================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _________to_________
Commission file number 001-14093
Young & Rubicam Inc.
--------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1493710
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
285 Madison Avenue, New York, New York 10017
- -------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(212) 210-3000
--------------
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]. No [ ].
The number of shares outstanding of the Registrant's Common Stock, $0.01 par
value, as of May 3, 1999 was 65,745,672.
<PAGE>
YOUNG & RUBICAM INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
PAGE NO.
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<C>
Consolidated Balance Sheets as of
March 31, 1999 and December 31, 1998 2
Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and 1998 3
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998 4
Notes to Consolidated Financial Statements 5 - 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 10
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES
EXHIBIT INDEX
</TABLE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document, information included in future filings by Young & Rubicam Inc.
("Y&R") with the United States Securities and Exchange Commission (the "SEC"),
and information contained in written materials, press releases and oral
statements issued by or on behalf of Y&R contain, or may contain, statements
that constitute "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. These statements include statements regarding
the intent, belief or current expectations of Y&R or its officers (including
statements preceded by, followed by or that include forward-looking terminology
such as "may," "will," "should," "believes," "expects," "anticipates,"
"estimates," "continues" or similar expressions or comparable terminology,
including the negative thereof) with respect to various matters. These
forward-looking statements include statements in the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" section of this
document relating to Y&R's performance. It is important to note that Y&R's
actual results could differ materially from those anticipated in these
forward-looking statements depending on, among other important factors, (i)
revenues received from clients, including revenues pursuant to incentive
compensation arrangements entered into by Y&R with certain clients, (ii) gains
or losses of clients and client business and projects, as well as changes in the
marketing and communications budgets of clients, (iii) the overall level of
economic activity in the principal markets in which Y&R conducts business and
other trends affecting Y&R's financial condition or results of operations, (iv)
the impact of competition in the marketing and communications industry, (v)
Y&R's liquidity and financing plans and (vi) risks associated with Y&R's efforts
to comply with Year 2000 requirements. All forward-looking statements in this
document are based on information available to Y&R on the date hereof. In
addition, the matters set forth under the caption "Risk Factors" in Y&R's
Preliminary Prospectus dated May 6, 1999 included in the Registration Statement
on Form S-1 (File No. 333-77235) filed by Y&R with the SEC pursuant to the
Securities Act of 1933, as amended, constitute cautionary statements identifying
important factors with respect to such forward-looking statements, including
certain risks and uncertainties that could cause actual results to differ
materially from those in such forward-looking statements.
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
YOUNG & RUBICAM INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 63,209 $122,138
Accounts receivable, net of allowance for doubtful accounts of
$18,485 and $17,938 at March 31, 1999 and December 31,
1998, respectively 866,609 835,284
Costs billable to clients 63,874 55,187
Other receivables 46,693 37,177
Deferred income taxes 46,831 46,803
Prepaid expenses and other assets 34,839 25,979
--------------------------
Total Current Assets 1,122,055 1,122,568
--------------------------
NONCURRENT ASSETS
Property and equipment, net 148,488 150,413
Deferred income taxes 150,231 158,646
Goodwill, less accumulated amortization of $76,959 and $84,292
at March 31, 1999 and December 31, 1998, respectively 123,302 120,075
Equity in net assets of and advances to unconsolidated companies 36,630 38,397
Other assets 41,919 45,156
--------------------------
Total Noncurrent Assets 500,570 512,687
==========================
Total Assets $ 1,622,625 $1,635,255
==========================
CURRENT LIABILITIES
Loans payable $ 52,699 $ 31,365
Accounts payable 931,378 1,008,624
Accrued expenses and other liabilities 184,487 203,099
Accrued payroll and bonuses 50,370 77,078
Income taxes payable 19,783 19,290
--------------------------
Total Current Liabilities 1,238,717 1,339,456
--------------------------
NONCURRENT LIABILITIES
Loans payable 151,338 31,494
Deferred compensation 31,353 30,635
Other liabilities 110,838 114,128
--------------------------
Total Noncurrent Liabilities 293,529 176,257
--------------------------
Commitments and Contingencies
Minority Interest 4,028 4,573
--------------------------
STOCKHOLDERS' EQUITY
