NLSN Nielsen Holdings PLC - 10-K

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 and Industry

We may be unable to adapt to significant technological or industry changes, 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 have been and will be required to adapt to changing technologies and industry standards, either by developing and marketing new services, investing in new services or by enhancing our existing services to meet client demand.

Moreover, accelerating technology turn-over in businesses, the introduction of new services embodying new technologies and the emergence of new regulatory and industry standards could render existing services technologically or commercially obsolete. Our continued success will depend on our ability to adapt to changing technologies, manage and process ever-increasing amounts of data and information, build and apply the appropriate processes to comply with requirements imposed by third parties regarding licensed or collected data, and improve the performance, features and reliability of our existing services in response to changing client, regulatory and industry demands. We may experience difficulties that could delay or prevent the successful design, development, testing, introduction or marketing of our services.

Traditional methods of television viewing continue to change as a result of fragmentation of channels and digital and other new television and video technologies; devices such as video-on-demand, digital video recorders, game consoles, tablets, other mobile devices; and the increasing prevalence of alternative distribution systems, such as Internet viewing/OTT delivery and non-ad supported platforms. Commerce across such channels may be less dependent on an independent provider of ad or content measurement, increasing a risk of reduced relevancy and a decrease in the demand for our service. 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.

If we are unable to continue to successfully adapt our media measurement systems to new viewing and consumption habits, our business, financial position and results of operations could be adversely affected.

Consolidation in the industries in which our clients operate could put pressure on the pricing of our services, thereby leading to decreased earnings and cash flows.

Consolidation in the industries in which our clients operate 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 and price compression and loss of revenue. While we are attempting 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 and cash flows.

Certain of our clients may seek price concessions from us in the regular course of negotiations similar to any other commercial relationship. Although this could put pressure on the pricing of our services, which could in turn limit the amounts we earn, we work very creatively to underscore the value proposition inherent in our offerings and have a strong track record of protecting our cost/value relationship. 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.

Adverse economic conditions, a reduction in client spending, or a delay in client payments could have a material adverse effect on our business, results of operations and financial position.

We have a large and diverse client and partner base and, at any given time, one or more of our clients or partners may experience financial difficulty, file for bankruptcy protection or go out of business. Additionally, adverse economic conditions could affect markets both in the U.S. and internationally, 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, hinder their ability to incur new obligations until the economy and their businesses strengthen or cause them to reduce or cease using our services. 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 present risks for an extended period of time. While we cannot predict the impact of economic slowdowns on our future financial performance, the direct impact on us could include reduced revenues and write-offs of accounts receivable and expenditures billable to clients, and if these effects were severe, the indirect impact could include impairments of intangible assets, credit facility covenant violations and reduced liquidity. That being said, we have an excellent track record of payment from our clients due to the strict adherence of our payment term and data suspension policies.  Our clients, in many situations, require our data to inform their own billings, collections and reconciliations and therefore they prioritize our payment out of their own self-interest.

To the extent that the businesses we service, especially our clients in the 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.

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. During challenging economic times, clients, and advertisers may reduce their discretionary advertising spend and may be less likely to purchase our analytical services, which would have an adverse effect on our revenue.

The success of our business depends on our ability to recruit sample participants to participate in our panels.

Our business uses surveys to gather consumer data from sample households as well as meters (e.g., Set Meters, People Meters, Active/Passive Meters, PPM’s) and other technologies to gather television, digital and audio audience measurement data from sample households. It is increasingly difficult and costly to recruit households to participate in the surveys, and increased focus by consumers on privacy could result in a greater reluctance to participate in research, which could impact our continued ability to recruit participants. Further, 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. The COVID-19 pandemic, political changes and trends such as populism, economic nationalism, immigration and sentiment towards multinational companies have made recruiting a sample that mirrors the entire population more difficult.  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 audience measurement services. If we are unsuccessful in our efforts to recruit appropriate participants, maintain the sample sizes and representation in 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. For example, in August 2020, the Media Rating Council (“MRC”), a voluntary trade organization whose members include many of our key client constituencies, suspended accreditation for our national television ratings and local television ratings services. While we have, and continue to, remediate issues raised by the MRC, MRC accreditation is not automatic, and despite our best efforts, we may not be able to obtain re-accreditation. As a result, clients may lose confidence in our audience measurement services, seek price reductions or open the door for competitors.

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 have been, and could continue to be, the target of criticism in the media and in other venues by various industry groups and market segments. We strive to be fair, transparent and impartial in the production of audience measurement services. The quality of our U.S. ratings services is voluntarily subject to review and accreditation by the MRC which suspended accreditation for our national television ratings and local television ratings service in August 2020. Further 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 and/or a decrease in the demand for our services and put additional pressure on the pricing of our services, thereby leading to decreased earnings and cash flows. 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 or decrease in business of one or more of our largest clients could adversely impact our results of operations.

Our top ten clients collectively accounted for approximately 35% of our total revenues for the year ended December 31, 2021. No customer accounted for 10% or more of our revenues in 2021. While we strive to enter into multiyear, comprehensive Multi Service Agreements with these clients staggered across the calendar by duration to minimize risk of any material risk in a given calendar year, we cannot assure you that any of our largest clients will continue to use our services to the same extent, or at all, in the future. A loss or decrease in business 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 may be unable to realize our new business strategy of driving growth by leveraging a single media platform across a global digital-first footprint.

This is a transformative time for Nielsen. We have redesigned our products, our business platform, and our operating model. We are now fully aligned around three essential solutions that are designed to drive growth by leveraging a single media platform across a global digital-first footprint, and we have announced our plans to launch a single, cross-media solution, Nielsen ONE. We cannot assure you that our new business strategy will be successful in accomplishing our objectives or that Nielsen ONE will deliver anticipated results or achieve market acceptance. The failure to achieve the goal of driving growth by leveraging a single media platform across a global digital-first footprint could have a material adverse effect on our business.

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.

Design defects, errors, failures or delays associated with our products or services could negatively impact our business.

Despite testing, software, products and services that we develop, license or distribute may contain errors or defects when first released or when major new updates or enhancements are released that cause the product or service to operate incorrectly or less effectively. Many of our products and services also rely on data, equipment, and services provided by third-party providers over which we have no control and may be provided to us with defects, errors or failures. These third-party providers may be unable to meet our quality, safety or timeline requirements in a way that may have an adverse impact on our products, services, or users. In addition, our data integrity and quality rely on human-led, manual data collection and management processes that may be vulnerable due to human error and complexity of systems, resulting in the need for increased field support to ensure sample representation and prevent unauthorized or excessive access. We may also experience delays while developing and introducing new products and services for various reasons, such as difficulties in licensing data inputs or adapting to particular operating environments. Supply chain or vendor production delays may adversely impact our ability to collect data or introduce new products or services, including our ability to introduce Nielsen ONE in accordance with our rollout schedule and our ability to recruit new PPM panelists, which has been impacted, and will continue to be impacted, by global supply chain issues that have affected PPM inventory and shipments. Defects, errors or delays in our products or services that are significant, or are perceived to be significant, could result in rejection or delay in market acceptance, damage to our reputation, loss of revenue, a lower rate of license renewals or upgrades, diversion of development resources, product liability claims or regulatory actions, or increases in service and support costs. We may also need to expend significant capital resources to eliminate or work around defects, errors, failures or delays. In each of these ways, our business, financial condition or results of operations could be materially adversely impacted.

We rely, in part, on acquisitions, joint ventures and other alliances to grow our business and expand our access to technology. If we are unable to complete or integrate acquisitions into our existing operations or successfully develop and maintain joint ventures and other alliances, our growth may be adversely impacted. In addition, the acquisition, integration or divestiture of businesses by us may not produce the expected financial or operating results.

We have made and expect to continue to make acquisitions or enter into other strategic transactions to strengthen our business and grow our Company. Such transactions present significant challenges and risks.

The market for acquisition targets and other strategic transactions is highly competitive, especially in light of industry consolidation, which may affect our ability to complete such transactions.

If we are unsuccessful in completing such transactions at all or within the anticipated time frame or if such opportunities for expansion do not arise, our business, financial condition or results of operations could be materially adversely affected.

If such transactions are completed, the anticipated growth and other strategic objectives of such transactions may not be fully realized, and a variety of factors may adversely affect any anticipated benefits from such transactions. For instance, the process of integration may require more resources than anticipated, we may assume unintended liabilities, there may be unexpected regulatory and operating difficulties and expenditures, we may fail to retain key personnel of the acquired business, we may fail to efficiently combine our business with the business of the acquired company in a manner that permits cost savings to be realized or such transactions may divert management’s focus from base strategies and objectives.

Acquisitions outside of the U.S. increase our exposure to risks associated with foreign operations, including fluctuations in foreign exchange rates and compliance with foreign laws and regulations.

Despite our past experience, opportunities to grow our business through acquisitions, joint ventures and other alliances may not be available to us in the future.

We have suffered losses due to goodwill and indefinite-lived asset impairment charges in the past and could do so 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, 2021, we had goodwill and intangible assets of $9,061 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.

Risks Related to Our Indebtedness and Financing

Our substantial indebtedness could adversely affect our business, results of operations, and financial health.

We have and will continue to have a significant amount of indebtedness. As of December 31, 2021, we had total indebtedness of $5,626 million.

Our substantial indebtedness could have important consequences. For example, it could:

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

potentially limit our ability to service future dividends and/or stock repurchases due to covenant restrictions.

In addition, the indentures governing our outstanding notes and our secured 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, including, in the case of the secured credit facility, by limiting the ability to make acquisitions, pay dividends or repurchase shares.  Moreover, 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. See Note 12 to our consolidated financial statements – “Long-term Debt and Other Financing Arrangements,” for a description of our debt arrangements and related covenants.

Despite our current indebtedness levels, we may still be able to incur substantially more debt. If new debt is added to our current debt levels, the related risks that we now face could intensify.

We 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 12 to our consolidated financial statements – “Long-term Debt and Other Financing Arrangements,” for a description of our debt arrangements and related maturities.

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, 2021, 2020 and 2019 was $264 million, $358 million and $386 million, respectively. On December 31, 2021, we had $2,093 million of floating-rate debt under our senior secured credit facilities of which $1,050 million 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 $10 million ($21 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.

