YOUNG & RUBICAM INC, 424B1, 1999-11-18

YOUNG & RUBICAM INC
424B1, 1999-11-18
ADVERTISING AGENCIES

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Filed Pursuant to Rule 424(b)(1)
Registration No. 333-90271

PROSPECTUS

5,231,443 SHARES

YOUNG & RUBICAM INC.

COMMON STOCK

-------------------
This is an offering of 5,231,443 shares of common stock of Young & Rubicam
Inc.

All of the 5,231,443 shares of common stock offered by this prospectus are
being sold by the selling stockholders named in this prospectus. Young & Rubicam
will not receive any of the proceeds from the sale of shares of common stock by
the selling stockholders.

The last reported sale price of the common stock, which is listed on the
New York Stock Exchange under the symbol "YNR", on November 17, 1999, was $48.13
per share.

INVESTING IN COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 7 TO READ ABOUT RISKS THAT YOU SHOULD CONSIDER BEFORE BUYING SHARES OF THE
COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

-------------------

<TABLE>
<CAPTION>
Per
Share Total
----------- ---------------
<S> <C> <C>
Public offering price ........................ $ 48.13 $251,763,194
Underwriting discount ........................ $ 1.56 $ 8,181,977
Proceeds to the selling stockholders ......... $ 46.56 $243,581,218
</TABLE>
-------------------
The underwriters may purchase up to an additional 284,000 shares from
selling stockholders to cover over-allotments. Young & Rubicam has agreed to pay
expenses incurred by the selling stockholders in connection with the offering,
other than the underwriting discount.

The underwriters expect to deliver the shares in New York, New York on
November 23, 1999.

-------------------
Joint Book-Running Managers

BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SALOMON SMITH BARNEY
-------------------
BANC OF AMERICA SECURITIES LLC
GOLDMAN, SACHS & CO.
ING BARINGS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
THOMAS WEISEL PARTNERS LLC

The date of this prospectus is November 17, 1999

<PAGE>

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary does not contain all of the information that you should consider
before investing in the common stock. You should read the entire prospectus
carefully, especially the risks of investing in the common stock discussed under
"Risk Factors."

YOUNG & RUBICAM INC.

Young & Rubicam Inc. is the fifth largest consolidated marketing and
communications organization in the world based on 1998 revenues. Since our
founding 75 years ago, we have evolved from a single New York-based advertising
agency to a diversified global marketing and communications company operating in
121 cities in 76 countries worldwide as of December 31, 1998. We operate through
recognized market leaders, including:

o Young & Rubicam Advertising, full-service advertising;

o Dentsu Young & Rubicam, full-service advertising in the Asia/Pacific
region;

o The Bravo Group and Kang & Lee, multi-cultural marketing and
communications;

o Wunderman Cato Johnson, direct marketing and sales promotion;

o KnowledgeBase Marketing, customer relationship marketing;

o Brand Dialogue, digital interactive branding and digital commerce;

o The Media Edge, media planning, buying and placement services;

o Burson-Marsteller, perception management and public relations;

o Cohn & Wolfe, full-service public relations;

o Landor Associates, branding consultation and design services; and

o Sudler & Hennessey, healthcare communications.

Our revenues in 1998 totaled $1.5 billion, representing a compound annual
growth rate of 12.2% from 1994 to 1998.

We are a single agency network, allowing us to centrally manage and
utilize our resources. Through multi-disciplinary, client-focused teams, we
provide clients with global access to fully integrated marketing and
communications solutions. Among our approximately 5,500 client accounts are a
number of large multinational organizations, including AT&T, Citibank,
Colgate-Palmolive, Ford and Philip Morris. We have maintained long-standing
relationships with many of our clients. The average length of relationship with
our top 20 clients exceeds 20 years.

Our mission is to be our clients' most valued business partner in
building, leveraging, protecting and managing their brands for both short-term
results and long-term growth. Consistent with our mission, we have developed an
organizational and management structure designed to meet the diverse needs of
our large global clients as well as the more specialized needs of our other
clients. Our strategy combines this organizational and management structure with
the pursuit of new business opportunities and continued investment in our
business, personnel and superior consumer knowledge. As part of our strategy, we
seek to provide clients with superior creative services and extensive research
capabilities, including access to Y&R's proprietary research tool, BrandAsset
Valuator.

Our principal executive office is located at 285 Madison Avenue, New
York, New York 10017, and our telephone number is (212) 210-3000.

<PAGE>

STRATEGY

Our strategy consists of the following key components:

o INCREASE PENETRATION OF KEY CORPORATE ACCOUNTS

o DEVELOP NEW CLIENT RELATIONSHIPS

o LEVERAGE EXISTING GLOBAL NETWORK

o CAPITALIZE ON EXISTING CAPABILITIES

o UTILIZE SUPERIOR CONSUMER KNOWLEDGE AND BRAND INSIGHTS

o CULTIVATE CREATIVE EXCELLENCE

o IMPROVE OPERATING EFFICIENCIES

o EXPAND CAPABILITIES THROUGH ACQUISITIONS AND INVESTMENTS

RECENT DEVELOPMENTS

On September 21, 1999, we contributed $15 million and certain net assets
of our Brand Dialogue operations in exchange for an ownership interest in
Luminant Worldwide Corporation, or Luminant, a newly formed internet and
e-commerce services firm that provides strategic consulting, content development
and systems integration capabilities to its clients. Under the terms of the
contribution agreement between Luminant and Y&R, we are eligible to receive
future contingent consideration from Luminant in the form of non-voting shares
of Luminant common stock and/or cash, at Luminant's discretion, based on the
revenue and operating profit performance of the Brand Dialogue contributed
assets for the period from July 1, 1999 through December 31, 1999 and on the
consolidated performance of Luminant for the first six months of 2000. We
recognized a net after-tax gain of approximately $42 million on the sale of the
Brand Dialogue contributed assets in the third quarter of 1999.

Effective August 2, 1999, the ownership and management structure of
Dentsu Young & Rubicam, which we refer to as DY&R, was amended. The agreement
resulted in our acquiring majority ownership in and operational control of all
DY&R companies throughout principal markets in Asia, excluding Japan. In Japan,
Dentsu has acquired a majority share. We paid approximately $6 million for the
incremental ownership interest and in the first quarter of 2001, will pay $4
million and may pay contingent consideration of up to an additional $1.5 million
in connection with this transaction, subject to DY&R's financial performance.
Effective August 2, 1999, we commenced consolidating the results of DY&R for
those markets where we hold a majority ownership interest. A preliminary
allocation of the cost to acquire the additional interest in DY&R has been made
based upon the fair value of the net assets.

