As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/28/07  NetRatings, LLC                   PREM14A                1:1.6M                                   Merrill Corp-MD/FA

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Preliminary Proxy Solicitation Material -- Merger   HTML   1.18M 
                          or Acquisition                                         

TABLE OF CONTENTS

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SUMMARY TERM SHEET

This summary highlights selected information from this document and may not contain all of the information that is important to you. To fully understand the merger agreement and the merger contemplated thereby, you should read carefully this entire document, including the merger agreement and the other annexes to this document, as well as the other documents to which we have referred you. See “Where You Can Find More Information” beginning on page 76. In this proxy statement, the terms “NetRatings,” “Company,” “we,” “our” and “us” refer to NetRatings, Inc. and its subsidiaries. In this proxy statement, the term “Nielsen” refers to The Nielsen Company B.V., the term “NMR” refers to Nielsen Media Research, Inc. and the term “NTRT Acquisition Sub” refers to NTRT Acquisition Sub, Inc. Page references are included in this summary to direct you to a more complete description of the topics.

Parties to the Merger (page 11)

The parties to the merger are NetRatings, NMR, our majority stockholder, and NTRT Acquisition Sub, a newly-formed, wholly-owned subsidiary of NMR. NMR and ACNielsen Corporation, a stockholder of ours, are wholly-owned indirect subsidiaries of Nielsen (formerly known as VNU Group B.V.) and Nielsen is a wholly-owned indirect subsidiary of Valcon Acquisition Holding (Luxembourg) S.a.r.l. NMR, NTRT Acquisition Sub., ACNielsen Corporation, Nielsen and Valcon Acquisition Holding (Luxembourg) S.a.r.l. are collectively referred to as the “Nielsen Parties” in this proxy statement.

What You Will Receive in the Merger (page 54)

Upon completion of the proposed merger of NTRT Acquisition Sub with and into NetRatings, holders of our common stock (other than NMR, any other direct or indirect subsidiary of Nielsen and any stockholders who perfect their appraisal rights under Delaware law) will have the right to receive $21.00 in cash, without interest, for each share of NetRatings common stock held by them immediately prior to completion of the merger.

Effects of the Merger (page 36)

The merger is a “going private” transaction which will result in all of our outstanding shares of common stock being wholly-owned by Nielsen and its subsidiaries. The merger will have the following effects when it is completed:

·       Nielsen and its subsidiaries will own all of NetRatings equity;

·       public stockholders will no longer participate financially in the potential risks or potential benefits associated with a common equity investment in NetRatings;

·       we will no longer be a public company and the NetRatings common stock will no longer be listed or traded on the NASDAQ Global Market; and

·       we will no longer be required to file annual, quarterly and current reports with the Securities and Exchange Commission, or the “SEC.”

Recommendations of the Special Committee and Our Board of Directors (page 20)

Certain of our directors are employed by, or serve as directors of, Nielsen or its affiliates. Because these directors have financial and other interests that may be different from, and in addition to, your interests in the merger, our board of directors decided that, in order to protect the interests of our unaffiliated stockholders in evaluating and negotiating the merger agreement, a special committee of independent directors who are not affiliated with Nielsen or its affiliates and who have no financial interest in the merger that is different than that of our unaffiliated stockholders generally should be formed to

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perform those tasks and, if appropriate, to recommend to our entire board of directors that it approve the merger and the terms of the merger agreement to our entire board of directors.

The special committee consists of three of our directors who are not officers or employees of Nielsen or otherwise affiliated with it. The special committee, acting with the advice and assistance of its independent financial and legal advisors, evaluated and negotiated the merger, including the terms and conditions of the merger agreement, with Nielsen. In light of the factors described in the section of this proxy statement entitled “Special Factors—Reasons for the Special Committee’s Determination; Fairness of the Merger,” the special committee unanimously concluded that the merger agreement and the transactions contemplated by it, including the merger, are advisable, fair to and in the best interests of our unaffiliated stockholders and unanimously recommended to the board of directors that the merger agreement and the merger be approved and adopted.

Based on the recommendation of the special committee, our board of directors unanimously concluded that the merger agreement and the transactions contemplated by it, including the merger, are advisable, fair to and in the best interests of the Company and its unaffiliated stockholders.  Our board of directors therefore unanimously recommends that you vote “FOR” the adoption of the merger agreement.

Opinion of the Special Committee’s Financial Advisor (page 24)

The special committee received an opinion, dated February 5, 2007, from Lehman Brothers Inc. (“Lehman Brothers”) that, as of such date, and based on and subject to matters stated in its opinion, from a financial point of view, the merger consideration to be received by the unaffiliated stockholders of NetRatings common stock is fair to such holders. The full text of Lehman Brothers’ opinion is attached to this proxy statement as Annex B. We encourage you to read Lehman Brothers’ opinion in its entirety and the section titled “Special Factors—Opinion of Lehman Brothers Inc.” beginning on page 24 for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Lehman Brothers in rendering its opinion. Lehman Brothers’ opinion was provided for the use and benefit of the special committee in connection with its consideration of the merger transaction and was not intended to be and does not constitute a recommendation to any NetRatings stockholder as to how such stockholder should vote at the special meeting with respect to the merger agreement or any other matter and does not in any manner address our underlying business decision to proceed with or effect the merger transaction.

The Position of the Nielsen Parties as to the Fairness of the Merger (page 33)

The Nielsen Parties believe that the merger is substantively and procedurally fair to NetRatings’ unaffiliated stockholders. The Nielsen Parties believe that this conclusion is supported by their knowledge and analysis of available information about NetRatings and by the factors discussed under “Special Factors—The Position of the Nielsen Parties as to the Fairness of the Merger” beginning on page 33.

Interests of Directors and Executive Officers of NetRatings in the Merger (page 43)

When considering the recommendation of our board of directors that you vote for adoption of the merger agreement and the transactions contemplated thereby, including the merger, you should be aware that certain of our directors and officers have interests in the merger that are different from, or in addition to, yours and that may present, or appear to present, a conflict of interest. These interests include the following:

·       some of our directors and executive officers hold our common stock and have options to purchase our common stock and, as a result, will receive the merger consideration for these shares and options upon the closing of the merger;

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·       NMR has agreed to honor, or cause to be honored, all of the employment, change in control, severance and termination plans, policies or arrangements we have with our directors, officers and employees, as well as all obligations pursuant to outstanding cash bonus plans and vested and accrued benefits under any employee benefit plan, program or arrangement of NetRatings or its subsidiaries, subject to certain limitations described in the merger agreement; and

·       following the merger, NMR has agreed to indemnify our current and former directors and officers and provide these directors and officers with liability insurance for six years.

The special committee and our board of directors were aware of these interests and considered them, among other matters, in approving the merger and the merger agreement.

The Special Meeting (page 12)

Date, Time and Place.   A special meeting of stockholders of NetRatings will be held on                 , 2007, at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, 35th floor, New York, New York 10104, at 9:00 a.m., Eastern Time. At the special meeting, NetRatings stockholders will be asked to adopt the merger agreement and to act upon any other matters that may properly come before the special meeting.

Record Date; Outstanding Shares.   Holders of record of shares of our outstanding common stock as of the close of business on                 , 2007 are entitled to vote at the special meeting. On that date there were [                ] shares of NetRatings common stock outstanding and entitled to vote. Each share of NetRatings common stock entitles the holder to one vote at the special meeting on all matters properly presented at the special meeting.

Required Votes.   Under Delaware law, the affirmative vote of the holders of a majority of the outstanding shares of our common stock is necessary to adopt the merger agreement. In the merger agreement, NMR has agreed to vote, or cause to be voted, all shares of our common stock beneficially owned by NMR and its affiliates, which represents approximately 60% of the outstanding shares of our common stock, in favor of the proposal to adopt the merger agreement. This agreement by NMR will ensure that the merger agreement is adopted by the holders of a majority of the outstanding shares of NetRatings common stock, as required by Delaware law. Exclusive of shares which may be acquired upon the exercise of presently exercisable stock options, the directors and executive officers of NetRatings collectively owned approximately [                ] shares or [    ]% of the outstanding shares of NetRatings common stock as of the record date for the special meeting. We anticipate that each of our directors and executive officers who is a stockholder will vote their outstanding shares of our common stock in favor of the merger. Abstentions and broker non-votes, as well as shares that are not voted, will have the same effect as a vote against the adoption of the merger agreement.

Granting and Revocation of Proxies.   Stockholders of record may grant a proxy to vote by mail, by telephone or via the Internet or may attend the special meeting and vote in person. If your shares are held in an account with a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted.

You will have the power to revoke your proxy at any time before it is exercised by:

·       delivering prior to the special meeting a written notice of revocation addressed to Alan Shapiro, Senior Vice President & General Counsel, NetRatings, Inc., 120 West 45th Street, 35th Floor, New York, New York 10036;

·       delivering to NetRatings prior to the special meeting a properly executed proxy with a later date;

·       granting a proxy to vote on a later date but prior to the special meeting by telephone or via the Internet (only your last telephone or Internet proxy will be counted); or

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·       attending the special meeting and voting in person.

Each proxy returned to NetRatings (and not subsequently revoked) by a holder of NetRatings common stock will be voted in accordance with the instructions indicated thereon. If no instructions are indicated, the proxy will be voted “FOR” the adoption of the merger agreement and, in the discretion of the proxies, upon any other matters that may properly come before the special meeting.

Voting Agreements and Understandings (page 13)

In the merger agreement, NMR has agreed to vote, or cause to be voted, all shares of our common stock beneficially owned by NMR and its affiliates, which represents approximately 60% of the outstanding shares of our common stock, in favor of the proposal to adopt the merger agreement. This agreement by NMR will ensure that the merger agreement is adopted by the holders of a majority of the outstanding shares of NetRatings common stock, as required by Delaware law.

Conditions to the Merger (page 55)

The completion of the merger is subject to the satisfaction of the following conditions:

·       the adoption of the merger agreement by the affirmative vote of the holders of a majority of the outstanding shares of our common stock;

·       the absence of any law, order or injunction prohibiting the completion of the merger;

·       the receipt of all required consents and approvals of governmental entities;

·       each party’s respective representations and warranties in the merger agreement must be true and correct as of the closing date in the manner set forth under “The Merger Agreement—Conditions to the Merger” beginning on page 55; and

·       each party must have performed in all material respects all obligations that it is required to perform under the merger agreement prior to the closing date for the merger.

Termination of the Merger Agreement (page 63)

The merger agreement may be terminated at any time prior to completion of the merger, notwithstanding any adoption of the merger agreement by our stockholders, in any of the following ways:

·       by mutual written consent of NetRatings, NMR and NTRT Acquisition Sub;

·       by either NetRatings or NMR if any court of competent jurisdiction or other United States governmental entity shall have issued a final order, decree, injunction or ruling or taken any other final non-appealable action restraining, enjoining or otherwise prohibiting the merger;

·       by either NetRatings or NMR if the merger has not been completed on or before the date which is eight (8) months from the date of the merger agreement;

·       by either NetRatings or NMR if there has been a material breach by the other party of any of its obligations or agreements or any of its representations or warranties set forth in the merger agreement, which would prevent satisfaction of a closing condition and the breach is not cured within 20 business days following written notice of the breach; or

·       by NMR if our board of directors upon the advice of the special committee shall have effected an adverse recommendation change or shall have recommended to our stockholders an acquisition proposal other than the merger, or shall have resolved to effect any of the foregoing.

Any termination of the merger agreement by NetRatings must be approved by the special committee.

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Material U.S. Federal Income Tax Consequences (page 48)

The receipt of cash for shares of our common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and also may be a taxable transaction under applicable state, local, foreign and other tax laws. For U.S. federal income tax purposes, each U.S. holder of our common stock generally will recognize gain or loss as a result of the merger measured by the difference, if any, between the cash received in the merger and the U.S. holder’s adjusted tax basis in the shares of NetRatings common stock owned by the U.S. holder. For U.S. federal income tax purposes, each non-U.S. holder generally will not be subject to U.S. federal income tax on the merger consideration received by such non-U.S. holder unless the non-U.S. holder has certain connections to the United States. For additional information regarding material U.S. federal income tax consequences of the merger to our stockholders, see “Special Factors—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 48. Stockholders are urged to consult their own tax advisors as to the particular tax consequences to them of the merger.

Appraisal Rights (page 50)

Stockholders who do not wish to accept the $21.00 per share cash consideration payable pursuant to the merger have the right under Delaware law to dissent from the merger and have their shares appraised by the Delaware Court of Chancery. This “right of appraisal” is subject to a number of restrictions and technical requirements. Generally, in order to exercise appraisal rights, among other things:

·       you must NOT vote in favor of adoption of the merger agreement; and

·       you must make a written demand for appraisal in compliance with Delaware law BEFORE the vote on the merger agreement.

Merely voting against the adoption of the merger agreement will not preserve your appraisal rights under Delaware law. Also, because a submitted proxy not marked “against” or “abstain” will be voted for the adoption of the merger agreement, the submission of a proxy not marked “against” or “abstain” will result in the waiver of appraisal rights. Annex C to this proxy statement contains the Delaware law relating to your right of appraisal. If you hold shares in the name of a broker or other nominee, you must instruct your nominee to take the steps necessary to enable you to assert appraisal rights. If you or your nominee fail to follow all of the steps required by this law, you will lose your right of appraisal.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

The following questions and answers address briefly some questions you may have regarding the special meeting and the proposed merger. These questions and answers may not address all questions that may be important to you as a stockholder of NetRatings. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

Q:   What is the date, time and place of the special meeting?

A:             The special meeting will be held on                 , 2007, at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, 35th floor, New York, New York 10104, at 9:00 a.m., Eastern Time.

Q:   What am I being asked to vote on?

A:             You are being asked to consider and vote on a proposal to adopt the merger agreement entered into by and among NetRatings, NMR and NTRT Acquisition Sub, a wholly-owned subsidiary of NMR, and the merger contemplated by the merger agreement. The merger agreement sets forth the terms and conditions under which NTRT Acquisition Sub will merge with and into NetRatings. See “The Special Meeting” and “The Merger Agreement” beginning on pages 12 and 54, respectively.

Q:   What will I receive in the merger?

A:             If the merger is completed, we will be wholly-owned by Nielsen and its subsidiaries and our stockholders (other than NMR, any other direct or indirect subsidiary of Nielsen and any stockholders who perfect their appraisal rights under Delaware law) will have the right to receive $21.00 in cash, without interest, for each share of NetRatings common stock outstanding immediately prior to completion of the merger. See “The Merger Agreement—The Merger” beginning on page 54.

Q:   What does our board of directors recommend?

A:             Our board of directors, based on the unanimous recommendation of the special committee composed entirely of independent directors, unanimously approved the merger agreement and determined that it and the merger are advisable, fair to and in the best interests of NetRatings and its unaffiliated stockholders. Our board of directors therefore recommends that you vote “FOR” the adoption of the merger agreement. We encourage you to review the background and reasons for the merger sections of this proxy statement in greater detail, see “Special Factors—Background of the Merger,” “Special Factors—Reasons for the Special Committee’s Determination; Fairness of the Merger” and “Special Factors—Reasons for Our Board of Directors’ Determination; Fairness of the Merger” beginning on pages 14, 20 and 24, respectively.