As of December 31, 2021, the Company had the following U.S. Dollar term loan floating-to-fixed rate outstanding interest rate swaps designated as hedges utilized in the management of its interest rate risk:

Notional Amount

Maturity Date

Interest Rates

July 2022

April 2023

May 2023

June 2023

July 2023

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. Further, on November 30, 2020 the ICE Benchmark Administration Limited (“ICE”) announced its plan to extend the date that most USD-LIBOR values would cease being computed to June 30, 2023. On March 5, 2021, ICE confirmed it would cease publication of Overnight, 1, 3, 6 and 12 Month USD LIBOR settings immediately following the LIBOR publication on June 30, 2023. ICE also ceased publishing 1 Week and 2 Month USD LIBOR settings immediately following the LIBOR publication on December 31, 2021. The Alternative Reference Rates Committee (“ARRC”) and the International Swaps and Derivatives Association have identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for USD-LIBOR in debt, derivatives and other financial contracts. Even if financial instruments are transitioned to alternative benchmarks, such as SOFR, successfully, the new benchmarks are likely to differ from LIBOR, and our interest expense associated with our outstanding indebtedness or any future indebtedness we incur may increase. Further, transitioning to an alternative benchmark rate, such as SOFR, may result in us incurring significant expense and legal risks, as renegotiation and changes to documentation may be required in effecting the transition. Any alternative benchmark rate may be calculated differently than LIBOR and may increase the interest expense associated with our existing or future indebtedness.

Risks Related to Cybersecurity and Privacy

We are exposed to risks related to cybersecurity and protection of confidential information.

In the ordinary course of our business, we rely extensively on our people, technology and business operations as well as trusted strategic partners and vendors to provide us with access to data and technology as well as related professional services.  We use several third-party service providers, including cloud providers, to access, store, transmit and process sensitive data. We receive, store and transmit large volumes of proprietary information and data that may contain personal information of our customers, employees, panelists, consumers and suppliers or sensitive client data entrusted to us. Our sensitive data may include our or a client’s intellectual property, financial information and business operations data.

An actual or perceived cybersecurity or privacy breach may affect us in many ways, including:

risk of loss of Nielsen and/or client proprietary data or data protected by law, statute or regulation;

loss of control of how Nielsen and/or client proprietary data or data protected by law, statute or regulation is re-purposed, shared or disseminated;

the inability to render services due to system outages;

expose us to potential litigation;

expose us to liability;

harm our reputation;

cause loss of confidence in security measures and accuracy of products;

deter customers from using our products or services;

make it more difficult and expensive to effectively recruit panelists and survey respondents;

cause loss of investor confidence;

result in official sanctions or statutory penalties; and

cause significant increases in cyber security costs.

Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations or stock price.

Owing to new and emerging technology risks, hackers or unauthorized users who successfully breach our network security, could misappropriate or misuse our proprietary information or cause interruptions in or denial of our services (i.e., ransomware). Given the relatively fast pace of changes in new and emerging technology risks, we may not be able to effectively anticipate and/or respond in a timely manner to all foreseeable and/or unforeseeable cyber security risks and events, thereby resulting in a potentially significant loss of client and investor confidence.

Notwithstanding our due diligence for new hires and employee training initiatives, we are at risk for employee malfeasance, inadvertent employee errors and other “insider risks” that may breach one or more of our information security provisions or policies. Our response in remediation of these data breaches or interruptions of service may require substantial commitments of resources and we may incur additional, unbudgeted operating and/or capital expenses, such as for specialized cyber security vendors as part of our response.

Similar to other companies, we have been the subject of attempts at unauthorized access to our systems, however, none have been material. We have taken and are taking reasonable steps to prevent future unauthorized access to our systems, including implementation of system security measures, information back-up and disaster recovery processes. However, these prophylactic steps may not be effective and there can be no assurance that any such steps can be effective against all possible risks.

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, including data that contain personal information about individuals. Similar to other companies, Nielsen is a target of cyber-attacks, however, none have been material. We have continued to invest in tools, technology and people to safeguard the enterprise. Cybersecurity breaches could expose us to a risk of loss or misuse of this information. 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 denials or 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 acces s 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 cybersecurity occurs, the perception of the effectiveness of our cybersecurity measures could be harmed and we could lose current and potential clients. In addition, we may be subject to investigation and fines in jurisdictions that have data protection laws.

Data protection laws and self-regulat ory codes may restrict our activities and increase our costs.

Various statutes and rules that regulate conduct in areas such as privacy and data protection may affect our collection, use, storage and transfer of information both abroad and in the U.S. The definitions of “personally identifiable information” and “personal data” continue to evolve and broaden, and new laws and regulations are being enacted (for example, recently passed data protection laws in South Africa and China abroad, and Colorado, Virginia and California in the U.S., and proposed laws in India and Indonesia), so that this area remains in a state of flux. In addition, some of our products and services are subject to self-regulatory programs relating to digital advertising. Changes in these laws (including newly released interpretations of these laws by courts and regulatory bodies) and/or self-regulatory codes may limit our data access, use and disclosure, and may require increased expenditures by us 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, restrictions on further use of data and/or liability under contractual warranties.

The California Consumer Privacy Act of 2018 (“CCPA”) took effect on January 1, 2020, and imposed new and more stringent requirements regarding the handling of personal data of persons in California. Because Nielsen does not typically segregate products and services on a state-by-state basis, Nielsen must generally adopt the requirements of CCPA across its U.S. business operations. Failure to meet CCPA requirements could result in penalties of up to $7,500 per violation. CCPA also provides individuals with a limited private right of action in the case of certain breaches of personal data. In 2023, similar laws will take effect in Virginia and Colorado (which will include penalties of up to $7,500 and $20,000 per violation, respectively).

The European Union’s General Data Protection Regulation (“GDPR”), imposes new and more stringent requirements regarding the handling of personal data of persons in the EU. Failure to meet the GDPR requirements could result in penalties of up to 4% of worldwide revenue. Many jurisdictions considering new data protection laws are looking to GDPR as a starting point .

The proposed EU “ePrivacy” Regulation, if adopted, is expected to have potentially significant impacts for the online/mobile advertising industry as a whole. Nielsen is continuing to monitor the development of the ePrivacy Regulation and industry response and will determine whether to take further action, as needed, following its final adoption. Nielsen is participating in an industry-wide transparency and consent fram ework mechanism developed by IAB Europe, an industry association for the digital marketing and advertising ecosystem, that facilitates users providing and companies passing consent to the advertising supply chain to address GDPR and ePrivacy notice and consent requirements. Recently, the Belgian Data Protection Authority issued a decision that IAB Europe’s implementation of the framework violates GDPR. IAB Europe has stated its intention to appeal this decision, while also working to address some of the regulator’s concerns. We anticipate that we and other participants will be required to make changes to better align the framework to the regulator’s expectations over the long term, but, at this point, we do not believe the framework will be terminated altogether .

We rely on third parties to provide or allow us to access certain data and services in connection with the provision of our current services. The loss or limitation of access to that data could harm our ability to provide our products and services.

We rely on third parties to provide access to 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, we enter into agreements with third parties to obtain data or facilitate the access to data from which we create products and services.

In the digital measurement business, publishers, browsers and platforms are making changes, often citing evolving regulatory requirements and the increased attention on consumer privacy, which may result in our inability to collect the data we need to create our services. This may impact our ability to measure the Web and provide our clients with reporting at the rate of granularity that we do so today, in which case our business and/or potential growth may be affected adversely.  We may need to modify or enter into additional agreements with third parties to continue to measure certain types of media and build and apply the appropriate processes to comply with such agreements. In the event we are unable to use such third - party data and services, access the necessary data, 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.

Other suppliers of data may increase restrictions on our use of such data due to factors such as the increasing attention on consumer privacy, the increased rigor of privacy regulation or cybersecurity risk, failure to adhere to our quality control standards or otherwise satisfactorily perform services, increasing the price they charge us for this data or refusing altogether to license the data to us (in some cases because of exclusive agreements they may have entered into with our competitors). For example, large platforms and certain companies are moving away from the use of individual identifiers and utilizing other techniques in connection with consumer privacy and to increase control over their data.  As a result, for some of these companies, measurement requires us to work within walled gardens. Working with the walled gardens to implement measurement methodologies may require sharing our panel data and deploying our proprietary technologies in third-party environments and may affect scalability by requiring custom relationships with each platform.

Consolidation of our data suppliers could put pressure on our cost structure, thereby leading to decreased earnings and cash flows. Additionally, if any of our suppliers are alleged or confirmed to be in violation of data protection laws or regulations, it may result in, among other things, civil and criminal liability, negative publicity, and/or restrictions on further use of data to or by Nielsen.

Risks Related to the COVID-19 Pandemic, Environment and Other External Factors

The COVID-19 pandemic has subjected our business, operations and financial condition to a number of risks, including, but not limited to, those discussed below:

COVID-19 Risks Related to Operations

Due to the COVID-19 pandemic, there has been a substantial curtailment of business activities in many countries around the world, which is affecting and may continue to affect our ability to conduct fieldwork, operate call centers, and provide other services that require or were conducted via face-to-face interactions. Early in the COVID-19 pandemic, we pivoted to a work from home stance that remains in place for the vast majority of our global workforce to protect our employees’ health and safety. This affects, and may continue to affect, overall business performance. As our measurement services require Nielsen to interact with panelists in order to recruit new panelist households and install metering equipment for existing panelists, over time, the pandemic, actions taken to protect employee health and related social distancing requirements and “stay at home” orders have adversely affected, and may continue to adversely affect, Nielsen’s audio and television ratings and measurement services. For example, in August 2020, the MRC suspended accreditation for our national television ratings and local television ratings service, in part due to panel size, which was impacted by our decision to prioritize the health and safety of our panelists and employees during the COVID-19 pandemic. Additionally, compliance with vaccine mandates, to the extent they are imposed in the jurisdictions in which we operate, may lead to employee absences, resignations or labor shortages.

COVID-19 Risks Related to Third-Party Providers

The COVID-19 pandemic has also caused operating challenges and discontinuity for some vendors, suppliers, partners and other third parties, which has affected and may continue to affect their ability to provide us essential products or services. If any of our third-party providers suffer from limited solvency, delays in manufacturing schedule, or delays in shipping because of the pandemic, it could negatively impact our operating model and our business. For example, a lack of equipment due to extended supply chain issues could adversely impact our television audience measurements, our audio audience measurements and our ability to resolve hardware failures quickly, which may disrupt our business. It is not possible to estimate the potential impact at this time.

COVID-19 Risks Related to Demand for Products & Services

The COVID-19 pandemic has had and could continue to have a negative impact on our business as clients cut back on services that are not already contracted, delay their spending, or declare bankruptcy in light of poor business performance due to the pandemic.  If the pandemic is not contained or otherwise continues, it will continue to have an adverse effect on our business, results of operations and financial position.

The pandemic, and ongoing uncertainty related to new variants of COVID-19, and the response thereto, including vaccination and booster vaccination efforts, continue to evolve, and we cannot at this time forecast its ultimate duration, severity or impact to our business, financial condition, results of operations and/or cash flows.

It is possible that COVID-19 could exacerbate any of the other risks described in this 2021 Form 10-K as well.

