SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): June 30, 1998
NIELSEN MEDIA RESEARCH, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-12275 06-1450569
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
299 Park Avenue
New York, New York 10171
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 708-7500
ITEM 5. Other Events
On January 15, 1998, the Board of Directors of the Registrant (formerly
named Cognizant Corporation) approved in principle a plan to distribute to
the holders of common stock of the Registrant (the "Distribution") all of the
common stock of the Registrant's subsidiary, IMS Health Incorporated ("IMS
HEALTH"). On June 15, 1998, the Registrant's Board of Directors formally
approved the Distribution and declared a dividend payable to each holder of
record of the Registrant's common stock at the close of business on June 25,
1998 (the "Record Date") of one share of IMS HEALTH common stock for each
share of the Registrant's common stock held by such holder at the close of
business on the Record Date. Prior to the Distribution, the Registrant
contributed to IMS HEALTH all or substantially all of the businesses which
comprise the IMS HEALTH business and which accounted for approximately 75% of
the Registrant's revenues and 68% of the Registrant's operating income in
1997. Certificates representing shares of IMS HEALTH common stock were mailed
to stockholders of the Registrant on or about June 30, 1998. The Registrant
has received a ruling from the Internal Revenue Service to the effect that
the Distribution will be tax-free to the Registrant and its stockholders.
As a result of the Distribution, the Registrant has separated into two
independent publicly traded companies: (i) IMS HEALTH, the leading global
provider of information solutions to the pharmaceutical and healthcare
industries and (ii) Nielsen Media Research, Inc., the leader in television
audience measurement services in North America.
IMS HEALTH is a newly created Delaware corporation, the businesses of
which focus on information solutions to the pharmaceutical and healthcare
industries. Covering over 90 countries with over 7,200 employees worldwide,
IMS HEALTH's businesses include those of I.M.S. International, Inc., the
leading global supplier of market information and decision-support services
to the pharmaceutical and healthcare industries; Erisco, Inc., a leading
supplier of software-based administrative and analytical solutions to the
managed care industry; Cognizant Enterprises, Inc., a venture capital unit
focused on investments in emerging healthcare businesses; Cognizant
Technology Solutions Corporation, a provider of software application
development and maintenance services and Year 2000 and Eurocurrency
compliance services; SSJ K.K., an entity based in Japan which markets
financial application software products and services tailored for the
Japanese market; and an equity investment in Gartner Group, Inc., the leading
supplier of research and analysis to the information technology industry.
Shares of IMS HEALTH Common Stock trade on the New York Stock Exchange, Inc.
(the "NYSE") under the symbol "RX".
The Registrant is the leading source of television audience measurement
services in North America. The Nielsen Media Research business, which prior
to the Distribution had been conducted by the Registrant's subsidiary,
Nielsen Media Research, Inc., continues to be conducted by the Registrant. At
the time of the Distribution, such subsidiary was merged into the Registrant
and as a result of such merger, the Registrant changed its name to Nielsen
Media Research, Inc. The Registrant's common stock continues to trade on the
NYSE after the Distribution, but the symbol under which it trades has been
changed from "CZT" to "NMR".
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As a result of the Distribution, the Registrant does not have any
ownership interest in IMS HEALTH, and IMS HEALTH is an independent public
company. In addition, IMS HEALTH does not have any ownership interest in the
Registrant (other than 800,000 shares of common stock of the Registrant which
IMS HEALTH has agreed to sell promptly after the Distribution).
IMS HEALTH and the Registrant have entered into certain agreements
governing the relationship between IMS HEALTH and the Registrant subsequent
to the Distribution and providing for the allocation of tax, employee
benefits and certain other assets and liabilities and obligations arising
from periods prior to the Distribution, including contingent liabilities
relating to certain litigation. Forms of such agreements are filed as
Exhibits 99.2 to 99.5 to this Form 8-K and are incorporated herein by
reference. In addition, Mr. Robert E. Weissman and Mr. M. Bernard Puckett
currently serve on the boards of directors of both companies.
In connection with the Distribution, the Registrant borrowed $300
million, the proceeds of which were used to repay existing intercompany
indebtedness to certain entities included in IMS HEALTH. This debt is an
obligation of the Registrant. IMS HEALTH retained $100 million in
pre-existing minority-interest financing.
Retroactive Restatement of Diluted Earnings Per Share Data
In accordance with the methodology provided for in the Employee
Benefits Agreement between Cognizant Corporation ("Cognizant") and IMS
HEALTH Incorporated (attached hereto as Exhibit 99.4), each unexercised
Cognizant stock option held by a Nielsen Media Research, Inc. ("Nielsen Media
Research") employee was converted into 12.3275 Nielsen Media Research stock
options. The data below includes Nielsen Media Research's previously reported
diluted earnings per share data adjusted retroactively to reflect the
conversion of the unexercised Cognizant stock options held by Nielsen Media
Research employees.