Q:   Why did our board of directors form the special committee?

A:             On October 9, 2006, our board of directors formed a special committee of independent directors who are not officers or employees of NetRatings or otherwise affiliated with Nielsen to consider the proposal by Nielsen to acquire each share of our common stock that Nielsen or its affiliates do not currently own. The special committee was formed in order to protect our public stockholders from potential conflicts of interest resulting from the majority interest in NetRatings held by Nielsen and its affiliates.

Q:   When do you anticipate the merger will be completed?

A:             We will try to complete the merger as soon as possible.  Before that happens, the merger agreement must be adopted by our stockholders in the required manner at the special meeting. Assuming this

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and the other customary conditions to the merger are satisfied, we expect to complete the merger during the second quarter of 2007.

Q:   Who is entitled to vote at the special meeting?

A:             Holders of record of shares of our outstanding common stock as of the close of business on                 , 2007, the record date for the special meeting, are entitled to vote at the special meeting. You will have one vote at the special meeting for each share of NetRatings common stock that you owned on that date.

Q:   What vote is required to approve the merger agreement and the merger?

A:             Under Delaware law, the proposal to approve the merger agreement must be adopted by the affirmative vote of the holders of a majority of all outstanding shares of NetRatings common stock. In the merger agreement, NMR has agreed to vote, or cause to be voted, all shares of our common stock beneficially owned by NMR and its affiliates, which represents approximately 60% of the outstanding shares of our common stock, in favor of the proposal to adopt the merger agreement. This agreement by NMR will ensure that the merger agreement is adopted by the holders of a majority of the outstanding shares of NetRatings common stock, as required by Delaware law.

Q:   What happens if I sell my shares of NetRatings common stock before the special meeting?

A:             If you sell your shares of NetRatings common stock before the record date, you will not be entitled to vote at the special meeting or to receive the merger consideration. If you sell your shares of NetRatings common stock after the record date but before the special meeting, you will, unless special arrangements are made, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration to the person to whom you sold your shares.

Q:   What do I need to do now?

A:             After carefully reading and considering the information contained in this proxy statement, please complete and promptly mail your proxy card in the return envelope enclosed, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free number or by using the Internet as described in the instructions included with your proxy card. Please do this as soon as possible so that your shares will be represented at the special meeting. See “The Special Meeting” beginning on page 12.

Q:   May I vote in person?

A:             Yes. You may attend the special meeting and vote your shares in person whether or not you sign and return a proxy card or otherwise vote by proxy. If your shares are held of record by a broker, bank or nominee and you wish to vote at the special meeting, you must obtain a proxy from the record holder of your shares in order to vote in person at the special meeting. Please note that stockholders may be asked to present photo identification for admittance to the special meeting.

Q:   Can I change my vote after I have mailed in my proxy card or voted by phone or the Internet?

A:             Yes. You will have the power to revoke your proxy at any time before it is exercised by (1) delivering prior to the special meeting a written notice of revocation addressed to Alan Shapiro, Senior Vice President & General Counsel, NetRatings, Inc., 120 West 45th Street, 35th Floor, New York, New York 10036; (2) delivering to NetRatings prior to the special meeting a properly executed proxy with a later date; (3) granting a proxy to vote on a later date but prior to the special meeting by telephone or via the Internet no later than 7:00 p.m., Eastern Time, on            , 2007 (only your last telephone or

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Internet proxy will be counted); or (4) attending the special meeting and voting in person. See “The Special Meeting” beginning on page 12.

Q:   If my shares are held in “street” name by my broker, will my broker vote my shares for me?

A:             Your broker will vote your shares only if you provide instructions to your broker on how to vote. You should instruct your broker to vote your shares by following the directions provided to you by your broker. If you do not provide instructions to your broker, your shares will not be voted and this will have the same effect as a vote against the merger agreement and the merger.

Q:   Will my shares held in “street” name or another form of record ownership be combined for voting purposes with shares I hold of record?

A:             No. Because any shares you may hold in “street” name with a broker, bank or other nominee will be deemed to be held by a different stockholder than any shares you hold of record, any shares so held will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity, and shares held in an IRA must be voted under the rules governing the account.

Q:   Should I send in my stock certificates now?

A:             No. Promptly after completion of the merger, each stockholder of NetRatings entitled to receive his, her or its portion of the merger consideration will receive a transmittal letter and instructions specifying the procedures to be followed for surrendering stock certificates in exchange for payment of the merger consideration. Upon surrender of your stock certificate(s) with a duly executed letter of transmittal you will be paid the portion of the merger consideration to which you are entitled. You should not send your stock certificate(s) to us or anyone else until you receive written instructions following completion of the merger.

Q:   I do not know where my stock certificate is. How will I get my cash?

A:             The materials that will be sent to you after completion of the merger will include the procedures that you must follow if you cannot locate your stock certificate. This will include an affidavit that you will need to sign attesting to the loss of your certificate. We also may require that you provide a bond to cover any potential loss and to enter into an indemnity agreement to indemnify NetRatings and the paying agent against any claim that may be made against them with respect to your stock certificate.

Q:   Where can I find more information?

A:             You may obtain more information from various sources as explained in the section “Where You Can Find More Information” beginning on page 76.

Q:   Who can answer further questions?

A:             If you have additional questions about the merger, you may call our proxy solicitor, MacKenzie Partners, Inc., toll-free at (800) 322-2885. If you would like additional copies of this proxy statement or a new proxy card, you may contact us in writing at NetRatings, Inc., 120 West 45th Street, 35th Floor, New York, New York 10036, Attention: Susan Hickey, or by telephone at (212) 703-5900.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF NETRATINGS

The following information at and for the years ended December 31, 2005, 2004, 2003, 2002 and 2001 has been derived from NetRatings’ historical audited consolidated financial statements for those years. The financial information at and for the nine months ended September 30, 2006 and 2005 has been derived from NetRatings’ unaudited consolidated financial statements for these periods, which financial information includes, in the opinion of NetRatings’ management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such information. The results for the nine months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006.

The information set forth below is only a summary and should be read in conjunction with NetRatings’ consolidated financial statements and the related notes contained in NetRatings’ periodic reports filed with the SEC, that have been incorporated by reference into this document.  See “Where You Can Find More Information” beginning on page 76.

		For the nine months ended September 30,						For the years ended December 31,
		2006			2005			2005			2004			2003			2002			2001
		(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenue		$	59,814		$	50,334		$	68,017		$	59,294		$	41,432		$	29,706		$	23,504
Gross profit		42,790			33,130			45,366			36,237			20,956			13,255			10,240
Total operating expenses		43,176			43,376			57,266			56,422			50,665			53,128			37,830
Operating loss		(386		)	(10,246		)	(11,900		)	(20,185		)	(29,709		)	(39,873		)	(27,590		)
Net income (loss)		2,730			(7,682		)	(8,395		)	(17,419		)	(25,135		)	(38,876		)	(17,634		)
Basic and diluted net income (loss) per common share		$	0.08		$	(0.21	)	$	(0.23	)	$	(0.50	)	$	(0.74	)	$	(1.17	)	$	(0.54	)
Shares used to compute net income (loss) per common share—basic		34,847			35,987			35,985			34,637			33,792			33,168			32,864
Shares used to compute net income (loss) per common share—diluted		35,884			35,987			35,985			34,637			33,792			33,168			32,864

 

		As of September 30,						As of December 31,
		2006			2005			2005			2004			2003			2002			2001
		(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities		$	180,927		$	194,188		$	180,252		$	197,602		$	210,039		$	241,411		$	322,563
Working capital		158,439			180,526			136,935			131,478			144,566			213,362			304,791
Total assets		305,171			314,894			300,254			314,457			314,923			331,266			341,699
Deferred revenue		15,577			13,627			12,666			11,435			10,449			10,823			7,031
Total stockholders’ equity		$	266,858		$	278,589		$	263,398		$	280,438		$	274,054		$	288,666		$	318,468

 

Book Value Per Share

Our net book value per share as of September 30, 2006 was $7.61.

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FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents which we incorporate by reference in this proxy statement, may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, but are not limited to, statements relating to anticipated financial and operating results, the Company’s 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 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 to the merger or to satisfy other conditions to the merger on the proposed terms and schedule; increased competition and the Company’s business and financial results. Information about potential factors that may affect the Company’s business and financial results is included in its annual report on Form 10-K for the fiscal year ended December 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). We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this proxy statement or the date of the documents incorporated by reference in this proxy statement.

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INTRODUCTION

This proxy statement and the accompanying form of proxy are being furnished to all record holders of NetRatings common stock in connection with the solicitation of proxies by the board of directors of NetRatings for use at the special meeting of stockholders of NetRatings to be held on               , 2007 and any adjournment or postponement of this meeting. The purpose of the special meeting is to consider and vote upon a proposal to adopt the merger agreement, dated as of February 5, 2007, by and among NetRatings, NMR and NTRT Acquisition Sub, a wholly-owned subsidiary of NMR, which sets forth the terms and conditions under which NTRT Acquisition Sub will merge with and into NetRatings. If the proposed merger is completed, all of our outstanding shares of common stock will be wholly-owned by Nielsen and its subsidiaries and our stockholders (other than NMR, any other direct or indirect subsidiary of Nielsen and any stockholders who perfect their appraisal rights under Delaware law) will have the right to receive $21.00 in cash, without interest, for each share of NetRatings common stock outstanding immediately prior to completion of the merger.

THE PARTIES TO THE MERGER

NetRatings, Inc.

We are a Delaware corporation and a majority-owned subsidiary of NMR. We are a leading provider of Internet audience measurement and analysis in the United States and around the world. All of our products and services are designed to assist companies in making critical business decisions regarding their Internet strategies and initiatives. We have a highly diversified and global client base, including large and small companies in the media, technology, advertising, financial services, consumer products, retail and travel industries.

The executive offices of NetRatings are located at 120 West 45th Street, 35th Floor, New York, New York 10036, and our telephone number is (212) 703-5900.

Nielsen Media Research, Inc.

Nielsen Media Research, Inc., a Delaware corporation and the majority stockholder of NetRatings, is principally engaged in the business of providing television audience measurement and related services in the United States and Canada. NMR is a wholly-owned indirect subsidiary of Nielsen. The principal business and office address of NMR is 770 Broadway, New York, New York 10003, and its telephone number at such location is (646) 654-5000.

NTRT Acquisition Sub, Inc.

NTRT Acquisition Sub, Inc. is a newly-formed Delaware corporation and a wholly-owned subsidiary of NMR. NTRT Acquisition Sub, Inc. was formed solely for the purpose of entering into the merger agreement and consummating the merger and has not engaged in any business except in furtherance of the merger. The principal business and office address of NTRT Acquisition Sub, Inc. is c/o Nielsen Media Research, Inc., 770 Broadway, New York, New York 10003, and its telephone number at such location is (646) 654-5000.

ACNielsen Corporation

ACNielsen Corporation, a Delaware corporation and a stockholder of NetRatings, is principally engaged in the business of delivering market research information and analysis to the consumer products and services industries. ACNielsen Corporation is a wholly-owned indirect subsidiary of Nielsen. Although ACNielsen Corporation is not a party to the merger agreement, it owns shares of our common stock, and, in accordance with the terms of the merger agreement, NMR will cause ACNielsen Corporation to vote these shares for the adoption of the merger agreement. ACNielsen Corporation’s principal business and

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office address is 770 Broadway, New York, New York 10003 and its telephone number at such location is (646) 654-5000.

The Nielsen Company B.V.

The Nielsen Company B.V., a Netherlands corporation, is principally engaged in the business of international media and international information services activities. The principal office address is Ceylonpoort 5-25, 2037 AA Haarlem, The Netherlands. The telephone number of Nielsen at such location is 011 31 23 546 3463. Nielsen indirectly owns 100% of the voting stock of Nielsen Media Research, Inc., ACNielsen Corporation and NTRT Acquisition Sub, Inc.

Valcon Acquisition Holding (Luxembourg) S.a.r.l.

Valcon Acquisition Holding (Luxembourg) S.a.r.l., a Luxembourg company, is the ultimate parent company of The Nielsen Company B.V. Valcon Acquisition Holding (Luxembourg) S.a.r.l .’s principal business and office address is 59, rue de Rollingergrund, L-2440 Luxembourg and its telephone number at such location is (+352) 260 289 1. Valcon Acquisition Holding (Luxembourg) S.a.r.l. is controlled by a private-equity group consisting of affiliated funds of AlpInvest Partners N.V., The Blackstone Group L.P., The Carlyle Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Thomas H. Lee Partners, L.P.

THE SPECIAL MEETING

Date, Place and Time

A special meeting of stockholders of NetRatings will be held at 9:00 a.m., Eastern Time, on         , 2007 at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, 35th floor, New York, New York 10104.

Matters to be Considered

The purposes of the NetRatings special meeting are to consider and vote on a proposal to adopt the merger agreement, dated as of February 5, 2007, among NetRatings, NMR and NTRT Acquisition Sub, and to consider and vote on any other matters that may be properly submitted for a vote at the special meeting. At this time, our board of directors is unaware of any matters, other than the proposal to adopt the merger agreement, that may be presented for action at the special meeting.

Shares Outstanding and Entitled to Vote; Record Date

We have fixed the close of business on               , 2007 as the record date for the determination of holders of our common stock entitled to notice of and to vote at the special meeting and any adjournment or postponement of the special meeting. At the close of business on the record date, there were          shares of NetRatings common stock outstanding and entitled to vote. Each share of NetRatings common stock entitles the holder to one vote at the special meeting on all matters properly presented at the special meeting.

How to Vote Your Shares

Stockholders of record may grant a proxy to vote by telephone, via the Internet, by mail or may vote themselves by attending the special meeting and voting in person.

·       Granting a Proxy by Telephone: You can grant a proxy to vote your shares by telephone by calling the toll-free telephone number on your proxy card. Telephone voting is available 24 hours a day. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. Our telephone voting procedures are designed to authenticate stockholders by using individual control numbers. If you vote by telephone, you do not need to return your proxy card.

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·       Granting a Proxy via the Internet: You can grant a proxy to vote via the Internet by accessing the web site listed on your proxy card and following the instructions you will find on the web site. Internet voting is available 24 hours a day. As with telephone voting, you will be given the opportunity to confirm that your instructions have been properly recorded. If you vote via the Internet, you do not need to return your proxy card.

·       Granting a Proxy by Mail: If you choose to grant a proxy to vote by mail, simply mark the enclosed proxy card, date and sign it, and return it in the postage paid envelope provided.

If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the special meeting, you must bring a letter from the broker, bank or other nominee confirming that you are the beneficial owner of the shares and granting you a proxy to vote those shares.