During the third quarter of 1999, we acquired Rainey Kelly Campbell
Roalfe, a London-based advertising agency, and a majority ownership interest in
The Banner Corporation, a European marketing communications firm specializing in
the technology sector, and made several other acquisitions and equity
investments for which the aggregate purchase price was approximately $43
million. Some of these transactions may require us to pay additional amounts as
contingent consideration over a period not to exceed five years, based on
company performance and the achievement of stipulated targets. All of these
acquisitions were accounted for under the purchase method of accounting, and a
preliminary allocation of the costs to acquire these entities has been made
based on the fair value of the net assets. Since September 30, 1999, we have
also acquired ownership interests in certain other entities. Cash payments made
in connection with these transactions amounted to approximately $40 million.

<PAGE>

million shares repurchased under our existing 12 million share repurchase
program. The shares are being purchased under this program principally in
anticipation of exercises of outstanding employee stock options, and will likely
be reissued to employees as options are exercised.

In August 1999, we announced certain changes in our senior management
team. Effective August 2, 1999, Ed Vick was named Chief Creative Officer and Tom
Bell was named President and Chief Operating Officer of Young & Rubicam Inc. On
January 1, 2000, Mr. Vick will become our Chairman and Mr. Bell will become our
Chief Executive Officer, as Peter Georgescu, our current Chairman and Chief
Executive Officer, assumes the role of Chairman Emeritus. As Chairman Emeritus,
Mr. Georgescu will continue to be active in client work and on other key
corporate initiatives.

<PAGE>

THE OFFERING

Common stock offered..... 5,231,443 shares

Common stock to be outstanding
after the offering...... 72,152,238 shares

This number excludes:

o 25,397,954 shares of common stock reserved for
issuance upon the exercise of outstanding employee
options at a weighted average exercise price of
$14.14 per share;

o 33,915 shares of common stock reserved for
issuance upon the exercise of outstanding options
issued to investors in Y&R at a weighted average
exercise price of $7.67 per share; and

o 20,500 shares of common stock reserved for
issuance upon the exercise of options to be
granted to employees of KnowledgeBase Marketing in
connection with the acquisition of KnowledgeBase
Marketing at an exercise price per share equal to
the fair market value of the common stock on the
date of grant.

Unless otherwise specified, all information in
this prospectus assumes that the underwriters'
over-allotment option is not exercised.

Dividend Policy......... On September 15, 1999 we paid our second quarterly
cash dividend of $0.025 per share of common stock
to all stockholders of record as of September 1,
1999.

Use of Proceeds........ We will not receive any of the proceeds from the
sale of common stock offered by this prospectus.
We expect to receive $19.4 million in cash in
connection with the exercise by the H&F investors
of options to purchase common stock.

New York Stock Exchange
Symbol.................. YNR

In connection with the offering, Hellman & Friedman Capital Partners III,
L.P., H&F Orchard Partners III, L.P. and H&F International Partners III, L.P.,
whom we refer to as the H&F investors, have notified Y&R that they intend to
exercise options to purchase 2,530,260 shares of common stock for a total
exercise price of $19.4 million and to sell an aggregate of 5,231,443 shares of
common stock in this offering. Following the offering, the H&F investors will
own no shares of Y&R, and accordingly the H&F investors will no longer have the
right to nominate and have elected any members of Y&R's board of directors. See
"Selling Stockholders." Prior to the offering, the H&F investors will distribute
shares of common stock of Y&R to some of their limited partners and to
individuals that control the H&F investors, so that following the offering those
limited partners and individuals will beneficially own an aggregate of 2.1% of
the outstanding shares of common stock.

RISK FACTORS

For a discussion of risks that you should consider before buying shares of
the common stock, see "Risk Factors."

<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------------------ -------------------------------------------
1999 1998 1998 1997 1996
--------------- -------------- -------------- -------------- -------------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ................................ $ 1,226,686 $1,095,720 $1,522,464 $1,382,740 $1,222,139
Compensation expense, including
employee benefits ...................... 724,491 659,449 903,948 836,150 730,261
General and administrative expenses 359,498 324,783 455,578 463,936 391,617
Other charges (1) ....................... -- 234,449 234,449 11,925 17,166
Recapitalization-related charges (1) .... -- -- -- -- 315,397
------------ ---------- ---------- ---------- ----------
Operating expenses ..................... 1,083,989 1,218,681 1,593,975 1,312,011 1,454,441
------------ ---------- ---------- ---------- ----------
Operating profit (loss) ................. 142,697 (122,961) (71,511) 70,729 (232,302)
Extraordinary charge for early
retirement of debt (net of tax
benefit of $2,834) ..................... -- (4,433) (4,433) -- --
Net income (loss) ....................... $ 124,228 $ (113,328) $ (86,068) $ (23,938) $ (238,311)
EARNINGS (LOSS) PER SHARE (2):
Basic:
Income (loss) before extraordinary
charge (2) ........................... $ 1.83 $ (1.84) $ (1.34) $ (0.51)
Extraordinary charge ................... -- (0.08) (0.08) --
------------ ---------- ---------- ----------
Net income (loss) ...................... $ 1.83 $ (1.92) $ (1.42) $ (0.51)
============ ========== ========== ==========
Diluted:
Income (loss) before extraordinary
charge (2) ........................... $ 1.50 $ (1.84) $ (1.34) $ (0.51)
Extraordinary charge ................... -- (0.08) (0.08) --
------------ ---------- ---------- ----------
Net income (loss) ...................... $ 1.50 $ (1.92) $ (1.42) $ (0.51)
============ ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING
USED TO COMPUTE:
Basic ................................... 67,914,158 58,939,274 60,673,994 46,949,355
Diluted ................................. 82,595,373 58,939,274 60,673,994 46,949,355

OTHER OPERATING DATA:
EBITDA (3) .............................. $ 194,232 $ 154,549 $ 223,548 $ 139,375 $ 147,221
Net cash provided by operating
activities ............................. 70,391 22,073 195,615 224,511 178,064
Net cash used in investing activities ... 211,705 39,260 99,683 67,142 76,094
Net cash provided by (used in)
financing activities ................... 112,155 (75,444) (136,242) (98,667) (12,614)
Capital expenditures .................... 53,947 34,784 76,378 51,899 51,792
International revenues as a % of
total revenues ......................... 45.8% 48.2% 49.1% 52.2% 53.3%
</TABLE>

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1999
--------------------
<S> <C>
BALANCE SHEET DATA:
Total assets (4) ................... $2,104,804
Total debt (5) ..................... 344,422
Total stockholders' equity ......... 289,571
</TABLE>

(footnotes on following page)

<PAGE>

- -----------
(1) For a discussion of other charges and recapitalization-related charges for
the years ended December 31, 1998, 1997 and 1996, see notes 4, 6 and 9 to
the audited consolidated financial statements incorporated by reference in
this prospectus.