Money Market Preferred Stock - cumulative variable dividend; liquidating value of $115
per share; one-tenth of one vote per share; authorized - 50,000 shares; issued and
outstanding - 87 shares - -
Cumulative Participating Junior Preferred Stock - minimum $1.00 dividend; liquidating
value of $1.00 per share; 100 votes per share; authorized - 2,500,000 shares; issued
and outstanding - 0 shares - -
Common stock, par value $.01 per share; authorized - 250,000,000 shares; issued and
outstanding - 65,886,003 shares and 66,374,569 shares at March 31, 1999 and December
31, 1998, respectively (excluding 4,322,392 shares and 3,976,941 shares in treasury) 702 704
Capital surplus 926,840 934,676
Accumulated deficit (738,592) (758,292)
Cumulative translation adjustment (18,024) (10,810)
Pension liability adjustment (1,738) (1,738)
--------------------------
169,188 164,540
Common stock in treasury, at cost (82,837) (49,571)
--------------------------
Total Stockholders' Equity 86,351 114,969
==========================
Total Liabilities and Stockholders' Equity $ 1,622,625 $ 1,635,255
==========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
YOUNG & RUBICAM INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE AMOUNTS) THREE MONTHS ENDED MARCH 31,
-----------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 383,873 $ 348,173
Compensation expense, including employee benefits 235,018 213,598
General and administrative expenses 114,297 109,242
-----------------------------------
Operating expenses 349,315 322,840
-----------------------------------
Income from operations 34,558 25,333
Interest expense, net (1,646) (5,575)
Other income - 827
-----------------------------------
Income before income taxes 32,912 20,585
Income tax provision 13,494 8,852
-----------------------------------
19,418 11,733
Equity in net (loss) income of unconsolidated companies (16) 115
Minority interest in net loss of consolidated subsidiaries 299 342
-----------------------------------
Net income $ 19,701 $ 12,190
===================================
Earnings per share:
Basic $ 0.30 $ 0.24
===================================
Diluted $ 0.24 $ 0.19
===================================
Weighted average shares outstanding (Note 3):
Basic 66,324,420 50,762,144
===================================
Diluted 81,892,192 64,453,134
===================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
YOUNG & RUBICAM INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------
(IN THOUSANDS) 1999 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,701 $ 12,190
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 15,769 14,180
Deferred income tax expense 8,280 3,777
Equity in net loss (income) of unconsolidated companies 16 (115)
Dividends from unconsolidated companies 905 252
Minority interest in net loss of consolidated subsidiaries (299) (342)
Change in assets and liabilities, excluding effects from acquisitions,
dispositions and foreign exchange:
Accounts receivable (29,034) (22,261)
Costs billable to clients (9,306) (21,508)
Other receivables (9,527) (5,031)
Prepaid expenses and other assets (5,895) (1,163)
Accounts payable (69,759) (43,672)
Accrued expenses and other liabilities (18,868) (34,377)
Accrued payroll and bonuses (26,616) (16,556)
Income taxes payable 1,167 (5,007)
Deferred compensation 355 1,478
Other (1,359) (4,021)
-------------------------------
Net cash used in operating activities $(124,470) $(122,176)
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment $ (14,788) $ (7,889)
Acquisitions, net of cash acquired (8,669) -
Investment in net assets of and advances to unconsolidated companies (1,912) (1,030)
Proceeds from notes receivable 322 339
-------------------------------
Net cash used in investing activities $ (25,047) $ (8,580)
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable, net 131,772 24,972
Common stock issued 1,134 1,287
Common stock repurchased (42,403) -
Payments of deferred compensation - (1,190)
Payment of installment notes, net - (2,100)
Other financing activities (59) (277)
-------------------------------
Net cash provided by financing activities $ 90,444 $ 22,692
-------------------------------
Effect of exchange rate changes on cash and cash equivalents 144 (1,234)
Net decrease in cash and cash equivalents (58,929) (109,298)
Cash and cash equivalents, beginning of period 122,138 160,263
===============================
Cash and cash equivalents, end of period $ 63,209 $ 50,965
===============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 2,939 $ 9,157
===============================
Income taxes paid $ 4,960 $ 9,237
===============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
YOUNG & RUBICAM INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - OPERATIONS AND BASIS OF PRESENTATION:
NATURE OF OPERATIONS: Young & Rubicam Inc. (the "Company") is a global marketing
and communications enterprise with integrated services in advertising,
perception management and public relations, branding consultation and design,
sales promotion, direct marketing and healthcare communications. The Company
operates in the United States, Canada, Europe, Latin America and the
Asia/Pacific region as well as through certain affiliations in other parts of
the world.
BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements of the Company have been prepared pursuant to the rules of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. These consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1998. In the opinion of management, the accompanying financial statements
reflect all adjustments, which are of a normal recurring nature, necessary for a
fair presentation of the results for the periods presented. Certain
reclassifications have been made to the prior years' financial statements to
conform to the 1999 presentation.
The results of operations for the interim periods presented are not necessarily
indicative of the results expected for the full year.
NOTE 2 - USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 3 - EARNINGS PER COMMON SHARE:
Basic net earnings per share is calculated by dividing net income by the
weighted average shares of common stock outstanding during the three months
ended March 31, 1999 and 1998. Diluted earnings per share reflects the dilutive
effect of stock options, primarily stock options granted to employees under
stock-based compensation plans. Shares used in computing basic and diluted
earnings per share were as follows:
THREE MONTHS ENDED MARCH 31,
1999 1998
- --------------------------------------------------------------------
Basic - weighted average shares 66,324,420 50,762,144
Dilutive effect of stock options 15,567,772 13,690,990
- --------------------------------------------------------------------
Diluted - weighted average shares 81,892,192 64,453,134
====================================================================
5
<PAGE>
NOTE 4 - COMPREHENSIVE INCOME
The following table sets forth total comprehensive income and its components:
THREE MONTHS ENDED MARCH 31,
(IN THOUSANDS) 1999 1998
- ---------------------------------------------------------------------------
Net income 19,701 12,190
Foreign currency translation adjustments (7,214) (2,054)
- ---------------------------------------------------------------------------
Total comprehensive income 12,487 10,136
===========================================================================
NOTE 5 - SUBSEQUENT EVENTS
ACQUISITION: On April 5, 1999, the Company announced that it had agreed to
acquire KnowledgeBase Marketing, Inc., a leading customer relationship marketing
service that specializes in gathering and analyzing marketing data, in a stock
and cash transaction valued at approximately $175 million. The Company expects
to issue approximately 2.1 million shares of common stock and to grant options
to purchase approximately 600,000 additional shares of common stock in
connection with this transaction. The transaction is expected to close in the
second quarter of 1999.
CASH DIVIDEND: On April 29, 1999, the Company announced that the Board of
Directors declared a cash dividend of $0.025 per common share, payable on June
15, 1999 to all stockholders of record as of June 1, 1999.
6
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our audited
consolidated financial statements and notes thereto, and the information under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations," contained in our Annual Report on Form 10-K for the year
ended December 31, 1998 as filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected items
derived from our consolidated statements of operations and the percentages of
revenue represented by these items.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Three Months Ended March 31,
% of % of
(in millions) 1999 Revenues 1998 Revenues
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 383.9 100.0% $ 348.2 100.0%
Compensation expense, including employee benefits 235.0 61.2% 213.6 61.3%
General and administrative expenses 114.3 29.8% 109.2 31.4%
- -----------------------------------------------------------------------------------------
Income from operations 34.6 9.0% 25.3 7.3%
Net income $ 19.7 5.1% $ 12.2 3.5%
=========================================================================================
* Totals may not add due to rounding.
</TABLE>
7
<PAGE>
FIRST QUARTER 1999 COMPARED TO FIRST QUARTER 1998
Revenues for the first quarter of 1999 increased by $35.7 million, or
10.3%, to $383.9 million compared to the first quarter of 1998. The increase was
primarily due to net new business, including business from new clients and
higher revenue from existing clients, that we generated from clients including
Ford and AT&T. United States revenues increased by 13.1% to $208.6 million for
the first quarter of 1999 compared to the first quarter of 1998. International
revenues increased by 7.1% to $175.3 million, primarily due to strong
performance in Europe, which was partially offset by declines in Latin America
and the Asia/Pacific region and the impact of the overall strengthening of the
U.S. dollar against foreign currencies. Organic worldwide revenue growth,
excluding the effect of acquisitions and foreign currency fluctuations, was also
10.3%, with the impact of the strengthening of the U.S. dollar against foreign
currencies offset by revenues from acquisitions. Excluding the effect of foreign
currency fluctuations and acquisitions, international revenues increased 7.8%
for the first quarter of 1999 compared to the first quarter of 1998.
