SOURCE: NetRatings, Inc.

March 16, 2007 09:00 ET

NetRatings Announces Fourth Quarter and Full Year 2006 Financial Results

NEW YORK, NY -- (MARKET WIRE) -- March 16, 2007 -- NetRatings, Inc. (NASDAQ: NTRT), a global leader in Internet media and market research, today announced financial results for the fourth quarter and year-ended Dec. 31, 2006.

Revenues for the fourth quarter of 2006 were $22 million, a 24 percent increase compared to revenues of $17.7 million for the fourth quarter of 2005. Revenues for the year-ended Dec. 31, 2006 were $81.8 million, an increase of 20 percent compared to revenues of $68 million in 2005.

Net income for the fourth quarter 2006 was $99,000, or $0.00 per share, on approximately 35.2 million shares. This compares with a net loss in the fourth quarter of 2005 of ($713,000), or ($0.02) per share, on approximately 36 million shares. During the fourth quarter of 2006, NetRatings recorded $778,000 in acquisition-related expenses in connection with the October 2006 proposal from The Nielsen Company B.V. to acquire the outstanding publicly held minority interest in NetRatings. NetRatings' results improved from a net loss of ($8.4 million), or ($0.23) per share, in 2005 to net income of $2.8 million, or $0.08 per share, in 2006.

For the fourth quarter of 2006, on a pro forma EBITDA basis (a non-GAAP measure that reflects net income/loss excluding interest income/expense, taxes, depreciation, amortization of intangibles and stock-based compensation, as well as acquisition-related expenses), NetRatings earned $3.3 million, or $0.09 per share, compared to pro forma EBITDA income in the fourth quarter of 2005 of $779,000, or $0.02 per share. NetRatings significantly improved its full year pro forma EBITDA results during 2006, moving from a loss in 2005 of ($1.2 million), or ($0.03) per share, to earnings of $10.1 million, or $0.29 per share, in 2006. A complete reconciliation of GAAP results to pro forma EBITDA results may be found in the accompanying financial tables and footnote.

Merger Agreement

On Feb. 5, 2007, NetRatings announced that it had signed a definitive merger agreement pursuant to which The Nielsen Company and its subsidiaries will acquire the outstanding publicly held minority interest in NetRatings for $21.00 in cash per share. Nielsen beneficially owns approximately 60 percent of the company's currently outstanding shares. NetRatings' board of directors unanimously adopted and approved the merger agreement following the unanimous recommendation of a special committee of NetRatings' board of directors comprised solely of independent directors. The merger is expected to be completed in the second quarter of 2007, subject to customary conditions and approvals. The exact timing is dependent on the review and clearance of necessary filings with the Securities and Exchange Commission. Due to the proposed merger, NetRatings will not hold a conference call or webcast regarding its fourth quarter and full year results.

About NetRatings

NetRatings, Inc. (NASDAQ: NTRT) delivers leading Internet media and market research solutions, marketed globally under the Nielsen//NetRatings brand. With high quality, technology-driven products and services, Nielsen//NetRatings is the global standard for Internet audience measurement and premier source for online advertising intelligence, enabling clients to make informed business decisions regarding their Internet and digital strategies. The Nielsen//NetRatings portfolio includes panel-based and site-centric Internet audience measurement services, online advertising intelligence, user lifestyle and demographic data, e-commerce and transaction metrics, and custom data, research and analysis. For more information, please visit www.nielsen-netratings.com.

Safe Harbor Statement

This news release contains "forward-looking statements." Such statements include, but are not limited to, statements relating to anticipated financial and operating results, the companies' plans, objectives, expectations and intentions and other statements including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "should," "may," and other similar expressions. Such statements are based upon the current beliefs and expectations of Nielsen's and NetRatings' management and involve a number of significant risks and uncertainties. Actual results may differ materially from the results anticipated in these forward-looking statements. The following factors, among others, could cause or contribute to such material differences: change in general economic conditions; the performance of financial markets and interest rates; the ability to obtain governmental approvals of the merger transaction or to satisfy other conditions to the merger transaction on the proposed terms and schedule; increased competition and NetRatings' business and financial results. Information about potential factors that may affect NetRatings' business and financial results is included in its annual report on Form 10-K for the fiscal year ended Dec. 31, 2005 and its quarterly reports on Form 10-Q, including, without limitation, under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors." Each of these documents is on file with the SEC and is available free of charge at the SEC's Internet site (http://www.sec.gov). Readers of this press release are referred to such filings. We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this news release or the date of the documents incorporated by reference in this news release.

