dated as of September 27, 2013, among The Nielsen Company (Luxembourg) S.ar.l., the Guarantors (as defined therein) and Deutsche Bank Trust Company Americas, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of Nielsen Holdings N.V. filed on September 27, 2013 (File No. 001-35042)) First Supplemental Indenture, dated as of December 31, 2013, between Nielsen Audio, Inc. and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.4(b) to the Annual Report on Form 10-K of Nielsen Holdings N.V. filed on February 21, 2014 (File No. 001-35042)) Second Supplemental Indenture, dated as of December 31, 2013, between Cardinal North LLC and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.4(c) to the Annual Report on Form 10-K of Nielsen Holdings N.V. filed on February 21, 2014 (File No. 001-35042)) Third Supplemental Indenture, dated as of December 31, 2013, between Nielsen International Holdings, Inc. and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.4(d) to the Annual Report on Form 10-K of Nielsen Holdings N.V. filed on February 21, 2014 (File No. 001-35042)) Fourth Supplemental Indenture, dated as of May 23, 2014, between Nielsen Consumer Insights, Inc. and Deutsche Bank Trust Company, as trustee (incorporated herein by reference to Exhibit 4.5 to the Quarterly Report on Form 10-Q of Nielsen N.V. filed July 29, 2014 (File No. 001-35042)) Fifth Supplemental Indenture, dated as of December 23, 2014, between Scarborough Research and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.3(f) to the Annual Report on Form 10-K of Nielsen N.V. filed on February 20, 2015 (File No. 001-35042)) Sixth Supplemental Indenture, dated as of December 23, 2014, between Nielsen N.V. and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.3 to the Current Report on Form 8-K of Nielsen N.V. filed on December 29, 2014 (File No. 001-35042)) Seventh Supplemental Indenture, dated as of January 23, 2015, between Valcon Acquisition B.V. and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.3(h) to the Annual Report on Form 10-K of Nielsen N.V. filed on February 20, 2015 (File No. 001-35042)) Eighth Supplemental Indenture, dated as of July 7, 2015, between eXelate, Inc. and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q filed on July 28, 2015 (File No. 001-35042)) Ninth Supplemental Indenture, dated as of August 17, 2015, between Affinnova, Inc. and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q filed on October 21, 2015 (File No. 001-35042)) Indenture, dated as of April 11, 2014, among Nielsen Finance LLC, Nielsen Finance Co., the Guarantors (as defined therein) and Law Debenture Trust Company of New York, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on April 11, 2014 (File No. 001-35042)) First Supplemental Indenture, dated as of May 23, 2014, between Nielsen Consumer Insights, Inc. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.4 to the Quarterly Report on Form 10-Q of Nielsen N.V. filed July 29, 2014 (File No. 001-35042)) Supplemental Indenture, dated as of July 8, 2014, among Nielsen Finance LLC, Nielsen Finance Co., the Guarantors (identified therein) and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of Nielsen N.V. filed on July 8, 2014 (File No. 001-35042)) Third Supplemental Indenture, dated as of December 23, 2014, between Scarborough Research and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.4(c) to the Annual Report on Form 10-K of Nielsen N.V. filed on February 20, 2015 (File No. 001-35042)) Fourth Supplemental Indenture, dated as of December 23, 2014, between Nielsen N.V. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K of Nielsen N.V. filed on December 29, 2014 (File No. 001-35042)) 129 Exhibit No. Description 4.4(e) Fifth Supplemental Indenture, dated as of January 23, 2015, between Valcon Acquisition B.V. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.4(e) to the Annual Report on Form 10-K of Nielsen N.V. filed on February 20, 2015 (File No. 001-35042)) 4.4(f) 4.4(g) 4.4(h) 10.1** 10.2** 10.3** 10.4** 10.5** 10.6(a)** 10.6(b)** 10.6(c)** 10.7** 10.8** Supplemental Indenture, dated as of February 25, 2015, among Nielsen Finance LLC, Nielsen Finance Co., the Guarantors (as defined therein) and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on February 25, 2015 (File No. 001-35042)) Sixth Supplemental Indenture, dated as of July 7, 2015, between eXelate, Inc. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q filed on July 28, 2015 (File No. 001-35042)) Seventh Supplemental Indenture, dated as of August 17, 2015, between Affinnova, Inc. and Law Debenture Trust Company of New York, as trustee (incorporated herein by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q filed on October 21, 2015 (File No. 001-35042)) Form of Severance Agreement (incorporated herein by reference to Exhibit 10.10(b) to Amendment No. 1 to the Registration Statement on Form S-4 of The Nielsen Company B.V. filed on June 21, 2007 (File No. 333-142546-29)) The Nielsen Company Deferred Compensation Plan, as amended and restated, effective September 11, 2012 (incorporated herein by reference to Exhibit 10.2 to the Form 10-Q of Nielsen Holdings N.V. filed on October 22, 2012 (File No. 001- 35042)) Form of Nielsen Holdings N.V. Performance Restricted Share Award Agreement (incorporated herein by reference to Exhibit 10.2 to the Form 10-Q of Nielsen Holdings N.V. filed on April 25, 2013 (File No. 001-35042)) Offer letter to Jamere Jackson, dated February 20, 2014 (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on April 24, 2014 (File No. 001-35042)) Form of Deferred Stock Unit Grant, dated as of September 11, 2012, for non-employee directors of Nielsen Holdings N.V. (incorporated herein by reference to Exhibit 10.4 to the Form 10-Q of Nielsen Holdings N.V. filed on October 22, 2012 (File No. 001-35042)) VNU Excess Plan, as amended and restated, effective April 1, 2002 (incorporated herein by reference to Exhibit 10.12(a) to Amendment No. 1 to the Company’s Registration Statement on Form S-4 of The Nielsen Company B.V. filed on June 21, 2007 (File No. 333-142546-29)) Amendment to the VNU Excess Plan, effective August 31, 2006 (incorporated herein by reference to Exhibit 10.12(b) to Amendment No. 1 to the Registration Statement on Form S-4 of The Nielsen Company B.V. filed on June 21, 2007 (File No. 333-142546-29)) Second Amendment to the VNU Excess Plan, effective January 23, 2007 (incorporated herein by reference to Exhibit 10.12(c) to Amendment No. 1 to the Registration Statement on Form S-4 of The Nielsen Company B.V. filed on June 21, 2007 (File No. 333-142546-29)) The Nielsen Company Deferred Compensation Plan, as amended and restated, effective October 28, 2008 (incorporated herein by reference to Exhibit 10.13(c) to the quarterly report on Form 10-Q of The Nielsen Company B.V. for the fiscal quarter ended September 30, 2008, (File No. 333-142546-29)) 2006 Stock Acquisition and Option Plan for Key Employees of Nielsen Holdings plc and its Subsidiaries (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K file by the registrant on August 31, 2015 (File No. 001-35042)) 10.9(a)** Form of Management Stockholder’s Agreement (incorporated herein by reference to Exhibit 10.15 to the Annual Report on Form 10-K of The Nielsen Company B.V. filed on March 31, 2008 (File No. 333-142546-29)) 10.9(b)** Form of Sale Participation Agreement (incorporated herein by reference to Exhibit 10.16 to the Annual Report on Form 10- K of The Nielsen Company B.V. filed on March 31, 2008 (File No. 333-142546-29)) 10.9(c)** Form of Amendment to Management Stockholder’s Agreement and Sale Participation Agreement dated September 29, 2011, originally filed on March 31, 2008 (incorporated herein by reference to Exhibit 10.1 to the Form 10-Q of Nielsen Holdings N.V. filed on October 27, 2011 (File No. 001-35042)) 10.10(a)** Form of Stock Option Agreement (incorporated herein by reference to Exhibit 10.24(b) to the Quarterly report on Form 10- Q of The Nielsen Company B.V. for the fiscal quarter ended March 31, 2010 (File No. 333-142546-29)) 130 Exhibit No. Description 10.10(b)** Form of Stock Option Agreement (incorporated herein by reference to Exhibit 10.26 to Amendment No. 2 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on July 30, 2010 (File No. 333-167271)) 10.11(a)† 10.11(b)† 10.11(c) 10.11(d)† 10.11(e)† 10.12** 10.13** 10.14** 10.15** 10.16** 10.17** 10.18** Amended and Restated Master Services Agreement, effective as of October 1, 2007, by and between Tata America International Corporation & Tata Consultancy Services Limited and ACNielsen (US), Inc. (incorporated herein by reference to Exhibit 10.16(a) to Amendment No. 1 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on July 8, 2010 (File No. 333-167271)) Amendment Number 1 to the Amended and Restated Master Services Agreement, effective as of March 31, 2008, by and between Tata America International Corporation, Tata Consultancy Services Limited and ACNielsen (US), Inc. (incorporated herein by reference to Exhibit 10.16(b) to Amendment No. 1 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on January July 8, 2010 (File No. 333-167271)) Amendment Number 2 to the Amended and Restated Master Services