(2) At September 30, 1999, Y&R had outstanding options to purchase 28,639,817
shares of common stock with a weighted average exercise price of $12.61 that
could potentially dilute basic earnings per share in the future. For a
discussion of options outstanding, see note 3 to the unaudited interim
consolidated financial statements and note 18 to the audited consolidated
financial statements incorporated by reference in this prospectus.

Earnings per share for 1996 cannot be computed because Y&R's capital
structure prior to its recapitalization in December 1996 consisted of both
common shares and limited partnership units in predecessor entities. For a
discussion of the recapitalization, see note 6 to the audited consolidated
financial statements incorporated by reference in this prospectus.

(3) EBITDA is defined as operating profit (loss) before depreciation and
amortization, other non-cash charges and recapitalization-related charges.
EBITDA is presented because it is a widely accepted financial indicator and
is generally consistent with the definition used for covenant purposes
contained in Y&R's credit facilities; however, EBITDA may not be comparable
to other registrants' calculation of EBITDA or similarly titled items. You
should not consider EBITDA as an alternative to net income (loss) as a
measure of operating results in accordance with generally accepted
accounting principles or as an alternative to cash flows as a measure of
liquidity. EBITDA for the nine months ended September 30, 1998 and for the
year ended December 31, 1998 is before $234,449 of non-cash compensation
charges related to the vesting of restricted stock taken at the time of our
initial public offering. EBITDA for 1997 and 1996 is before $11,925 and
$11,096, respectively, of non-cash charges primarily related to impairment
write-downs which are included in other charges. For a discussion of other
charges and recapitalization-related charges for the years ended December
31, 1998, 1997 and 1996, see notes 4, 6 and 9 to the audited consolidated
financial statements incorporated by reference in this prospectus.

(4) Total assets as of September 30, 1999 include net deferred tax assets of
$145,926 consisting primarily of federal, state and foreign net operating
loss carryforwards.

(5) Total debt includes current and non-current loans and installment notes,
which are discussed in notes 14 and 15 to the audited consolidated financial
statements incorporated by reference in this prospectus.

<PAGE>

RISK FACTORS

An investment in the common stock involves a number of risks. You should
consider carefully the following information about these risks, together with
the other information included and incorporated by reference in this prospectus,
before buying shares of common stock.

WE HAVE RECENTLY INCURRED SUBSTANTIAL NET LOSSES.

We reported net losses of $86.1 million for 1998 and $23.9 million for
1997. The net loss in 1998 includes a non-cash pre-tax compensation charge of
$234.4 million recorded in connection with the vesting of restricted stock upon
completion of our initial public offering, or IPO, in May 1998 and a $7.3
million pre-tax charge for unamortized deferred financing costs related to a
credit facility that we replaced in connection with the IPO.

WE MAY HAVE DIFFICULTY COMPETING IN THE HIGHLY COMPETITIVE MARKETING AND
COMMUNICATIONS INDUSTRY.

The marketing and communications industry is highly competitive, and we
expect it to remain so. Our principal competitors are large multinational
marketing and communications companies, as well as numerous smaller agencies
that operate in one or more countries or local markets. We must compete with
these other companies and agencies to maintain existing client relationships and
to obtain new clients and assignments. Some clients, such as U.S. governmental
agencies, require agencies to compete for business at mandatory periodic
intervals. We compete principally on the basis of the following factors:

o creative reputation;

o knowledge of media;

o geographical coverage and diversity;

o relationships with clients;

o quality and breadth of services; and

o financial controls.

Recently, traditional advertising agencies also have been competing with
major consulting firms, which have developed practices in marketing and
communications. New competitors also include smaller companies such as systems
integrators, database marketing and modeling companies and telemarketers, which
offer technological solutions to marketing and communications issues faced by
clients.

When we represent a client, we do not necessarily handle all advertising
or public relations for that client. In addition, the ability of agencies within
marketing and communications organizations to acquire new clients or additional
assignments from existing clients may be limited by the conflicts policy
followed by many clients. This conflicts policy typically prohibits agencies
from performing similar services for competing products or companies. Our
principal international competitors are holding companies for more than one
global advertising agency network. As a result, in some situations separate
agency networks within these holding companies may be able to perform services
for competing products or for products of competing companies. We have one
global advertising agency network. Accordingly, our ability to compete for new
advertising assignments and, to a lesser extent, other marketing and
communications assignments, may be limited by these conflicts policies. Industry
practices in other areas of the marketing and communications business reflect
similar concerns with respect to client relationships.

WE MAY BE ADVERSELY AFFECTED BY A DOWNTURN IN THE MARKETING AND COMMUNICATIONS
INDUSTRY, WHICH IS CYCLICAL.

The marketing and communications industry is cyclical and as a result it
is subject to downturns in general economic conditions and changes in client
business and marketing budgets. Our prospects, business, financial condition and
results of operations may be materially adversely affected by a downturn in
general economic conditions in one or more markets or changes in client business
and marketing budgets.

<PAGE>

WE MAY LOSE CLIENTS DUE TO CONSOLIDATION OF ACCOUNTS WITH OTHER GLOBAL MARKETING
AND COMMUNICATIONS AGENCIES.

We believe that large multinational companies will seek to consolidate
their accounts with one organization that can fulfill their marketing and
communications needs worldwide. We may not continue to benefit from this trend
towards consolidation of global accounts. In addition, this trend towards
consolidation of global accounts requires companies seeking to compete
effectively in the international marketing and communications industry to make
significant investments. These investments include additional offices and
personnel around the world and new and improved technology for linking these
offices and people. We are required to make significant capital expenditures for
maintenance, expansion and upgrades of the computer networks that link our
international network of employees and offices. To the extent that our
competitors may have broader geographic scope or greater financial resources to
invest in additional offices, personnel or technology, they may be better able
than we are to take advantage of an opportunity for the consolidation of a
global account. In those circumstances, our business and results of operations
could suffer.

WE ARE DEPENDENT UPON, AND RECEIVE A SIGNIFICANT PERCENTAGE OF OUR REVENUES
FROM, A LIMITED NUMBER OF LARGE CLIENTS.