You will have the power to revoke your proxy at any time before it is exercised by:

·       delivering prior to the special meeting a written notice of revocation addressed to Alan Shapiro, Senior Vice President & General Counsel, NetRatings, Inc., 120 West 45th Street, 35th Floor, New York, New York 10036;

·       delivering to NetRatings prior to the special meeting a properly executed proxy with a later date;

·       granting a proxy to vote on a later date but prior to the special meeting by telephone or via the Internet (only your last telephone or Internet proxy will be counted); or

·       attending the special meeting and voting in person.

Attendance at the special meeting will not, in and of itself, constitute revocation of a proxy.

If you provide specific voting instructions, your shares will be voted as instructed. If you hold shares in your name and sign and return a proxy card or vote by telephone or via the Internet without giving specific voting instructions, your shares will be voted “FOR” the adoption of the merger agreement and the transactions contemplated thereby.

At this time, our board of directors is unaware of any matters, other than adoption of the merger agreement and the transactions contemplated thereby, that may be presented for action at the special meeting. If other matters are properly presented, however, the persons named as proxies will vote in accordance with their judgment with respect to such matters.

Votes Required

Quorum.   A quorum, consisting of the holders of a majority of the issued and outstanding shares of NetRatings common stock, must be present in person or by proxy before any action may be taken at the special meeting.

The Merger Agreement.   Under Delaware law, the affirmative vote of the holders of a majority of the outstanding shares of NetRatings common stock is necessary to adopt the merger agreement. In the merger agreement, NMR has agreed to vote, or cause to be voted, all shares of our common stock beneficially owned by NMR and its affiliates, which represents approximately 60% of the outstanding shares of our common stock, in favor of the proposal to adopt the merger agreement. This agreement by NMR will ensure that the merger agreement is adopted by the holders of a majority of the outstanding shares of our common stock, as required by Delaware law. As of                , 2007, the record date for the special meeting, there were [          ] shares of our common stock outstanding.

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Other Matters.   The affirmative vote of a majority of the votes cast of our common stock present in person or by proxy at the special meeting is required to approve any other matter properly submitted to stockholders for their consideration at the special meeting.

Effect of Abstentions, “Broker Non-Votes” and Failures to Vote.   “Broker non-votes” are shares held by brokers or nominees as to which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and the broker or nominee does not have discretionary voting power under rules applicable to broker-dealers. Abstentions and broker non-votes, as well as shares that are not voted, will have the same effect as a vote against adoption of the merger agreement.

Shares Owned by Directors and Executive Officers of NetRatings

Exclusive of shares which may be acquired upon the exercise of presently exercisable stock options, the directors and executive officers of NetRatings and their respective affiliates collectively owned approximately [______] shares or [__]% of the outstanding shares of NetRatings common stock as of the record date for the special meeting. See “Beneficial Ownership of Capital Stock by Certain Beneficial Owners and Management” on page 66.

Solicitation of Proxies

NetRatings and NMR will share equally the cost of filing, printing and mailing this proxy statement. In addition to solicitation by mail, the directors, officers and employees of NetRatings, NMR and their respective subsidiaries may solicit proxies from stockholders of NetRatings in person or by telephone, telegram, facsimile or other electronic methods without any additional compensation other than reimbursement for their actual expenses.

Arrangements also will be made with brokerage firms and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and we will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection therewith.

We have retained MacKenzie Partners, Inc., a professional proxy solicitation firm, to assist us in the solicitation of proxies. The fee payable to such firm in connection with the merger is $3,500, plus reimbursement for reasonable out-of-pocket expenses.

SPECIAL FACTORS

Background of the Merger

In 1998 and 1999, Nielsen, through its subsidiaries NMR and ACNielsen Corporation, formed a strategic relationship with the Company. This strategic relationship provided us with a unique opportunity to leverage Nielsen brands, expertise and industry relationships to facilitate the rapid acceptance and deployment of our diverse portfolio of products and services. Since that time, Nielsen has beneficially owned a majority of the outstanding shares of the Company.

On June 8, 2006, Valcon Acquisition Holding (Luxembourg) S.a.r.l., a holding company controlled by a private equity group consisting of affiliated funds of AlpInvest Partners, N.V., The Blackstone Group L.P., The Carlyle Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Thomas H. Lee Partners, L.P., acquired approximately 99% of Nielsen’s share capital pursuant to Valcon Acquisition Holding (Luxembourg) S.a.r.l.’s previously announced offer (and thereafter initiated a squeeze out procedure to acquire the remaining share capital).

With Nielsen’s change of ownership, the Company’s independent directors considered the likelihood that Nielsen would seek to acquire the Company’s public minority shares. In June 2006, in anticipation of this possibility and at the request of the Company’s independent directors, our management approached

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Lehman Brothers to discuss the Company’s relationship with Nielsen and to examine possible options that Nielsen might pursue if Nielsen chose to seek to acquire the Company’s outstanding public minority interest. On July 7, 2006, Lehman Brothers met with the independent directors of the Company and presented its views on these issues and also provided the committee with information regarding Lehman Brothers’ experience, qualifications and ability to act in an independent manner as financial advisor. Also present at the meeting were certain members of our management and representatives from the Company’s outside counsel, Bryan Cave LLP. At this meeting, Bryan Cave LLP made a presentation to the special committee regarding the special committee’s role and responsibilities in any potential transaction with Nielsen.

On October 6, 2006, our board of directors received a proposal from Nielsen, which then beneficially owned 60.5% of our common stock, to acquire the outstanding publicly held minority interest in the Company for $16.00 per share in cash pursuant to a merger whereby the Company would become a wholly-owned subsidiary of Nielsen. Nielsen indicated that its proposed merger would be subject to approval of a special committee to be formed by our board of directors consisting of only independent directors as well as approval by the holders of a majority of all the outstanding shares of the Company’s common stock. The proposal contemplated only a vote by all the Company’s stockholders as a single class including the shares held by Nielsen and its affiliates. Nielsen made clear that it was interested only in acquiring the publicly held shares and not interested in selling its interest in the Company.

On October 9, 2006, a special meeting of our board of directors was held to discuss the Nielsen proposal. The independent directors also met separately that day to discuss the Nielsen proposal. Our board of directors decided that, although our Company was not for sale, it would be prudent to establish a special committee of the board of directors, consisting solely of directors who were independent of both the Company and Nielsen, and who had no financial interest in the proposed transaction other than as a stockholder generally. The special committee was delegated exclusive authority, among other things, to determine the advisability of the proposed transaction, to negotiate with Nielsen and to recommend to the full board what action, if any, should be taken by the board with respect to the proposed transaction. Our board of directors resolved not to recommend the proposed transaction without a favorable recommendation by the special committee. Our board of directors also authorized the special committee to retain independent legal and financial advisors to assist it in its evaluation of Nielsen’s proposal. The special committee is composed of Messrs. Arthur F. Kingsbury, D. Scott Mercer and Jerrell W. Shelton. Mr. Kingsbury was elected to serve as chair of the special committee. The directors who are employees of or consultants to Nielsen generally recused themselves from the process and thereafter did not participate in any negotiations between the Company or Nielsen or any internal valuation discussions conducted by Nielsen.

On October 10, 2006, the special committee determined to retain Lehman Brothers as its financial advisor and Gibson, Dunn & Crutcher LLP (“Gibson Dunn”) as its independent legal counsel to advise the special committee in connection with the Nielsen proposal. Lehman Brothers’ engagement letter was executed later that day.

Also on October 10, 2006, the special committee held its first meeting at the Company’s offices. Present at the meeting were also representatives of Lehman Brothers and Gibson Dunn. In addition, certain members of our management and representatives of Bryan Cave LLP were present for part of the meeting. At the meeting, various procedural and legal issues relating to the Nielsen proposal were discussed. The special committee also received advice from representatives of Gibson Dunn regarding the special committee’s legal duties in connection with considering a possible going private transaction.

Following the announcement of Nielsen’s proposal, three substantially similar putative class action lawsuits were filed, two on October 9, 2006 and one on October 10, 2006, by certain of our stockholders against us, our directors and Nielsen in the Delaware Court of Chancery. Additionally, one putative class action lawsuit was filed on November 6, 2006 by a stockholder of the Company against us, our directors

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and Nielsen in the Supreme Court of the State of New York, County of New York. The complaints generally alleged that our directors and Nielsen had violated their fiduciary duties owed to our unaffiliated stockholders in connection with the merger and sought, among other things, to enjoin the Nielsen proposal or, in the alternative, damages in an unspecified amount and rescission in the event a merger occurred pursuant to the proposal, as more fully described under the heading entitled “Special Factors—Litigation Related to the Merger” beginning on page 50.

On or about October 10, 2006, our board of directors received a letter from Praxis Partners, a stockholder of the Company, stating, among other things, that Praxis Partners believed Nielsen’s proposed offer price of $16 per share to be inadequate and not properly valuing the Company and its prospects.

The Company’s management had developed a three year strategic plan in June 2006 in connection with its annual strategic planning meeting (the “Three Year Strategic Plan”). Following receipt of the Nielsen proposal, in mid-October the special committee requested that the Company’s management develop an updated and more comprehensive financial forecast for the Company including estimates for the remainder of fiscal year 2006 and projections for fiscal years 2007 through 2011 (collectively, the “Five Year Financial Forecast”) because: (1) there had been important developments in the Company’s operations and businesses since the preparation of the Three Year Strategic Plan and (2) the Three Year Strategic Plan was created for strategic planning purposes and was not intended to serve as the basis for the type of valuation and financial analyses that would need to be performed to enable the special committee to adequately evaluate the Nielsen proposal.

Also in mid-October, Lehman Brothers met with representatives of the Company’s largest minority stockholder, TCS Capital Management LLC (“TCS”). At this meeting, TCS expressed its views regarding valuation of the Company and described why, in its opinion, Nielsen’s proposal undervalued the Company’s stock.

Throughout October and November, Lehman Brothers conducted numerous telephonic and in-person meetings with our management as part of their due diligence review of the Company. The special committee met three additional times in October with Lehman Brothers and Gibson Dunn to discuss the status of due diligence being conducted by Lehman Brothers and by Nielsen and its financial advisor, J.P. Morgan Securities Inc. (“JPMorgan”), and other matters, including the process of the special committee. Certain members of management and representatives of Bryan Cave LLP participated in portions of certain of those meetings.

On October 27, 2006, Lehman Brothers and Gibson Dunn held a telephonic meeting with a representative of another of the Company’s minority stockholders, Neuberger Berman, to hear its concerns about the adequacy of the Nielsen proposal.

In early November 2006, our management provided the special committee with its Five Year Financial Forecast. See “Special Factors—Financial Forecasts of NetRatings”  beginning on page 35.

On November 2, 2006, the Company issued a press release announcing its financial results for the third quarter ended September 30, 2006.  In the press release the Company announced that its revenues for the third quarter of 2006 increased by 29 percent over its revenues in the third quarter of 2005. For more information, see the Company’s report on form 8-K filed with the SEC on November 2, 2006.

On the morning of November 9, 2006, Lehman Brothers and Gibson Dunn met with Nielsen’s financial advisor, JPMorgan, and its legal counsel, Simpson Thacher & Bartlett LLP (“Simpson Thacher”). In this meeting JPMorgan presented its views on the valuation of the Company and of the proposed $16 per share offer price and the reasons why the special committee should support the $16.00 per share offer price.

At noon on November 9, 2006, the special committee held a meeting with Lehman Brothers and Gibson Dunn. During the meeting, Lehman Brothers and Gibson Dunn updated the committee on their meeting earlier in the day with JPMorgan.

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The special committee, Lehman Brothers and Gibson Dunn reconvened later that day to meet with the Company’s management and discuss the Five Year Financial Forecast. After that meeting, the special committee, Lehman Brothers and Gibson Dunn continued to discuss, without management’s presence, various issues relating to the valuation of the Company’s patent portfolio and in particular the Company’s patent enforcement program. Upon the recommendation of Gibson Dunn, the special committee decided to interview CRA International, Inc. (“CRA”) to serve as an independent intellectual property consultant to the special committee. Shortly after November 9, 2006, our management finalized the financial projections set forth in the Five Year Financial Forecast.

On November 13, 2006, the special committee held a telephonic meeting with Lehman Brothers and Gibson Dunn to discuss the status of Lehman Brothers’ due diligence. Later that day, the special committee held another telephonic meeting with Lehman Brothers and Gibson Dunn to interview CRA and to discuss the timing and scope of the work to be performed by CRA.

On November 14, 2006, the special committee formally engaged CRA as its independent intellectual property consultant to assist the committee in determining whether the estimates of future patent royalties prepared by management of the Company to be received in connection with the Company’s patent enforcement program (the “Potential Patent Royalties”) were reasonable.

The special committee met, telephonically, with Lehman Brothers and Gibson Dunn on November 16th, 21st, 22nd and 28th to discuss a variety of issues in connection with the evaluation of the Nielsen proposal, including the projections set forth in management’s Five Year Financial Forecast, the status of due diligence being conducted by Lehman Brothers and by Nielsen and JPMorgan and the patent portfolio valuation process. The special committee also received additional information from TCS’s representatives, expressing TCS’s concerns related to Nielsen’s proposal.

On November 29, 2006, the special committee held a meeting with Lehman Brothers and Gibson Dunn at the offices of Gibson Dunn in New York. Representatives of CRA were also in attendance via telephone. The special committee heard a presentation by CRA of its preliminary findings. Gibson Dunn also updated the special committee on the status of its own diligence, based on materials provided by the Company, concerning the Company’s patent portfolio. After CRA left the meeting, Lehman Brothers presented the results of its due diligence and its preliminary analysis with respect to the value of the Company. At that time, Lehman Brothers noted that its analyses were heavily dependent on management’s projections as reflected in the Five Year Financial Forecast and took into consideration the value of the Company’s patent portfolio (assuming the Potential Patent Royalties, as projected by management, were fully realized in the time frame indicated).  Lehman Brothers also noted that its analysis took into account NetRatings’ net operating losses (or NOLs), but not the potential synergies from the contemplated merger transaction. Following Lehman’s presentation, the special committee discussed the information presented as well as other matters relating to the Company’s prospects and expected trends. The special committee, Lehman Brothers and Gibson Dunn then discussed the appropriate response to the Nielsen offer.

On December 1, 2006, the special committee held a meeting with Gibson Dunn, Lehman Brothers and representatives of TCS at which TCS communicated its views as to the value of the Company.

On December 6, 2006, Lehman Brothers and Gibson Dunn held a meeting at the offices of Gibson Dunn in New York with representatives of Nielsen, JPMorgan, Simpson Thacher, representatives of Nielsen’s controlling stockholder group and the Company’s management. At the meeting, representatives of the Company’s management presented to Nielsen, members of Nielsen’s controlling stockholder group and JPMorgan the Five Year Financial Forecast.