Agreement, effective as of October 31, 2007, by and between Tata America International Corporation, Tata Consultancy Services Limited and ACNielsen (US), Inc. (incorporated herein by reference to Exhibit 10.16(c) to Amendment No. 1 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on July 8, 2010 (File No. 333-167271)) Amendment Number 3 to the Amended and Restated Master Services Agreement, effective as of May 11, 2009, by and between Tata America International Corporation, Tata Consultancy Services Limited and ACNielsen (US), Inc. (incorporated herein by reference to Exhibit 10.16(d) to Amendment No. 1 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on July 8, 2010 (File No. 333-167271)) Amendment Number Four to the Amended and Restated Master Services Agreement dated and made effective as of February 7, 2013, by and between Tata America International Corporation, Tata Consultancy Services Limited and The Nielsen Company (US), LLC. (incorporated herein by reference to Exhibit 10.1 to the Form 10-Q of Nielsen Holdings N.V. filed on April 25, 2013 (File No. 001-35042)) Form of Offer Letter, dated February 20, 2007, by and between The Nielsen Company B.V. and Brian J. West (incorporated herein by reference to Exhibit 10.19 to the Annual Report on Form 10-K of The Nielsen Company B.V. filed on March 31, 2008 (File No. 333-142546-29)) Amended and Restated Arbitron Inc. 2008 Equity Compensation Plan (incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K file by the registrant on August 31, 2015 (File No. 001-35042)) Nielsen Holdings N.V. Directors Deferred Compensation Plan, effective September 11, 2012 (incorporated herein by reference to Exhibit 10.3 to the Form 10-Q of Nielsen Holdings N.V. filed on October 22, 2012 (File No. 001-35042)) Amended and Restated Nielsen 2010 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K file by the registrant on August 31, 2015 (File No. 001-35042)) Form of Termination Protection Agreement (incorporated herein by reference to Exhibit 10.11 to Amendment No. 1 to the Registration Statement on Form S-4 of The Nielsen Company B.V. filed on June 21, 2007 (File No. 333-142546-29)) Nielsen Holdings Executive Annual Incentive Plan ((incorporated herein by reference to Annex A to the proxy statement on Form DEF14A filed on April 14, 2014 (File No. 001-35042)) Form of Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 10.27 to Amendment No. 2 to the Registration Statement on Form S-1 of Nielsen Holdings N.V. filed on July 30, 2010 (File No. 333-167271)) 10.19(a)** Form of Nielsen Holdings N.V. Performance Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on April 24, 2014 (File No. 001-35042)) 10.19(b)** Form of Nielsen N.V. Performance Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q filed on April 22, 2015 (File No. 001-35042)) 10.20** 10.21** 10.22** Form of Nielsen Holdings N.V. Performance Restricted Share Award Agreement (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on April 24, 2014 (File No. 001-35042)) Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K file by the registrant on August 31, 2015 (File No. 001-35042)) Form of Letter of Appointment (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K file by the registrant on August 31, 2015 (File No. 001-35042)) 131 Exhibit No. Description 21.1* Nielsen Holdings plc Active Subsidiaries 23.1* 31.1* 31.2* 32.1* 32.2* 101* Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm CEO 302 Certification pursuant to Rule 13a-15(e)/15d-15(e) CFO 302 Certification pursuant to Rule 13a-15(e)/15d-15(e) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) The following financial information from Nielsen Holdings plc’s Annual Report on Form 10-K for the year ended December 31, 2015, formatted in XBRL includes: (i) Consolidated Statements of Operations for the three years ended December 31, 2015, 2014 and 2013, (ii) Consolidated Statements of Comprehensive Income for the three years ended December 31, 2015, 2014 and 2013; (iii) Consolidated Balance Sheets at December 31, 2015 and 2014, (iv) Consolidated Statements of Cash Flows for the three years ended December 31, 2015, 2014 and 2013, (v) Consolidated Statements of Changes in Equity for the three years ended December 31, 2015, 2014 and 2013, and (vi) the Notes to the Consolidated Financial Statements. * Filed or furnished herewith. ** Management contract or compensatory plan in which directors and/or executive officers are eligible to participate. † Certain portions have been omitted in accordance with a request for confidential treatment that the Company has submitted to the SEC. Omitted information has been filed separately with the SEC. (1) Certain of the schedules and exhibits to the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Nielsen hereby undertakes to furnish supplementally to the Securities and Exchange Commission copies of any omitted schedules and exhibits upon request therefor by the Securities and Exchange Commission. 