Attached files
file | filename |
---|---|
EX-99 - EX-99.1 - Nielsen Holdings plc | nlsn-ex991_201309306.htm |
EX-23 - EX-23 - Nielsen Holdings plc | nlsn-ex23_2013093028.htm |
8-K/A - FORM 8-K/A - Nielsen Holdings plc | nlsn-8k_20130930.htm |
EX-99 - EX-99.3 - Nielsen Holdings plc | nlsn-ex993_201309308.htm |
EXHIBIT 99.2
Consolidated Balance Sheets
(In thousands, except par value data)
|
|
June 30, |
|
|
December 31, |
| ||
|
|
(Unaudited) |
|
|
(Audited) |
| ||
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
95,065 |
|
|
$ |
66,469 |
|
Trade accounts receivable, net of allowance for doubtful accounts of $4,477 as of June 30, 2013, and $4,856 as of December 31, 2012 |
|
|
61,919 |
|
|
|
59,185 |
|
Prepaid expenses and other current assets |
|
|
10,648 |
|
|
|
6,516 |
|
Deferred tax assets |
|
|
4,911 |
|
|
|
5,513 |
|
Total current assets |
|
|
172,543 |
|
|
|
137,683 |
|
Equity and other investments |
|
|
13,934 |
|
|
|
12,501 |
|
Property and equipment, net |
|
|
58,028 |
|
|
|
61,669 |
|
Goodwill, net |
|
|
45,461 |
|
|
|
45,540 |
|
Other intangibles, net |
|
|
6,893 |
|
|
|
8,177 |
|
Noncurrent deferred tax assets |
|
|
2,473 |
|
|
|
2,384 |
|
Other noncurrent assets |
|
|
757 |
|
|
|
1,138 |
|
Total assets |
|
$ |
300,089 |
|
|
$ |
269,092 |
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
14,700 |
|
|
$ |
11,407 |
|
Accrued expenses and other current liabilities |
|
|
24,141 |
|
|
|
33,879 |
|
Deferred revenue |
|
|
50,996 |
|
|
|
38,497 |
|
Total current liabilities |
|
|
89,837 |
|
|
|
83,783 |
|
Noncurrent liabilities |
|
|
29,352 |
|
|
|
31,900 |
|
Total liabilities |
|
|
119,189 |
|
|
|
115,683 |
|
Stockholders equity |
|
|
|
|
|
|
|
|
Preferred stock, $100.00 par value, 750 shares authorized, no shares issued |
|
|
|
|
|
|
|
|
Common stock, $0.50 par value, 500,000 shares authorized, 32,338 shares issued as of June 30, 2013, and December 31, 2012 |
|
|
16,169 |
|
|
|
16,169 |
|
Retained earnings |
|
|
183,417 |
|
|
|
156,530 |
|
Common stock held in treasury, 5,416 shares as of June 30, 2013, and 5,714 shares as of December 31, 2012 |
|
|
(2,708 |
) |
|
|
(2,857 |
) |
Accumulated other comprehensive loss |
|
|
(15,978 |
) |
|
|
(16,433 |
) |
Total stockholders equity |
|
|
180,900 |
|
|
|
153,409 |
|
Total liabilities and stockholders equity |
|
$ |
300,089 |
|
|
$ |
269,092 |
|
See accompanying notes to consolidated financial statements.
1
ARBITRON INC.
Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)
|
|
Three Months Ended |
| |||||
|
|
| ||||||
|
|
2013 |
|
|
2012 |
| ||
Revenue |
|
$ |
107,410 |
|
|
$ |
104,407 |
|
Costs and expenses |
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
65,323 |
|
|
|
63,205 |
|
Selling, general and administrative |
|
|
24,547 |
|
|
|
20,701 |
|
Research and development |
|
|
10,117 |
|
|
|
9,896 |
|
Total costs and expenses |
|
|
99,987 |
|
|
|
93,802 |
|
Operating income |
|
|
7,423 |
|
|
|
10,605 |
|
Equity in net income of affiliate |
|
|
5,495 |
|
|
|
5,391 |
|
Income before interest and income tax expense |
|
|
12,918 |
|
|
|
15,996 |
|
Interest income |
|
|
20 |
|
|
|
11 |
|
Interest expense |
|
|
131 |
|
|
|
132 |
|
Income before income tax expense |
|
|
12,807 |
|
|
|
15,875 |
|
Income tax expense |
|
|
5,754 |
|
|
|
5,912 |
|
Net income |
|
$ |
7,053 |
|
|
$ |
9,963 |
|
Income per weighted-average common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.26 |
|
|
$ |
0.38 |
|
Diluted |
|
$ |
0.26 |
|
|
$ |
0.37 |
|
Weighted-average common shares used in calculations |
|
|
|
|
|
|
|
|
Basic |
|
|
26,878 |
|
|
|
26,318 |
|
Potentially dilutive securities |
|
|
567 |
|
|
|
486 |
|
Diluted |
|
|
27,445 |
|
|
|
26,804 |
|
Dividends declared per common share outstanding |
|
$ |
0.10 |
|
|
$ |
0.10 |
|
See accompanying notes to consolidated financial statements.
2
ARBITRON INC.
Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)
|
|
Six Months Ended |
| |||||
|
|
| ||||||
|
|
2013 |
|
|
2012 |
| ||
Revenue |
|
$ |
219,194 |
|
|
$ |
210,801 |
|
Costs and expenses |
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
114,924 |
|
|
|
110,653 |
|
Selling, general and administrative |
|
|
47,045 |
|
|
|
38,704 |
|
Research and development |
|
|
19,431 |
|
|
|
19,614 |
|
Total costs and expenses |
|
|
181,400 |
|
|
|
168,971 |
|
Operating income |
|
|
37,794 |
|
|
|
41,830 |
|
Equity in net income of affiliate |
|
|
3,108 |
|
|
|
3,035 |
|
Income before interest and income tax expense |
|
|
40,902 |
|
|
|
44,865 |
|
Interest income |
|
|
42 |
|
|
|
31 |
|
Interest expense |
|
|
296 |
|
|
|
261 |
|
Income before income tax expense |
|
|
40,648 |
|
|
|
44,635 |
|
Income tax expense |
|
|
17,305 |
|
|
|
16,865 |
|
Net income |
|
$ |
23,343 |
|
|
$ |
27,770 |
|
Income per weighted-average common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.87 |
|
|
$ |
1.04 |
|
Diluted |
|
$ |
0.85 |
|
|
$ |
1.02 |
|
Weighted-average common shares used in calculations |
|
|
|
|
|
|
|
|
Basic |
|
|
26,786 |
|
|
|
26,782 |
|
Potentially dilutive securities |
|
|
580 |
|
|
|
491 |
|
Diluted |
|
|
27,366 |
|
|
|
27,273 |
|
Dividends declared per common share outstanding |
|
$ |
0.20 |
|
|
$ |
0.20 |
|
See accompanying notes to consolidated financial statements.
3
ARBITRON INC.
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
| ||||||||||
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
| ||||
Net income |
|
$ |
7,053 |
|
|
$ |
9,963 |
|
|
$ |
23,343 |
|
|
$ |
27,770 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(367 |
) |
|
|
(664 |
) |
|
|
(297 |
) |
|
|
(271 |
) |
Retirement liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net actuarial loss included in net periodic cost |
|
|
622 |
|
|
|
523 |
|
|
|
1,245 |
|
|
|
1,050 |
|
Retirement liabilitiesbefore tax |
|
|
622 |
|
|
|
523 |
|
|
|
1,245 |
|
|
|
1,050 |
|
Income tax expense |
|
|
(246 |
) |
|
|
(205 |
) |
|
|
(493 |
) |
|
|
(410 |
) |
Retirement liabilitiesafter tax |
|
|
376 |
|
|
|
318 |
|
|
|
752 |
|
|
|
640 |
|
Other comprehensive income (loss), net of tax |
|
|
9 |
|
|
|
(346 |
) |
|
|
455 |
|
|
|
369 |
|
Comprehensive income |
|
$ |
7,062 |
|
|
$ |
9,617 |
|
|
$ |
23,798 |
|
|
$ |
28,139 |
|
See accompanying notes to consolidated financial statements.
4
ARBITRON INC.