The presence of our Global Technology and Information Center in Florida, our data centers in high property value facilities such as in Singapore, as well as the global nature of our panels, heightens our exposure to climate-change related risks, including hurricanes, cyclones 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, tropical storm or other severe weather events specific to this region. The data centers in locations such as Singapore, also face high physical risks such as cyclones and sea level rise. These weather events could cause severe damage to our property and technology and could cause major disruptions to our operations, including our ability to produce and deliver ratings information. For example, a hurricane or other similar event could lead to business interruption and other adverse consequences such as penalty fees, business interruption claims, lost business or the inability to obtain panelist data from impacted households. While we continue to ensure identified physical risks to our facilities are addressed through the business continuity and our enterprise risk management plans (including ensuring that our GTIC is 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, hurricanes, cyclones or tropical storms could have an adverse effect on our business. In addition, our panels rely on field staff traveling to panelists’ homes for onboarding and troubleshooting; therefore, worsening or more frequent climate change-related weather events could disrupt the size and quality of our panels. With the increased occurrence of climate change-related natural disasters globally, such as droughts, record snowfalls, sea-level rise, heat waves and fires, we recognize the wide-ranging risks this poses to our business continuity in certain locations as well as on a global scale.

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, ransomware, break-ins and similar events at our various computer facilities, or delays in our data gathering or panel maintenance operations due to weather events, including those related to climate change, other acts of nature, or public health crises, such as pandemics and epidemics, 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 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.

Risks Relating to Intellectual Property and Litigation and Regulatory Proceedings

If we are unable to protect our intellectual property rights, our business could be adversely affected.

Our business relies on a combination of patented and patent-pending technologies, systems, processes, and methodologies; trademarks; copyrights; other proprietary rights; and contractual arrangements, including licenses, to establish and protect our technology and intellectual property. We believe our proprietary technologies and intellectual property rights are important to our continued success and our competitive position. Any impairment of any such intellectual property could adversely impact the results of our operations or financial condition.

We rely on a combination of contractual and confidentiality provisions and procedures, licensing arrangements, and the intellectual property laws of the U.S. and other countries to protect our intellectual property, as well as the intellectual property rights of third parties whose content, data and technology we license. These legal measures afford only limited protection and may not provide sufficient protection to prevent the infringement, misuse or misappropriation of our intellectual property. Although our employees, consultants, clients, and collaborators all enter into confidentiality agreements with us, our trade secrets, data and know-how could be subject to unauthorized use, misappropriation or unauthorized disclosure.

Our business success depends, in part, on:

obtaining patent protection for our technology and services;

enforcing and 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 intellectual property rights held by third parties.

Our ability to establish, maintain and protect our intellectual property and proprietary rights against theft or infringement could be materially and adversely affected by insufficient and/or changing proprietary rights and intellectual property legal protections in some jurisdictions and markets. Intellectual property law in several foreign jurisdictions is subject to considerable uncertainty. Our pending patent and trademark applications may not be allowed in certain jurisdictions and inadequate intellectual property laws may limit our rights and ability to detect unauthorized uses or take appropriate, timely and effective steps to remedy unauthorized conduct, to protect or enforce our rights. Such limitations may allow competitors to design around our intellectual property rights, to independently develop non-infringing competing technologies, products, or services similar or identical to ours, thereby potentially eroding our competitive position, enabling competitors greater opportunity to capture market share, and consequently negatively impacting our revenues and operating results. The expiration of certain of our patents may also lead to increased competition. As such, our patents, copyrights, trademarks, and other intellectual property may not adequately protect our rights, provide significant competitive advantages, or prevent third parties from infringing or misappropriating our proprietary rights.

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. For example, certain platforms may require Nielsen to run its proprietary technology within their secure environments, which may require moving Nielsen technology to a third party-controlled environment. In this way, competitors or other third parties may gain access to our intellectual property and proprietary information. Third parties that license our intellectual property and proprietary rights may take actions or create incidents that may diminish the value of our rights, harm our business, reduce revenue, increase expenses, and/or harm our reputation.

To prevent or respond to unauthorized uses of our intellectual property, we may be required to enforce our intellectual property rights to protect our confidential and proprietary information by engaging in costly and time-consuming litigation or other proceedings that may be distracting to management, could result in the impairment or loss of portions of our intellectual property rights, and we may not ultimately prevail.

Third parties may claim that we are infringing their intellectual property and we could suffer significant litigation or licensing expenses, or be prevented from selling products or services, which may adversely impact our operating profits.

We cannot be certain that we do not and will not infringe the intellectual property rights of others in operating our business. In the ordinary course of business, third parties may claim, with or without merit, that one or more of our products or services infringe their intellectual property rights and may engage in legal proceedings against us. In some jurisdictions, plaintiffs can also seek injunctive relief that may limit the operation of our business or prevent the marketing and selling of our services that allegedly infringe a plaintiff’s intellectual property rights.

Certain agreements with suppliers or clients contain provisions where we indemnify, subject to certain limitations, the counterparty for damages suffered as a result of claims related to intellectual property infringement based on our data or technology. Infringement claims covered by such indemnity provisions could be expensive to litigate and may result in significant settlement payments. In certain businesses, we rely on third-party intellectual property licenses, and depending upon the outcome of any intellectual property dispute, we cannot ensure that these licenses will be available to us in the future on favorable terms or at all.

Any such claims of intellectual property infringement, even those without merit, could:

be expensive and time-consuming to defend;

result in our being required to pay possibly significant damages;

cause us to cease providing our products or services that allegedly incorporate a third party’s intellectual property;

require us to redesign or rebrand our services and;

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 results and could harm our financial condition and prospects.

We analyze and take action in response to such claims on a case-by-case basis. Any dispute or litigation regarding patents or other intellectual property could be costly and time-consuming due to the complexity of our business and technology and the uncertainty of intellectual property litigation and could divert our management and key personnel from our business operations.

If we do not resolve these claims in advance of a trial, there is no guarantee that we will be successful in court.  A claim of intellectual property infringement could compel us to enter into a license agreement with restrictive terms and/or significant fees, which may or may not be available under acceptable terms or at all, and an adverse judgment could subject us to significant damages or to an injunction against development and/or sale of certain of our products or services. We may be required to implement costly redesigns to the affected product or services, or pay damages to satisfy contractual obligations to others.

Inadvertent use of certain open source software could impose unanticipated limitations upon our ability to commercialize our products and services or subject our proprietary code to public disclosure if not properly managed.

We use certain open source software in our technologies, most often as small, isolated components supporting a larger product or service. Moreover, open source software is also contained in some third-party software that we license. We also contribute to the open source community in certain circumstances, which then may make it difficult or impossible to maintain proprietary rights in such contributions. There are many types of open source licenses, some of which are quite complex, and most have not been interpreted or adjudicated by U.S. or other courts. Although we do have an open source use policy and practice and conduct training around this policy, inadvertent use of certain open source licenses could impose unanticipated limitations upon our ability to commercialize our products and services or subject our proprietary code to public disclosure if not properly managed. Remediation of such issues may involve licensing the software on less than unfavorable terms or require remedial actions including a need to re-engineer our products and services, either of which could have a material adverse effect on our business.

We are currently subject to shareholder litigation, and may become subject to additional shareholder litigation, antitrust litigation or government investigations in the future, any of 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, or have been the subject of shareholder litigation. We have been sued by private parties for alleged violations of the antitrust and competition laws of certain jurisdictions. 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.

We are subject to allegations, claims and legal actions arising in the ordinary course of business.  In addition, we are currently subject to securities litigation, which we discuss in greater detail below under “Item 3. Legal Proceedings” and Note 17–Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The outcome of many of these proceedings cannot be predicted.  If any proceedings, inspections or investigations were to be determined adversely against us or result in legal actions, claims, regulatory proceedings, enforcement actions, or judgments, fines, or settlements involving a payment of material sums of money, or if injunctive relief were issued against us, we may be required to change the way we do business and our business, financial condition and results of operations could be materially adversely affected.  Even the successful defense of legal proceedings may cause us to incur substantial legal costs and may divert management’s attention and resources.

Risks Relating to Governmental or Regulatory Change

Future legislation, regulations, or policy changes under the new U.S. administration and Congress as well as other countries could have a material effect on our business and results of operations.

Future legislation, regulatory changes or policy shifts under the new U.S. administration could impact our business. Trade issues between the U.S. and several countries could continue and provide a changing and sometimes challenging landscape. Existing trade tensions with China and other countries may continue under the new Administration and provide challenges and marketplace uncertainty to Nielsen and Nielsen’s clients. Nielsen has been granted an exclusion from tariffs on certain products by the Office of the United States Trade Representative but cannot guarantee the continuation of such exemptions or additional grants of exemptions based on future legislation, regulatory changes or policy shifts in the United States or abroad.

Other possible U.S. legislation and regulation that could have an impact on Nielsen include comprehensive state and federal privacy legislation and regulation, artificial intelligence policy, government restrictions on manufacturers within Nielsen’s existing supply chain, competition policy, and accura cy of the decennial Census count and the American Community Survey, which provide a touchstone for Nielsen’s demographics.

It is unknown to the extent the U.S. government will want to monitor TV measurement activity as it relates to MRC accreditation.  While new legislation that passes into law is unlikely, it is entirely possible public inquiries could be made by Congress or regulatory bodies.

The new Administration may continue to implement new rules and regulations both emanating from the U.S. Tax Cuts and Jobs Act (“TCJA”) and the tax code generally.  The Biden Administration has indicated its support for the concept of a global minimum tax rate and to increase the tax rate applied to profits earned outside the United States. The impact of these potential new rules could be material to our tax provision and value of deferred tax assets and liabilities.

In Europe, various proposals could impact both competition and privacy. Nielsen will almost assuredly have to monitor and adjust business practices to comply with these changes. The extent to which is unknown.  Abroad, a number of jurisdictions, including France and the U.K., have introduced a digital services tax, which is generally a tax on gross revenue generated from users or customers located in those jurisdictions. While the Organization for Economic Cooperation and Development (“OECD”) has been hosting negotiations with more than 130 countries to adapt an international tax system, if an agreement is not finalized, France and other states could begin to implement the tax in their markets.  Its impact on Nielsen's services remains unclear.

T he U.K. announced that they will require companies to report on Climate Change by 2025, becoming the first country to make the disclosures mandatory as investors and governments demand corporations curb their greenhouse gas emissions. This means a mandate to report the financial impacts of climate change on our business within the next three years, in addition to the greenhouse gas emissions the current regulation requires reporting on. Also, the new government in the U.S. is expected to move closer to requiring environmental, social and governance disclosures from companies.

Market access issues for Nielsen may also arise in some international markets.  Various countries are actively considering changes to the structure of their domestic media measurement regimes for both broadcast and digital services.  This can take the form of proposed government audits and/or ownership.  This activity also may include stringent regulatory policies on digital content and delivery.  The success of such onerous proposals remains uncertain.