In connection with the proposed merger, NetRatings has filed a preliminary proxy statement with the Securities and Exchange Commission. Stockholders of NetRatings are urged to read the definitive proxy statement regarding the proposed merger, because it will contain important information. Stockholders may obtain a free copy of the definitive proxy statement as well as other filings containing information about The Nielsen Company and NetRatings, when available, without charge, at the SEC Internet site (http://www.sec.gov). In addition, copies of the proxy statement can be obtained without charge, by directing a request to NetRatings, Inc., 120 West 45th Street, New York, NY 10036, Attention: Susan Hickey, 212-703-5900.

NetRatings, its directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding NetRatings' directors and executive officers is available in NetRatings' proxy statement for its most recent annual meeting, which was filed with the Securities and Exchange Commission on April 28, 2006. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement, the Schedule 13E-3 transaction statement and other relevant materials to be filed with the Securities and Exchange Commission when they become available.

NetRatings, Inc.
Statements of Operations
(in thousands, except per share data)


                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                  2006       2005       2006       2005
                                ---------  ---------  ---------  ---------
                                unaudited  unaudited

Revenue                         $  21,955  $  17,683  $  81,769  $  68,017

Cost of revenue                     5,879      5,547     22,726     22,651
                                ---------  ---------  ---------  ---------
Gross profit                       16,076     12,136     59,043     45,366
                                ---------  ---------  ---------  ---------

Operating expenses:
  Research and development          3,263      2,732     11,721     11,580
  Sales and marketing               6,312      6,391     25,073     25,718
  General and administrative        4,159      3,027     15,315     12,130
  Restructuring expenses                -          -          -      1,700
  Acquisition-related expenses        778          -        778          -
  Amortization of intangibles         594        594      2,377      2,761
  Amortization of stock-based
   compensation                     1,953      1,046      5,148      3,377
                                ---------  ---------  ---------  ---------
    Total operating expenses       17,059     13,790     60,412     57,266
                                ---------  ---------  ---------  ---------
Income/(loss) from operations        (983)    (1,654)    (1,369)   (11,900)

Interest income, net                1,880      1,453      6,395      4,519
Minority interest in gains of
 consolidated subsidiaries           (309)      (192)    (1,137)      (750)
Equity in earnings of joint
 ventures                               -          -          -         56
                                ---------  ---------  ---------  ---------
Net income/(loss) before
 provision for income taxes and
 cumulative effect of change in
 accounting principle                 588       (393)     3,889     (8,075)
Provision for income taxes           (489)      (320)    (1,429)      (320)
                                ---------  ---------  ---------  ---------
Net income/(loss) before
 cumulative effect of change
 in accounting principle        $      99  $    (713) $   2,460  $  (8,395)
Cumulative effect of change in
 accounting principle                   -          -        369          -
                                ---------  ---------  ---------  ---------
Net income/(loss)               $      99  $    (713) $   2,829  $  (8,395)
                                =========  =========  =========  =========

Basic net income/(loss) per
 common share:
   Before cumulative effect of
    change in accounting
    principle                   $    0.00  $   (0.02) $    0.07  $   (0.23)
   Cumulative effect of change
    in accounting principle             -          -       0.01          -
                                ---------  ---------  ---------  ---------
     Net income/(loss) per
      common share              $    0.00  $   (0.02) $    0.08  $   (0.23)
                                =========  =========  =========  =========

Diluted net income/(loss) per
 common share:
  Before cumulative effect of
   change in accounting
   principle                    $    0.00  $   (0.02) $    0.07  $   (0.23)
  Cumulative effect of change
   in accounting principle              -          -       0.01          -
                                ---------  ---------  ---------  ---------
     Net income/(loss) per
      common share              $    0.00  $   (0.02) $    0.08  $   (0.23)
                                =========  =========  =========  =========

