• successfully commercialize our Portable People MeterTM service;

• successfully manage the impact on our business of the current economic downturn generally, and in the advertising market, in particular, including, without limitation, the insolvency of any of our customers or the impact of such downturn on our customers' ability to fulfill their payment obligations to us;

• successfully maintain and promote industry usage of our services, a critical mass of broadcaster encoding, and the proper understanding of our audience measurement services and methodology in light of governmental actions, including investigation, regulation, legislation or litigation, customer or industry group activism, or adverse community or public relations efforts;

• compete with companies that may have financial, marketing, sales, technical or other advantages over us;

• successfully design, recruit and maintain PPM panels that appropriately balance research quality, panel size and operational cost;

• successfully develop, implement and fund initiatives designed to increase sample quality;

• complete the Media Rating Council, Inc. ("MRC") audits of our local market PPM ratings services in a timely manner and successfully obtain and/or maintain MRC accreditation for our audience measurement business;

• renew contracts with key customers;

• successfully execute our business strategies, including entering into potential acquisition, joint-venture or other material third-party agreements;

• effectively manage the impact, if any, of any further ownership shifts in the radio and advertising agency industries;

• effectively respond to rapidly changing technological needs of our customer base, including creating new proprietary software systems, such as software systems to support our cell-phone-only sampling plans, and new customer services that meet these needs in a timely manner;

• successfully manage the impact on costs of data collection due to lower respondent cooperation in surveys, consumer trends including a trend toward increasing incidence of cell-phone-only households, privacy concerns, technology changes, and/or government regulations;

• successfully develop and implement technology solutions to encode and/or measure new forms of media content and delivery, and advertising in an increasingly competitive environment;

• successfully integrate our new management team;

• realize the anticipated savings from the Company's workforce and expense reduction program; and

• provide appropriate levels of operational capacity and funding to support the more labor intensive identification and recruitment of cell-phone-only households into our panels and samples.

There are a number of additional important factors that could cause actual events or our actual results to differ materially from those indicated by such forward-looking statements, including, without limitation, the factors set forth in "ITEM 1A. RISK FACTORS" in our Annual Report on Form 10-K for the year ended December 31, 2008, and elsewhere, and any subsequent periodic or current reports filed by us with the Securities and Exchange Commission (the "SEC").
In addition, any forward-looking statements represent our expectations only as of the day we filed this Quarterly Report with the SEC and should not be relied upon as representing our expectations as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our expectations change. Overview
We are a leading media and marketing information services firm primarily serving radio, cable television, advertising agencies, advertisers, retailers, out-of-home media, online media and, through our Scarborough Research joint venture with The Nielsen Company ("Nielsen"), broadcast television and print media. We currently provide four main services:
• measuring and estimating radio audiences in local markets in the United States;

• measuring and estimating radio audiences of network radio programs and commercials;

• providing software used for accessing and analyzing our media audience and marketing information data; and

• providing consumer, shopping, and media usage information services.

Historically, our quantitative radio audience measurement business and related software have accounted for a substantial majority of our revenue. For the nine-month periods ended September 30, 2009, and 2008, our quantitative radio audience measurement business and related software accounted for approximately 93 percent and 92 percent of our revenue, respectively. We expect that for the year ending December 31, 2009, our quantitative radio audience measurement business and related software licensing will account for approximately 90 percent of our revenue.
Quarterly fluctuations in these percentages are reflective of the seasonal delivery schedule of our quantitative radio audience measurement business and our Scarborough revenues. For further information regarding seasonality trends, see "Seasonality."
While we expect that our quantitative radio audience measurement business and related software licensing will continue to account for the majority of our revenue for the foreseeable future, we are actively seeking opportunities to diversify our revenue base by, among other things, leveraging the investment we have made in our PPM technology and exploring applications of the technology beyond our domestic radio audience measurement business.
We are in the process of executing our previously announced plan to commercialize progressively our PPM radio ratings service in the largest United States radio markets, which we currently anticipate will result in