A significant reduction in the marketing and communications spending by,
or the loss of one or more of, our largest clients could weaken our financial
condition and cause our business and results of operations to suffer. A
relatively small number of clients contribute a significant percentage of our
consolidated revenues. In 1998, our Key Corporate Accounts, or KCAs, contributed
48.6% of consolidated revenues, and our largest client account, Ford Motor
Company, contributed 10.5% of consolidated revenues. Our dependence on revenues
from these client accounts may increase in the future as we pursue our strategy
of increasing penetration of existing large clients. In addition, clients'
conflicts policies typically prohibit us from performing similar services for
competing products or companies.

These major clients, and our other clients, may not continue to use our
services to the same extent, or at all, in the future. Most of our agreements
with U.S.-based clients are cancelable on 90 days' notice, and our agreements
with non-U.S. clients typically are cancelable on 90 to 180 days' notice. In
addition, clients generally are able to reduce marketing and communications
spending or cancel projects at any time for any reason.

WE MAY LOSE SOME OF OUR EXISTING CLIENTS AND MAY NOT BE ABLE TO ATTRACT NEW
CLIENTS FOR OUR MARKETING AND COMMUNICATIONS SERVICES.

The loss of one or more of our largest clients could weaken our financial
condition and cause our business and results of operations to suffer. Our
success, like the success of other marketing and communications organizations,
depends on our continuing ability to attract and retain clients. We have
approximately 5,500 client accounts worldwide. Although historically we have
maintained long-term relationships with many of our largest clients, clients may
move their advertising and other communications assignments from agency to
agency, or may divide their assignments among two or more agencies, with
relative ease. In addition, in order to maintain and increase revenues, we must
obtain new assignments in areas of our business that are project-based, such as
the perception management and public relations business, and the branding
consultation and design business. As is typical in the marketing and
communications industry, we have lost or resigned client accounts and
assignments, including Blockbuster Video, International Home Foods and Molson,
for a variety of reasons, including conflicts with newly acquired clients. We
may not be successful in replacing clients or revenues when a client
significantly reduces the amount of work given to Y&R.

STRENGTHENING OF THE U.S. DOLLAR AGAINST OTHER MAJOR CURRENCIES COULD
MATERIALLY ADVERSELY AFFECT US.

Our financial statements are denominated in U.S. dollars. In 1998,
operations outside the United States represented 49.1% of our revenues.
Currency fluctuations may give rise to translation gains or losses when
financial statements of foreign operating units are translated into U.S.
dollars. Significant strengthening of the U.S. dollar against other major
foreign currencies could harm our results

<PAGE>

of operations and weaken our financial position. With limited exceptions, we do
not actively hedge our foreign currency exposure.

THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE DUE TO THE LARGE NUMBER OF
SHARES ELIGIBLE FOR FUTURE SALE.

Following the offering, we will have 72,152,238 shares of common stock
outstanding, substantially all of which will be eligible for sale in the public
market without registration under the Securities Act, subject, in some cases, to
compliance with the volume limitations, manner of sale provisions and other
restrictions of Rule 144 under the Securities Act. Following the offering, and
based upon information as of November 12, 1999, an aggregate of 23,203,868
shares of common stock and shares subject to options that are currently vested
or will vest within 60 days of the date of this prospectus held by current or
former employees of Y&R, whom we refer to as management investors, will be
eligible for sale in the public market without registration under the Securities
Act, subject, in some instances, to compliance with the volume limitations,
manner of sale provisions and other restrictions of Rule 144 under the
Securities Act.

Following the offering, individuals and entities that control the H&F
investors and some of the limited partners of the H&F investors will hold an
aggregate of 1,508,777 shares of common stock that will be eligible for sale in
the public market without registration under the Securities Act, subject, in the
case of affiliates of the H&F investors who are currently members of our board
of directors, to compliance with the volume limitations, manner of sale
provisions and other restrictions of Rule 144 under the Securities Act. Of this
number, 1,313,484 shares will be subject to the 90-day lock-up agreements
described in this prospectus. An additional 187,432 shares of common stock are
subject to a prohibition on sale under a limited partnership agreement with the
H&F investors for 90 days from the date of this prospectus.

Future sales of common stock, or the perception that future sales could
occur, could adversely affect prevailing market prices for the common stock.

WE ARE CONTROLLED BY OUR PRINCIPAL STOCKHOLDERS, INCLUDING MANAGEMENT
STOCKHOLDERS, WHOSE INTERESTS MAY DIFFER FROM THOSE OF OTHER STOCKHOLDERS.

A substantial percentage of our common stock is owned by management
investors. All common stock held at any time by management investors is required
to be deposited in a voting trust, which we refer to as the management voting
trust, that is controlled by six members of Y&R's senior management, in their
capacities as voting trustees. Following the offering, and based upon
information as of November 12, 1999, this trust will hold voting power over
28.5% of the outstanding shares of common stock, assuming the exercise of all
options held by the management investors that are currently vested or will vest
within 60 days of the date of this prospectus. As a result, this voting trust
will continue to be able to exercise substantial control over any matters
requiring the vote of stockholders, including the election of directors, which
could delay or prevent a change in control of Y&R. Furthermore, the vote of
Peter A. Georgescu, or any other person duly elected chief executive officer of
Y&R with the prior approval of the voting trust, will bind the voting trust
unless he or his successor is outvoted by the five other voting trustees. As a
result of the foregoing, Peter A. Georgescu or his successor will be able to
exercise a significant degree of control over business decisions affecting Y&R.
In addition, the management voting trust could delay or prevent a change in
control of us. This voting trust will terminate no later than May 15, 2000. In
the event that, following the termination of the voting trust, Y&R management
continues to own collectively a significant percentage of the outstanding shares
of common stock, management acting together will be able to exercise a
significant degree of control over business decisions affecting Y&R.

Following the offering, the H&F investors will own no shares of common
stock of Y&R, and accordingly the H&F investors will no longer have the right to
nominate and have elected any members of Y&R's board of directors.

<PAGE>

OUR COMPETITIVE POSITION DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN KEY
MARKETING AND COMMUNICATIONS PERSONNEL.

Our ability to maintain our competitive position depends on retaining the
services of our senior management. The loss of the services of key members of
senior management could harm our business and results of operations. In
addition, our success has been, and is expected to continue to be, highly
dependent upon the skills of our creative, research, media and account personnel
and practice group specialists, and their relationships with our clients.
Employees generally are not subject to employment contracts and are, therefore,
typically able to move within the industry with relative ease. Although the
agreement establishing the management voting trust and other stock option and
restricted stock agreements contain non-competition and non-solicitation
covenants, these covenants may not be effective in helping us retain qualified
personnel. We may be adversely affected by the failure to retain qualified
personnel.