On December 7, 2006, the special committee, Lehman Brothers and Gibson Dunn held a telephonic meeting. Representatives of CRA were also in attendance.  CRA made an oral presentation to the special committee. CRA reported that it had conducted research regarding industry transactions, including licensing arrangements, in order to determine the reasonableness of the royalty rates in the settlements

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reached by the Company in its patent infringement cases thus far, and that CRA had concluded that management’s approach to the patent infringement cases had been reasonable.

On December 8, 2006, Lehman Brothers and JPMorgan held a telephonic meeting to discuss the views of Nielsen’s financial advisor with respect to the information presented by the Company’s management on December 6, 2006. During the meeting, Nielsen’s financial advisor raised questions regarding management’s ability to achieve the Five Year Financial Forecast.

On the evening of December 12, 2006, Lehman Brothers and JPMorgan held a meeting, with Gibson Dunn and Simpson Thacher also in attendance. In the meeting, Lehman Brothers presented its views and underlying financial analyses with respect to the Company’s valuation and on the inadequacy of the $16 per share price offered by Nielsen. JPMorgan reiterated its reservations about management’s ability to achieve the Five Year Financial Forecast. During the meeting, Lehman Brothers gave JPMorgan directional guidance with respect to the inadequacy as to $16 per share but, as previously instructed by the special committee, did not convey a specific per share counterproposal given how far apart the parties were on price. Lehman Brothers also reiterated their previous statements regarding the special committee’s belief and support of management’s Five Year Financial Forecast and its achievability by the Company.

Between December 12, 2006 and the second week in January 2007, the special committee held several telephonic meetings with Lehman Brothers and Gibson Dunn to receive updates on the status of the discussions with Nielsen, JPMorgan and representatives of Nielsen’s controlling stockholder group. In these meetings the special committee learned that Nielsen was completing its analyses as well as considering its alternatives with respect to NetRatings if it withdrew its proposal in response to the lack of a counteroffer.

On January 15, 2007, the special committee, Lehman Brothers and Gibson Dunn held a telephonic meeting. In light of the fact that Nielsen had not responded to the guidance given by Lehman Brothers on December 12, 2006, the special committee decided to issue a press release, prior to the opening of the market the following day, to inform the Company’s public stockholders of the status of the discussions with Nielsen to date.

On the morning of January 16, 2007, the special committee issued a press release updating the stockholders of the Company on the status of discussions with Nielsen.

At the request of Nielsen, on January 29, 2007, the special committee, Lehman Brothers and Gibson Dunn met with James W. Cuminale, Chief Legal Officer of Nielsen, JPMorgan and Simpson Thacher, and representatives of Nielsen’s controlling stockholder group at Gibson Dunn’s offices in New York. At the meeting, Nielsen communicated an indicative value of $18.50 to elicit the special committee’s receptivity to concluding a transaction at that price. This indication of value was subject to certain conditions including the absence of any requirement to have the transaction approved by a majority vote of the public minority. A representative of Lehman Brothers indicated on behalf of the special committee that this price was not sufficient to justify a specific price as a counteroffer. Following further negotiation between the special committee and Mr. Cuminale and representatives of Nielsen’s controlling stockholder group, a representative of the group suggested a willingness to pursue a transaction based on a price of $20 per share in cash subject to a majority of minority condition and negotiation of a mutually acceptable merger agreement. Such representative explained, however, that he would need to seek authority for this proposal because the limit of the management team’s authority was a price of $20 per share coupled with the absence of any requirement to have the transaction approved by a majority vote of the public minority stockholders.

Late on January 30, 2007, the special committee, Lehman Brothers and Gibson Dunn held a telephonic meeting with Mr. Cuminale, JPMorgan, Simpson Thacher, and representatives of Nielsen’s controlling stockholder group. At this meeting, Mr. Cuminale indicated that Nielsen’s executive committee had authorized the management team to pursue a transaction at $20 per share subject to a majority of

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minority condition. Mr. Cuminale indicated that Nielsen was not prepared to go beyond $20 per share, particularly given the uncertainty associated with the majority of minority condition.

On January 31, 2007, the special committee, Lehman Brothers and Gibson Dunn held a telephonic meeting with Mr. Cuminale, JPMorgan and Simpson Thacher and representatives of Nielsen’s controlling stockholder group. Mr. Kingsbury stated that the special committee was not prepared to pursue a transaction at $20 per share. He then indicated that the special committee was prepared to accept an offer at $21.50 per share conditioned on a majority of minority vote. Mr. Kingsbury also suggested the special committee was prepared to accept an offer of $23 per share offer that was not conditioned on a majority of minority vote. Mr. Cuminale responded that these proposals were unlikely to be acceptable given prior discussions with Nielsen’s executive committee and that he expected that Simpson Thacher would be in contact with the special committee’s advisors later that evening to discuss the issuance of a joint release announcing the withdrawal of Nielsen’s proposal. Later that evening, after a lengthy discussion with its advisors, the special committee authorized Lehman Brothers to convey the message that the special committee would be willing to eliminate the majority of minority vote condition if Nielsen were prepared to accept a price of $21.00 per share. Lehman Brothers conveyed this message to a member of Nielsen’s controlling stockholder group. Following further discussion, Nielsen indicated that it was willing to proceed with the going private transaction of $21.00 per share in cash, without a majority of the minority approval condition.

On the morning of February 1, 2007, Nielsen’s legal advisor presented Gibson Dunn with a draft merger agreement. On the evening of February 1, 2007, the special committee held a telephonic meeting with Lehman Brothers and Gibson Dunn. Gibson Dunn informed the special committee that a draft merger agreement was distributed by Nielsen’s legal advisor earlier that day and that Gibson Dunn had identified several high-level issues to be discussed with the special committee before preparing a markup of the draft merger agreement on behalf of the special committee. Gibson Dunn then guided the special committee through the key terms of the proposed going private transaction and the key provisions in the draft merger agreement and the parties discussed each of the issues so identified. One of the issues discussed was a provision requiring the reimbursement of Nielsen’s out-of-pocket expenses, up to $4 million dollars, by the Company in the event of termination of the merger agreement under certain circumstances.

Over the course of the next several days, Gibson Dunn and Nielsen’s legal advisor held several telephonic meetings, exchanged multiple drafts of the merger agreement, and commenced negotiations of the final terms of the merger agreement and the transactions contemplated by it. The special committee rejected the notion of any expense reimbursement in the context of a transaction with Nielsen, and the final merger agreement did not include such a provision.

On February 4, 2007, the special committee met, telephonically, with Lehman Brothers and Gibson Dunn to discuss the terms of the proposed transaction. At the meeting, Lehman Brothers made a presentation including financial analyses of the proposed transaction. At this meeting Lehman Brothers also delivered its oral opinion, subsequently confirmed in writing, that as of that date and based on and subject to matters stated in this opinion, the proposed consideration was fair, from a financial point of view, to our unaffiliated stockholders. The special committee also reviewed the terms of the proposed merger agreement and received an update on the status of the negotiations. As there were still several issues outstanding in the merger agreement, the special committee resolved to meet again the following morning to consider the transaction.

Early morning on February 5, 2007, the special committee met, telephonically, with Lehman Brothers and Gibson Dunn to receive an update regarding the final terms of the proposed merger agreement which had been finalized since the previous evening. After considering the proposed price and the terms of the merger agreement and the various presentations of Lehman Brothers and Gibson Dunn, including Lehman Brothers’ oral opinion, the special committee unanimously recommended to the board of directors that the merger agreement and the merger be approved and adopted.

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Later that same morning, our board of directors held a telephonic meeting. Certain members of management and representatives of Lehman Brothers, Gibson Dunn and Bryan Cave LLP were also in attendance. Our board of directors heard a presentation by the chairperson of the special committee, Mr. Kingsbury, regarding the negotiations with Nielsen for the past several months and the key terms of the business agreement agreed to by the parties. Gibson Dunn presented the members of our board of directors with an overview of the final terms of the merger agreement and Lehman Brothers summarized for the members of our board of directors their financial analyses of the proposed transaction and their views on the fairness, from a financial point of view, of the merger consideration to our unaffiliated stockholders. Based on the recommendation of the special committee, our board then unanimously approved the merger, the merger agreement and the transactions contemplated by it. Later that day, the special committee received a copy of Lehman Brothers’ fairness opinion.

On the morning of February 5, 2007, the Company and Nielsen executed the merger agreement and issued a joint press release announcing the execution of the merger agreement.

Recommendations of the Special Committee and Our Board of Directors

Certain of our directors are employed by, or serve as directors of, Nielsen or its affiliates. Because these directors have financial and other interests that may be different from, and in addition to, your interests in the merger, our board of directors decided that, in order to protect the interests of our unaffiliated stockholders in evaluating and negotiating the merger agreement, a special committee of independent directors who are not affiliated with Nielsen or its affiliates, and who have no financial interest in the merger, other than the indemnification rights under the merger agreement, that is different than that of our unaffiliated stockholders generally should be formed to perform those tasks and, if appropriate, to recommend the merger and the terms of the merger agreement to our entire board.

At the meeting of the special committee held on February 5, 2007, the members of the special committee considered and discussed the terms of the merger agreement, and unanimously concluded that the merger agreement and the transactions contemplated by it, including the merger, are advisable, fair to and in the best interests of our unaffiliated stockholders and unanimously recommended to the board of directors that the merger agreement and the merger be approved and adopted. The special committee considered a number of factors in reaching its determinations and recommendations as more fully described below.

Our board of directors, based upon the unanimous recommendation of the special committee and the other factors more fully described below, unanimously concluded that the merger agreement and the transactions contemplated by it, including the merger, are advisable, fair to and in the best interests of the Company and its unaffiliated stockholders. In addition, our board of directors unanimously approved the merger agreement and the transactions contemplated by it, including the merger.

Our board of directors unanimously recommends that you vote “FOR” the adoption of the merger agreement.

Reasons for the Special Committee’s Determination; Fairness of the Merger

In determining the fairness of the merger and recommending adoption of the merger agreement and approval of the merger to our board of directors, the special committee considered a number of factors which, in the opinion of the members of the special committee, supported the special committee’s recommendation, including:

·       the special committee’s extensive knowledge, gained through a combined 15 years of experience on our board of directors, of our business, assets, financial condition and results of operations, our competitive position, the nature of our business, the industry in which we compete and our future prospects;

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·       the relationship between the merger consideration and recent market prices for our common stock, including the following points: (i) $21.00 per share in cash represents a 44.1% premium over our closing price on October 6, 2006 (the last day of trading before the public announcement of Nielsen’s proposal), and (ii) our common stock had not traded above $21.00 during the past five years;

·       the Five Year Financial Forecast prepared by our management and considered by the special committee and its advisors is inherently uncertain and may not be achieved in the amounts and at the times projected;

·       the projections of the Potential Patent Royalties prepared by our management and considered by the special committee and its advisors are inherently uncertain and may overstate the actual amount of Potential Patent Royalties received by us in the future;

·       the special committee’s belief, based on its knowledge and experience, that many of the factors that may have caused our shares over the last five years to trade at price levels substantially below the merger consideration are not likely to change in the foreseeable future;

·       the negotiations with respect to the merger consideration that, among other things, led to an increase in Nielsen’s initial offer from $16 per share of our common stock to $21.00 per share of our common stock, and the special committee’s determination that, following extensive negotiations between the special committee and Nielsen, $21.00 per share was the highest price that Nielsen would agree to pay, with the special committee basing its belief on a number of factors, including the duration and tenor of negotiations, assertions made by Nielsen and their advisors during the negotiation process, and the experience of the special committee and its advisors;

·       the financial analyses, methodologies and information provided by the special committee’s financial advisor, Lehman Brothers, each of which is described below under “Special Factors—Opinion of Lehman Brothers Inc.” beginning on page 24;

·       the written opinion of Lehman Brothers that, as of February 5, 2007, the merger consideration was fair, from a financial point of view, to our unaffiliated stockholders;

·       the oral opinion of CRA International, Inc., an independent patent expert hired by, reporting directly to and taking direction solely from the special committee, with respect to reasonableness of the projections of the Potential Patent Royalties prepared by our management;

·       the fact that the merger consideration will be paid entirely in cash to our stockholders, eliminating any uncertainties in value to our stockholders;

·       the fact that there is no financing contingency to the merger, and the likelihood that Nielsen has the financial and capital resources to complete the merger without the need to obtain financing and without undue delay;

·       our existing relationship with Nielsen, including its majority ownership position in the Company and the fact that Nielsen currently has the right to elect a majority of our board of directors and could control the outcome of most matters submitted to a vote of our stockholders;

·       the fact that the terms of the merger agreement permit the special committee, under certain circumstances and if necessary to comply with its fiduciary duties, to consider unsolicited bona fide alternative proposals; provided that, pursuant to the agreement, Nielsen has the opportunity to negotiate, within a limited timeframe, a transaction whose terms are equal to or better than the terms of such alternative proposal;

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·       the merger agreement did not include a break-up fee provision; and

·       the ability of our stockholders who may not support the merger to exercise appraisal rights under Delaware law.

The special committee also considered the following factors relating to the procedural safeguards that the special committee believes were and are present to ensure the fairness of the merger and to permit the special committee to represent the Company’s unaffiliated stockholders. The special committee believes these factors support its decision and provide assurance as to the procedural fairness of the merger to the Company’s unaffiliated stockholders:

·       our board of directors established a special committee to consider and negotiate the terms of the merger and the merger agreement;

·       the special committee is composed of directors who are not officers, employees or controlling stockholders of the Company or Nielsen or any of their affiliates or directors of Nielsen or any of its affiliates, are not otherwise affiliated with Nielsen (except that from 1994 to 1996 one member of the special committee, Arthur F. Kingsbury, served as President and Chief Operating Officer of VNU USA, Inc.), are all independent of the Company’s management and, other than the indemnification rights under the merger agreement, the members of the special committee do not have a financial interest in the proposed transaction that is different than that of our unaffiliated stockholders (the special committee was aware of Mr. Kingsbury’s previous relationship with the Nielsen Parties and, after careful consideration and consultation with its legal advisor, the special committee determined that no current conflict of interest exists and that our unaffiliated stockholders would be better served with Mr. Kingsbury on the special committee);

·       the special committee was granted the full authority of our board of directors to evaluate Nielsen’s proposal;

·       the resolutions establishing the committee give it authority to determine whether or not to proceed with the transaction, and the members of the special committee recognized that they were under no obligation to recommend approval of the merger proposal and that they had the authority to recommend against the merger;

·       the members of the special committee will be adequately compensated for their services and their compensation was agreed before negotiations commenced and is in no way contingent on their approval of the merger;

·       the special committee retained and received advice from its own independent legal and financial advisors in evaluating, negotiating and recommending the terms of the merger agreement, and these advisors reported directly to and took direction solely from the special committee;

·       the special committee hired and received advice from its own independent patent valuation expert, who reported directly to and took direction solely from the special committee;

·       the special committee and its advisors took an active and direct role in the negotiations with respect to the merger, and extensively deliberated the proposed transaction at numerous meetings of the special committee;

·       the price of $21.00 per share and the other terms and conditions of the merger agreement resulted from active and lengthy arms-length negotiations between the special committee and Nielsen;

·       the negotiations between the special committee and its independent advisors on the one hand, and Nielsen and its advisors, on the other hand, were structured and conducted so as to preserve the independence of the special committee and promote the fairness of the transaction; and

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·       the stockholders who do not vote in favor of the merger agreement and who comply with certain procedural requirements would be entitled, upon completion of the merger, to exercise statutory appraisal rights under Delaware law, which allows stockholders to have the fair value of their shares determined by the Delaware Chancery Court and paid to them in cash.