Consolidated Statements of Cash Flows
(In thousands and unaudited)
|
|
Six Months Ended June 30, |
| |||||
|
|
2013 |
|
|
2012 |
| ||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
23,343 |
|
|
$ |
27,770 |
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization of property and equipment |
|
|
12,242 |
|
|
|
14,137 |
|
Amortization of other intangible assets |
|
|
1,224 |
|
|
|
1,220 |
|
Loss on asset disposals and impairments of property and equipment |
|
|
956 |
|
|
|
733 |
|
Deferred income taxes |
|
|
513 |
|
|
|
(1,687 |
) |
Equity in net income of affiliate |
|
|
(3,108 |
) |
|
|
(3,035 |
) |
Distributions from affiliate |
|
|
1,675 |
|
|
|
4,300 |
|
Bad debt expense |
|
|
557 |
|
|
|
860 |
|
Non-cash share-based compensation |
|
|
3,903 |
|
|
|
4,377 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
(3,308 |
) |
|
|
722 |
|
Prepaid expenses and other assets |
|
|
(4,604 |
) |
|
|
(548 |
) |
Accounts payable |
|
|
3,428 |
|
|
|
(1,319 |
) |
Accrued expenses and other current liabilities |
|
|
(15,015 |
) |
|
|
(10,770 |
) |
Deferred revenue |
|
|
12,499 |
|
|
|
15,227 |
|
Noncurrent liabilities |
|
|
420 |
|
|
|
1,667 |
|
Net cash provided by operating activities |
|
|
34,725 |
|
|
|
53,654 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Additions to property and equipment |
|
|
(9,790 |
) |
|
|
(10,627 |
) |
Net cash used in investing activities |
|
|
(9,790 |
) |
|
|
(10,627 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from stock option exercises and stock purchase plan |
|
|
5,187 |
|
|
|
3,311 |
|
Stock repurchases |
|
|
|
|
|
|
(50,025 |
) |
Dividends paid to stockholders |
|
|
(2,676 |
) |
|
|
(5,454 |
) |
Excess tax benefits realized from share-based awards |
|
|
1,261 |
|
|
|
554 |
|
Net cash provided by (used in) financing activities |
|
|
3,772 |
|
|
|
(51,614 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(111 |
) |
|
|
(55 |
) |
Net change in cash and cash equivalents |
|
|
28,596 |
|
|
|
(8,642 |
) |
Cash and cash equivalents at beginning of period |
|
|
66,469 |
|
|
|
19,715 |
|
Cash and cash equivalents at end of period |
|
$ |
95,065 |
|
|
$ |
11,073 |
|
See accompanying notes to consolidated financial statements.
5
Notes to Consolidated Financial Statements
June 30, 2013
(unaudited)
1. |
Basis of Presentation and Consolidation |
Presentation
The accompanying unaudited consolidated financial statements of Arbitron Inc. (the Company or Arbitron) have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included and are of a normal recurring nature. The consolidated balance sheet as of December 31, 2012 was audited as of that date, but all of the information and notes as of December 31, 2012 required by GAAP have not been included in this Form 10-Q. For further information, refer to the consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2012. Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform to the current periods presentation.
Consolidation
The consolidated financial statements of Arbitron for the six-month period ended June 30, 2013, reflect the consolidated financial position, results of operations and cash flows of the Company and its wholly-owned subsidiaries: Arbitron Holdings Inc., Arbitron Mobile Oy, Astro West LLC, Cardinal North LLC, Ceridian Infotech (India) Private Limited, Arbitron International, LLC, and Arbitron Technology Services India Private Limited. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has one segment which meets the quantitative thresholds for being a reportable segment.
2. |
New Accounting Pronouncements |
Testing Other Intangibles for Impairment . In July 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2012-02, Intangibles Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02), to allow entities to use a qualitative approach to test indefinite-lived assets for impairment. ASU 2012-02 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to calculate the fair value of the intangible asset and perform the quantitative impairment test. Otherwise, the entity need not perform the quantitative impairment test. ASU 2012-02 is effective for the Company for interim and annual periods ended during 2013. The adoption of this guidance had no impact on the Companys consolidated financial statements.
Comprehensive Income Presentation. In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02), to require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. ASU 2013-02 is effective for the Company beginning with interim and annual periods ended during 2013. The Company has adopted this guidance and disclosed the appropriate information within the consolidated financial statements and notes to the financial statements for the periods presented.