Policy issues, such as trade, privacy, tax, and market access, will be risks that span the globe.  At this time, we cannot predict the scope or nature of these changes or assess what the overall effect of such potential changes could be on our results of operations or cash flows.

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.

We operate in more than 55 countries, and changes in tax laws, international tax treaties, regulations, related interpretations and tax accounting standards in the United States, the United Kingdom and other countries in which we operate may adversely affect our financial results, particularly our income tax expense, liabilities and cash flow. Our effective tax rate could be affected by changes in our business (including acquisitions or dispositions and the impairment of goodwill), intercompany transactions, the applicability of special tax regimes (including the availability of tax credits), adjustments to income taxes upon the finalization of tax returns, the release of valuation allowances, the resolution of tax audits, and the relative amount of foreign earnings in jurisdictions with high statutory tax rates or where losses are incurred for which we are not able to realize tax benefits.  In addition, the OECD (shortly followed by the EU) finally released the model rules on Pillar Two (Global Minimum Tax) in late December 2021. These new rules

provide for some clarity on how taxpayers around the world may be affected by the introduction of Pillar Two as of January 1, 2023.  It is possible that these rules could increase the taxes we pay outside the United States.

Governments are resorting to more aggressive tax audit tactics and are increasingly considering changes to tax laws or policies as a means to cover budgetary shortfalls resulting from the current economic environment.  We are subject to direct and indirect taxes in numerous jurisdictions and the amount of tax we pay is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. We have taken and will continue to take tax positions based on our interpretation of tax laws, but tax accounting often involves complex matters and judgment.  Although we believe that we have complied with all applicable tax laws, we have been and expect to continue to be subject to ongoing tax audits in various jurisdictions and tax authorities have disagreed, and may in the future disagree, with some of our interpretations of applicable tax law. We regularly assess the likely outcomes of these audits to determine the appropriateness of our tax provisions. However, our judgments may not be sustained on completion of these audits, and the amounts ultimately paid could be different from the amounts previously recorded, which could have a material adverse effect on our results of operations and financial condition .

Risks Related to Competition

We face competition, which could adversely affect our business, financial condition, results of operations and cash flow.

We are faced with a number of competitors worldwide in the markets in which we operate. Some of our competitors in our markets may have substantially greater financial, marketing, technological and other resources than we do and may in the future engage in aggressive pricing action to compete with us or develop products and services that are superior to or that achieve greater market acceptance than our products and services. Although we are the currency of choice in the U.S. media linear TV market and 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 our status as the currency of choice or 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.

Risks Related to Operating a Global Business

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 Japan, Mexico, India and Brazil. International operations expose us to various additional risks, which could adversely affect our business, including:

costs of customizing services for clients outside of the U.S.;

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 in different cultural environments;

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;

the risks of an outbreak of war, the escalation of hostilities and acts of terrorism in the jurisdictions in which we operate;

the risks of outbreaks of pandemic or contagious diseases, such as Ebola, measles, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine) flu, Zika virus and COVID-19 (and related variants); and

the risk of maintaining subscribers because there has been no historical practice of using audience measurement or similar information in the buying and selling of advertising time.

Our international operations expose us to regulatory risks, which could have an adverse effect on our business, financial results and operations.

We are subject to complex U.S., European and other regional and local laws and regulations that are applicable to our operations abroad, including trade sanctions laws, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010, anti-bribery laws, anti-money laundering laws, and other financial crimes laws.  Although we have implemented a compliance program that includes internal controls, policies and procedures and employee training to deter prohibited practices, such measures may not be effective in preventing employees, contractors or agents from violating or circumventing such internal policies and violating applicable laws and regulations. Given our operations in the United Kingdom and Continental Europe, we face uncertainty surrounding the United Kingdom’s exit from the European Union in January 2020, commonly referred to as “Brexit.” Despite the implementation of the EU-U.K. Trade and Cooperation Agreement beginning on January 1, 2021, it is still unclear how Brexit will ultimately impact relationships within the U.K. and between the U.K. and other countries on many aspects of fiscal policy, cross-border trade and international relations. It is likely that Brexit will cause increased regulatory and legal complexities and create uncertainty surrounding our business, including our relationships with existing and future clients, suppliers and employees, which could have an adverse effect on our business, financial results and operations .

Currency exchange rate fluctuations may negatively impact our business, results of operations and financial position.

We operate globally, deriving approximately 17% of revenues for the year ended December 31, 2021 in currencies other than U.S. dollars, with approximately 5% 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 U.S. 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 revenues and profits of these operations, as well as on the value of balance sheet items (including cash) not denominated in U.S. dollars. In addition, we are subject to currency transaction exposure in those instances where transactions are not conducted in the relevant local currency. In certain instances, we may not be able to freely convert foreign currencies into U.S. dollars due to governmental limitations placed on such conversions.

Of our $380 million in cash and cash equivalents as of December 31, 2021, approximately $247 million was held in jurisdictions outside 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.

Risks Related to Human Capital Management

Our ability to successfully manage ongoing organizational changes could impact our business results.

As we have in prior years, we continue to execute a number of significant business and organizational changes, including operating reorganizations, acquisition integration and divestitures to improve productivity and create efficiencies 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, engagement and 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 specific markets, businesses and functions where there is increased demand for specific skills or experiences. 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 engage employees, we may not be able to compete effectively and will not be able to expand our business.

Our success and ability to grow is dependent, in part, on our ability to hire, retain and engage 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, managerial, and particularly consulting personnel is intense. Changes to U.S. or other immigration policies that restrain the flow of professional talent may also inhibit our ability to staff our offices or projects. Further, as a result of our review of strategic alternatives, we may suffer increased attrition.  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 execute on growth initiatives as well as obtain and successfully complete important client engagements and partnerships and thus maintain or increase our revenues.

Our results of operations and financial condition could be negatively impacted by our U.S. and non-U.S. pension plans.

The performance of the financial markets and interest rates impact our plan expenses, plan assets and funding obligations.  Changes in market interest rates, decreases in our pension trust assets or investment losses could increase our funding obligations, which would negatively impact our operations and financial condition.

Our attempts to fully reopen our offices and operate under a hybrid working environment may not be successful.

The COVID-19 pandemic caused us to modify our workforce practices, including having the vast majority of our employees work from home during the pandemic. As we reopen our offices, we intend to operate under a flexible working environment adopted by many other companies, meaning that the majority of our office-based employees will have the flexibility to work remotely or in our offices. This “hybrid” working environment may impair our ability to maintain our collaborative and innovative culture, and may cause disruptions among our employees, including decreases in productivity, challenges in communications between on-site and off-site employees and, potentially, employee dissatisfaction and attrition. If our attempts to safely reopen our offices and operate with a flexible working environment are not successful, our business could be adversely impacted.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 each of its consolidated subsidiaries unless other w ise stated or indicated by context.

Background and Executive Summary

We serve the world’s media and content ecosystem and are a global leader in audience measurement, data and analytics. Through our understanding of people and their behaviors across all channels and platforms, we empower our clients with independent and actionable intelligence so they can connect and engage with their audiences—now and into the future.

We provide a holistic and objective understanding of the media industry to our various clients. Our data is used by our publishing clients to understand their audiences, establish the value of their advertising inventory and maximize the value of their content. Our data is used by our marketer and advertiser agency clients to plan and optimize their spend and is used by our content creator clients to inform decisions and identify trends.

We believe that only Nielsen provides a fair playing field for the business of media, under our unique approach AUDIENCE IS EVERYTHING ® , and we believe that we are the only provider with data that’s representative of the entire media ecosystem. All of our products have been reviewed to ensure they are representative of diverse populations and we have launched intelligence into the marketplace on the value of audience representation .   We are the currency of choice in the U.S. media market and essential to the global media and content ecosystem.  We believe that we are uniquely positioned to deliver the most reliable deduplication metrics across linear and digital platforms. An S&P 500 company, we offer measurement and analytics service in more than 55 countries.

We believe that important measures of our results of operations include revenue, operating income /(loss) 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 improve 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. Our measurement, data and analytics solutions, which have been developed through substantial investment over many decades, are deeply embedded into our clients’ workflows. Typically, before the start of each year, approximately 80% of our annual revenue has been committed under contracts, which provides us with a greater degree of stability for our revenue and allows us to more 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.

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 effectively invest our capital in technology and infrastructure to keep pace with our clients’ demands and our competitors. Core to managing these key risk areas is our commitment to data privacy and security as it drives our ability to deliver quality insights for our clients in line with evolving regulatory requirements and governing standards across all the geographies and industries in which we operate. Our operating footprint in over 55 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.

COVID-19

We experienced an improvement in our business, particularly our short-cycle revenue and our sports business, in the last half of 2021 as compared to the same period in 2020, due to a recovery from the COVID-19 pandemic.

Global economic conditions will continue to be volatile as long as the COVID-19 pandemic remains a public health threat, including, as a result of new information concerning the severity of the pandemic, government actions to mitigate the effects of the pandemic in the near-term, and the resulting impact on our business and operations and sales and customer demand. We expect global economic performance and the performance of our businesses to vary by geography and discipline until the impact of the COVID-19 pandemic on the global economy subsides.

For further discussion regarding the potential impacts of COVID-19 and related economic conditions on the Company, see Part I, Item 1A “Risk Factors—Risks Related to the COVID-19 Pandemic, Environment and Other External Factors.”

Sale of our Global Connect Business

On March 5, 2021, we completed the previously announced sale of our Global Connect business (such business, “Global Connect,” and the sale of Global Connect, the “Connect Transaction”) to affiliates of Advent International Corporation (“Purchaser”), pursuant to the Stock Purchase Agreement, dated as of October 31, 2020 (the “Stock Purchase Agreement”). Pursuant to the Stock Purchase Agreement, Purchaser acquired Global Connect by means of a sale of the equity interests of certain subsidiaries held by us, which operate Global Connect, for $2.7 billion in cash, subject to adjustments based on closing levels of cash, indebtedness, debt-like items and working capital, and a warrant to purchase equity interests in the company that, following the sale, owns Global Connect (the “Connect Warrant”). We received net proceeds of $2.4 billion on March 5, 2021 and recorded a gain of $489 million net of tax, inclusive of closing adjustments, during the year ended December 31, 2021. Proceeds from the sale were primarily utilized for debt repayment. See Note 20 to our consolidated financial statements– Discontinued Operations.

The results of operations of Global Connect have been classified as discontinued operations for all periods presented. As such, the results of Global Connect have been excluded from both continuing operations and segment results for all periods presented. Our continuing business operates as a single operating and reportable segment.