Compensation expense increased by $21.4 million to $235.0 million for the
first quarter of 1999 compared to the first quarter of 1998. This increase in
compensation expense was primarily due to salary increases and additional
staffing to support new business growth. Compensation expense in the first
quarter of 1999 decreased as a percentage of revenues to 61.2% from 61.3% in the
first quarter of 1998.
General and administrative expenses increased by $5.1 million to $114.3
million for the first quarter of 1999 compared to the first quarter of 1998.
This increase was primarily due to additional operating expenses to support new
business growth, offset in part by the impact of cost containment measures
implemented by management. General and administrative expenses in the first
quarter of 1999 decreased as a percentage of revenues to 29.8% from 31.4% in the
first quarter of 1998.
Income from operations increased by $9.3 million, or 36.8%, to $34.6
million for the first quarter of 1999 compared to the first quarter of 1998.
This increase was primarily due to net new business gains in 1999 and improved
operating margins.
Net interest expense decreased by $3.9 million to $1.6 million for the
first quarter of 1999 compared to the first quarter of 1998. The decline was due
to lower average borrowing levels and lower average borrowing rates during the
first quarter of 1999 compared to the first quarter of 1998.
We recognized income tax expense of $13.5 million for the first quarter of
1999 compared to $8.9 million for the first quarter of 1998. The effective tax
rate for the first quarter of 1999 was 41.0%, as compared to 43.0% in the first
quarter of 1998. The decrease in the effective tax rate was due to a decrease in
foreign income taxed at rates greater than the U.S statutory rate and lower
taxes on U.S. income.
Net income for the first quarter of 1999 was $19.7 million compared to net
income of $12.2 million for 1998. This increase was primarily the result of
revenue growth, improved operating margins, lower net borrowing costs and a
reduced effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
We generally finance our working capital, capital expenditures,
acquisitions and equity repurchases from cash generated from operations and
third-party borrowings.
Cash and cash equivalents were $63.2 million and $122.1 million at March
31, 1999 and December 31, 1998. Cash used in operating activities in the first
quarter of 1999 was $124.5 million compared to $122.2 million in the first
quarter of 1998. Quarterly operating cash flows are significantly impacted by
the seasonal media spending patterns of advertisers, including the timing of
payments made to media and
8
<PAGE>
other suppliers on behalf of clients as well as the timing of cash collections
from clients to fund these expenditures. Our practice is to bill and collect
from our clients in sufficient time to pay the amounts due the media.
Cash used in investing activities in the first quarter of 1999 was $25.0
million and included $14.8 million in capital expenditures and $10.2 million for
net acquisitions, investments and other investing activity. In the first quarter
of 1998, cash used in investing activities was $8.6 million, principally
consisting of $7.9 million in capital expenditures. The majority of capital
expenditures in the first quarter of 1999 were for information
technology-related purchases and leasehold improvements. These capital
expenditures are estimated to be approximately $65 million for the remainder of
1999. Acquisitions and investments in the first quarter of 1999 consisted
primarily of the purchase of a company located in the United States specializing
in grassroots issues management.
Cash provided by financing activities in the first quarter of 1999 was
$90.4 million and included net borrowings of $131.8 million. In the first
quarter of 1999, we repurchased 1.1 million shares of common stock on the open
market and in other transactions for an aggregate of $42.4 million. As of March
31, 1999, we had repurchased a total of 3.0 million shares under the existing
8.0 million share repurchase program. As of May 12, 1999, we had repurchased
approximately 0.2 million additional shares for an aggregate of $8.3 million
under the share repurchase program during the second quarter of 1999.
In the first quarter of 1998, cash provided by financing activities was
$22.7 million, reflecting borrowings under our short and long-term credit
facilities that existed at that time to fund our operations and capital
expenditures.
At March 31, 1999, we had approximately $151 million in outstanding
indebtedness under our $400 million credit facility. We expect to fund payments
of principal and interest under this credit facility with cash from operations.
We intend to increase our borrowing capacity by entering into an additional $200
million credit facility during the second quarter of 1999. During the first
quarter of 1999, all interest rate protection agreements to which we were party
either matured or were retired. Accordingly, at March 31, 1999, we had no such
agreements outstanding.
At March 31, 1999, our net deferred tax assets were $197.1 million
consisting primarily of federal, state and foreign net operating loss
carryforwards and deferred tax assets resulting from prior period compensation
payments made in connection with our initial public offering of common stock in
1998 and our recapitalization in 1996.