3. |
Pending Merger with Nielsen Holdings N.V. |
On December 17, 2012, the Company entered into an Agreement and Plan of Merger, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of January 25, 2013, with Nielsen Holdings N.V. (Nielsen) and TNC Sub I Corporation, a Delaware corporation and an indirect wholly-owned subsidiary of Nielsen (Merger Sub), pursuant to which, subject to satisfaction or waiver of the conditions therein, Merger Sub will merge with and into the Company (the Merger) with Arbitron surviving as an indirect wholly-owned subsidiary of Nielsen. The transaction has been approved by the boards of both companies. On April 16, 2013, the Companys shareholders approved the adoption of the Merger. The Merger remains subject to certain regulatory approvals, including expiration of the Hart-Scott-Rodino antitrust waiting period, and customary closing conditions. The Company
6
recognized $9.4 million in selling, general, and administrative expense for consulting and legal services received in association with the Merger during the six-month period ended June 30, 2013. For additional information regarding the business risks associated with pursuing the Merger, see Item 1A. Risk Factors Risk Factors Relating to the Merger, in the Companys Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC.
4. |
Stockholders Equity |
Changes in stockholders equity for the six-month period ended June 30, 2013, were as follows (in thousands):
|
|
Shares |
|
|
Common |
|
|
Treasury |
|
|
Retained |
|
|
Accumulated |
|
|
Total |
| ||||||
Balance as of December 31, 2012 |
|
|
26,624 |
|
|
$ |
16,169 |
|
|
$ |
(2,857 |
) |
|
$ |
156,530 |
|
|
$ |
(16,433 |
) |
|
$ |
153,409 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,343 |
|
|
|
|
|
|
|
23,343 |
|
Common stock issued from treasury stock |
|
|
298 |
|
|
|
|
|
|
|
149 |
|
|
|
3,747 |
|
|
|
|
|
|
|
3,896 |
|
Excess tax benefits from share-based awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,261 |
|
|
|
|
|
|
|
1,261 |
|
Non-cash share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,903 |
|
|
|
|
|
|
|
3,903 |
|
Dividends declared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,367 |
) |
|
|
|
|
|
|
(5,367 |
) |
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
455 |
|
|
|
455 |
|
Balance as of June 30, 2013 |
|
|
26,922 |
|
|
$ |
16,169 |
|
|
$ |
(2,708 |
) |
|
$ |
183,417 |
|
|
$ |
(15,978 |
) |
|
$ |
180,900 |
|
A quarterly cash dividend of $0.10 per common share was paid to stockholders on July 1, 2013.
5. |
Net Income per Weighted-Average Common Share |
The computations of basic and diluted net income per weighted-average common share for the six-month periods ended June 30, 2013, and 2012, are based on the Companys weighted-average shares of common stock and potentially dilutive securities outstanding. Potentially dilutive securities are calculated in accordance with the treasury stock method, which assumes the proceeds from the exercise of all dilutive stock options are used to repurchase the Companys common stock at the average market price for the period.
As of June 30, 2013, and 2012, there were stock options to purchase 1,469,890 shares, and 2,012,378 shares of the Companys common stock outstanding, respectively, of which stock options to purchase 148,426 shares, and 1,295,172 shares of the Companys common stock, respectively, were excluded from the computation of the diluted net income per weighted-average common share for the six-month periods ended June 30, 2013, and 2012, respectively, either because the stock options exercise prices were greater than the average market price of the Companys common shares or assumed repurchases from proceeds from the stock options exercise were antidilutive.