In light of the foregoing factors, the special committee determined that the merger is procedurally fair despite the fact that the terms of the merger agreement do not require the approval of at least a majority of our unaffiliated stockholders.

The special committee also considered a variety of risks and other potentially negative factors concerning the merger. The material risks and potentially negative factors considered by the special committee were as follows:

·       upon consummation of the merger, the Company will cease to be a public company and our stockholders will no longer be equity holders in the Company and therefore will no longer participate in any potential future growth;

·       while we expect that the merger will be consummated, there can be no assurances that all conditions to the parties’ obligations to complete the merger agreement will be satisfied and, as a result, the merger may not be consummated;

·       because NMR has agreed to vote, or cause to be voted, approximately 60% of the voting power of our common stock in favor of approving the merger, the proposed merger does not require the approval of any unaffiliated stockholders;

·       there may be disruptions to our operations following the announcement of the merger;

·       if the merger is not consummated, there may be disruptions to our operations, including the diversion of management and employee attention, employee attrition and an adverse effect on business and customer relationships;

·       the Five Year Financial Forecast prepared by our management and considered by the special committee and its advisors is inherently uncertain and may underestimate the Company’s future performance;

·       the projections of Potential Patent Royalties prepared by our management and considered by the special committee and its advisors are inherently uncertain and may understate the actual amount of Potential Patent Royalties received by the Company in the future;

·       for U.S. federal income tax purposes, the merger consideration will be taxable to our stockholders receiving the merger consideration; and

·       the restrictions on the conduct of our business prior to the consummation of the merger require us to conduct our business in the ordinary course, subject to specific limitations, which may delay or prevent us from undertaking business opportunities that may arise pending completion of the merger.

The special committee concluded, however, that these risks and potentially negative factors could be managed or mitigated by the Company or were unlikely to have a material impact on the merger, and that, overall, the potentially negative factors associated with the merger were outweighed by the potential benefits of the merger.

The special committee and our board of directors were fully aware of and considered possible conflicts of interest of certain of our directors and officers, as set forth below under “Special Factors—Interests of Directors and Officers of NetRatings in the Merger” beginning on page 43.  The special committee was aware of these interests and considered them in making its determination.

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Because of the variety of factors considered, the special committee did not find it practicable to quantify or otherwise assign relative weights to, and did not make specific assessments of, the specific factors considered in reaching its determination. In addition, individual members of the special committee may have assigned different weights to various factors. The determination of the special committee was made after consideration of all of the factors together.

Reasons for Our Board of Directors’ Determination; Fairness of the Merger

Our board of directors consists of nine directors, three of whom serve on the special committee. On February 5, 2007, following the special committee’s meeting with its legal and financial advisors, our board of directors, acting upon the unanimous recommendation of the special committee, unanimously concluded that the merger agreement and the transactions contemplated by it, including the merger, are advisable, fair to and in the best interests of the Company and its unaffiliated stockholders. In addition, our board of directors unanimously approved the merger agreement and the transactions contemplated by it, including the merger.

Our board of directors believes that the merger agreement and the merger are substantively and procedurally fair to, and in the best interests of, our unaffiliated stockholders based on the following material factors:

·       the report of the special committee, including the unanimous recommendation of the special committee, as described above;

·       the special committee’s retention of independent legal and financial advisors who have significant experience with transactions similar to the merger and who assisted the special committee in evaluating the merger and in negotiating with Nielsen;

·       the opinion of Lehman Brothers that, as of February 5, 2007, the merger consideration was fair, from a financial point of view to our unaffiliated stockholders;

·       the fact that the merger consideration and other terms of the merger agreement resulted from active and lengthy arms-length negotiations between the special committee and Nielsen; and

·       the other factors considered by the special committee as set forth above under the heading “Reasons for the Special Committee’s Determination; Fairness of the Merger.”

Opinion of Lehman Brothers Inc.

On October 10, 2006, the special committee engaged Lehman Brothers to act as its financial advisor with respect to evaluating the offer made by Nielsen. On February 4, 2007, Lehman Brothers rendered its oral opinion (subsequently confirmed in writing) to the special committee that as of such date and, based upon and subject to the matters stated in its opinion, from a financial point of view, the consideration to be received by the unaffiliated stockholders of NetRatings in the merger was fair to such stockholders.

THE FULL TEXT OF LEHMAN BROTHERS’ WRITTEN OPINION, DATED FEBRUARY 5, 2007, IS ATTACHED AS ANNEX B TO THIS PROXY STATEMENT. STOCKHOLDERS ARE ENCOURAGED TO READ LEHMAN BROTHERS’ OPINION CAREFULLY IN ITS ENTIRETY FOR A DESCRIPTION OF THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, FACTORS CONSIDERED AND LIMITATIONS UPON THE REVIEW UNDERTAKEN BY LEHMAN BROTHERS IN RENDERING ITS OPINION. THE FOLLOWING IS A SUMMARY OF LEHMAN BROTHERS’ OPINION AND THE METHODOLOGY THAT LEHMAN BROTHERS USED TO RENDER ITS OPINION. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION.

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Copies of Lehman Brothers’ written presentations to the special committee on November 29, 2006 and February 4, 2007 have been filed as Exhibits (c)(2)  and (c)(3) to the Schedule 13E-3 filed with the SEC by the Nielsen Parties and us in connection with the merger.

Lehman Brothers’ advisory services and opinion were provided for the information and assistance of the special committee in connection with its consideration of the merger. Lehman Brothers’ opinion is not intended to be and does not constitute a recommendation to any stockholder of NetRatings as to how such stockholder should vote in connection with the merger. Lehman Brothers was not requested to opine as to, and Lehman Brothers’ opinion does not address, NetRatings’ underlying business decision to proceed with or effect the merger.

In arriving at its opinion, Lehman Brothers reviewed and analyzed, among other things:

(1)         the merger agreement and the specific terms of the merger;

(2)         publicly available information concerning the Company that it believed to be relevant to its analysis, including the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2005, and quarterly reports on Form 10-Q for the quarters ended March 31, 2006; June 30, 2006; and September 30, 2006;

(3)         financial and operating information with respect to the business, operations and prospects of the Company furnished to Lehman Brothers by the Company, including the Five Year Financial Forecast and the Potential Patent Royalties;

(4)         a trading history of the Company’s common stock from January 31, 2002, to January 31, 2007;

(5)         a comparison of the historical financial results and present financial condition of the Company with those of other companies that Lehman Brothers deemed relevant;

(6)         a comparison of the financial terms of the merger transaction with the financial terms of certain other transactions that Lehman Brothers deemed relevant; and

(7)         estimates of third party research analysts with respect to the future financial performance of the Company.

In addition, Lehman Brothers had discussions with the management of the Company concerning its business, operations, assets, liabilities, financial condition and prospects and undertook such other studies, analyses and investigations as Lehman Brothers deemed appropriate.

In arriving at its opinion, Lehman Brothers assumed and relied upon the accuracy and completeness of the financial and other information used by Lehman Brothers without assuming any responsibility for independent verification of such information and further relied upon the assurances of management of the Company that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the Five Year Financial Forecast, upon advice of the special committee, Lehman Brothers assumed that the Company’s projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company and that the Company would perform substantially in accordance with such projections. Furthermore, with respect to the Potential Patent Royalties, Lehman Brothers understood that the special committee received the oral opinion of CRA that it believed that the Company’s projections relating to the Potential Patent Royalties to be reasonable. Upon advice of the special committee, Lehman Brothers relied, without independent verification, upon management’s calculation of the Potential Patent Royalties. In arriving at its opinion, Lehman Brothers did not conduct a physical inspection of the properties and facilities of the Company nor did it make or obtain any evaluations or appraisals of the assets or liabilities of the Company. In addition, the special committee did not authorize Lehman Brothers to solicit, and Lehman Brothers did not solicit, any indications of interest from any third party with respect to the purchase of all or a part of the Company’s business. Lehman

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Brothers’ opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, February 5, 2007.

The following is a summary of the material financial analyses used by Lehman Brothers in connection with providing its opinion to the special committee. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by Lehman Brothers, the tables must be read together with the text of each summary. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Lehman Brothers’ opinion.

Historical Share Price Analysis

Lehman Brothers considered historical data with regard to the trading prices of NetRatings’ common stock from January 31, 2002 to January 31, 2007. During this period, the closing stock price of NetRatings ranged from a low of $4.65 to a high of $20.71 per share. Lehman Brothers noted the average closing price 30 days ($14.59), 60 days ($14.51), 90 days ($13.87), 180 days ($13.73), 1 year ($13.55) and 5 years ($12.20) prior to the initial offer made after the close of business on October 6, 2006 was below the $21.00 purchase price offered by Nielsen. The foregoing historical share price analysis was presented to the special committee to provide it with background information and perspective with respect to the relative historical share price of NetRatings’ common stock.

Discounted Cash Flow Analysis

As part of its analysis, and in order to estimate the present value of NetRatings’ common stock, Lehman Brothers prepared a five-year discounted cash flow analysis for NetRatings, calculated as of December 31, 2006, of after-tax unlevered free cash flows for fiscal years 2007 through 2011, assuming NetRatings would perform in accordance with the Five Year Financial Forecast.

A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors. Lehman Brothers performed a discounted cash flow analysis for NetRatings by adding (1) the present value of the Company’s projected after-tax unlevered free cash flows for fiscal years 2007 through 2011 to (2) the present value of the “terminal value” of the Company as of 2011. “Terminal value” refers to the value of all future cash flows from an asset at a particular point in time.

To determine terminal value, Lehman Brothers estimated, after taking into account the enterprise value to 2007E EBITDA multiples of selected comparable web analytics, digital marketing and marketing research companies, a range of terminal values in 2011 calculated based on selected forward EBITDA multiples of 12.0x to 15.0x. Lehman Brothers discounted the unlevered free cash flow streams and the estimated terminal value to a present value at a range of discount rates from 11% to 13%. The discount rates utilized in this analysis were chosen by Lehman Brothers based on its experience with the web analytics, digital marketing and marketing research industries and also on an analysis of the weighted average cost of capital of NetRatings and other comparable companies. Lehman Brothers calculated per share equity values by first determining a range of enterprise values of NetRatings by adding the present values of the after-tax unlevered free cash flows and terminal values for each EBITDA terminal multiple and discount rate scenario, and then subtracting from the enterprise values the net debt as of September 30, 2006 (which is total debt minus cash) of the Company, and dividing those amounts by the number of fully diluted shares of NetRatings.

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Based on the Five Year Financial Forecast and the assumptions set forth above (including the midpoint of the terminal value range), the discounted cash flow analysis of NetRatings yielded an implied valuation range of NetRatings’ common stock of $16.80 to $20.63 per share.

Lehman Brothers also prepared discounted cash flow analyses of both the Potential Patent Royalties, as projected by management, to be received prior to the expiration of various patents in the period 2015-2017, and NetRatings’ net operating losses (“NOLs”). The present value of the Potential Patent Royalties was calculated by discounting the projected cash flows resulting from the Potential Patent Royalties, reduced for estimated legal expenses and revenue sharing arrangements, for the fiscal years 2007 to 2014 at the midpoint of the range of discount rates (12%). Based on the Potential Patent Royalties, as projected by management, and assumptions set forth above, the discounted cash flow analysis of the Potential Patent Royalties yielded an implied valuation of $0.60 per share of NetRatings common stock.

The present value of the Company’s NOLs were calculated by discounting the potential tax savings resulting from the utilization of the Company’s NOLs, as projected by the management of NetRatings, at the midpoint of the range of discount rates (12%). Based on the assumptions set forth above, the discounted cash flow analysis of the Company’s NOLs yielded an implied valuation of $0.70 per share of NetRatings common stock.

Lehman Brothers noted that including the value of both the Potential Patent Royalties and Company’s NOLs, the discounted cash flow analyses yielded an implied combined valuation range of NetRatings’ common stock of $18.11 to $21.94 per share.

Lehman Brothers also performed the same discounted cash flow analysis using publicly available research estimates for NetRatings’ future financial performance from the following firms:

·       Natexis Bleichroeder

·       Stephens Inc.

·       Stifel Nicolaus

Based on the assumptions set forth above and the average of estimates from the firms listed above, the discounted cash flow analysis yielded an implied valuation range of NetRatings’ common stock of $12.41 to $14.79 per share excluding the Potential Patent Royalties and NOLs and $13.72 to $16.10 per share including the value of the Potential Patent Royalties and NOLs.

Minority Squeeze-Out Premiums Paid Analysis

Lehman Brothers reviewed premiums paid for minority squeeze-out transactions since 2001 with over $100 million of equity acquired in which all cash consideration was offered and where the acquirer owned greater than 50% and/or had voting control of the target before the transaction. Lehman Brothers calculated the premium per share paid by the acquirer compared to the average share price of the target company (i) one day, (ii) thirty days, (iii) 90 days and (iv) 180 days prior to the announcement of the transaction. This analysis produced the following mean and median premiums and implied equity values for NetRatings:

 

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Wall Street Target Prices

As part of its analysis, Lehman Brothers compared publicly available research analyst price targets for NetRatings’ common stock. In performing the analysis, Lehman Brothers utilized research from the following firms:

·       Natexis Bleichroeder

·       Stephens Inc.

·       Stifel Nicolaus

The analysis yielded per share prices for NetRatings’ common stock of $16.50 to $18.00 per share.

Comparable Company Analysis

In order to assess how the public market values shares of similar publicly traded companies, Lehman Brothers, based on its experience with companies in the web analytics, digital marketing and marketing research industries, reviewed and compared specific financial and operating data relating to NetRatings with selected companies that Lehman Brothers deemed comparable to the Company, including Omniture, WebSideStory, Unica, ValueClick, aQuantive, 24/7 Real Media, Arbitron, Data Monitor and Greenfield Online. As part of its comparable company analysis, Lehman Brothers calculated and analyzed various financial multiples, including NetRatings’ and each comparable company’s enterprise value to certain historical financial criteria (such as revenue, earnings before interest, taxes, depreciation and amortization (or, EBITDA) and growth-adjusted EBITDA).  The enterprise value of each company was obtained by adding its short and long term debt to the sum of the market value of its common equity, the value of any preferred stock (at liquidation value) and the book value of any minority interest, and subtracting its cash and cash equivalents. All of these calculations were performed, and based on publicly available financial data (including Wall Street research estimates) and closing prices, as of January 31, 2007.