Critical Accounting Estimates

Our consolidated financial statements 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, liabilities, revenues and expenses.  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. The most significant of these estimates relate to revenue recognition, goodwill and indefinite-lived intangible assets, long-lived assets, accounting for income taxes, share based compensation and pension costs

Revenue Recognition

Revenue is measured based on the consideration specified in a contract with a customer.  We recognize revenue when it satisfies a performance obligation by transferring control of a product or service to a customer, which generally occurs over time.  Our customer contracts may include promises to transfer multiple products or services.  Determining whether products or services are considered distinct performance obligations that should be accounted for separately may require significant judgment. Additionally, where there are multiple performance obligations, judgment is required to determine revenue for each distinct performance obligation.

Revenue is primarily generated from television, radio, digital and mobile audience measurement services and analytics, which are used by our media clients to establish the value of airtime and more effectively schedule and promote their programming and our advertising clients to plan and optimize their spend. As the customer simultaneously receives and consumes the benefits provided by our performance, revenues for these services are recognized over the period during which the performance obligations are satisfied, and control of the service is transferred to the customer.

We enter cooperation arrangements with certain customers, under which the customer provides us with its data in exchange for our services. We record these transactions at fair value, which is determined based on the fair value of goods or services received, if reasonably estimable. If not reasonably estimable, we consider the fair value of the goods or services surrendered.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and other indefinite-lived intangible assets are stated at historical cost less accumulated impairment losses, if any. At December 31, 2021, goodwill and other indefinite-lived intangibles was $7,432 million.

We perform our annual goodwill impairment testing in the fourth quarter. Goodwill and other indefinite-lived intangible assets, consisting of our trade name, 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 review the recoverability of our goodwill by comparing the estimated fair value of our reporting unit with the respective carrying amount.

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. The market-based approach utilizes available market comparisons such as indicative industry multiples that are applied to current year revenue and earnings, next year’s revenue and earnings as well as recent comparable transactions.

Estimating the fair value of our reporting unit requires the use of significant judgments that are based on a number of factors including actual operating results, internal forecasts, market observable multiples, and determining the appropriate discount rate and long-term growth rate assumptions.  It is reasonably possible that the judgments and estimates described above could change in future periods, and therefore could affect the amount of potential impairment.

The 2021 evaluation resulted in no goodwill impairment charges. We used a 2.5% long-term growth rate and 11.2% discount rate in our evaluation. The fair value exceeded carrying value by more than 20% for our reporting unit.  We also performed sensitivity analyses on our assumptions, primarily around long-term growth rates and discount rate assumptions. Our sensitivity analyses included several combinations of reasonably possible scenarios regarding these assumptions, including 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 carrying value for our reporting unit.

Other indefinite-lived intangible assets are tested for impairment on an annual basis and whenever events or circumstances indicate that the carrying amount of such asset may not be recoverable. The impairment test for other indefinite-lived intangible assets consists of a comparison of the fair value of an 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 the royalty rate, estimated future revenue (inclusive of long-term revenue growth rates) and discount rate.  Discount rate assumptions are based on an assessment of the risk inherent in the respective intangible assets.  The discount rates we used in our evaluation was 11.7%. Assumptions about the royalty rate are based on the rates at which comparable trade names and trademarks are being licensed in the marketplace.   The 2021 evaluation resulted in no impairment charge as the fair value exceeded carrying value.  As of the annual impairment assessment, the fair value exceeded carrying value by less than 10%. The valuation is sensitive to the assumptions discussed above. A downward trend in revenue projections or an increase in discount rate could lead to a future impairment.

Amortizable Intangible Assets

We are required to assess whether the value of our 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.

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 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.

No impairment indicators were noted for other long-lived assets in 2021.

Income Taxes

We have a presence in more than 55 countries, and our effective tax rate is subject to significant variation due to several factors including variability in our pre-tax and taxable income or loss and the mix of jurisdictions to which they relate, intercompany transactions, the applicability of special tax regimes, changes in where or how we do business, acquisitions or dispositions, audit-related developments, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions.

We have completed a number of material acquisitions and divestitures that have generated complex tax issues requiring management to use its judgment to make various tax determinations. We have sought 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.

We record 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, which is more likely than not to be realized upon settlement with the applicable taxing authority with full knowledge of all relevant information. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

The U.S. Tax Cuts and Jobs Act (“TCJA”) imposed a U.S. tax on global intangible low taxed income (“GILTI”) that is earned by certain foreign affiliates owned by a U.S. shareholder and was intended to tax earnings of a foreign corporation that are deemed to be in excess of certain threshold return. As of December 31, 2018, Nielsen made a policy decision and elected to treat taxes on GILTI as a current period expense and have reflected as such in the financial statements for the years ended December 31, 2019 through December 31, 2021.

Share-based Compensation

Our share-based compensation programs are comprised of stock options, performance-based stock options, restricted stock units and performance restricted stock units. We measure the cost of all share-based payments, including stock options, at fair value on the grant date and recognize such costs within the consolidated statements of operations.

Determining the fair value of share-based awards at the grant date requires considerable judgment. Share-based compensation expense for the performance-based stock options is based on the Monte Carlo simulation model which considers factors such as estimating the expected term of stock options, expected volatility of our stock, and the number of share-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

We consider the historical option exercise behavior of our employees, which we believe is representative of future behavior, in estimating the expected life of our options granted. For 2021 and 2020, expected volatility was based on our historical volatility. For the year ended December 31, 2019, there were no time and performance-based stock options issued.

The assumptions used in calculating the fair value of share-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.

In addition, for our share-based awards where vesting is dependent upon achieving certain operating performance goals over an annual or multi-year time period, we estimate the likelihood of achieving the performance goals.

Pension Costs

We provide a number of retirement benefits to our employees, including defined benefit pension plans. 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. 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 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 expected return on assets would increase pension expense on our principal plans by approximately $1 million per year. We assumed that the weighted averages of long-term returns on our pension plans were 5.8% for the year ended December 31, 2021, 6.5% for the year ended December 31, 2020 and 6.7% for the year ended December 31, 2019. 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, 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.

Factors Affecting Nielsen’s Financial Results

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.

Year Ended December 31,

U.S. Dollar

Euro

Other Currencies

Total

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 $1.18, $1.14 and $1.12 to €1.00 for the years ended December 31, 2021, 2020 and 2019, 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 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 year-over-year 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.

Consolidated Results of Operations – Yea rs E nded December 31, 2021, 2020 and 2019

The following table sets forth, for the periods indicated, the amounts included in our consolidated statements of operations:

Year Ended December 31,

(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

Impairment of goodwill and other long-lived assets

Restructuring charges

Operating income

Interest expense, net

Foreign currency exchange transaction (losses)/gains, net

Other expense, net

Income before income taxes and equity in net loss of affiliates

Benefit/(provision) for income taxes

Equity in net loss of affiliates

Net income from continuing operations

Net income/(loss) from discontinued operations, net of taxes

Net income/(loss)

Net income attributable to noncontrolling interests

Net income/(loss) attributable to Nielsen shareholders

Net Income from continuing operations to Adjusted EBITDA Reconciliation

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. Adjusted EBITDA margin is Adjusted EBITDA for a particular period expressed as a percentage of revenues for that period.

We use Adjusted EBITDA to measure our performance from period to period 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 or loss, operating income/(loss), 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. In addition, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies and may, therefore, have limitations as a comparative analytical tool.

We define Adjusted EBITDA as net income or loss from continuing operations of our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, impairment of goodwill and other long-lived assets, share-based compensation expense and other non-operating items from our consolidated statements of operations, as well as certain other items that arise outside the ordinary course of our continuing operations specifically described below.

Impairment of goodwill and other long-lived assets : We exclude the impact of charges related to the impairment of goodwill and other long-lived assets.  We believe that the exclusion of these impairments, which are non-cash, allows for meaningful comparisons of operating results to peer companies. We believe that this increases period-to-period comparability and is useful to evaluate the performance of the total company.

Share-based compensation expense : We exclude the impact of costs relating to share-based compensation. Due to the subjective assumptions and a variety of award types, we believe that the exclusion of share-based compensation expense, which is typically non-cash, allows for more meaningful comparisons of our operating results to peer companies. Share-based compensation expense can vary significantly based on the timing, size and nature of awards granted.

Restructuring charges : We exclude restructuring expenses, which primarily include employee severance, office consolidation and contract termination charges, from our Adjusted EBITDA to allow more accurate comparisons of the financial results to historical operations and forward-looking guidance. By excluding these expenses from our non-GAAP measures, we are better able to evaluate our ability to utilize our existing assets and estimate the long-term value these assets will generate for us. Furthermore, we believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.

Other non-operating income/(expense), net : We exclude foreign currency exchange transaction gains and losses, primarily related to intercompany financing arrangements, as well as other non-operating income and expense items, such as gains and losses recorded on business combinations or dispositions, sales of investments, net income/(loss) attributable to noncontrolling interests and early redemption payments made in connection with debt refinancing. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.

Other items : To measure operating performance, we exclude certain expenses and gains that arise outside the ordinary course of our continuing operations. Such costs primarily include legal settlements and related fees, acquisition related expenses, business optimization costs and other transaction costs. We believe the exclusion of such amounts allows management and the users of the financial statements to better understand our financial results.

The below table presents a reconciliation from net income from continuing operations to Adjusted EBITDA for the years ended December 31, 2021, 2020 and 2019:

Year Ended December 31,

(IN MILLIONS)

Net income from continuing operations

Less: Net income attributable to noncontrolling interests

Net income from continuing operations attributable to Nielsen shareholders

Interest expense, net

(Benefit)/provision for income taxes

Depreciation and amortization

EBITDA

Equity in net loss of affiliates

Other non-operating expense, net (1)

Restructuring charges

Impairment of goodwill and other long-lived assets

Share-based compensation expense

Dis-synergy costs (2 )

Other items (3)

Adjusted EBITDA

In 2019, other non-operating expense, net, included non-cash expenses of $72 million for pension settlements which included plan transfers to third parties in the Netherlands and UK, where we terminated our responsibility for future defined benefit obligations and transferred that responsibility to the third parties. See Note 11 to our consolidated financial statements – “Pensions and Other Post-Retirement Benefits” for more information.

Costs to stand-up Nielsen as a standalone company including incremental real estate, IT/infrastructure, transition services agreements (TSAs) and commercial arrangements.

Other items primarily consists of legal settlements and related fees, business optimization costs and transaction related costs in 2021. Other items primarily consists of business optimization costs, including strategic review costs and transaction related costs, for the years ended December 31, 2020 and 2019.

Results from continuing operations for the Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

Revenues

The table below sets forth our revenue in 2021 compared to the year ended December 31, 2020, both on an as-reported and constant currency basis.