Shares used to compute basic
 net income/(loss) and Pro
 Forma EBITDA net income/(loss)
 per common share                  35,214     35,989     34,940     35,985
                                =========  =========  =========  =========

Shares used to compute diluted
 net income/(loss) and Pro
 Forma EBITDA net
 income/(loss) per common share    36,442     35,989     35,732     35,985
                                =========  =========  =========  =========


                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                  2006       2005       2006       2005
                                ---------  ---------  ---------  ---------
                                unaudited  unaudited  unaudited  unaudited

Pro Forma EBITDA (1)
Net income/(loss)               $      99  $    (713) $   2,829  $  (8,395)
Less:
Interest income, net               (1,880)    (1,453)    (6,395)    (4,519)
Provision for income taxes            489        320      1,429        320
Depreciation                        1,277        985      4,348      3,565
Restructuring expenses                  -          -          -      1,700
Acquisition-related expenses          778          -        778          -
Amortization of intangibles           594        594      2,377      2,761
Amortization of stock-based
 compensation                       1,953      1,046      5,148      3,377
Cumulative effect of change in
 accounting principle                   -          -       (369)         -
                                ---------  ---------  ---------  ---------
Pro Forma EBITDA                $   3,310  $     779  $  10,145  $  (1,191)
                                =========  =========  =========  =========

Basic Pro Forma EBITDA
 income/(loss) per common share $    0.09  $    0.02  $    0.29  $   (0.03)
                                =========  =========  =========  =========

Diluted Pro Forma EBITDA
 income/(loss) per common share $    0.09  $    0.02  $    0.28  $   (0.03)
                                =========  =========  =========  =========


(1) Pro Forma EBITDA reflects net income/loss excluding interest
income/expense, taxes, depreciation, restructuring expenses,
acquisition-related expenses, amortization of intangibles and stock-based
compensation, and cumulative effect of change in accounting principle.
Management uses this measure internally to evaluate the company's
performance. NetRatings provides results, guidance, and associated
reconciliation of this non-GAAP measure to the investment community, as we
believe it provides consistent and comparable measures to help investors
understand our current and future operating cash flow performance. Interest
income/expense and provision for income taxes are excluded as it is not
related to our operating performance. Restructuring expenses and
acquisition-related expenses are excluded as they are one-time items not
directly related to operations. Depreciation expenses, amortization of
stock-based compensation, and cumulative effect of change in accounting
principle are excluded as they are non-cash charges. NetRatings excludes
amortization of intangibles as it is a non-cash charge not directly related
to operations. Pro Forma EBITDA data is provided as a complement to results
provided in accordance with GAAP, and should be considered in addition to,
and not as a substitute for or superior to, other measures of financial
performance prepared in accordance with GAAP.




NetRatings, Inc.
Balance Sheets
(in thousands)


                                              December 31,   December 31,
                                                  2006           2005
                                              -------------- --------------
ASSETS

Current assets
  Cash, cash equivalents & short-term
   marketable securities                      $      171,693 $      151,671
  Accounts receivable                                 26,329         16,537
  Other current assets                                 3,544          3,867
                                              -------------- --------------
    Total current assets                             201,566        172,075

  Long-term marketable securities                     15,320         28,581
  Property and equipment                               9,582          7,827
  Intangibles                                         10,901         13,278
  Goodwill                                            76,301         76,856
  Other assets                                         1,803          1,637
                                              -------------- --------------
    Total assets                              $      315,473 $      300,254
                                              ============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable & accrued expenses         $       22,991 $       21,436
  Deferred revenue                                    17,632         12,666
  Restructuring liabilities                              354          1,038
                                              -------------- --------------
    Total current liabilities                         40,977         35,140

  Restructuring liabilities, less current
   portion                                                64            418
                                              -------------- --------------
    Total liabilities                                 41,041         35,558

  Minority interest                                    2,221          1,298

Stockholders' equity                                 272,211        263,398
                                              -------------- --------------
    Total liabilities and stockholders'
     equity                                   $      315,473 $      300,254
                                              ============== ==============


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