The analysis of various financial multiples indicated that, for the selected comparable companies, the multiple of enterprise value as a multiple of 2007 revenues ranged from 4.0x to 5.0x, and the multiples of enterprise value as a multiple of 2007 EBITDA and 2007 growth-adjusted EBITDA (defined as the ratio of (a) enterprise value as a multiple of 2007 EBITDA to (b) the compound annual growth rate of EBITDA) ranged from 16.5x to 20.0x, and 0.45x to 0.55x, respectively.

Lehman Brothers selected the comparable companies above because their businesses and operating profiles are reasonably similar to that of NetRatings. However, because of the inherent differences between the business, operations and prospects of NetRatings and the businesses, operations and prospects of the selected comparable companies, no comparable company is exactly the same as NetRatings. Therefore, Lehman Brothers believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the comparable company analysis. Accordingly, Lehman Brothers also made qualitative judgments concerning differences between the financial and operating characteristics and prospects of NetRatings and the companies included in the comparable company analysis that would affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between NetRatings and the companies included in the comparable company analysis.

General

In connection with the review of the merger by the special committee, Lehman Brothers performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary

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description. In arriving at its opinion, Lehman Brothers considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor considered by it. Furthermore, Lehman Brothers believes that the summary provided and the analyses described above must be considered as a whole and that selecting any portion of its analyses, without considering all of them, would create an incomplete view of the process underlying its analyses and opinion. In addition, Lehman Brothers may have given various analyses and factors more or less weight than other analyses and factors and may have deemed various assumptions more or less probable than other assumptions, so that the ranges of valuations resulting from any particular analysis described above should not be taken to be Lehman Brothers’ view of the actual value of NetRatings.

In performing its analyses, Lehman Brothers made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of NetRatings. Any estimates contained in Lehman Brothers’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates. The analyses performed were prepared solely as part of Lehman Brothers’ analysis of the fairness from a financial point of view to our unaffiliated stockholders and were prepared in connection with the delivery by Lehman Brothers of its opinion, dated February 5, 2007, to the special committee and do not purport to be appraisals.

The terms of the merger were determined through arms-length negotiations between the special committee and Nielsen and were unanimously approved by the special committee and our board of directors. Lehman Brothers’ opinion was provided to the special committee to assist it in its consideration of the merger. Lehman Brothers’ opinion does not address any other aspect of the merger transaction and does not constitute a recommendation to any stockholder as to how to vote or to take any other action with respect to the merger. Lehman Brothers’ opinion was one of the many factors taken into consideration by the special committee in making its unanimous determination to approve the merger agreement. Lehman Brothers’ analyses summarized above should not be viewed as determinative of the opinion of the special committee with respect to the value of NetRatings or whether the special committee would have been willing to agree to a different price.

Lehman Brothers is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. The special committee selected Lehman Brothers because of its expertise, reputation and familiarity with NetRatings and the Internet industry generally and because its investment banking professionals have substantial experience in transactions comparable to the merger.

As compensation for its services in connection with the merger, NetRatings paid Lehman Brothers $1,000,000 upon the signing of the merger agreement and the delivery of Lehman Brothers’ opinion. Additional compensation of $3,000,000 will be payable on completion of the merger. In addition, NetRatings has agreed to reimburse Lehman Brothers for reasonable out-of-pocket expenses incurred in connection with the merger and to indemnify Lehman Brothers for certain liabilities that may arise out of its engagement by the Company and the rendering of the Lehman Brothers’ opinion. Lehman Brothers in the past has rendered investment banking services to NetRatings and received customary fees for such services.

In the ordinary course of its business, Lehman Brothers may actively trade in the debt or equity securities of NetRatings for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

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Report of CRA International, Inc.

The special committee decided to retain its own patent valuation expert to assist the special committee in its evaluation of our management’s projections with respect to the Company’s patent portfolio. The special committee selected CRA International, Inc., which we refer to as “CRA”, and entered into a letter agreement with it pursuant to which the special committee engaged CRA to act as its patent valuation expert in connection with the merger. The special committee selected CRA based on its experience and reputation and upon advice of its advisors. CRA is an internationally recognized economic, financial valuation and business consulting firm and is regularly engaged in the valuation of intellectual property assets in a variety of contexts, including purchase/sale transactions, licensing transactions, litigation risk analysis, and valuations for corporate or other purposes. Prior to its engagement, CRA had no relationship with the Company or any of its affiliates.

In connection with CRA’s engagement, the special committee requested that CRA evaluate the reasonableness of our management’s projections of the Potential Patent Royalties to be received in connection with the Company’s patent enforcement program.

CRA reviewed publicly available business and financial information relating to the target markets for the Potential Patent Royalties, as well as other information provided to or discussed with CRA by our management. In addition, CRA conducted several meetings with our management and its outside patent counsel, with representatives from the Company’s technology and research and development departments, and with the special committee’s advisors.

In performing its analyses, CRA assumed and relied, without independent verification, on the completeness and accuracy of the information provided to it or represented to it by the Company or otherwise utilized by it and relied upon the assurances of management of the Company that they are not aware of any facts that would make inaccurate the information provided to CRA or represented to CRA by the Company. CRA also relied upon publicly available information from sources generally considered to be reliable and sources routinely used by CRA and other patent valuation experts.

In evaluating the Company’s patent enforcement program, CRA performed a variety of economic and valuation analyses, including the following:

·       performed an assessment of the assumptions relied on by our management in preparing the Potential Patent Royalties;

·       researched and analyzed industry transactions, including patent license agreements and merger and acquisition transactions known to include significant patent assets; and

·       prepared a probability model (i.e. decision tree analysis), which considered certain general risks and costs associated with licensing and litigating the Company’s patent portfolio.

In addition, CRA performed an investigation into other intellectual property assets, if any, including patents, patent applications and trade secrets, which it understood had not been specifically identified by the Company as part of its patent enforcement program or included in the Company’s projections of Potential Patent Royalties. The purpose of this analysis was to identify any additional potential value to the Company, which had not been considered or reflected in our management’s projections of Potential Patent Royalties.

The following is a summary of the material valuation analyses conducted by CRA.

CRA conducted a search of proprietary databases to identify potentially comparable transactions, which included royalty rates and/or amounts paid by companies to acquire technology through merger or acquisition. Based on the potentially comparable transactions identified by CRA, the royalty rates were heavily dependant on the portion of market revenues subject to an infringement/enforcement claim, as

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well as the overall size of the infringing revenue base. CRA determined that the projected royalty rates considered by the Company were consistent with historical industry royalty rates.

CRA also researched, analyzed and considered amounts paid by companies, which are potential targets of the Company’s patent enforcement program, in settlement of patent litigation. This analysis included a comparative analysis between the infringing revenues at issue in the subject litigation and the infringing revenues and potential settlements that could result from a patent infringement claim asserted by the Company.

CRA estimated the income to the Company based on a range of potential outcomes that might result from the patent enforcement program. This estimate was in part based upon CRA’s own independent research as well as from discussions with Company management.  CRA used a decision tree model to account explicitly for certain general risks associated with licensing and litigating the potentially infringed patents included in the Company’s patent enforcement program. CRA estimated the potential licensing revenues to be received by the Company based on the market of potential licensees and litigants, the methods by which the Company can pursue monetization of the patent portfolio, and the timing and order of the monetization strategy.

In structuring its decision tree model, CRA assumed a phased approach for the patent enforcement program, which took into account the probability of successful licensing and litigation if licensing was unsuccessful. Based on projected infringing revenues and market royalty rates, which varied depending on the product coverage and amount of infringing revenues, along with the probabilities of successful licensing and litigation, CRA estimated the potential revenues obtainable from the Company’s patent enforcement program. Based upon the results of the decision tree analysis, CRA determined that the potential value from the patent enforcement program set forth in our management’s projections of the Potential Patent Royalties was reasonable.

This summary is not a complete description of the analyses performed by CRA.  The preparation of valuation analyses are complex analytical processes involving various determinations as to the most appropriate and relevant methods of analysis and the application of those methods to the particular circumstances and, therefore, such analyses are not readily susceptible to summary description. Accordingly, CRA believes that its analyses must be considered as a whole and that selecting portions of its analysis and certain factors, without considering all analyses and all factors, could create a misleading or incomplete view of the processes underlying its analyses.

In an oral report delivered to the special committee on December 7, 2006, CRA concluded that, based on its analyses, our management’s projections as reflected in the Potential Patent Royalties with regard to the value that might result from a campaign to license and enforce the Company’s patent portfolio were reasonable.

CRA’s engagement was limited to an analysis of the reasonableness of our management’s projections with regard to the value that might result from a campaign to license and enforce the Company’s patent portfolio. CRA was not asked to, nor have they given, any opinions, assessments or conclusions with respect to any other issue in connection with the merger. CRA’s conclusions do not constitute a recommendation to any holder of our common stock as to how such stockholder should vote with respect to the merger.

In connection with the CRA’s engagement, the Company agreed to pay CRA on a time-and-materials basis for actual hours worked according to CRA’s standard hourly rates. In addition, the Company has agreed to reimburse CRA for reasonable out-of-pocket expenses incurred in connection with its engagement and to indemnify CRA against certain liabilities incurred in connection with its engagement, including liabilities under federal securities laws. Through February 21, 2007, the Company had incurred

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total fees, including reimbursements of out-of-pocket expenses, to CRA in the amount of approximately $120,000.

Neither CRA’s employment or its compensation is in any way contingent upon its opinion in this matter.  Neither CRA nor any of its employees has any material financial interest in the Company nor any other matter involving the Company.

CRA’s opinion is necessarily based on economic, market and other conditions in effect on, and the information made available to CRA as of, the time at which it delivered its oral report. It should be understood that subsequent developments may affect those conclusions and that CRA does not have any obligation to update, revise or reaffirm its oral report.

CRA’s conclusions and analyses were only one of many factors considered by the special committee in its evaluation of Nielsen’s proposal and should not be viewed as determinative of the views of the special committee or our management with respect to the Company’s patent portfolio, the merger or the merger consideration.

Purpose and Reasons for the Merger

NetRatings

The purpose of the merger for NetRatings is to enable its unaffiliated stockholders to immediately realize the value of their investment in NetRatings through their receipt of the per share merger consideration of $21.00 in cash, without interest, representing a premium of approximately 44% to the closing market price of NetRatings common stock on October 6, 2006, the last trading day before the public announcement of the initial proposal by Nielsen.  For this reason, and the reasons discussed under “Reasons for the Special Committee’s Determination; Fairness of the Merger” and “Reasons for Our Board of Director’s Determination; Fairness of the Merger,” our board of directors has unanimously concluded that the merger agreement and the transactions contemplated by it, including the merger, are advisable, fair to and in the best interests of the Company and its unaffiliated stockholders.

Nielsen Parties

The purpose of the Nielsen Parties for engaging in the merger is to increase Nielsen’s ownership of NetRatings common stock from its current position of approximately 60% of the outstanding shares to 100%. Upon completion of the merger, all of our outstanding shares of common stock will be wholly-owned by Nielsen and its subsidiaries.

After analysis conducted by NMR’s management and an evaluation by the respective boards of directors of Nielsen and NMR, together with their financial advisor, the Nielsen Parties view the proposed acquisition of the outstanding publicly held minority interest in NetRatings to be part of and consistent with Nielsen and NMR’s long-term growth strategy. The Nielsen Parties believe the advantages of combining the operations of NetRatings with NMR include, but are not limited to:

·       the simplified corporate structure enhances the ability of NMR to satisfy increasing customer demands for integrated solutions in response to the convergence of Internet and traditional media;

·       enhancement of NMR’s ability to strategically align and integrate NetRatings’ product offerings with similar NMR measurement services;

·       increased flexibility to operate NetRatings without the legal and regulatory requirements and other considerations of a public company;

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·       elimination of separate and redundant costs, including audit and legal costs, management’s commitment of time and resources associated with NetRatings being a stand-alone public company subject to reporting requirements under federal securities laws;

·       to the extent NetRatings requires additional capital investment in the future, the entire benefit of such capital investment will inure to NMR; and

·       with respect to new transactions between NMR and NetRatings, NMR will be able to interact with NetRatings directly without the necessity of involving the audit committees of the board of directors of both NMR and NetRatings and without the requirement of ensuring that these transactions occur on arms-length terms.

The Position of the Nielsen Parties as to the Fairness of the Merger

Under the rules of the SEC, the Nielsen Parties are required to express their belief as to the substantive and procedural fairness of the proposed merger to the unaffiliated stockholders of NetRatings. The Nielsen Parties did not undertake a formal evaluation of the fairness of the proposed merger and are making the statements included in this section solely for purposes of complying with such requirements. The views of the Nielsen Parties with respect to the fairness of the merger are not, and should not be construed as, a recommendation to any stockholder as to how that stockholder should vote on the proposal to adopt the merger agreement.

The Nielsen Parties believe that the merger is substantively fair to NetRatings’ unaffiliated stockholders based on, among other things, the following factors:

·       the special committee of NetRatings’ board of directors, which is comprised of three directors who are not affiliated with Nielsen, NMR or officers or employees of NetRatings, unanimously concluded that the merger, the merger agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of the unaffiliated stockholders of NetRatings and unanimously recommended to our board of directors that the merger agreement and the merger be approved and adopted.

·       the special committee and the board of directors of NetRatings received an opinion from their independent financial advisor, Lehman Brothers, to the effect that, as of the date of the opinion and subject to the assumptions, qualifications and limitations set forth therein, the merger consideration was fair to the unaffiliated stockholders of NetRatings common stock from a financial point of view.

·       the consideration to be paid in the merger represents a 44.1% premium over the closing sale price of the NetRatings common stock on the NASDAQ Global Market on October 6, 2006, the last trading day before the first offer was made by Nielsen to the NetRatings board of directors.

·       the consideration to be paid in the merger represents an implied firm value that is 50.8 times NetRatings’ estimated EBITDA for 2007 (based on publicly available information and equity research estimates, but excluding the value of minority interests and excluding all revenue and expenses related to the Company’s patent enforcement program).

·       the consideration to be paid in the merger is all cash and is not subject to any financing condition, which provides certainty of value for NetRatings’ stockholders.

·       stockholders who do not vote in favor of the merger agreement and who comply with certain procedural requirements will be entitled, upon completion of the merger, to exercise statutory appraisal rights under Delaware law, which allows stockholders to have the fair value of their shares determined by the Delaware Chancery Court and paid to them in cash.

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·       the merger will provide liquidity, without the brokerage and other costs typically associated with market sales, for NetRatings’ public stockholders whose ability to sell their shares of NetRatings common stock is adversely affected by the limited trading volume and low public float of the shares.

The Nielsen Parties also believe that the proposed merger is procedurally fair to NetRatings’ unaffiliated stockholders based on, among other things, the following factors:

·       the special committee, together with its independent legal and financial advisors, negotiated all financial and other terms and conditions of the merger agreement on an arms-length basis with Nielsen and its advisors. The Nielsen Parties did not participate in the deliberations of the special committee.