commercialization of the service in 49 local markets by December 2010 (the "PPM Markets"). We may continue to update the expected timing of commercialization and the composition of the PPM Markets from time to time. According to our analysis of BIA's 2009 Investing in Radio Market Report, those broadcasters with whom we have entered into multi-year PPM agreements account for most of the total radio advertising dollars in the PPM markets. These agreements generally provide for a higher fee for PPM-based ratings than we charge for Diary-based ratings. As a result, we expect that the percentage of our revenues derived from our radio ratings and related software is likely to slightly increase as we commercialize the PPM service.
Nielsen's signing of Cumulus Media Inc. ("Cumulus") and Clear Channel Communications, Inc. ("Clear Channel") as customers for its radio ratings service in certain small to mid-sized markets was a primary factor in a $4.6 million decline in our revenue for the nine months ended September 30, 2009 and is anticipated to adversely impact our expected revenue by approximately $5.0 million for all of 2009, and $10.0 million per year thereafter. Due to the impact of the current economic downturn on anticipated sales of discretionary services and renewals of agreements to provide ratings services, as well as the high penetration of our current services in the radio station business, we expect that our future annual organic rate of revenue growth from our quantitative Diary-based radio ratings services will be slower than historical trends.
We continue to operate in a highly challenging business environment. Our future performance will be impacted by our ability to address a variety of challenges and opportunities in the markets and industries we serve, including our ability to continue to maintain and improve the quality of our PPM service, and manage increased costs for data collection, arising from, among other things, increased numbers of cell-phone-only households, which are more expensive for us to recruit than are households with landline telephones. Our goal is to obtain and/or maintain MRC accreditation in all of our PPM Markets, and develop and implement effective and efficient technological solutions to measure multimedia and advertising.
Protecting and supporting our existing customer base, and ensuring our services are competitive from a price, quality and service perspective are critical components to these overall goals, although there can be no guarantee that we will be successful in our efforts. Diary Trends and Initiatives
MRC Accreditation. The continuous, condensed, and standard Radio Market Reports and certain other radio ratings data produced by our Diary service is accredited by the MRC in the continental U.S., Alaska and Hawaii.
Quality Improvement Initiatives. Response rates are an important measure of our effectiveness in obtaining consent from persons to participate in our surveys. Another measure often used by clients to assess quality in our ratings is sample proportionality, which refers to how well the distribution of the sample for any individual survey matches the distribution of the population in the local market. It has become increasingly difficult and more costly for us to obtain consent from persons to participate in our surveys. We must achieve a level of both sample proportionality and response rates sufficient to maintain confidence in our ratings, the support of the industry and accreditation by the MRC. Overall response rates for all survey research have declined over the past several decades, and Arbitron has been adversely impacted. We have worked to address this decline through several initiatives, including various survey incentive programs. If response rates continue to decline or the costs of recruitment initiatives significantly increase, our radio audience measurement business could be adversely affected. We believe that additional expenditures will be required in the future to research and test new measures associated with improving response rates and sample proportionality. As part of our continuous improvement program, we intend to continue to invest in Diary service quality enhancements in 2009 and beyond. For example, in an effort to better target our Diary keeper premium expenditures to key buying demographics of the users of our estimates, we reduced the premium we pay to households where all members are aged 55 or older and redirected those premiums to households containing persons aged 18-34, beginning with the Spring 2009 Diary survey.

We use a measure known as Designated Delivery Index ("DDI") to measure our performance in delivering sample targets based on how the number of persons actually in the sample compares to our target number of persons in a particular demographic. We define DDI as the actual sample size achieved for a given demographic indexed against the target sample size for that demographic (multiplied by 100).
Beginning with the Spring 2009 survey, we added cell-phone-only households to the Diary sample in 151 Diary markets using a hybrid methodology of address-based recruitment for cell-phone-only households, while using random digit dialing ("RDD") recruitment for households with landline phone service. In August 2009, we announced that cell-phone-only sampling had increased the average DDI for Persons aged 18-34 by approximately 25 percent in the 151 Diary markets that included cell-phone-only households in the Spring 2009 survey sample. Beginning with the Fall 2009 survey, we intend to expand cell-phone-only sampling to all Diary markets in the continental United States, Alaska and Hawaii. We also intend to increase our sample target for cell-phone-only households in Diary markets from ten percent of total households, as achieved in the Spring 2009 survey, to an average of 15 percent of total households across all Diary markets by year-end 2010.
As noted above, it is increasingly expensive for us to recruit cell-phone-only households. Because we intend to increase the number of cell-phone-only households in our samples, we believe this quality improvement initiative will significantly increase our costs. PPM Trends and Initiatives
MRC Accreditation. In January 2007, the MRC accredited the average-quarter-hour, time-period radio ratings data produced by our PPM radio ratings service in the Houston-Galveston local market. In January 2009, the MRC accredited the average-quarter-hour, time-period radio ratings data produced by our PPM radio ratings service in the Riverside-San Bernardino local market.
Based on audits completed during 2007, and our replies to the MRC's follow-up queries, the MRC denied accreditation of the PPM radio ratings services in Philadelphia, New York, Nassau-Suffolk (Long Island), and Middlesex-Somerset-Union in January 2008. During 2008, the MRC reaudited the PPM radio ratings service in those markets. The results of those reaudits, together with additional information provided by Arbitron, were shared with the MRC PPM audit subcommittee in late 2008. As of the date of this Form 10-Q, the denial status remains in place, and the data produced by the PPM radio ratings services in the Philadelphia, New York, Nassau-Suffolk (Long Island), and Middlesex-Somerset-Union local markets remain unaccredited by the MRC. Among other things, the MRC identified response rates, compliance rates, and differential compliance rates as concerns it had with the PPM service in these local markets.
The MRC has audited the local market PPM methodology and execution in all other PPM Markets where we have commercialized the service, including Los Angeles, Chicago, San Francisco, San Jose, Atlanta, Dallas-Ft. Worth, Detroit, Washington D.C., Boston, Miami-Ft. Lauderdale-Hollywood, Seattle-Tacoma, Phoenix, Minneapolis-St. Paul, San Diego, Tampa-St. Petersburg-Clearwater, St. Louis, Denver-Boulder, Baltimore and Pittsburgh. The MRC has neither granted nor denied accreditation for these markets. The data produced by the PPM radio ratings services in each of these markets remain unaccredited by the MRC.
Commercialization. We may continue to update the timing of commercialization and the composition of the PPM Markets from time to time. We currently utilize our PPM radio ratings service to produce audience estimates in 25 United States local radio markets, which represent more than 50% of the total advertising dollars in the U.S. according to our analysis of BIA's 2009 Investing in Radio Market Report.