If we were unable to continue to attract and retain additional key
personnel, or if we were unable to retain and motivate our existing key
personnel, our prospects, business, financial condition and results of
operations would be materially adversely affected.

WE ARE EXPOSED TO VARIOUS RISKS FROM OPERATING A MULTINATIONAL BUSINESS.

If we were unable to remain in compliance with local laws in developing
countries in which we conduct business, our prospects, business and results of
operations could be harmed, and our financial condition could be weakened. We
conduct business in various developing countries in Asia, Latin America, Eastern
Europe and Africa, where the systems and bodies of commercial law and trade
practices are evolving. Commercial laws in many of these countries are often
vague, arbitrary, contradictory, inconsistently administered and retroactively
applied. Under these circumstances, it is difficult for us to determine with
certainty at all times the exact requirements of these local laws. In addition,
the global nature of our operations poses various challenges to our management
and our financial, accounting and other systems which, if not satisfactorily
met, also could harm our prospects, business and results of operations and
weaken our financial condition.

WE MAY NOT BE SUCCESSFUL IN IDENTIFYING APPROPRIATE ACQUISITION CANDIDATES OR
INVESTMENT OPPORTUNITIES, COMPLETING ACQUISITIONS OR INVESTMENTS ON
SATISFACTORY TERMS OR INTEGRATING NEWLY ACQUIRED COMPANIES.

Our business strategy includes increasing our share of clients' marketing
expenditures by adding to or enhancing our existing marketing and communications
capabilities, and expanding our geographic reach. We intend to implement this
strategy in part by making acquisitions and investments. We may not be
successful in identifying appropriate acquisition candidates or investment
opportunities or consummating acquisitions or investments on terms satisfactory
to us. In addition, we may not be successful in integrating any newly acquired
companies into our existing global network. We may use common stock, which could
result in dilution to purchasers of common stock, incur indebtedness, which may
be long-term, expend cash or use any combination of common stock, indebtedness
and cash for all or part of the consideration to be paid in future acquisitions.
While we regularly evaluate potential acquisition opportunities, we have no
present commitments, agreements or understandings with respect to any material
acquisition.

WE ARE EXPOSED TO POTENTIAL LIABILITIES, INCLUDING LIABILITIES ARISING FROM
ALLEGATIONS THAT OUR CLIENTS' ADVERTISING CLAIMS ARE FALSE OR MISLEADING OR
OUR CLIENTS' PRODUCTS ARE DEFECTIVE.

From time to time, we may be, or may be joined as, a defendant in
litigation brought against our clients by third parties, including our clients'
competitors, governmental or regulatory bodies or consumers. These litigations
could include claims alleging that:

o advertising claims made with respect to our clients' products or
services are false, deceptive or misleading;

o our clients' products are defective or injurious; or

o marketing and communications materials created for our clients
infringe on the proprietary rights of third parties.

<PAGE>

If, in those circumstances, we are not insured under the terms of our
insurance policies or are not indemnified under the terms of our agreements with
clients or this indemnification is unavailable for these claims, then the
damages, costs, expenses or attorneys' fees arising from any of these claims
could have an adverse effect on our prospects, business, results of operations
and financial condition. In addition, our contracts with clients generally
require us to indemnify clients for claims brought by competitors or others
claiming that advertisements or other communications infringe on intellectual
property rights. Although we maintain an insurance program, including insurance
for advertising agency liability, this insurance may not be available, or if
available may not be sufficient to cover any claim, if a significant adverse
claim is made.

OUR COMPUTER SYSTEMS, AND THOSE OF THIRD PARTIES ON WHOM WE RELY, MAY NOT
ACHIEVE YEAR 2000 READINESS.

We continue to work 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 all significant systems necessary for us to operate
our business that we have identified as requiring Year 2000 remediation. We have
completed the testing of all critical systems and continue working on finalizing
tests for the non-critical systems. 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.

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.

The out-of-pocket costs incurred in the first nine months of 1999 for the
Year 2000 issue were not material to consolidated results of operations and are
expected to be immaterial for the year ended December 31, 1999. We have funded
all identified remedial projects in connection with our program. We may
experience cost overruns or delays as we replace or modify systems, however,
which could have a material adverse effect on our prospects, business, financial
condition and results of operations.

We have completed the assessment and compliance testing phases and
believe that the implementation phase of the Year 2000 readiness plan will be
substantially completed during the fourth quarter. Contingency planning for
critical business processes will continue through the fourth quarter, to seek to
ensure a smooth migration into the year 2000.

THE MARKET PRICE OF THE COMMON STOCK WILL FLUCTUATE, AND COULD FLUCTUATE
SIGNIFICANTLY.

The market price of the common stock will fluctuate, and could fluctuate
significantly, in response to various factors and events, including the
following:

o the liquidity of the market for the common stock;

o differences between Y&R's actual financial or operating results and
those expected by investors and analysts;

o changes in analysts' recommendations or projections;

o changes in marketing and communications budgets of clients;

o new statutes or regulations or changes in interpretations of existing
statutes and regulations affecting our business;

o changes in general economic or market conditions; and

o broad market fluctuations.

<PAGE>

OUR ORGANIZATIONAL DOCUMENTS, PROVISIONS OF DELAWARE LAW AND OUR STOCKHOLDER
RIGHTS PLAN MAY DELAY, DETER OR PREVENT A CHANGE IN CONTROL OF US.

Various provisions of our organizational documents, and of the law of
Delaware, where we are incorporated, may delay, deter or prevent a change in
control of Y&R not approved by our board of directors. These provisions include:

o a classified board of directors;

o a requirement that no action required or permitted to be taken at any
annual or special meeting of stockholders may be taken without a
meeting;

o a requirement that special meetings of stockholders be called only by
the chairman of the board of directors or the board of directors;

o advance notice requirements for stockholder proposals and nominations;

o limitations on the ability of stockholders to amend, alter or repeal
provisions of our organizational documents;

o authorization for the board of directors to issue without stockholder
approval preferred stock with terms as the board of directors may
determine; and

o authorization for the board of directors to consider the interests of
clients and other customers, creditors, employees and other
constituencies of Y&R and its subsidiaries and the effect upon
communities in which Y&R and its subsidiaries do business, in
evaluating proposed corporate transactions.