·       the special committee unanimously concluded that the merger agreement and the transactions contemplated by it, including the merger are advisable, fair to and in the best interests of the unaffiliated stockholders of NetRatings, and unanimously recommended to the board of directors that the merger agreement and the merger be approved and adopted.

·       in certain circumstances prior to obtaining stockholder approval of the merger agreement, NetRatings is permitted to furnish information to and participate in discussions or negotiations with persons making acquisition proposals for NetRatings and the board of directors of NetRatings is permitted to withdraw or modify its recommendation of the merger agreement.

·       stockholders who do not vote in favor of the merger agreement and who comply with certain procedural requirements would be entitled, upon completion of the merger, to exercise statutory appraisal rights under Delaware law, which allows stockholders to have the fair value of their shares determined by the Delaware Chancery Court and paid to them in cash.

Although J.P. Morgan Securities Inc., which we refer to as JPMorgan, generally assisted the Nielsen Parties in connection with the merger and, in particular, performed certain financial analyses relating to the proposed transaction as described under “Special Factors—Financial Analysis of J.P. Morgan Securities Inc.,” JPMorgan was not requested to, and did not, deliver any opinion to any of the Nielsen Parties as to the fairness of the merger consideration.

The Nielsen Parties did not consider the potential for alternative transactions involving NetRatings because NMR, as the controlling stockholder of NetRatings, determined that NetRatings was an integral component of its long-term growth strategy and accordingly did not intend to consider or participate in any alternative transaction involving a sale of or reduction of its investment in NetRatings. As a result, the Nielsen Parties did not evaluate the prices potentially attainable in an alternative transaction. Similarly, due to NetRatings’ strategic importance to NMR, the Nielsen Parties did not consider the liquidation value of NetRatings’ assets. The Nielsen Parties are not aware of any offer during the last two years for NetRatings and accordingly no comparison to any such offer was made.

The foregoing discussion of the information and factors considered and given weight by the Nielsen Parties in connection with the fairness of the merger agreement and the merger is not intended to be exhaustive but is believed to include all material factors considered by the Nielsen Parties. The Nielsen Parties did not find it practicable to assign, and did not assign, relative weights to the individual factors considered in reaching their conclusion as to the fairness of the proposed merger. Rather, the determination of the Nielsen Parties as to fairness was made after consideration of all of the foregoing factors as a whole. None of the material factors considered by the Nielsen Parties failed to support their belief in the fairness of the merger.

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Financial Forecasts of NetRatings

We do not, as a matter of course, make public projections as to our future performance or earnings beyond the current fiscal year, and we are especially wary of making projections for extended periods due to the unpredictability of the underlying assumptions and estimates. However, following receipt of the Nielsen proposal, at the request of the special committee, our management prepared the Five Year Financial Forecast and the Potential Patent Royalties which we provided in early November 2006 to the special committee and its financial advisor Lehman Brothers in connection with their respective considerations of the merger. In addition, we provided the Five Year Financial Forecast to Nielsen and JPMorgan on November 21, 2006. We have included below the consolidated projections contained in the Five Year Financial Forecast and the Potential Patent Royalties to give our stockholders access to certain nonpublic information for the purpose of considering and evaluating the merger, and because Lehman Brothers used this data in connection with its fairness opinion and related presentation to the special committee. See “Special Factors—Opinion of Lehman Brothers Inc.”  beginning on page 24.

Our forecasts were not prepared with a view to public disclosure. We did not prepare the forecasts with a view to complying with the published guidelines of the SEC regarding forecasts, and we did not prepare the forecasts in accordance with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts. The projected financial information set forth below has been prepared by and is the responsibility of our management. Neither our independent auditors nor any other independent accountants have compiled, examined or performed any procedures with respect to the prospective financial information contained in the projections, nor have they expressed any opinion or given any form of assurance on the projections or their achievability. Lehman Brothers and our special committee may have varied some of the assumptions underlying the projections for purposes of their analyses. Furthermore, the projections:

·       necessarily make numerous assumptions, many of which are beyond our control and may not prove to have been, or may no longer be, accurate;

·       do not necessarily reflect revised prospects for NetRatings’ business, changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the projections were prepared;

·       are not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable than as set forth below; and

·       should not be regarded as a representation that they will be achieved.

The financial projections do not reflect any of the effects of the merger or other changes that may in the future be deemed appropriate concerning NetRatings and its assets, business, operations, properties, policies, corporate structure, capitalization or management in light of the circumstances then existing. Additionally, among the numerous assumptions made by management, the Five Year Financial Forecast excludes revenues and expenses related to the Potential Patent Royalties. Furthermore, the financial projections do not taken into account the expenses associated with the merger transaction.

The projected financial information set forth below constitutes forward-looking statements. It is not possible to predict whether the assumptions made in preparing the forecasts will be valid, and we caution stockholders that any such forward-looking statements are not guarantees of future performance. We cannot assure you that our forecasts will be realized, and actual results may be materially more or less favorable than those contained in the forecasts set forth below. Investors should consider the risks and uncertainties in our business that may affect future performance and that are discussed under “Forward-Looking Statements” and in the documents incorporated by reference in this proxy statement.

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Our inclusion of the forecasts should not be regarded as an indication that we, the special committee, our board of directors, Nielsen or any of our or their respective financial advisors considered or consider the forecasts to be a reliable prediction of future events, and the forecasts should not be relied upon as such. To the extent that our forecasts represent our management’s best estimate of possible future performance, this estimate is made only as of the date of the forecasts and not as of any later date. We do not intend to update, revise or correct these forecasts if they become inaccurate. Stockholders should take this into account when evaluating any factors or analyses based on our forecasts.

Five Year Financial Forecast
(in millions)

*                    EBITDA represents net income/loss excluding interest income/expense, taxes, depreciation, amortization of intangible assets and stock-based compensation, and cumulative effect of change in accounting principle.

Our management estimated that the net recovery to the Company relating to the Potential Patent Royalties (following the payments to NMR and the legal contingency payments and other expenses) would total approximately $65 million between 2007 and 2014.

Certain Effects of the Merger

The merger is a “going private” transaction, which will result in all of our outstanding shares of common stock being wholly-owned by Nielsen and its subsidiaries. The merger will have the following effects when it is completed:

Participation in Future Growth.   After the completion of the merger, holders of NetRatings common stock will cease to have ownership interests in NetRatings or rights as our stockholders. As a result of the merger, Nielsen and its subsidiaries will be the sole beneficiary of our future earnings and growth, if any. Similarly, Nielsen and its subsidiaries also will bear the risk of any losses generated by our operations and any decrease in our value after the merger.

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After the completion of the merger, Nielsen’s interest in NetRatings’ net book value and net income or loss will increase from approximately 59.7% to 100%. Based on NetRatings’ annual report on Form 10-K for the year ended December 31, 2005 and its Quarterly Report on Form 10-Q for the nine months ended September 30, 2006, the following table shows what Nielsen’s interests in NetRatings’ net book value and net earnings were as of December 31, 2005 and September 30, 2006, and what those interests would have been had the merger been completed as of those dates.

 

Effect on the Market for NetRatings Common Stock.   If the merger is completed, there will be no publicly traded NetRatings common stock.

Delisting of NetRatings Common Stock.   Following the merger, the NetRatings common stock will no longer be listed or traded on the NASDAQ Global Market.

Deregistration of NetRatings Common Stock under the Exchange Act.   Following the merger, the registration of NetRatings common stock under the Securities Exchange Act of 1934, as amended, or “Exchange Act,” will be terminated. Due to this termination, we will no longer be required to file annual, quarterly and current reports with the SEC. Moreover, we will no longer be subject to the requirement to furnish proxy statements in connection with meetings of stockholders pursuant to Section 14(a) of the Exchange Act and the related requirement to furnish an annual report to stockholders.

Financial Analysis of J.P. Morgan Securities Inc.

Nielsen retained JPMorgan in October 2006 as its financial advisor in connection with a potential transaction involving NetRatings. JPMorgan is and has been one of Nielsen’s advisers for financial advisory and financing services including corporate advisory, debt underwriting, equity underwriting, loan syndication and other investment banking services. In selecting JPMorgan to represent Nielsen as a financial advisor, Nielsen considered primarily JPMorgan’s qualifications and knowledge of the business affairs of Nielsen and NetRatings, as well as the reputation of JPMorgan as an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger.

At the request of Nielsen, JPMorgan prepared a presentation (the “Presentation”) for Nielsen’s Executive Committee of the Supervisory Board in connection with Nielsen’s potential acquisition of the shares of NetRatings not owned by the Nielsen Parties. On February 4, 2007, JPMorgan presented the Presentation to Nielsen’s Executive Committee of the Supervisory Board and answered related questions. JPMorgan was not asked to deliver and has not delivered a fairness opinion to Nielsen in connection with the merger. JPMorgan did not prepare the Presentation for the benefit of any of the minority stockholders. JPMorgan did not determine or recommend the consideration of $21.00 per share of NetRatings common stock to be paid in the merger, which was determined by negotiation between NetRatings and the special committee. The Presentation does not constitute a recommendation or support a recommendation to the minority stockholders with respect to any particular offer price for the shares of NetRatings common stock

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not held by Nielsen. JPMorgan also did not prepare the Presentation in order to support a determination that the offer price is fair to either Nielsen or the minority stockholders.

THE FULL TEXT OF THE PRESENTATION OF JPMORGAN DATED FEBRUARY 4, 2007, HAS BEEN FILED AS AN EXHIBIT TO ITEM 16 TO THE SCHEDULE 13E-3 FILED WITH THE SEC BY NETRATINGS AND THE NIELSEN PARTIES IN CONNECTION WITH THE MERGER AND IS INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PRESENTATION MAY BE OBTAINED FROM THE SEC. SEE “WHERE YOU CAN FIND MORE INFORMATION” BEGINNING ON PAGE 76. YOU ARE URGED TO, AND SHOULD, READ THE PRESENTATION IN ITS ENTIRETY. THE PRESENTATION DOES NOT CONSTITUTE A RECOMMENDATION AS TO WHETHER ANY NETRATINGS STOCKHOLDER SHOULD VOTE IN FAVOR OF THE ADOPTION OF THE MERGER AGREEMENT.

JPMorgan was provided with two sets of financial projections prepared by NetRatings’ management: (a) the Three Year Strategic Plan, which was provided to JPMorgan prior to Nielsen’s initial offer, and (b) the Five Year Financial Forecast, which was provided to JP Morgan on November 21, 2006 as part of the due diligence process in connection with the merger.

In providing financial advice and preparing the Presentation, JPMorgan, among other things:

·       reviewed certain publicly available business and financial information concerning NetRatings and the industry in which the business operates;

·       reviewed NetRatings’ quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2006 and annual report on Form 10-K for the fiscal year ended December 31, 2005;

·       compared the proposed financial terms and considerations of the merger with the publicly available financial terms of certain minority buy-in transactions JPMorgan deemed relevant;

·       compared the financial and operating performance of NetRatings with publicly available information concerning certain other companies JPMorgan deemed relevant;

·       reviewed current and historical market prices at which shares of NetRatings common stock have traded;

·       analyzed equity research analysts’ price target ranges for the shares of NetRatings common stock;

·       reviewed NetRatings’ share prices, implied multiples and financial metrics at various offer premiums;

·       reviewed certain internal financial forecasts prepared by the management of NetRatings (the Three Year Strategic Plan and the Five Year Financial Forecast);

·       performed a discounted cash flow analysis with respect to NetRatings, based on projections provided by NetRatings’ management as well as on equity research analysts’ projections for NetRatings; and

·       performed such other financial studies and analyses and considered such other information as JPMorgan deemed appropriate during the course of providing financial advice and preparing the Presentation.

Summary of Presentation Prepared By JPMorgan

The following summaries include information presented in tabular format. You should read these tables together with the text of each summary. The summaries set forth below do not purport to be, and are not, a complete description of the financial analyses or data undertaken or presented by JPMorgan, but the analyses presented below are all the material analyses undertaken by JPMorgan in their Presentation.

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Historical Share Price Summary

JPMorgan compiled and presented in its Presentation historical trading activity at various share prices for the shares during the (i) one month period ending October 6, 2006, (ii) three month period ending October 6, 2006, (iii) six month period ending October 6, 2006 and (iv) twelve month period ending October 6, 2006. JPMorgan determined that the average prices for the four periods were $14.58, $13.88, $13.75 and $13.54, respectively.

Bid Premium Summary

JPMorgan calculated hypothetical bid premiums, based on both equity and firm values, represented by a range of hypothetical bid prices between $16.00 and $21.00 compared to:

·       “Unaffected price” as of October 6, 2006 (last trading day before the offer);

·       Six month average unaffected price for the six months ending October 6, 2006;

·       Initial offer announced on October 9, 2006;

·       Average unaffected equity research analysts’ price targets prior to October 6, 2006;

·       Average current equity research analysts’ price targets; and

·       Weighted average price since the date of the initial offer (October 9, 2006).

Premiums based on firm values were calculated by comparing (a) the firm value implied by a given offer price to (b) the firm value implied by the price selected for comparison. Total net cash outlay for Nielsen was calculated by subtracting from the NetRatings total cash position as of September 30, 2006 (i) the total value of the minority stake and (ii) illustrative total transaction expenses of $9 million.

A summary of the results follows:

(1)          Volume weighted average price

Implied Multiple Analysis

JPMorgan calculated various multiples, based on firm value, represented by a range of hypothetical bid prices between $16.00 and $21.00 compared to EBITDA for specified periods, as provided under the Five Year Financial Forecast, the Three Year Strategic Plan and Wall Street analysts’ projections for NetRatings. Firm value equals the sum of the equity value at a given price per share plus total debt and book value of minority interest minus cash and cash equivalents; however, JPMorgan did not add NetRatings’ minority interest to the firm value where EBITDA was net of minority interest expense. EBITDA for the Five Year Financial Forecast, the Three Year Strategic Plan and Wall Street analysts’ projections excludes all revenue and expenses related to the Company’s patent enforcement program.

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A summary of the results follows:

 

Equity Analysts’ Price Targets

JPMorgan also advised the Executive Committee of the Supervisory Board of Nielsen that, at the time of its analysis, equity research analyst reports available to JPMorgan had established 12-18 month price targets for the shares ranging from $16.50 to $18.00 per share. At the time of the initial offer, equity research analyst reports available to JPMorgan had established 12-18 month price targets for the shares ranging from $16.00 to $16.50 per share.