132 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] CORPORATE INFORMATION CORPORATE OFFICE Nielsen Holdings plc 85 Broad Street New York, NY 10004 United States REGISTERED ADDRESS AC Nielsen House London Road Oxford Oxfordshire OX3 9RX United Kingdom WEBSITE www.nielsen.com FORM 10-K AND OTHER REPORTS The Form 10-K, along with other Nielsen SEC filings and corporate governance documents, are available without charge on www.nielsen.com/investors. COMMON STOCK INFORMATION Nielsen’s common stock trades on the New York Stock Exchange under the symbol “NLSN.” INVESTOR RELATIONS Phone: +1-646-654-4602 E-mail: ir@nielsen.com Website: www.nielsen.com/investors TRANSFER AGENT, REGISTRAR Computershare P.O. Box 30170 College Station, TX 77842-3170 Overnight correspondence: Computershare 211 Quality Circle, Suite 210 College Station, TX 77845 TOLL-FREE NUMBER +1-866-332-7309 OUTSIDE U.S./CANADA +1-201-680-6578 HEARING IMPAIRED — TTY PHONE +1-781-575-4592 SHAREHOLDER ONLINE INQUIRIES www-us.computershare.com/investor/contact WEBSITE www.computershare.com/investor INDEPENDENT ACCOUNTANTS Ernst & Young LLP 5 Times Square New York, NY 10036 United States m o c . e s o p r u p n o s a e d i . w w w , e s o p r u P n O s a e d I : n g i s e D ADJUSTED EBITDA AND ADJUSTED NET INCOME RECONCILIATION ($ millions) Net income (Income)/loss from discontinued operations, net of tax Interest expense, net Provision for income taxes Depreciation and amortization EBITDA Equity in net (income)/loss of affiliates Other non-operating loss/(income), net Restructuring charges Stock-based compensation expense Other items(a) Adjusted EBITDA(b) Interest expense, net Depreciation and amortization Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes Stock-based compensation expense Interest expense attributable to mandatory convertible bonds Adjusted Net Income(c) 2015 $575 — 307 383 574 2014 $381 — 297 236 573 2013 $736 (305) 307 91 510 1,839 1,487 1,339 3 (175) 51 48 92 4 171 89 47 39 1,858 1,837 (307) (574) 205 (159) (48) (297) (573) 204 (154) (47) (2) 34 119 47 80 1,617 (307) (510) 162 (147) (47) — — 2 $975 $970 $770 (a) Other items primarily consist of non-recurring items and acquisition adjustments. (b) We define Adjusted EBITDA as net income or loss from our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, goodwill and intangible asset impairment charges, stock-based compensation expense, and other non-operating items from our consolidated statements of operations as well as certain other items considered unusual or non-recurring in nature. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. Adjusted EBITDA is not a presentation made in accordance with GAAP. (c) We define Adjusted Net Income as net income or loss from our consolidated statements of operations before income taxes, depreciation and amortization associated with acquired tangible and intangible assets, equity in net income of affiliates, restructuring charges, goodwill and intangible asset impairment charges, other non-operating items from our consolidated statements of operations, and certain other items considered unusual or non-recurring in nature, reduced by cash paid for income taxes. Adjusted Net Income is not a presentation made in accordance with GAAP. FREE CASH FLOW RECONCILIATION ($ millions) 2015 2014 2013 Net cash provided by operating activities Capital expenditures, net One-time Arbitron costs Excess tax benefits on stock-based compensation Free Cash Flow(a) $1,179 ($401) — $26 $1,093 ($412) — — $901 ($374) $46 — $804 $681 $573 (a) We define Free Cash Flow as net cash provided by operating activities, plus the adjustments for excess tax benefit on stock-based compensation in 2015, and one-time Arbitron costs in 2013, less capital expenditures. We believe providing Free Cash Flow information provides valuable supplemental information regarding the cash flow that may be available for discretionary use by us. Free Cash Flow is not a presentation made in accordance with GAAP. However, Free Cash Flow does not represent residual cash flows entirely available for discretionary purposes. Nielsen Holdings plc 85 Broad Street New York, NY 10004 United States www.nielsen.com 

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