Section 203 of the Delaware general corporation law imposes restrictions
on mergers and other business combinations between Y&R and any holder of 15% or
more of the common stock. These restrictions generally do not apply to the H&F
investors, their affiliates and any of their permitted transferees that acquire
15% or more of the outstanding common stock, who have been exempted from these
restrictions by the board of directors.

In addition, we have adopted a stockholder rights plan under which each
holder of common stock also receives rights. Under the stockholder rights plan,
if any person acquires beneficial ownership of 15% or more of the outstanding
shares of common stock (with exceptions, including the management voting trust),
that person will become an "acquiring person". As a result, holders of rights
other than the acquiring person and some other transferees and related persons
will be entitled to purchase shares of common stock at one-half their market
price. In general, the H&F investors and any permitted transferee of the H&F
investors that beneficially owns more than 15% of the outstanding common stock
after a transfer from the H&F investors will not become an acquiring person
unless they acquire additional shares of common stock under circumstances
described in the stockholder rights plan. While the stockholder rights plan is
designed to protect stockholders in the event of an unsolicited offer and other
takeover tactics which, in the opinion of the board of directors, could impair
Y&R's ability to represent stockholder interests, the provisions of the
stockholder rights plan may render an unsolicited takeover of Y&R more difficult
or less likely to occur or might prevent such a takeover.

These provisions of our organizational documents, Delaware law and the
stockholder rights plan, together with the control of 28.5% of the outstanding
shares of common stock by the management voting trust upon completion of the
offering (assuming the exercise of all options held by management investors that
are currently vested or will vest within 60 days of the date of this prospectus
and based upon information as of November 12, 1999), could discourage potential
acquisition proposals and could delay, deter or prevent a change in control of
Y&R, although a majority of Y&R's stockholders might consider these acquisition
proposals, if made, to be desirable. These provisions also could make it more
difficult for third parties to remove and replace the members of the board of
directors. Moreover, these provisions could diminish the opportunities for a
stockholder to participate in tender offers, including tender offers at prices
above the then-current market price of the common stock, and may also inhibit
increases in the market price of the common stock that could result from
takeover attempts or speculation. In addition, some options issued to our
employees contain change in control

<PAGE>

provisions that could have the effect of delaying, deterring or preventing a
change in control of us.

OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM RESULTS ANTICIPATED IN
FORWARD-LOOKING STATEMENTS WE MAKE.

Some of the statements included or incorporated by reference in this
prospectus are forward-looking statements. These forward-looking statements
include statements in the "Young & Rubicam Inc.--Industry Trends" and
"--Strategy" sections of this prospectus relating to trends in the advertising
and marketing and communications industries, including anticipated advertising
expenditures, and the growth thereof, in the world's advertising markets. These
forward-looking statements also include statements relating to Y&R's performance
in the "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Business" sections of our Annual Report on Form 10-K for the
year ended December 31, 1998 and Quarterly Reports on Form 10-Q for the first,
second and third quarters of 1999. In addition, we may make forward-looking
statements in future filings with the Securities and Exchange Commission, and in
written material, press releases and oral statements issued by or on behalf of
us. Forward-looking statements include statements regarding the intent, belief
or current expectations of Y&R or its officers. Forward-looking statements
include statements preceded by, followed by or that include forward-looking
terminology such as "may," "will," "should," "believes," "expects,"
"anticipates," "estimates," "continues" or similar expressions.

It is important to note that our actual results could differ materially
from those anticipated in these forward-looking statements depending on various
important factors. These important factors include the following:

o revenues received from clients, including under incentive compensation
arrangements entered into by us with clients;

o gains or losses of clients and client business and projects, as well as
changes in the marketing and communications budgets of clients;

o our ability to successfully integrate companies and businesses that we
acquire;

o the overall level of economic activity in the principal markets in
which we conduct business and other trends affecting our financial
condition or results of operations;

o the impact of competition in the marketing and communications industry;

o our liquidity and financing plans; and

o risks associated with our efforts to comply with Year 2000
requirements.

All forward-looking statements included in this prospectus are based on
information available to us on the date hereof. We do not undertake to update
any forward-looking statements that may be made by or on behalf of us, in this
prospectus or otherwise. In addition, the matters set forth above in this "Risk
Factors" section constitute cautionary statements identifying important factors
with respect to these forward-looking statements, including risks and
uncertainties that could cause actual results to differ materially from those
included in these forward-looking statements.

<PAGE>

YOUNG & RUBICAM INC.

Young & Rubicam Inc. ("Y&R") is the fifth largest consolidated marketing
and communications organization in the world based on 1998 revenues. Since our
founding 75 years ago, we have evolved from a single New York-based advertising
agency to a diversified global marketing and communications company operating in
121 cities in 76 countries worldwide as of December 31, 1998. We operate through
recognized market leaders including:

o Young & Rubicam Advertising, full-service advertising;

o Dentsu Young & Rubicam, full-service advertising in the Asia/Pacific
region;

o The Bravo Group and Kang & Lee, multi-cultural marketing and
communications;

o Wunderman Cato Johnson, direct marketing and sales promotion;

o KnowledgeBase Marketing, customer relationship marketing;

o Brand Dialogue, digital interactive branding and digital commerce;

o The Media Edge, media planning, buying and placement services;

o Burson-Marsteller, perception management and public relations;

o Cohn & Wolfe, full-service public relations;

o Landor Associates, branding consultation and design services; and

o Sudler & Hennessey, healthcare communications.

Our revenues in 1998 totaled $1.5 billion, representing a compound annual
growth rate of 12.2% from 1994 to 1998.

In late 1992, we created the Key Corporate Account, or KCA, program to
enhance the coordination of services sought by clients from both a global
coverage as well as an integrated solutions perspective. KCAs are large global
client accounts that, as a group, contribute the greatest share of our revenues
and profits, and are served on a multinational basis by two or more of our
businesses. Revenues from the client accounts designated as KCAs accounted for
48.6% of our consolidated revenues in 1998. In order to further strengthen
client relationships and reward us for meeting or exceeding performance targets,
we are working with KCAs to adopt incentive compensation arrangements that align
our compensation with our performance and our clients' business performance.