Arbitron PPM Markets commercialized since the second quarter of 2009:

                                        No. of PPM                      Data Release
                 Market                   Markets        Data Month        Month
    Miami-Ft. Lauderdale-Hollywood,
    Seattle-Tacoma, Phoenix,
    Minneapolis-St. Paul, San Diego            5       June 2009        July 2009

    Tampa-St. Petersburg-Clearwater,
    St. Louis, Denver-Boulder,
    Baltimore, Pittsburgh                      5       September 2009   October 2009

We currently intend to commercialize the PPM radio ratings service in eight additional local markets during the fourth quarter of 2009.
While there is the possibility that the pace of commercialization of the PPM radio ratings service could be slowed, we believe that the PPM radio ratings service is both a viable replacement for our Diary-based radio ratings service and a significant enhancement to our audience estimates in major radio markets, and it is an important component of our anticipated future growth. If the pace of the commercialization of our PPM radio ratings service is modified, revenue increases that we expect to receive related to the service would also be adjusted.
Commercialization of our PPM radio ratings service has and will continue to require a substantial financial investment. As we anticipated, our efforts to support the commercialization of our PPM radio ratings service have had a material negative impact on our results of operations. The amount of capital required for deployment of our PPM radio ratings service and the impact on our results of operations will be greatly affected by the speed of the commercialization. We anticipate that PPM costs and expenses for each PPM Market will generally accelerate six to nine months in advance of the commercialization of the service in each PPM Market as we build the panels. These costs are incremental to the costs associated with our Diary-based ratings service.
Quality Improvement Initiatives. As we have commercialized the PPM radio ratings service in several PPM Markets, we have experienced and expect to continue to experience challenges in the operation of the PPM radio ratings service similar to those we face in the Diary-based service, including several of the challenges related to sample proportionality and response rates mentioned above. We expect to continue to implement additional measures to address these challenges. In connection with our interactions with several governmental entities, we have announced a series of commitments concerning our PPM radio ratings services that we have agreed to implement over the next several years. We believe these commitments, which we refer to as our "continuous improvement" initiatives, are consistent with our ongoing efforts to obtain and maintain MRC accreditation and to generally improve our radio ratings services. These initiatives will likely require expenditures that may be material in the aggregate.
On August 13, 2009, we announced a plan to increase our sample target for cell-phone-only households in all PPM Markets to an average of 20 percent of total households across all PPM Markets by year-end 2010. We have since implemented a hybrid method of using an address-based sample frame for cell-phone-only households together with an RDD sample frame to recruit landline households. Under this new methodology, we are using auto-dialers to contact cell-phone-only households for recruitment into our panels.
As noted above, it is increasingly expensive for us to recruit cell-phone-only households. Because we intend to increase the number of cell-phone-only households in our panels, we believe this quality improvement initiative will increase our cost of revenue.