Nielsen Media Research Selected Financial Data
Three Months
Ended March 31, Year Ended December 31,
------------------------- -------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited)
($ amounts in thousands,
except per share data)
Income Statement Data:
Operating Revenue $96,064 $86,271 $358,594 $319,404 $288,652 $250,303 $209,894
Net Income $14,246 $12,730 $ 52,475 $ 47,605 $ 40,412 $ 30,115 $ 19,661
Earnings Per Share- Basic $ 0.09 $ 0.07 $ 0.32 $ 0.28 $ 0.24 $ 0.18 --
Earnings Per Share -
Diluted (as restated) $ 0.08 $ 0.07 $ 0.31 $ 0.28 $ 0.24 $ 0.18 --
Average Number of Shares
Outstanding - Basic 162,406,000 169,770,000 165,163,000 169,944,000 169,522,000 169,946,000
Dilutive Effect of Shares
Issuable Under Stock
Options (as restated) 8,889,163 133,038 3,541,974 729,418 -- --
Adjustment of Shares
Applicable to Exercise of
Stock Options (as restated) 2,400,879 123,928 2,646,307 -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Average Number of Shares
Outstanding - Diluted
(as restated) 173,696,042 170,026,967 171,351,282 170,673,418 169,522,000 169,946,000
Balance Sheet Data:
Total Assets $199,645 $178,598 $192,434 $170,331 $134,521 $138,842 $ 97,831
Long-Term Debt $ - $ - $ - $ - $ 78 $ 244 $ 411
Proforma Earnings Per Share Data
In addition, on July 8, 1998, the Board of Directors of Nielsen Media
Research approved a 1-for-3 reverse stock split which is subject to
shareholder approval by shareholders of record as of July 31, 1998 at a
special meeting of shareholders to be held on August 26, 1998. If approved,
shareholders at the close of business on the record date will receive one new
share of Nielsen Media Research Common Stock in exchange for three old
shares. As a result of the reverse stock split, basic and diluted earnings
per share reflected on a proforma basis would be as follows (afer giving
effect to the conversion of the unexercised Cognizant stock options to
Nielsen Media Research stock options referred to above).
Three Months
Ended March 31, Year Ended December 31,
----------------------- -------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ---------- ----------- ----------- ----------- ----------- -----------
Proforma Basic Earnings Per Share
- Unaudited $ 0.26 $ 0.22 $ .95 $ .84 $ .72 $ .54 -
Proforma Diluted Earnings Per Share
- Unaudited $ 0.25 $ 0.22 $ .92 $ .84 $ .72 $ .54 -
Attached hereto as Exhibit 99.1 is the Information Statement dated as of
June 22, 1998 (the "Information Statement") which the Registrant has sent to
each of the record holders of its common stock as of the close of business on
the Record Date. The Information Statement contains additional information
regarding the Distribution and the Registrant. All of the information
included in the following sections of the Information Statement is
incorporated herein by reference:
Questions and Answers About the Distribution and Related Matters
Information Statement Summary
Forward-Looking Statements
Risk Factors--Risks Relating to IMS HEALTH and Nielsen Media Research and
--Risks Relating to Nielsen Media Research
The Distribution
Relationship Between IMS HEALTH and Nielsen Media Research After the
Distribution
Dividend Policies--Nielsen Media Research
Nielsen Media Research Capitalization
Nielsen Media Research Selected Financial Data
Nielsen Media Research Management's Discussion and Analysis of Financial
Condition and Results of Operations
Nielsen Media Research Business
Nielsen Media Research Management and Executive Compensation
Nielsen Media Research Security Ownership By Certain Beneficial Owners and
Management
Financial Statements--Nielsen Media Research, Inc. (Pages F-39 to F-59
inclusive)
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ITEM 7. Financial Statements; Pro Forma Financial Statements and Exhibits
(b) Pro Forma Financial Information
The information included in the section of the Information Statement
entitled "Nielsen Media Research Unaudited Consolidated Pro Forma Financial
Statements" is incorporated herein by reference. Readers should note that
notwithstanding the legal form of the Distribution described above, whereby
the Registrant has "spun-off" IMS HEALTH, because of the relative
significance of the IMS HEALTH business to the Registrant, IMS HEALTH is
being treated as the "accounting successor" to the Registrant for financial
reporting purposes. The pro forma financial statements incorporated by
reference herein relate to the ongoing operations of the Registrant after the
Distribution.
(c) Exhibits
Exhibit No. Description
- ----------- -----------
23 Consent of Independent Accountants
27 Financial Data Schedule
99.1 Information Statement dated as of June 22, 1998
99.2 Form of Distribution Agreement between Cognizant Corporation and
IMS Health Incorporated
99.3 Form of Tax Allocation Agreement between Cognizant Corporation
and IMS Health Incorporated
99.4 Form of Employee Benefits Agreement between Cognizant
Corporation and IMS Health Incorporated
99.5 Form of Amended and Restated Transition Services Agreement among
Cognizant Corporation, IMS Health Incorporated, The Dun &
Bradstreet Corporation, The New Dun & Bradstreet Corporation,
ACNielsen Corporation and Gartner Group, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NIELSEN MEDIA RESEARCH, INC.
By: /s/ Stephen J. Boatti
------------------------------
Title: Senior Vice President,
Chief Legal Officer and
Secretary
Date: July 20, 1998
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
23 Consent of Independent Accountants
27 Financial Data Schedule
99.1 Information Statement dated as of June 22, 1998
99.2 Form of Distribution Agreement between Cognizant Corporation and
IMS Health Incorporated
99.3 Form of Tax Allocation Agreement between Cognizant Corporation
and IMS Health Incorporated
99.4 Form of Employee Benefits Agreement between Cognizant
Corporation and IMS Health Incorporated
99.5 Form of Amended and Restated Transition Services Agreement among
Cognizant Corporation, IMS Health Incorporated, The Dun &
Bradstreet Corporation, The New Dun & Bradstreet Corporation,
ACNielsen Corporation and Gartner Group, Inc.