INDUSTRY TRENDS

The marketing and communications industry encompasses a wide range of
services used to develop and deliver messages to both broad and targeted
audiences through multiple communications channels. Several significant trends
are changing the dynamics of the marketing and communications industries,
including the following:

<PAGE>

o GROWTH IN UNITED STATES MARKETING AND COMMUNICATIONS MARKETS.
Advertising expenditures in the United States have continued to
grow, increasing from approximately $140 billion in 1993 to
approximately $200 billion in 1998.

o GROWTH OF INTERNATIONAL MARKETING AND COMMUNICATIONS MARKETS. Since
1986, non-U.S. advertising expenditures have grown more rapidly than
U.S. expenditures and, according to industry sources, have increased
from approximately 44% of worldwide expenditures in 1986 to
approximately 52% in 1998.

o INVESTMENT IN BRAND DEVELOPMENT. Over the last several years,
advertisers have focused on the image or brand identity of their
organizations, products and services in an effort to differentiate
themselves from competitors and increase brand loyalty.

o DEMAND FOR INTEGRATED SERVICE OFFERINGS. Demand has increased for
globally integrated marketing and communications solutions as
companies seek consistent and effective delivery of their messages
through multiple communications channels and across a variety of
geographic markets.

o INCREASED EMPHASIS ON TARGETED MARKETING. The desire of companies to
reach their target audiences and quantify the effectiveness of their
communications has resulted in greater demand for customized direct
marketing methods, such as database marketing, infomercials,
in-store promotions and interactive programs.

STRATEGY

Our strategy consists of the following key components:

o INCREASE PENETRATION OF KEY CORPORATE ACCOUNTS. We believe that
there are significant opportunities to increase our share of the
marketing and communications expenditures of our KCAs by leveraging
our global network to provide integrated services. In recent years,
we have successfully increased our share of the marketing and
communications expenditures of some KCAs. KCAs also have increased
their use of multiple services offered by us over the same period.
During 1998, our 20 largest KCAs used the capabilities of an average
of five of our marketing and communications services.

o DEVELOP NEW CLIENT RELATIONSHIPS. We believe that there are
significant opportunities for future revenue and profit growth by
providing services to new clients in targeted industry sectors and
to those clients seeking to build and maintain global, regional and
local brands. We have successfully used our integrated and global
approach as an effective tool in winning new business.

o LEVERAGE EXISTING GLOBAL NETWORK. With a worldwide presence in 76
countries as of December 31, 1998, we believe that we are well
positioned to continue to benefit from the trend toward the
globalization of client marketing and communications needs and the
consolidation of those needs with a single global network.

o CAPITALIZE ON EXISTING CAPABILITIES. We intend to continue the
development of our existing capabilities into more visible and
accessible client services. For example, we created our Brand
Dialogue unit in 1997 by combining the existing interactive
capabilities of Young & Rubicam Advertising and Wunderman Cato
Johnson in the United States, Latin America, Europe and the
Asia/Pacific region.

o UTILIZE SUPERIOR CONSUMER KNOWLEDGE AND BRAND INSIGHTS. To assist
our clients in building, leveraging, protecting and managing their
brands, we have developed and are maintaining extensive knowledge of
consumer brand perceptions. For example, we have developed
BrandAsset Valuator, a proprietary database that reflects the
perceptions of over 95,000 consumers in 32 countries on five
continents. We believe that BrandAsset Valuator is the first global
consumer study that provides

<PAGE>

an empirically derived model for how brands gain and lose their
strength over time.

o CULTIVATE CREATIVE EXCELLENCE. We intend to continue emphasizing the
importance of creative marketing and communications. We have created
numerous memorable marketing and communications programs for
clients, including "The Softer Side of Sears," "Everybody Needs a
Little KFC," "It's All Within Your Reach" for AT&T, "The Document
Company" for Xerox and "Be All That You Can Be" for the United
States Army. We have also performed identity and design assignments,
including the creation of corporate identities, for Lucent
Technologies, Netscape and the 2002 Salt Lake City Olympics.

o IMPROVE OPERATING EFFICIENCIES. We believe that opportunities exist
to improve operating efficiencies in order to expand margins and
increase future profitability. For example, we have implemented
initiatives that have both improved productivity and reduced
compensation expense as a percentage of consolidated revenues.

o EXPAND CAPABILITIES THROUGH ACQUISITIONS AND INVESTMENTS. In order
to add new capabilities, enhance our existing capabilities and
expand the geographic scope of our operations, we regularly evaluate
and intend to pursue appropriate acquisition and investment
opportunities. For example, in May 1999, we acquired KnowledgeBase
Marketing, Inc., a provider of database and analytical services, in
a stock and cash transaction valued at approximately $175 million.

<PAGE>

RECENT DEVELOPMENTS

In the third quarter of 1999, we repurchased approximately 800,000 shares
of common stock at an average price of $42.13 on the open market and in other
transactions. From October 1, 1999 through November 12, 1999, we repurchased an
additional approximately 1.0 million shares of common stock at an average price
of $44.85 on the open market and in other transactions. This brings the total to
5.4 million shares repurchased under our existing 12 million share repurchase
program. The shares are being purchased under this program principally in
anticipation of exercises of outstanding employee stock options, and will likely
be reissued to employees as options are exercised.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares of common
stock by the selling stockholders. We expect to receive $19.4 million in cash in
connection with the exercise by the H&F investors of options to purchase
2,530,260 shares of common stock.

17
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated statement of operations data and
consolidated balance sheet data as of and for the years ended December 31, 1994
through 1998 have been derived from Y&R's audited annual consolidated financial
statements, including the consolidated balance sheets as of December 31, 1997
and 1998 and the related consolidated statements of operations and of cash flows
for the three years ended December 31, 1998 and the notes thereto incorporated
by reference in this prospectus.

Data for the nine months ended September 30, 1999 and 1998 have been
derived from Y&R's unaudited interim consolidated financial statements,
including the consolidated balance sheet as of September 30, 1999 and the
related consolidated statements of operations and of cash flows for the nine
months ended September 30, 1999 and 1998 and the notes thereto incorporated by
reference in this prospectus.

The selected consolidated financial data set forth below should be read
in conjunction with the consolidated financial statements incorporated by
reference in this prospectus. See "Available Information."