(IN MILLIONS)

Year Ended

December 31,

Year Ended

December 31,

% Variance

Reported

Year Ended

December 31,

Constant

Currency

% Variance

Constant

Currency

Measurement

Impact / Content

Total

Revenues increased 4.1% to $3,500 million in 2021 from $3,361 million in 2020 or an increase of 3.4% on a constant currency basis. Revenue growth was primarily driven by growth in Measurement, which increased 3.7%, or an increase of 3.2% on a constant currency basis, with overall solid growth, with strength in national and digital measurement products and local products returning to positive growth. Impact / Content revenues increased 5.4%, or an increase of 3.9% on a constant currency basis. This was driven in part by improving trends in short-cycle revenues, solid growth in Content, and recovery in the Sports business.

Cost of Revenues, Exclusive of Depreciation and Amortization

Cost of revenues decreased 1.9% to $1,212 million in 2021 from $1,235 million in 2020, or a decrease of 2.6% on a constant currency basis. The decrease in costs were primarily from the impact of our broad-based optimization plan during 2020 and other productivity initiatives and temporary actions taken in response to the COVID-19 pandemic, partially offset by our continued investments in our products and services.

Selling, General and Administrative Expenses, Exclusive of Depreciation and Amortization

Selling, general and administrative expenses increased 24.8% to $891 million in 2021 from $714 million in 2020, or an increase of 23.1% on a constant currency basis. The increase in costs were primarily due to our increased costs to operate as a standalone company without the Global Connect business and continued investments in our products and services, partially offset by the impact of our broad-based optimization plan during 2020 and other productivity initiatives, as well as the impact of temporary actions taken in response to the COVID-19 pandemic.

Depreciation and Amortization

Depreciation and amortization expense was $512 million in 2021 as compared to $550 million in 2020, inclusive of depreciation and amortization expense associated with tangible and intangibles assets acquired in business combinations of $152 million and $165 million, respectively. This decrease was primarily due to certain assets becoming fully amortized and the decrease in depreciation and amortization expense associated with tangible and intangible assets acquired in business combinations, partially offset by higher capital expenditures during the period.

Impairment of Goodwill and other Long-Lived Assets

There were no impairment charges in 2021.

We recorded a non-cash charge of $58 million for the impairment of other long-lived assets in 2020, related to management’s decision to exit certain smaller, underperforming markets and non-core businesses as well as a change in the extent to which certain self-developed software would be utilized. Also in 2020, we recorded a non-cash charge of $88 million for the impairment of an indefinite-lived trade name related to our annual impairment testing .

Restructuring Charges

On June 30, 2020, we announced a broad-based optimization plan (the “Restructuring Plan”) to drive permanent cost savings and operational efficiencies, as well as to position us for greater profitability and growth. The Restructuring Plan was substantially completed in 2020. Pre-tax restructuring charges in 2021 were $13 million, which primarily r elated to real estate consolidation, and $37 million in 2020, which primarily related to severance costs associated with employee separation packages.

Operating Income

Operating income was $872 million in 2021 as compared to operating income of $679 million in 2020. The increase was primarily due to the revenue performance discussed above, temporary actions taken in response to the COVID-19 pandemic, the benefit of permanent cost actions from the Restructuring Plan, lower depreciation and amortization expense and lower restructuring charges in 2021, as well as the impairment charge recorded during the year ended December 31, 2020, partially offset by our increased costs to operate as a standalone company without the Global Connect business .

Interest Expense, Net

Interest expense was $285 million in 2021 compared to $329 million in 2020. This decrease was primarily due to lower loan balances and lower LIBOR rates.

Foreign Currency Exchange Transaction Gains/(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 $1.18 and $1.14 to €1.00 for the years ended December 31, 2021 and 2020, respectively.

We realized net losses of $5 million and net gains of $17 million in 2021 and 2020, respectively, resulting primarily from fluctuations in certain foreign currencies associated with intercompany transactions.

Other Expense, Net

Other expense, net of $24 million in 2021, was primarily related to the write-off of certain previously capitalized deferred financing fees in conjunction with the May 2021 debt refinancing and a loss from a business disposition, partially offset by a gain from the sale of an equity investment.

Other expense, net of $20 million in 2020, was primarily related to certain costs incurred in connection with our debt refinancing transactions, as well as the write-off of certain previously deferred financing fees in conjunction with the refinancing, certain non-service related pension costs , and loss from business disposition.

Income from continuing operations before Income Taxes and Equity in Net Loss of Affiliates

Income was $558 million in 2021 compared to income of $347 million in 2020 due primarily to the consolidated results mentioned above.

Income Taxes

The effective tax rates in December 31, 2021 and 2020 were 0% and 41%, respectively.

Our effective tax rate of 0% in December 31, 2021 was lower than the UK statutory rate primarily as a result of decreases in valuation allowances attributable to the utilization of foreign tax credits and the utilization of net operating losses.

Our effective tax rate in December 31, 2020 was higher than the UK statutory rate primarily as a result of withholding and foreign taxes as well as state and local income taxes.

At December 31, 2021 and 2020, we had gross uncertain tax positions of $161 million and $128 million, respectively. We also have accrued interest and penalties associated with these uncertain tax positions as of December 31, 2021 and 2020 of $7 million and $11 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 $131 million to $139 million of uncertain tax positions may occur within the next twelve months, and of this amount, approximately $1 million to $9 million would result in a tax benefit for income taxes as a result of projected resolutions of worldwide tax disputes, filed tax returns, and expirations of statute of limitations in various jurisdictions, along with related interest and penalties. Furthermore, the amounts ultimately paid may differ from the amounts accrued.

A djusted EBITDA

(IN MILLIONS)

Year Ended

December 31,

Year Ended

December 31,

% Variance

Reported

Year Ended

December 31, 2020

Constant Currency

% Variance

Constant Currency

Adjusted EBITDA

Adjusted EBITDA increased 5.7% to $1,491 million in 2021 from $1,411 million in 2020, or an increase of 5.4% on a constant currency basis. Our Adjusted EBITDA margin increased to 42.6% in 2021 from 42.0% driven by the strong revenue performance and benefits from the Restructuring Plan, partially offset by the return of the temporary costs savings realized in 2020 in response to the COVID-19 pandemic and investments in growth initiatives.

Revenues

The table below sets forth our segment revenue performance data in 2020 compared to 2019, both on an as-reported and constant currency basis.

(IN MILLIONS)

Year Ended

December 31,

Year Ended

December 31,

% Variance

Reported

Year Ended

December 31,

Constant

Currency

% Variance

Constant

Currency

Measurement

Impact / Content

Total

Revenues decreased 2.3% to $3,361 million in 2020 from $3,441 million in 2019, or a decrease of 2.3% on a constant currency basis. Revenues from Measurement decreased 0.6%, or a decrease of 0.5% on a constant currency basis, reflecting the impact of the COVID-19 pandemic on sports and non-contracted revenue and pressure in local television. Impact / Contact revenues decreased 6.7% on a reported and constant currency basis, primarily reflecting the impact of the COVID-19 pandemic on sports, Gracenote auto and short-cycle revenue .

Cost of Revenues, Exclusive of Depreciation and Amortization

Cost of revenues increased 3.7% to $1,235 million in 2020 from $1,191 million in 2019, or an increase of 3.8% on a constant currency basis, primarily due to the impact of our investments and higher spending on product portfolio management initiatives, partially offset by temporary actions taken in response to the COVID-19 pandemic and productivity initiatives.

Selling, General and Administrative Expenses, Exclusive of Depreciation and Amortization

Selling, general and administrative expenses decreased 19.3% to $714 in 2020 from $885 million in 2019, or a decrease of 19.3% on a constant currency basis, primarily due to temporary actions taken in response to the COVID-19 pandemic and the impact of our optimization plan and other productivity initiatives.

Depreciation and Amortization

Depreciation and amortization expense was $550 million in 2020 as compared to $465 million in 2019. This increase was primarily due to higher depreciation and amortization expense associated with more assets in use. Depreciation and amortization expense associated with tangible and intangibles assets acquired in business combinations decreased to $165 million in 2020 from $166 million in 2019 and is included in depreciation and amortization expense in the consolidated statement of operations.

Impairment of Goodwill and other Long-Lived Assets

During 2020, we recorded a non-cash impairment charge of other long-lived assets of $58 million related to management’s decision to exit certain smaller, underperforming markets and non-core businesses as well as a change in the extent to which certain self-developed software would be utilized.  We recorded a non-cash charge of $88 million for the impairment of an indefinite-lived trade name related to our annual impairment testing.

There were no impairment charges in 2019 .

Restructuring Charges

In June 2020, we announced a broad-based optimization plan to drive permanent cost savings and operational efficiencies, as well as to position us for greater profitability and growth. The plan was substantially completed in 2020 .

We recorded $37 million in restructuring charges in 2020. These charges primarily related to severance costs associated with employee separation packages.

We recorded $30 million in restructuring charges, primarily related to employee severance costs associated with our plans to reduce selling, general and administrative expenses and consolidate operations centers, as well as automation initiatives in 2019.

Operating Income

Operating income was $679 million in 2020 as compared to $870 million in 2019. The decrease was driven primarily by the revenue decrease due to the COVID-19 pandemic discussed above, higher depreciation and amortization expense, higher restructuring charges and the impairment of other long-lived assets in 2020.

Interest Expense, Net

Interest expense was $329 million in 2020 compared to $342 million in 2019. This decrease was primarily due to slightly lower USD LIBOR interest rates on our senior secured term loans without hedged positions .

Foreign Currency Exchange Transaction Gains/(Losses), Net

Foreign currency exchange transaction gains/(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 $1.14 and $1.12 to €1.00 for the years ended December 31, 2020 and 2019, respectively.

We realized net gains of $17 million and net losses of $13 million in 2020 and 2019, respectively, resulting primarily from fluctuations in certain foreign currencies associated with intercompany transactions.

Other Expense, Net

Other expense, net of $20 million in 2020, was primarily related to certain costs incurred in connection with our debt refinancing transactions, as well as the write-off of certain previously deferred financing fees in conjunction with the refinancing, certain non-service related pension costs, and loss from business disposition.

Other expense, net of $77 million in 2019 was primarily related to a non-cash expense of $72 million for pension settlements which included plan transfers to third parties in the Netherlands and UK, where we terminated our responsibility for future defined benefit obligations and transferred that responsibility to the third parties. See Note 11 to our consolidated financial statements – “Pensions and Other Post-Retirement Benefits” for more information.

Income from continuing operations Before Income Taxes and Equity in Net Loss of Affiliates

Income was $347 million in 2020 compared to income of $438 million in 2019 due primarily to the consolidated results mentioned above.

Income Taxes

The effective tax rates in December 31, 2020 and 2019 were 41% and a benefit of 32%, respectively.

Our effective tax rate in December 31, 2020 was higher than the UK statutory rate primarily as a result of withholding and foreign taxes as well as state and local income taxes.