Our $400 million credit facility contains financial and operating
restrictions and covenant requirements, and permits the payment of cash
dividends except in the event of a continuing default under the credit
agreement. On April 29, 1999, we announced that our board of directors declared
a cash dividend of $0.025 per common share, payable on June 15, 1999 to all
stockholders of record as of June 1, 1999. Any determination to pay additional
dividends in the future will be at the discretion of our board of directors and
will depend upon, among other factors, our results of operations, financial
condition, capital requirements and contractual restrictions in our credit
facilities.
On April 5, 1999, we announced that we had agreed to acquire KnowledgeBase
Marketing, Inc., a leading customer relationship marketing service that
specializes in gathering and analyzing marketing data, in a stock and cash
transaction valued at approximately $175 million. We expect to issue
approximately 2.1 million shares of common stock and grant options to purchase
approximately 600,000 additional shares of
9
<PAGE>
common stock in connection with the transaction. The transaction is expected to
close in the second quarter of 1999.
We may, from time to time, pursue acquisition opportunities that would
expand or enhance existing capabilities or expand the geographic scope of our
operations.
We believe that cash provided by operations and funds available under our
credit facilities will be sufficient to meet our anticipated cash requirements
as presently contemplated.
YEAR 2000 COMPLIANCE
We are working to resolve the potential impact of the year 2000 on the
ability of our computer systems to accurately process information with dates
later than December 31, 1999, or to process date-sensitive information
accurately after the turn of the century (referred to as the "Year 2000" issue).
We have modified or replaced the majority of all affected systems and are in the
process of testing these systems to fully validate their readiness for
compliance with the Year 2000 issue. We are also dependent in part on
third-party computer systems and applications, particularly with respect to such
critical tasks as accounting, billing and buying, planning and paying for media,
as well as on our own computer systems. We have performed tests of major systems
in this category and have received assurances as to their readiness for
compliance with the Year 2000 issue. However, we continue to monitor the
adequacy of the processes and progress of other less critical vendors of systems
and applications that may be affected by the Year 2000 issue and to seek
assurances from these vendors that their systems are Year 2000 compliant.
While we believe our process is designed to be successful, because of the
complexity of the Year 2000 issue and the interdependence of organizations using
computer systems, it is possible that our efforts, or those of third parties
with whom we interact, will not be satisfactorily completed in a timely fashion.
Our failure to satisfactorily address the Year 2000 issue could have a material
adverse effect on our prospects, business, financial condition and results of
operations.
We do not expect the costs of our Year 2000 project to be material, and we
have funded all identified remedial projects in connection with our program.
However, we may experience cost overruns or delays as we replace or modify
systems, which could have a material adverse effect on our prospects, business,
financial condition and results of operations.
We are presently evaluating the extent of contingency planning that may be
required.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities", which is
required to be adopted in years beginning after June 15, 1999. We do not
anticipate that the adoption of this statement will have a significant effect on
our financial condition.
10
<PAGE>
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index
(b) Reports on Form 8-K: None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Young & Rubicam Inc.
--------------------
(Registrant)
Date: May 17, 1999
----------------
/s/ John A. Wozniak
------------------------------------
Name: John A. Wozniak
Title: Senior Vice President, Controller
Principal Accounting Officer
12
<PAGE>
EXHIBIT INDEX
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF YOUNG & RUBICAM AND SUBSIDIARY COMPANIES
FOUND IN THE COMPANY'S FORM 10-Q AS OF AND FOR THE THREE MONTHS ENDED MARCH 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001030048
<NAME> Young & Rubicam Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 63,209,000
<SECURITIES> 0
<RECEIVABLES> 885,094,000
<ALLOWANCES> (18,485,000)
<INVENTORY> 0
<CURRENT-ASSETS> 1,122,055,000
<PP&E> 378,744,000
<DEPRECIATION> (230,256,000)
<TOTAL-ASSETS> 1,622,625,000
<CURRENT-LIABILITIES> 1,238,717,000
<BONDS> 0
0
0
<COMMON> 702,000
<OTHER-SE> 85,649,000
<TOTAL-LIABILITY-AND-EQUITY> 1,622,625,000
<SALES> 0
<TOTAL-REVENUES> 383,873,000
<CGS> 0
<TOTAL-COSTS> 349,315,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,646,000
<INCOME-PRETAX> 32,912,000
<INCOME-TAX> 13,494,000
<INCOME-CONTINUING> 19,701,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,701,000
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.24
</TABLE>