On October 2, 2009, we announced implementation details of our plan, first disclosed in July 2008, to increase the total PPM sample size for Persons aged 12 and older by approximately 10 percent in the aggregate across all PPM Markets together with implementation of increased minimum sample sizes in all PPM Markets by mid-year 2011.
International. On August 31, 2009, BBM Canada, the media ratings consortium in Canada, launched the world's largest combined panel for television and radio audience measurement using our PPM technology. Following a competitive process, BBM Canada chose our joint solution with TNS Media Research to support its multi-media measurement initiative in April 2008. Television Suite of Audience Measurement Services On June 23, 2009, we announced the creation of ARB-TV, a new suite of audience measurement services designed to improve visibility into away-from-home television audiences for media companies and advertisers. By leveraging the mobility and utility of our PPM technologies, we believe the ARB-TV analytical tool can complement existing data services, offers media greater insight into what constitutes their total audience, and help advertisers plan how to reach that audience. The ARB-TV service is not part of a regular syndicated rating service accredited by the MRC, and we have not requested accreditation. Arbitron does provide one or more syndicated services that are accredited by the MRC. General Economic Conditions
Our clients derive most of their revenue from transactions involving the sale or purchase of advertising. During the challenging economic times we are presently experiencing, advertisers have reduced advertising expenditures, impacting advertising agencies and media companies. This, as well as the general economic downturn and credit conditions, has had a material impact on our customers, which has had a material and negative effect on our sales and renewal activity.
Since September 2008, we have experienced an increase in the average number of days our sales have been outstanding before we have received payment, which has resulted in a material increase in trade accounts receivable as compared to historical trends. If the economic downturn expands or is sustained for an extended period into the future, it may also lead to increased incidence of customers' inability to pay their accounts, an increase in our provision for doubtful accounts, and a further increase in collection cycles for accounts receivable or insolvency of our customers.
We depend on a limited number of key customers for our radio ratings services and related software. For example, in 2008, Clear Channel represented 18 percent of our total revenue. Because many of our largest customers own and operate radio stations in markets that we expect to transition to PPM measurement, we expect that our dependence on our largest customers will continue for the foreseeable future. Additionally, if one or more key customers owning radio stations in a number of markets do not renew all or part of their contracts, we could experience a significant decrease in our operating results. Restructuring, Reorganization and Expense Reduction Plan During the first quarter of 2009, we implemented a restructuring, reorganization, and expense reduction plan (the "Plan"). Part of the Plan included reducing our full-time workforce by approximately ten percent. During the nine months ended September 30, 2009, we incurred $10.1 million of restructuring charges, related principally to severance, termination benefits, retirement plan settlement charges, outplacement support and certain other expenses that were incurred as part of the Plan.
In accordance with our retirement plan provisions, participants may elect, at their option, to receive their retirement benefits either in a lump sum payment or an annuity. If the lump sum distributions paid during the plan

year exceed the total of the service cost and interest cost for the plan year, any unrecognized gain or loss in the plan should be recognized for the pro rata portion equal to the percentage reduction of the projected benefit obligation. During the third quarter 2009, the aggregate of lump sum distribution elections by a number of pension plan participants who were terminated as part of the Plan, resulted in the recognition of a $1.8 million non-cash charge for the settlement related to two of the Company's retirement plans. As a result of this settlement charge, we estimate that the total restructuring charge for the full year ending December 31, 2009, including the non-cash settlement charge, will be approximately $10.0 million.
Legal Expenses
During 2008 and the nine months ended September 30, 2009, we incurred approximately $8.6 million in legal costs and expenses in connection with two securities-law civil actions and a governmental interaction that commenced during 2008, relating primarily to the commercialization of our PPM radio ratings service. We believe approximately $6.8 million of the expenses incurred during the nine months ended September 30, 2009, are probable for recovery under our Directors and Officers insurance policy. As of September 30, 2009, $2.0 million in insurance reimbursements related to these legal actions were received. We are also involved in other legal matters for which we do not expect that the legal costs and expenses will be recoverable through insurance. We can provide no assurance that we will not incur significant net legal costs and expenses during the remainder of 2009. For further information regarding these legal costs, see "-Critical Accounting Policies and Estimates" below. Critical Accounting Policies and Estimates Critical accounting policies and estimates are those that are both important to the presentation of our financial position or results of operations, and require our most difficult, complex or subjective judgments.
We capitalize software development costs with respect to significant internal use software initiatives or enhancements. The costs are capitalized from the time that the preliminary project stage is completed and management considers it probable that the software will be used to perform the function intended, until the time the software is placed in service for its intended use. Once the software is placed in service, the capitalized costs are amortized over periods of three to five years. We perform an assessment quarterly to determine if it is probable that all capitalized software will be used to perform its intended function. If an impairment exists, the software cost is written down to estimated fair value. As of September 30, 2009, and December 31, 2008, our capitalized software developed for internal use had carrying amounts of $24.2 million and $22.6 million, respectively, including $13.8 million and $13.3 million, respectively, of software related to the PPM service.
We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year and for deferred tax assets and liabilities for the future tax consequences of events that have been recognized in an entity's financial statements or tax returns. We must make assumptions, judgments and estimates to determine the current provision for income taxes and also deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset. Our assumptions, judgments and estimates relative to the current provision for income taxes take into account current tax laws, interpretation of current tax laws and possible outcomes of current and future audits conducted by domestic and foreign tax authorities. Changes in tax law or interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts provided for income taxes in the consolidated financial statements. Our assumptions, judgments and estimates . . .