6. |
Accumulated Other Comprehensive Loss |
The changes in accumulated other comprehensive loss for the three- and six-month periods ended June 30, 2013, and 2012, were as follows (in thousands):
|
|
Three Months Ended June 30, 2013 |
|
|
Three Months Ended June 30, 2012 |
| ||||||||||||||||||
|
|
Foreign |
|
|
Retirement |
|
|
Total |
|
|
Foreign |
|
|
Retirement |
|
|
Total |
| ||||||
Beginning balance |
|
$ |
(2,168 |
) |
|
$ |
(13,819 |
) |
|
$ |
(15,987 |
) |
|
$ |
(1,755 |
) |
|
$ |
(13,131 |
) |
|
$ |
(14,886 |
) |
Other comprehensive income before reclassification adjustments |
|
|
(367 |
) |
|
|
|
|
|
|
(367 |
) |
|
|
(664 |
) |
|
|
|
|
|
|
(664 |
) |
Amounts reclassified from accumulated other comprehensive loss |
|
|
|
|
|
|
376 |
{a} |
|
|
376 |
|
|
|
|
|
|
|
318 |
{a} |
|
|
318 |
|
Net current period other comprehensive income |
|
|
(367 |
) |
|
|
376 |
|
|
|
9 |
|
|
|
(664 |
) |
|
|
318 |
|
|
|
(346 |
) |
Ending balance |
|
$ |
(2,535 |
) |
|
$ |
(13,443 |
) |
|
$ |
(15,978 |
) |
|
$ |
(2,419 |
) |
|
$ |
(12,813 |
) |
|
$ |
(15,232 |
) |
7
|
Six Months Ended June 30, 2013 |
|
|
Six Months Ended June 30, 2012 |
| |||||||||||||||||||
|
|
Foreign |
|
|
Retirement |
|
|
Total |
|
|
Foreign |
|
|
Retirement |
|
|
Total |
| ||||||
Beginning balance |
|
$ |
(2,238 |
) |
|
$ |
(14,195 |
) |
|
$ |
(16,433 |
) |
|
$ |
(2,148 |
) |
|
$ |
(13,453 |
) |
|
$ |
(15,601 |
) |
Other comprehensive income before reclassification adjustments |
|
|
(297 |
) |
|
|
|
|
|
|
(297 |
) |
|
|
(271 |
) |
|
|
|
|
|
|
(271 |
) |
Amounts reclassified from accumulated other comprehensive loss |
|
|
|
|
|
|
752 |
{a} |
|
|
752 |
|
|
|
|
|
|
|
640 |
{a} |
|
|
640 |
|
Net current period other comprehensive income |
|
|
(297 |
) |
|
|
752 |
|
|
|
455 |
|
|
|
(271 |
) |
|
|
640 |
|
|
|
369 |
|
Ending balance |
|
$ |
(2,535 |
) |
|
$ |
(13,443 |
) |
|
$ |
(15,978 |
) |
|
$ |
(2,419 |
) |
|
$ |
(12,813 |
) |
|
$ |
(15,232 |
) |
All amounts are net of tax. Amounts in parentheses indicate debits.
{a} |
These components were reclassified, gross of tax, as part of net periodic cost associated with the amortization of the actuarial loss related to the Companys benefit plan obligations. See Note 7 for additional details. |
7. |
Retirement Plans |
Certain of the Companys United States employees participate in a defined-benefit pension plan that closed to new participants effective January 1, 1995. The Company has a nonqualified, unfunded supplemental retirement plan, as well as a postretirement healthcare plan for eligible retired employees who participate in the pension plan and were hired before January 1, 1992. The components of periodic benefit costs for the defined-benefit pension, postretirement healthcare and supplemental retirement plans were as follows for the three- and six-month periods ended June 30, 2013, and 2012 (in thousands):
|
|
Defined-Benefit |
|
|
Postretirement Healthcare |
|
|
Supplemental |
| |||||||||||||||
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
| ||||||
Service cost |
|
$ |
254 |
|
|
$ |
216 |
|
|
$ |
10 |
|
|
$ |
10 |
|
|
$ |
13 |
|
|
$ |
8 |
|
Interest cost |
|
|
471 |
|
|
|
477 |
|
|
|
14 |
|
|
|
18 |
|
|
|
40 |
|
|
|
40 |
|
Expected return on plan assets |
|
|
(559 |
) |
|
|
(509 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net actuarial loss {a} |
|
|
564 |
|
|
|
470 |
|
|
|
2 |
|
|
|
5 |
|
|
|
56 |
|
|
|
48 |
|
Net periodic benefit cost |
|
$ |
730 |
|
|
$ |
654 |
|
|
$ |
26 |
|
|
$ |
33 |
|
|
$ |
109 |
|
|
$ |
96 |
|
|
|
Defined-Benefit |
|
|
Postretirement Healthcare |
|
|
Supplemental |
| |||||||||||||||
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
| ||||||
Service cost |
|
$ |
508 |
|
|
$ |
431 |
|
|
$ |
19 |
|
|
$ |
18 |
|
|
$ |
25 |
|
|
$ |
15 |
|
Interest cost |
|
|
941 |
|
|
|
953 |
|
|
|
29 |
|
|
|
36 |
|
|
|
79 |
|
|
|
80 |
|
Expected return on plan assets |
|
|
(1,118 |
) |
|
|
(1,018 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net actuarial loss {a} |
|
|