Comparable Publicly Traded Companies

JPMorgan compared NetRatings to comparable Internet advertising services companies aQuantive Inc., ValueClick Inc., 24/7 Real Media Inc., Omniture, Inc. and WebSideStory Inc. JPMorgan also compared the Company to comparable information services companies Dun & Bradstreet, Arbitron, Harris Interactive and Greenfield Online. Although none of the selected companies is directly comparable to NetRatings, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of NetRatings. JPMorgan concluded that based on a range of multiple of revenues (2.0x-6.2x) used for similar comparables, NetRatings had a per share value within a range of $9.60 to $19.06 using the Five Year Financial Forecast’s 2007 revenue, $9.59 to $19.06 using the Three Year Strategic Plan’s 2007 revenue and $9.61 to $19.09 using Wall Street analysts’ projections of NetRatings’ 2007 revenues. JPMorgan also concluded that based on a range of multiple of EBITDA (12.0x-37.2x) used for similar comparables, NetRatings had a per share value within a range of $7.67 to $13.25 using the Five Year Financial Forecast’s 2007 EBITDA, $7.31 to $12.16 using the Three Year Strategic Plan’s 2007 EBITDA and $8.85 to $16.75 using Wall Street analysts’ projections of NetRatings’ 2007 EBITDA. When computing the ratio of the Company’s share price implied by the firm value to EBITDA multiples, JPMorgan has excluded minority interest from the net debt used to calculate equity value.

Discounted Cash Flow Analysis

JPMorgan conducted a discounted cash flow per share (“DCF”) analysis of NetRatings. A discounted cash flow analysis is a method used to derive an implied total firm value and equity value of a business by calculating the “present value” of the estimated future unlevered after tax free cash flows of the business. The term unlevered as used in this analysis means that no adjustment has been made for interest expense. The present value is obtained by discounting both (i) the estimated free cash flows of the business over the period for which estimates are available, referred to as the estimate period, (ii) a “terminal value” for the business as of the end of the estimate period, and (iii) the present value of the future tax savings from NetRatings’ net operating loss and research and development carryforwards using a selected discount rate intended to reflect an estimate of the average cost of capital for the business. The terminal value refers to the implied value of all future cash flows from a business from the end of the estimate period to perpetuity,

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calculated by (a) projecting an amount of terminal free cash flow using the perpetuity growth rate and (b) dividing the terminal free cash flow by a percentage equal to the discount rate minus the perpetuity growth rate.

In performing its analysis, JPMorgan relied upon five cases of estimates for NetRatings for each year from 2006 through 2010 (2011 in the case of the Five Year Financial Forecast). These estimates consisted of (i) The Five Year Financial Forecast, (ii) a sensitivity case assuming a reduction of the Five Year Financial Forecast’s revenue growth and EBITDA margin by 5 percentage points from 2008 onwards (“Sensitivity 1”), (iii) a sensitivity case assuming a 50% decrease in revenue  growth and EBITDA margin excess of the Five Year Financial Forecast over the Three Year Strategic Plan (“Sensitivity 2”), (iv) The Three Year Strategic Plan and (v) a case using Wall Street analysts’ projections for NetRatings. Financials for all cases exclude all revenue and expenses related to the Company’s patent enforcement program. JPMorgan calculated a terminal value based on the perpetuity growth method using a 4% to 6% perpetuity growth rate. The other principal assumptions upon which JPMorgan based its analyses are set forth in the full text of the Presentation, which is attached as Exhibit (c)(4) to the Schedule 13E-3 filed with the SEC by NetRatings and the Nielsen Parties in connection with the merger. The unlevered free cash flows were discounted to present value (assuming a December 31, 2006 valuation date) using discount rates of 10% to 13%. The discount rates utilized in this analysis were chosen by JPMorgan based on its experience with the Internet advertising services and information services industries and also on an analysis of the weighted average cost of capital of NetRatings and other comparable companies. JPMorgan calculated per share equity values by first determining a range of total firm values of NetRatings by adding the present values of the after-tax unlevered free cash flows and terminal values for each perpetuity growth rate and discount rate combination, and then subtracting from the total firm value the projected net debt as of December 31, 2006 (which is total debt minus cash) of the Company, and dividing those amounts by the number of fully diluted shares of NetRatings. This analysis yielded illustrative value ranges for NetRatings of (A) $13.33 to $22.47 for the Five Year Financial Forecast, (B) $11.08 to $17.48 for Sensitivity 1, (C) $11.38 to $18.06 for Sensitivity 2, (D) $9.50 to $14.00 for the Three Year Strategic Plan, and (E) $10.29 to $15.62 for Wall Street analysts’ projections for NetRatings.

Premium Summary of Recent Transactions

JPMorgan reviewed and compared 46 recent transactions involving the acquisition of all outstanding shares of target companies by their respective majority stockholders and reported: (i)  the implied median final offer premium over the firm value one day prior to announcement was 18.2%, (ii) the implied median final offer premium over the market price one day prior to announcement was 28.5%, (iii) the implied median final offer premium over the firm value one day prior to announcement for cash transactions only was 19.2% and (iv) the implied median final offer premium over the market price one day prior to announcement for cash transactions only was 34.0%. The 46 transactions consisted of 27 all-cash transactions, 16 all-stock transactions and three transactions with both cash and stock consideration. The JPMorgan analysis applied premiums of 18.2%, 28.5%, 19.2% and 34.0% to NetRatings’ closing share price on October 6, 2006, yielding illustrative values of approximately $16.27, $18.72, $16.37 and $19.52 per share, respectively.

No company or transaction reviewed by JPMorgan in its Presentation to Nielsen’s management is identical to NetRatings or the proposed merger, as the case may be. Accordingly, the values of such companies or transactions, as the case may be, should not be construed as illustrative of a value for NetRatings or the shares of NetRatings common stock.

JPMorgan’s advice was necessarily based on economic market and other conditions as in effect on, and the information made available to JPMorgan as of, the date of the Presentation. In providing financial advice and preparing the Presentation, JPMorgan relied upon and assumed, without independent verification, the accuracy and completeness of all information that was publicly available or was furnished to JPMorgan by Nielsen or otherwise reviewed by JPMorgan, and has not assumed any responsibility or liability therefor. JPMorgan was not asked to make, and has not assumed responsibility for making, any

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independent evaluation of NetRatings, and did not verify and has not assumed any responsibility for making any independent verification of the information JPMorgan reviewed. In addition, JPMorgan did not conduct any valuation or appraisal of any assets or liabilities, nor have any such valuations or appraisals been provided to JPMorgan. JPMorgan also assumed that there have been no material changes in NetRatings’ condition, results of operations, business or prospects since the date of the most recent financial statements made available to JPMorgan and JPMorgan does not have any obligation to update, revise or reaffirm the Presentation. JPMorgan based its analyses on assumptions that it deemed reasonable, including assumptions concerning general business and economic conditions and industry-specific factors. JPMorgan’s analyses are not necessarily indicative of actual values or actual future results that might be achieved, which values may be higher or lower than those indicated. Moreover, JPMorgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold.

JPMorgan, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. JPMorgan is familiar with Nielsen, having acted as its financial advisor in connection with the merger and has also provided certain investment banking services to Nielsen from time to time, and may provide investment banking services to Nielsen in the future. JPMorgan provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold securities, including derivative securities, of Nielsen and NetRatings for its own account and for the account of customers. Nielsen has agreed to pay JPMorgan as compensation for its services as financial advisor in connection with the transaction a fee of $1.875 million, a majority of which is payable upon closing of the transaction. Nielsen has also agreed to reimburse JPMorgan for its reasonable out-of-pocket expenses, including the fees and expenses of its counsel, in connection with the transaction and has agreed to indemnify JPMorgan against certain liabilities arising out of its engagement.

Plans for NetRatings After the Merger

As a global leader in audience/consumer measurement and analysis, Nielsen will meet client needs through the development of integrated television/Internet product offerings in the media and marketing measurement segments. Upon completion of the merger, the Nielsen Parties will continue the evaluation of NetRatings’ business, practices, operations, properties, corporate structure, management and personnel to determine what changes, if any, will be desirable in light of the circumstances which then exist. The Nielsen Parties intend to manage the properties of the surviving corporation and its subsidiaries to maximize its net operating income. Subject to this evaluation and except as otherwise described in this proxy statement, the Nielsen Parties expect that, initially following the merger, the business and operations of NetRatings will generally continue as currently being conducted. The Nielsen Parties expressly reserve the right to make any changes that they deem necessary or appropriate in light of their review or future developments.

The Nielsen Parties do not have any current plans or proposals or negotiations which relate to or would result in an extraordinary corporate transaction such as a liquidation, sale or transfer of a material amount of assets related to NetRatings.

If the merger is not completed because the conditions to the merger are not satisfied or waived, we expect that current management will continue to operate the business substantially as presently operated. However, if the merger is not completed, the Nielsen Parties will re-evaluate changing their current operating relationships with NetRatings within the overall Nielsen corporate strategy.

Conduct of Business of NetRatings if the Merger is Not Completed

In the event that the merger is not completed for any reason, NetRatings’ stockholders will not receive any payment for their shares in connection with the merger. Instead, NetRatings will remain a publicly

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held, majority-owned subsidiary of NMR, the NetRatings’ common stock will continue to be listed and traded on the NASDAQ Global Market and NetRatings’ stockholders will continue to be subject to the same risks and opportunities as they currently have with respect to their ownership of NetRatings common stock. If the merger is not completed, there can be no assurance as to the effects of these risks and opportunities on the future value of your NetRatings common stock, including the risk that the market price of the NetRatings common stock may decline to the extent that the current market price of the NetRatings common stock reflects a market assumption that the merger will be completed or for other reasons. If the merger agreement is not adopted by our stockholders in the required manner, or the merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to NetRatings will be offered, whether by NMR or another person, or even if offered by another person, that NMR, as a majority stockholder of NetRatings, would support it.

Interests of Directors and Executive Officers of NetRatings in the Merger

In considering the recommendation of our board of directors with respect to the merger, you should be aware that some of our directors and executive officers have interests in the merger which may be in addition to, or different from, the interests of our stockholders generally. These interests may present them with actual or potential conflicts of interest, and these interests, to the extent material, are described below. Our board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement.

Termination of Employment and Change-in-Control Arrangements

NetRatings entered into severance arrangements with the following executive officers of the Company at the time of their appointment: Louise Ainsworth, Manish Bhatia, Forrest Didier, John Kleine, William Pulver, Alan Shapiro and Todd Sloan.

With respect to each of Messrs. Pulver and Sloan, if his employment terminates as a result of an “involuntary termination” he shall be entitled to receive (i) additional cash compensation equal to twelve months’ annual salary and the full amount of the targeted annual incentive bonus, as in effect immediately prior to the date of termination, and (ii) the acceleration of vesting on the number of shares that would have vested had he remained employed by the Company for the twelve month period immediately following the termination. “Involuntary termination” is defined, in part, as (i) the reduction in duties, without the executive’s express written consent, which results in a significant diminution of the position then maintained by the executive or his responsibilities with the Company, or the termination of employment other than for cause; (ii) a material reduction by the Company, without the executive’s express written consent, in total cash compensation as in effect immediately prior to such reduction, or the kind or level of employee benefits which the executive was entitled to with the result being that the overall benefits package is significantly reduced; or (iii) the death or disability of the executive.

With respect to each of Messrs. Kleine and Shapiro, if his employment terminates as a result of an “involuntary termination” he shall be entitled to receive an amount equal to six months of base salary as in effect as of the date of such termination. “Involuntary termination” is defined, in part, as (i) the reduction in duties, without the executive’s express written consent, which results in a significant diminution of the position then maintained by the executive or his responsibilities with the Company, or the termination of employment other than for cause; or (ii) a material reduction by the Company, without the executive’s express written consent, in total cash compensation as in effect immediately prior to such reduction (except, in the case of Mr. Shapiro, in the event of a broad reduction affecting the senior executives of the Company), or the kind or level of employee benefits which the executive was entitled to with the result being that the overall benefits package is significantly reduced.

In the event Mr. Didier is terminated without cause or in the event his employment terminates as a result of an “involuntary termination,” Mr. Didier shall be entitled to receive an amount equal to six months of base salary and reasonable relocation expenses for Mr. Didier and his family to return to the United States. “Involuntary termination” is defined as (i) the reduction of duties, without his express

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written consent, which results in a significant diminution of his position or responsibilities with the Company; or (ii) a material reduction, without his express written consent, in his salary or bonus, except in the case of a broad reduction affecting the senior executives.

If Ms. Ainsworth is terminated by the Company following a change of control (which includes the merger with NMR), or if there is a “material change” to Ms. Ainsworth’s position or compensation within twelve months following a change of control, Ms. Ainsworth is entitled to an amount equal to six months’ salary, as well as other contractual benefits, including a bonus payment. “Material change” is defined as (i) a reduction in her duties which results in a significant diminution of her position and responsibilities; (ii) a material reduction in her total cash compensation; or (iii) a material reduction in the kind or level of employee benefits resulting in the overall benefits package being significantly reduced.

With respect to Mr. Bhatia, if his employment is terminated without cause or if he terminates his employment for “good reason,” he shall be entitled to receive an amount equal to six months of base salary as in effect as of the date of such termination. “Good reason” is defined, in part, as (i) a material reduction in his duties and responsibilities; (ii) a material reduction in his salary and bonus (except in the event of a broad reduction affecting the senior executives of the Company); or (iii) a change in his reporting relationship so that he no longer reports to specific executives or the relocation of his primary worksite to a location more than 30 miles outside of New York City.

In connection with the merger, NMR has agreed to honor, or cause to be honored, all of the employment, change in control, severance and termination plans, policies or arrangements we have with our directors, officers and employees, as well as all other employee benefit plans, agreements and other arrangements that we provide to our directors, officers and employees.

Merger Bonus Agreements

On December 7, 2006, NetRatings and Alan Shapiro entered into a letter agreement pursuant to which the Company agreed to pay a bonus to Mr. Shapiro in the amount of $75,000 in recognition of Mr. Shapiro’s efforts in providing assistance in connection with the evaluation of the proposal from Nielsen to purchase the outstanding minority stake in the Company. The $75,000 bonus will be paid on (i) the two month anniversary of the consummation of the proposed merger or (ii) May 1, 2007 in the event that an agreement with respect to the proposed merger is not signed by the parties by April 30, 2007; provided in both cases that Mr. Shapiro is still employed by the Company (or an affiliated entity) on such date. Notwithstanding the foregoing, in the event that Mr. Shapiro is terminated without cause or resigns as a result of an involuntary termination prior to the payment date, he shall be entitled to payment of the bonus within five days of the termination of his employment.

On December 18, 2006, NetRatings and Todd Sloan entered into a letter agreement pursuant to which the Company agreed to pay a bonus to Mr. Sloan in the amount of $100,000 in recognition of Mr. Sloan’s efforts in providing assistance in connection with the evaluation of the proposal from Nielsen to purchase the outstanding minority stake in the Company. The $100,000 bonus will be paid on (i) the two month anniversary of the consummation of the proposed merger or (ii) May 1, 2007 in the event that an agreement with respect to the proposed merger is not signed by the parties by April 30, 2007; provided in both cases that Mr. Sloan is still employed by the Company (or an affiliated entity) on such date. Notwithstanding the foregoing, in the event that Mr. Sloan is terminated without cause or resigns as a result of an involuntary termination prior to the payment date, he shall be entitled to payment of the bonus within five days of the termination of his employment.

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