Our effective tax rate benefit in December 31, 2019 was lower than the UK statutory rate primarily as a result of the changes in estimates for uncertain tax positions and audit settlements and decreases in valuation allowances attributable to the utilization of

foreign tax credits and the utilization of net operating losses, offset by the unfavorable impact of state and local taxes and base erosion and anti-abuse tax (“BEAT”).

Adjusted EBITDA

(IN MILLIONS)

Year Ended

December 31,

Year Ended

December 31,

% Variance

Reported

Year Ended

December 31, 2019

Constant Currency

% Variance

Constant Currency

Adjusted EBITDA

Adjusted EBITDA increased 1.9% to $1,411 million in 2020 from $1,385 million in 2019, or an increase of 2.0% on a constant currency basis. Our Adjusted EBITDA margin increased to 41.98% in 2020 from 40.25% in 2019 driven by temporary cost savings realized in 2020 in response to the covid-19 pandemic and the Restructuring Plan, partially offset by the revenue performance discussed above and investments in our growth initiatives.

Results from Discontinued Operations for the Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 as well as the Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

The Connect Transaction closed on March 5, 2021. The Company received net proceeds of $2.4 billion on March 5, 2021, subject to final closing adjustments.  During the third quarter of 2021, the Company finalized the closing adjustments resulting in a $10.5 million reduction in net proceeds, and recorded a gain of $489 million net of tax, inclusive of closing adjustments, during the year ended December 31, 2021. Proceeds from the sale were primarily utilized for debt repayment. The results of operations of Global Connect have been classified as discontinued operations for all periods presented.

Net income/(loss) from discontinued operations, net of taxes from Global Connect in 2021 was $412 million as compared to $(196) million in 2020. The increase is primarily due to the gain on sale of $489 million recorded in 2021. Included in the $412 million is a net loss from Global Connect of $77 million, which reflects operating results through March 5, 2021.  This compares to a net loss of $196 million in the twelve months of 2020 which included $107 million in restructuring expense and $38 million impairment of other long-lived assets.

Net loss from discontinued operations from Global Connect in 2020 was $196 million as compared to a loss of $982 million in 2019. The decrease in net loss from discontinued operations is primarily due to the goodwill impairment of $1,004 million recorded during the year ended December 31, 2019.

See Note 20 to our consolidated financial statements – Discontinued Operations - for further detail.

Consolidated Liquidity and Capital Resources

Cash flows from operations (including Global Connect through the Connect Transaction close date), provided a source of funds of $666 million, $999 million and $1,066 million during the years ended December 31, 2021, 2020 and 2019, respectively. This decrease in net cash provided in operating activities was primarily due to working capital timing and higher separation related cash costs, partially offset by the Adjusted EBITDA performance discussed above, lower interest payments, lower employee annual incentive payments, and lower income tax payments .

We provide 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, 2021, 2020 and 2019:

(IN MILLIONS)

Net cash from operating activities

Cash and short-term marketable securities

Revolving credit facility

Of the $380 million in cash and cash equivalents at December 31, 2021, approximately $247 million was held in jurisdictions outside 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 millions)

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.

Except as disclosed below, 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.

Long-term borrowings

The following table provides a summary of our outstanding long-term borrowings as of December 31, 2021:

Weighted

(IN MILLIONS)

Carrying

Interest

Senior secured term loans

Amount

Rate

Maturing in 2023, L+1.75%

Maturing in 2023, L+2.00%

Maturing in 2023, $850 revolving credit facility L+1.75%

Total (with weighted-average interest rate)

Senior debenture loans

$500, maturing in 2025, 5.000%

$1,000, maturing in 2028, 5.625%

$750, maturing in 2030, 5.875%

$625, maturing in 2029, 4.500%

$625, maturing in 2031, 4.750%

Total (with weighted-average interest rate)

Total long-term debt

Finance lease and other financing obligations

Total debt and other financing arrangements

Less: Current portion of long-term debt, finance lease and other

financing obligations and other short-term borrowings

Non-current portion of long-term debt and finance lease and other

financing obligations

On March 16, 2021, primarily utilizing the proceeds from the Connect Transaction, we completed the partial prepayment of $1.0 billion of the senior secured term loans due 2023 and $0.3 billion of the senior secured term loans due 2025. We redeemed $150 million outstanding aggregate principal amount of its 5.500% senior notes due 2021 effective March 21, 2021 and called for redemption of $825 million of outstanding aggregate principal amount of the 5.000% senior notes due 2022 effective April 10, 2021, in each case at a redemption price equal to 100% of the principal amount of such notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the applicable redemption date.

The indentures governing the senior notes limit the majority of our subsidiaries’ ability to 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 under each indenture to make an offer to redeem all of the senior notes issued pursuant to such indenture at a redemption price equal to the 101% of the aggregate principal amount plus accrued and unpaid interest. The senior notes are jointly and severally guaranteed by the Company, substantially all of our wholly owned material U.S. subsidiaries and certain of the non-U.S. wholly-owned subsidiaries of the Company .

Nielsen applied the net proceeds of the offering plus cash on hand to prepay the approximately $430 million aggregate outstanding principal amount of senior secured dollar term loans and the approximately €530 million aggregate outstanding principal amount of senior secured euro term loans which were both due 2025 and the approximately €204 million aggregate outstanding principal amount of senior secured euro term loans due 2023 , in each case, at a prepayment price equal to par plus accrued and unpaid interest. Nielsen wrote-off certain previously deferred financing fees of $20 million in connection with the May 2021 prepayments.

In connection with the prepayment of the senior secured dollar and euro term loans due 2025, Nielsen terminated the Credit Agreement dated June 4, 2020, as amended on July 21, 2020, and all commitments thereunder .

During the fourth quarter of 2021, Nielsen utilized cash on hand to partially prepay approximately $250 million of senior secured dollar term loans due 2023 at a prepayment price equal to par plus accrued and unpaid interest. Nielsen wrote-off certain previously deferred financing fees of $0.4 million in connection with the prepayments made during the fourth quarter of 2021.

For the years ended December 31, 2021, 2020 and 2019 interest expense, net, includes zero, $2 million and $6 million of interest income in our consolidated statement of operations.

Covenants

As of December 31, 2021, Nielsen were in full compliance with the financial covenant described below.

Nielsen’s Sixth Amended and Restated Credit Agreement, dated July 21, 2020 (the “Amended Credit Agreement”) contain 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 $1.3 billion at December 31, 2021. The Amended Credit Agreement contains a total leverage covenant that requires the Covenant Parties (as defined in the Amended Credit Agreement) maintain a ratio of Consolidated Total Net Debt (as defined in the Amended Credit Agreement) to Consolidated EBITDA (as defined in the Amended Credit Agreement) at or below 5.50 to 1.00, measured at the end of each calendar quarter for the four quarters most recently ended. Neither Nielsen nor TNC B.V. is currently bound by any financial or negative covenants contained in the Amended Credit Agreement. The Amended Credit Agreement also contain certain customary affirmative covenants and events of default. Certain significant financial covenants are described further below.

Failure to comply with the financial covenant described above would result in an event of default under Nielsen’s Amended Credit Agreement unless waived by certain of Nielsen’s term lenders and our revolving lenders. An event of default under the Company’s Amended Credit Agreement can result in the acceleration of our indebtedness under the facilities thereunder, which in turn would result in an event of default and possible acceleration of indebtedness under the agreements governing Nielsen’s debt securities. As Nielsen’s failure to comply with the financial covenant described above can cause Nielsen to go into default under the agreements governing our indebtedness, management believes that our Amended Credit Agreement and this covenant are material to Nielsen.

Pursuant to the terms of our Amended Credit Agreement, Nielsen are subject to making mandatory prepayments on the term loans outstanding thereunder to the extent in any full calendar year we generate Excess Cash Flow (“ECF”), as defined in the Amended Credit Agreement. The percentage of ECF that must be applied as a repayment under the Amended Credit Agreement is a function of several factors, including Nielsen’s ratio of total net debt to Covenant EBITDA, as well other adjustments, including any voluntary term loan repayments and permanent reductions of revolving credit commitments 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 applicable lenders. At December 31, 2021, Nielsen’s ratio of total net debt to Covenant EBITDA was less than 5.00 to 1.00 and therefore no mandatory repayment was required. Nielsen’s next ECF measurement date will occur upon completion of the 2022 results, and although Nielsen does not expect to be required to issue any mandatory repayments in 2022 or beyond, it is uncertain at this time if any such payments will be required in future periods .

Supplemental Consolidating Information

Pursuant to Regulation S-X Rule 13-01, which simplifies certain disclosure requirements for guarantors and issuers of guaranteed securities, Nielsen is no longer required to provide consolidating financial statements for Nielsen and its subsidiaries, including the guarantors and non-guarantors under the Amended Credit Agreement and the indentures governing our senior notes. Nielsen Holding and Finance B.V., the parent covenant party under the Amended Credit Agreement and the indentures governing the Company’s senior notes, and its restricted subsidiaries together comprise substantially all of Nielsen’s assets, liabilities and operations, and there are no material differences between the consolidating information related to Nielsen, on the one hand, and Nielsen Holding and Finance B.V. and its restricted subsidiaries on a standalone basis, on the other hand.

Revolving Credit Facility

The Amended Credit Agreement contains a senior secured revolving credit facility with aggregate revolving credit commitments of $850 million and a final maturity of July 2023 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 senior secured revolving credit facility is provided under the Amended Credit Agreement and so contains covenants and restrictions as noted above with respect to the Amended Credit Agreement. Obligations under the revolving credit facility are guaranteed by the same entities that guarantee obligations under the Amended Credit Agreement.

As of December 31, 2021, Nielsen had zero borrowings outstanding and outstanding letters of credit of $13 million. As of December 31, 2020, Nielsen had zero borrowings outstanding and outstanding letters of credit of $18 million. As of December 31, 2021, Nielsen had $837 million available for borrowing under the revolving credit facility.

Dividends and Share Repurchase

We continue to drive shareholder value through our quarterly cash dividend policy, which was adopted by our Board of Directors (“Board”) in 2013. Under this plan, we have paid consecutive quarterly cash dividends since 2013. We paid $86 million in cash dividends during each of the years ended December 31, 2021 and 2020. On November 3, 2019, the Board approved a plan to reduce the quarterly cash dividend, with the goal of strengthening our balance sheet and providing added flexibility to invest for growth.  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.

On February 10, 2022, our Board declared a cash dividend of $0.06 per share on our common stock. The dividend is payable on March 17, 2022 to shareholders of record at the close of business on March 3, 2022.