1,128 |
|
|
|
943 |
|
|
|
4 |
|
|
|
11 |
|
|
|
113 |
|
|
|
96 |
|
Net periodic benefit cost |
|
$ |
1,459 |
|
|
$ |
1,309 |
|
|
$ |
52 |
|
|
$ |
65 |
|
|
$ |
217 |
|
|
$ |
191 |
|
{a} |
The total amount of amortization of net actuarial loss for all retirement plans was $622 and $523 for the three-month periods ended June 30, 2013, and 2012, respectively, and $1,245 and $1,050 for the six-month periods ended June 30, 2013, and 2012, respectively. |
8. |
Arbitron Mobile Contingent Consideration |
On July 28, 2011, a wholly-owned subsidiary of the Company acquired Zokem Oy, which is now being consolidated as Arbitron Mobile. The purchase price was $10.6 million in cash plus a contingent consideration arrangement. The contingent consideration arrangement provides for possible additional cash payments to be made by the Company to the former Zokem Oy shareholders through 2015 of up to $12.0 million, which are contingent upon Arbitron Mobile reaching certain financial performance targets in the future. The Company periodically reassesses the fair value of the contingent consideration by applying the income approach method. The key assumptions used in the fair value valuation include a probability-weighted range of performance targets for the four-year measurement period of 2012 through 2015 and an adjusted discount rate. As of both June 30, 2013 and December 31,
8
2012, the Companys fair value estimate of the contingent consideration was $0.6 million, which is recorded as a portion of noncurrent liabilities on the Companys consolidated balance sheet.
9. |
Taxes |
The effective tax rate increased to 42.6% for the six-month period ended June 30, 2013, from 37.8% for the six-month period ended June 30, 2012. This increase for the six-month period ended June 30, 2013, as compared to the same period of 2012, resulted primarily from certain nondeductible transaction costs anticipated during 2013 in relation to the pending Merger.
During the six-month period ended June 30, 2013, the Companys unrecognized tax benefits for certain tax contingencies decreased from $1.3 million as of December 31, 2012, to $1.2 million as of June 30, 2013. The decrease is primarily attributable to the settlement of various state income tax audits. If recognized, the $1.2 million in unrecognized tax benefits would reduce the Companys effective tax rate in future periods. Income taxes paid for the six-month periods ended June 30, 2013 and 2012, were $21.7 million and $19.0 million, respectively.
10. |
Share-Based Compensation |
The following table sets forth information with regard to the income statement recognition of share-based compensation for the three- and six-month periods ended June 30, 2013, and 2012 (in thousands):
|
|
Three Months |
|
|
Three Months |
|
|
Six Months |
|
|
Six Months |
| ||||
Cost of revenue |
|
$ |
194 |
|
|
$ |
97 |
|
|
$ |
249 |
|
|
$ |
243 |
|
Selling, general and administrative |
|
|
1,345 |
|
|
|
2,018 |
|
|
|
3,464 |
|
|
|
3,940 |
|
Research and development |
|
|
115 |
|
|
|
94 |
|
|
|
190 |
|
|
|
194 |
|
Share-based compensation |
|
$ |
1,654 |
|
|
$ |
2,209 |
|
|
$ |
3,903 |
|
|
$ |
4,377 |
|
No share-based compensation cost was capitalized during the six-month periods ended June 30, 2013, and 2012.
Stock Options
Stock options awarded to employees under the Companys 2008 Equity Compensation Plan (2008 Plan) generally vest annually over a three-year period, have a 10-year term and have an exercise price equal to the fair market value of the Companys common stock at the date of grant. Compensation expense for stock options is recognized on a straight-line basis over the vesting period using the fair value of each stock option estimated as of the grant date.
For the three-month period ended June 30, 2013, no stock options were granted. For the three-month period ended June 30, 2012, the number of stock options granted was 12,511, and the weighted-average exercise price for those stock options granted was $35.46.
For the six-month period ended June 30, 2013, no stock options were granted. For the six-month period ended June 30, 2012, the number of stock options granted was 106,466, and the weighted-average exercise price for those stock options granted was $34.06.
As of June 30, 2013, there was $2.1 million in total unrecognized compensation cost related to unvested stock options. This aggregate unrecognized cost is expected to be recognized over a weighted-average remaining period of 1.7 years. The weighted-average exercise price and weighted-average remaining contractual term for outstanding stock options as of June 30, 2013, were $33.49 and 5.6 years, respectively.
Service and Performance Award Units
Service award units. The Company granted service award units under the 2008 Plan to certain employees. These employee service award units (i) were issued at the fair market value of the Companys common stock on the date of grant, (ii) generally vest in equal annual installments over four years beginning on the first anniversary date of the grant, except for service award units granted to the Companys executives since December 30, 2012, which vest in 12 equal quarterly installments following the date of the grant for the CEO and 16 equal quarterly installments following the date of grant for the Companys other executives, and (iii) for any unvested units, expire without vesting if the employee is no longer employed by the Company.
9
For 2013 and 2012, the Board members had the right to elect to receive all or a portion of their annual compensation as Board service award units. These Board service award units (i) were issued at the fair market value of the Companys common stock on the date of grant, and (ii) vest completely on the first anniversary date of the grant.
Compensation expense for service award units is recognized on a straight-line basis over the vesting period using the fair market value of the Companys common stock on the date of grant. As of June 30, 2013, there was $7.6 million of total unrecognized compensation cost related to unvested service award units granted to certain Board members and employees. This aggregate unrecognized cost for service award units is expected to be recognized over a weighted-average period of approximately 3.2 years.
Additional information for the three- and six-month periods ended June 30, 2013, and 2012, is noted in the following table (dollars in thousands, except per share amounts):
Total Service Award Units Granted to Board and Employees |
|
Three Months |
|
|
Three Months |
|
|
Six Months |
|
|
Six Months |
| ||||
Number of service award units granted during the period |
|
|
6,408 |
|
|
|
10,223 |
|
|
|
121,113 |
|
|
|
10,223 |
|
Weighted average grant-date fair value per share granted during the period |
|
$ |
46.82 |
|
|
$ |
35.46 |
|
|
$ |
46.80 |
|
|
$ |
35.46 |
|
Fair value of service award shares vested during the period |
|
$ |
2,104 |
|
|
$ |
1,292 |
|
|
$ |
2,497 |
|
|
$ |
1,740 |
|
Performance award units. During the six-month period ended June 30, 2013, the Company did not grant any performance award units. During the six-month period ended June 30, 2012, the Company granted performance award units under the 2008 Plan. These performance award units (i) were issued at the fair market value of the Companys common stock on the date of grant, (ii) will vest in four equal annual installments beginning with the first anniversary date of the grant, and (iii) for any unvested units, expire without vesting if the recipient is no longer employed by the Company. The performance goal for these performance award units was met.
Compensation expense for performance award units is recognized (i) using the fair market value of the Companys common stock on the date of grant, and (ii) on a graded basis, which is accelerated as compared to a straight-line expense attribution method. As of June 30, 2013, there was $0.8 million of total unrecognized compensation cost related to unvested performance award units. This aggregate unrecognized cost is expected to be recognized over a weighted-average period of 2.1 years.
Additional information for the three- and six-month periods ended June 30, 2013, and 2012, is noted in the following table (dollars in thousands, except per share amounts):
Total Performance Award Units Granted |
|
Three Months |
|
|
Three Months |
|
|
Six Months |
|
|
Six Months |
| ||||
Number of performance award units granted during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,229 |
|
Weighted average grant-date fair value per share granted during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
33.87 |
|
Fair value of performance award shares vested during the period |
|
$ |
422 |
|
|
$ |
325 |
|
|
$ |
1,508 |
|
|
$ |
847 |
|
Board DSUs . The Company issues deferred stock units to its Board of Directors (Board DSUs) under the 2008 Plan. These Board DSUs (i) were issued at the fair market value of the Companys common stock on the date of grant and (ii) if vested, will be convertible to shares of the Companys common stock subsequent to termination of service as a director. For 2013 and 2012, the Board members had the right to elect to receive all or a portion of their annual compensation as Board DSUs that vest completely on the first anniversary date of the grant. For 2011 and 2010, annual grants were issued to the Board as Board DSUs that vest annually in three equal installments over three-year periods.