On February 26, 2022, our Board authorized the repurchase of up to $1 billion of our ordinary shares. The Board authorization may be suspended, modified or terminated at any time without prior notice subject to compliance with applicable laws and regulation. This share repurchase authorization replaces all previous authorizations. There were no share repurchases in 2021 or 2020. The timing of any repurchases will depend on a number of factors, including constraints specified in any Rule 10b5-1 trading, price, general business and market conditions, and alternative investment opportunities. This authorization has been executed within the limitations of the authority granted to us at our annual shareholders meeting held on May 25, 2021 (the "Authority") such authority to remain in place until the end of the 2022 annual shareholders meeting, or close of business on August 25, 2022, whichever is earlier. Pursuant to the Authority, we may only repurchase ordinary shares in accordance with procedures for "off-market" purchases under the UK Companies Act (the "Act") and, in order to be compliant with the Act, share repurchases can only be made pursuant to the terms of one or more share repurchase agreements entered into in either of the forms approved, and with counterparties that have also been approved, by shareholders at the 2021 annual shareholders meeting.

Two forms of share repurchase contracts were approved by shareholders. The first provides that the counterparty will purchase shares on the New York Stock Exchange at such prices and in such quantities as we may instruct from time to time, subject to the limitations set forth in Rule 10b-18 of the Exchange Act, as amended. The second form of agreement provides that the amount of shares to be purchased each day, the limit price and the total amount that may be purchased under the agreement will be determined at the time the agreement is executed. Both agreements provide that the counterparty will purchase the ordinary shares as principal and sell any ordinary shares purchased to us in record form. Any such shares repurchased by us pursuant to either form of contract will be cancelled.

Consolidated Cash Flows for the year ended December 31, 2021 versus for the year ended December 31, 2020

Operating activities . Net cash provided by operating activities was $666 million in 2021, compared to $999 million in 2020. This decrease in net cash provided by operating activities was primarily due to working capital timing and higher separation related cash costs, partially offset by the Adjusted EBITDA performance discussed above, lower interest payments, lower employee annual incentive payments, and lower income tax payments . Our key collections performance measure, days billing outstanding, increased by two days as compared to the same period last year, excluding Global Connect results .

Investing activities. Net cash provided by investing activities was $1,933 million in 2021, compared to net cash used in investing activities $537 million in 2020. The primary drivers for the increase were the proceeds from the sale of our Global Connect business received during the first quarter of 2021 and lower capital expenditures during the year ended December 31, 2021 as compared to the same period for 2020.

Financing activities . Net cash used in financing activities was $2,816 million in 2021, compared to $307 million in 2020. The increase in net cash used by financing activities was primarily due to higher debt repayments and lower net proceeds from debt issuances as compared to the same period for 2020 .

Consolidated Cash Flows for the year ended December 31, 2020 versus for the year ended December 31, 2019

Operating activities . Net cash provided by operating activities was $999 million in 2020, compared to $1,066 million in 2019. This decrease in net cash provided in operating activities was primarily due to higher employee annual incentive payments and higher restructuring payments, partially offset by working capital timing and lower income tax payments and interest payments . Our key collections performance measure, days billing outstanding (DBO), increased by 3 days as compared to the same period last year.

Investing activities. Net cash used in investing activities was $537 million in 2020, compared to $582 million in 2019. The primary drivers for the decrease were lower acquisition payments and a decrease in purchases of equity investments during the year ended December 31, 2020 as compared to the same period for 2019.

Financing activities . Net cash used in financing activities was $307 million in 2020, compared to $544 million in 2019. The decrease in net cash used in financing activities was primarily due to the decrease in cash dividends, as described in “Dividends and Share Repurchase”, partially offset by the net proceeds from debt issuances and repayments compared to the same period for 2019.

Capital Expenditures (includes Global Connect prior to the sale)

Investments in property, plant, equipment, software and other assets totaled $341 million, $519 million and $519 million in 2021, 2020 and 2019, respectively.

Commitments and Contingencies

Outsourced Services Agreements

In July 2019, Nielsen amended its Second Amended and Restated Master Services Agreement (the “MSA”), dated as of October 1, 2017 and effective as of January 1, 2017 (the “Effective Date”), with Tata America International Corporation and Tata Consultancy Services Limited (jointly, “TCS”) by executing Amendment Number One (the “Amendment”) with TCS, dated as of July 1, 2019 and effective as of January 1, 2019 (the “Amendment Effective Date”). The Amendment reduced the amount of services Nielsen committed to purchase from TCS from the Amendment Effective Date through the remaining term of the MSA (the “Minimum Commitment”) to $1.4 billion, including a commitment to purchase at least $184 million in services per year from 2021 through 2024, and $138 million in services in 2025 (in each of the foregoing cases, the “Annual Commitment”). As of December 31, 2020, the aggregate TCS commitment was approximately $875 million.  In September 2021, it was agreed with TCS that Nielsen’s remaining Minimum Commitment, after giving effect to the sale of Global Connect, was $90 million (“Remaining Minimum Commitment”). It was also agreed that the remaining annual commitment for services would be $45 million in 2021 and $17 million per year from 2022 through 2025 (“Remaining Annual Commitment”).  As of December 31, 2021, the Remaining Minimum Commitment was fully satisfied and the Remaining Annual Commitment no longer applies as a result.

Other Contractual Obligations

Our other contractual obligations include finance 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.

At December 31, 2021, 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 positions at December 31, 2021, we are unable to make reasonably reliable estimates of the timing of any potential cash settlements with the respective taxing authorities. Therefore, $168 million in uncertain tax positions (which includes interest and penalties of $7 million) have been excluded from the contractual obligations table below. See Note 15 to our consolidated financial statements – “Income Taxes” – for a discussion on income taxes.

Payments due by period

(IN MILLIONS)

Total

Thereafter

Finance lease obligations (a)

Operating leases (b)

Other contractual obligations (c)

Long-term debt, including current portion (a)

Interest (d)

Pension fund obligations (e)

Total

Our short-term and long-term debt obligations are described in Note 12 – “Long-term Debt and Other Financing Arrangements” and our short-term and long-term finance lease obligations are described in Note 5 to our consolidated financial statements – “Leases”.

Our operating lease obligations are described in Note 17 to our consolidated financial statements – “Commitments and Contingencies”.

Other contractual obligations represent obligations under agreements, 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 including cloud services.

Interest payments consists of interest on both fixed-rate and variable-rate debt based on LIBOR as of December 31, 2021.

Our contributions to pension and other post-retirement defined benefit plans were $14 million, $13 million and $4 million during 2021, 2020 and 2019, respectively. Future minimum pension and other post-retirement benefits contributions are not determinable for time periods after 2022. See Note 11 to our consolidated financial statements – “Pensions and Other Post -Retirement Benefits” – for a discussion on plan obligations.

Guarantees and Other Contingent Commitments

At December 31, 2021, 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 $13 million at December 31, 2021.

Legal Proceedings and Contingencies

In August 2018, a putative shareholder class action lawsuit was filed in the Southern District of New York, naming as defendants Nielsen, former Chief Executive Officer Dwight Mitchell Barns, and former Chief Financial Officer Jamere Jackson. Another lawsuit, which alleged similar facts but also named other of our officers, was filed in the Northern District of Illinois in

September 2018 and transferred to the Southern District of New York in December 2018. The actions were consolidated on April 22, 2019, and the Public Employees’ Retirement System of Mississippi was appointed lead plaintiff for the putative class. The operative complaint was filed on September 27, 2019, and asserts violations of certain provisions of the Securities Exchange Act of 1934, as amended, based on allegedly false and materially misleading statements relating to the outlook of our Buy segment (now “Global Connect,” which was sold in the first quarter of 2021), o ur preparedness for changes in global data privacy laws and our reliance on third-party data. We moved to dismiss the operative complaint on November 26, 2019. On January 4, 2021, certain of th e allegations against us and our officers were dismissed, while others were sustained. On February 3, 2022, the parties reached a settlement in principle to resolve this litigation and are currently documenting the terms of that settlemen t for submission to the Court.  Once the formal documents are executed and submitted to the Court, the settlement will be su bject to Court approval.  The amount of any settlement payment, if approved, is expected to be paid by our insurance carriers.

In addition, in January 2019, a shareholder derivative lawsuit was filed in New York Supreme Court against a number of our current and former officers and directors. The derivative lawsuit alleges that the named officers and directors breached their fiduciary duties to us in connection with factual assertions substantially similar to those in the putative class action complaint. The derivative lawsuit further alleges that certain officers and directors engaged in trading our stock based on material, nonpublic information. An amended complaint was filed on May 7, 2021, which we moved to dismiss on July 16, 2021. By agreement dated September 8, 2021, the action was stayed for a period of 90 days. On January 31, 2022, the stay was extended to June 1, 2022. We intend to defend this lawsuit vigorously. Based on currently available information, we believe that we have meritorious defenses to this action and that its resolution is not likely to have a material adverse effect on our business, financial position, or results of operations .

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.

Summary of Recent Accounting Pronouncements

Income Taxes (Topic 740): Simplifying the Accounting for Income taxes

Effective January 1, 2021, we adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The standard amends and aims to simplify accounting disclosure requirements regarding a number of topics including: intraperiod tax allocation, accounting for deferred taxes when there are changes in consolidation of certain investments, tax basis step up in an acquisition and the application of effective rate changes during interim periods, amongst other improvements.  The adoption of this new standard did not have a significant impact on our financial statements.

Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting

On March 12, 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASC 848 contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The provisions of ASC 848 must be applied at a Topic, Subtopic or Industry Subtopic for all transactions other than derivatives, which may be applied at a hedging relationship level. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur .

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.

For the years ended December 31, 2021 and 2020, we recorded a net loss of $1 million and $2 million, respectively, associated with foreign currency derivative financial instruments within foreign currency exchange transactions gains/(losses), net in our consolidated statements of operations. As of December 31, 2021 and 2020, the notional amounts of outstanding foreign currency derivative financial instruments were $29 million and $68 million, respectively.

The table below details the percentage of revenues and expenses by currency for the years ended December 31, 2021 and 2020:

U.S. Dollars

Euro

Other Currencies

Year ended December 31, 2021

Revenues

Operating costs

Year ended December 31, 2020

Revenues

Operating costs

Based on the year ended December 31, 2021, a one cent change in the U.S. dollar/Euro exchange rate would have impacted revenues by approximately $2 million annually, with an immaterial impact on operating income/(loss).

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, 2021, we had $2,093 million of floating-rate debt under our senior secured credit facilities, of which $1,050 million was subject to effective floating-fixed interest rate swaps. These derivatives have been designated as interest rate cash flow hedges and fix the LIBOR-related portion of interest rates of a corresponding amount of our variable-rate-debt. A one percent increase in interest rates applied to our floating rate indebtedness would therefore increase annual interest expense by approximately $10 million ($21 million without giving effect to any of our interest rate swaps).

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.