During the six-month period ended June 30, 2012, the Board members had the right to elect to receive all or a portion of their retainer and meeting attendance fees as Board DSUs, which vest immediately. Board DSUs are only granted to nonemployee Directors. Board DSUs also include dividend equivalent DSUs, which vest immediately upon the date of grant.
Compensation expense for Board DSUs is recognized on a straight-line basis over the vesting period using the fair market value of the Companys common stock on the date of grant. As of June 30, 2013, there was $0.9 million of total unrecognized
10
compensation cost related to Board DSUs granted to nonemployee directors. This aggregate unrecognized cost is expected to be recognized over the weighted-average period of less than 1.0 year.
Former CEO DSUs. Prior to 2013, the Company granted deferred stock unit awards under the 2008 Plan to its then current CEO (Former CEO DSUs), whose employment with the Company ended during the first quarter of 2013. These Former CEO DSUs (i) were granted at the fair market value of the Companys stock on the date of grant, (ii) generally vest annually over a four-year period on each anniversary date of the grant, (iii) provide for accelerated vesting upon termination without cause or the former CEOs retirement as defined in his employment agreement, and (iv) are convertible into shares of the Companys common stock, following the holders termination of employment, in accordance with the former CEOs employment agreement. As of June 30, 2013, there was no unrecognized compensation cost related to these Former CEO DSUs.
Additional information related to both Board DSUs and Former CEO DSUs for the three- and six-month periods ended June 30, 2013, and 2012, is noted in the following table (dollars in thousands, except per share amounts):
Board DSUs and Former CEO DSUs |
|
Three Months |
|
|
Three Months |
|
|
Six Months |
|
|
Six Months |
| ||||
Number of shares granted during the period |
|
|
15,410 |
|
|
|
21,179 |
|
|
|
16,181 |
|
|
|
82,798 |
|
Number of DSUs converted to common stock shares during the period |
|
|
|
|
|
|
|
|
|
|
47,189 |
|
|
|
|
|
Weighted-average grant date fair value per share granted during the period |
|
$ |
46.82 |
|
|
$ |
35.41 |
|
|
$ |
46.83 |
|
|
$ |
34.31 |
|
Fair value of shares vested during the period |
|
$ |
1,221 |
|
|
$ |
554 |
|
|
$ |
1,328 |
|
|
$ |
1,624 |
|
11. |
Concentration Risk |
Arbitron is a leading media and marketing information services firm primarily serving radio, advertisers, advertising agencies, cable and broadcast television, retailers, out-of-home media, online media, mobile media, telecommunications providers, and print media. The Companys quantitative radio audience ratings service and related software licensing revenue accounted for the following percentages, in the aggregate, of total Company revenue:
|
|
Three Months |
|
|
Three Months |
|
|
Six Months |
|
|
Six Months |
| ||||
Quantitative radio audience ratings service and related software licensing revenue |
|
|
81 |
% |
|
|
82 |
% |
|
|
88 |
% |
|
|
89 |
% |
The Company had one customer that individually represented approximately 19% of its revenue for the six-month period ended June 30, 2013. The Company had two customers that individually represented approximately 22%, and 20% of its total accounts receivable balance as of June 30, 2013, and one customer that individually represented approximately 26% of its total accounts receivable balance as of December 31, 2012. The Company has historically experienced a high level of contract renewals.
12. |
Stock Repurchases |
On February 9, 2012, the Companys Board of Directors authorized a program to repurchase up to $100.0 million in shares of the Companys outstanding common stock through either periodic open-market or private transactions, in accordance with applicable insider trading and other securities laws and regulations, at then-prevailing market prices over a period of up to two years ending February 9, 2014. As of June 30, 2013, the Company had repurchased 1,372,853 shares of its outstanding common stock under this program for approximately $50.0 million, which were repurchased during the six-month period ended June 30, 2012. No shares of the Companys common stock were repurchased during the six-month period ended June 30, 2013.
11