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1999 1998
------------- -------------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ................................ $ 1,226,686 $ 1,095,720
Compensation expense, including
employee benefits ...................... 724,491 659,449
General and administrative expenses 359,498 324,783
Other charges(1) ........................ -- 234,449
Recapitalization-related charges(1) ..... -- --
----------- -----------
Operating expenses ..................... 1,083,989 1,218,681
----------- -----------
Operating profit (loss) ................. 142,697 (122,961)
Interest income ......................... 8,554 6,129
Interest expense ........................ (17,778) (19,144)
Other income ............................ 70,835 2,200
----------- -----------
Income (loss) before income taxes ....... 204,308 (133,776)
Income tax provision (benefit) .......... 81,723 (22,291)
----------- -----------
122,585 (111,485)
Equity in net income (loss) of
unconsolidated companies ............... 3,049 3,194
Minority interest in net (income)
loss of
consolidated subsidiaries .............. (1,406) (604)
----------- -----------
Income (loss) before extraordinary
charge ................................. 124,228 (108,595)
Extraordinary charge for early
retirement of debt (net of tax
benefit of $2,834) ..................... -- (4,433)
----------- -----------
Net income (loss) ....................... $ 124,228 $ (113,328)
=========== ===========
EARNINGS (LOSS) PER SHARE(2):
Basic:
Income (loss) before extraordinary
charge(2) ............................. $ 1.83 $ (1.84)
Extraordinary charge ................... -- (0.08)
----------- -----------
Net income (loss) ...................... $ 1.83 $ (1.92)
=========== ===========
Diluted:
Income (loss) before extraordinary
charge(2) ............................. $ 1.50 $ (1.84)
Extraordinary charge ................... -- (0.08)
----------- -----------
Net income (loss) ...................... $ 1.50 $ (1.92)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING
USED TO COMPUTE:
Basic ................................... 67,914,158 58,939,274
Diluted ................................. 82,595,373 58,939,274

<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ................................ $ 1,522,464 $ 1,382,740 $1,222,139 $1,085,494 $ 959,275
Compensation expense, including
employee benefits ...................... 903,948 836,150 730,261 672,026 594,322
General and administrative expenses 455,578 463,936 391,617 356,523 323,087
Other charges(1) ........................ 234,449 11,925 17,166 31,465 4,507
Recapitalization-related charges(1) ..... -- -- 315,397 -- --
----------- ----------- ---------- ---------- ---------
Operating expenses ..................... 1,593,975 1,312,011 1,454,441 1,060,014 921,916
----------- ----------- ---------- ---------- ---------
Operating profit (loss) ................. (71,511) 70,729 (232,302) 25,480 37,359
Interest income ......................... 8,315 8,454 10,269 9,866 12,100
Interest expense ........................ (26,001) (42,879) (28,584) (27,441) (23,027)
Other income ............................ 2,200 -- -- -- --
----------- ----------- ---------- ---------- ---------
Income (loss) before income taxes ....... (86,997) 36,304 (250,617) 7,905 26,432
Income tax provision (benefit) .......... (2,644) 58,290 (20,611) 9,130 12,998
----------- ----------- ---------- ---------- ---------
(84,353) (21,986) (230,006) (1,225) 13,434
Equity in net income (loss) of
unconsolidated companies ............... 4,707 342 (9,837) 5,197 4,740
Minority interest in net (income)
loss of
consolidated subsidiaries .............. (1,989) (2,294) 1,532 (3,152) (2,742)
----------- ----------- ---------- ---------- ---------
Income (loss) before extraordinary
charge ................................. (81,635) (23,938) (238,311) 820 15,432
Extraordinary charge for early
retirement of debt (net of tax
benefit of $2,834) ..................... (4,433) -- -- -- --
----------- ----------- ---------- ---------- ---------
Net income (loss) ....................... $ (86,068) $ (23,938) $ (238,311) $ 820 $ 15,432
=========== =========== ========== ========== =========
EARNINGS (LOSS) PER SHARE(2):
Basic:
Income (loss) before extraordinary
charge(2) ............................. $ (1.34) $ (0.51)
Extraordinary charge ................... (0.08) --
----------- -----------
Net income (loss) ...................... $ (1.42) $ (0.51)
=========== ===========
Diluted:
Income (loss) before extraordinary
charge(2) ............................. $ (1.34) $ (0.51)
Extraordinary charge ................... (0.08) --
----------- -----------
Net income (loss) ...................... $ (1.42) $ (0.51)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING
USED TO COMPUTE:
Basic ................................... 60,673,994 46,949,355
Diluted ................................. 60,673,994 46,949,355
</TABLE>

18
<PAGE>

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------------- ---------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ----------- ------------- ----------- ----------- ------------ ------------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<S> <C> <C> <C> <C> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA(3) ............................ $ 194,232 $ 154,549 $ 223,548 $ 139,375 $ 147,221 $ 72,972 $ 77,662
Net cash provided by operating
activities .......................... 70,391 22,073 195,615 224,511 178,064 79,809 43,314
Net cash used in investing activities 211,705 39,260 99,683 67,142 76,094 45,821 49,941
Net cash provided by (used in)
financing activities ................ 112,155 (75,444) (136,242) (98,667) (12,614) (50,025) (30,705)
Capital expenditures ................. 53,947 34,784 76,378 51,899 51,792 42,096 33,196
International revenues as a % of
total revenues ...................... 45.8% 48.2% 49.1% 52.2% 53.3% 54.7% 53.6%
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
---------------------
1999
---------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Working capital (deficit)(4) ............ $ (110,191)
Total assets(5) ......................... 2,104,804
Total debt(6) ........................... 344,422
Mandatorily redeemable equity
securities(7) .......................... --
Total stockholders' equity (deficit) .... 289,571

<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)(4) ............ $ (216,888) $ (106,169) $ (196,509) $ 27,827 $ 72,651
Total assets(5) ......................... 1,635,119 1,537,807 1,598,812 1,226,581 1,118,846
Total debt(6) ........................... 63,925 351,051 267,238 230,831 256,032
Mandatorily redeemable equity
securities(7) .......................... -- 508,471 363,264 -- --
Total stockholders' equity (deficit) .... 114,969 (661,714) (480,033) (55,485) 69,982
</TABLE>
- ----------
(1) For a discussion of other charges and recapitalization-related charges for
the years ended December 31, 1998, 1997 and 1996, see notes 4, 6 and 9 to
the audited consolidated financial statements incorporated by reference in
this prospectus.

Earnings per share for 1996 and 1995 cannot be computed because Y&R's
capital structure prior to its recapitalization in 1996 consisted of both
common shares and limited partnership units in predecessor entities. For a
discussion of the recapitalization, see note 6 to the audited consolidated
financial statements incorporated by reference in this prospectus.

(3) EBITDA is defined as operating profit (loss) before depreciation and
amortization, other non-cash charges and recapitalization-related charges.
EBITDA is presented because it is a widely accepted financial indicator and
is generally consistent with the definition used for covenant purposes
contained in Y&R's credit facilities; however, EBITDA may not be comparable
to other registrants' calculation of EBITDA or similarly titled items. You
should not consider EBITDA to be an alternative to net income (loss) as a
measure of operating results in accordance with generally accepted
accounting principles or as an alternative to cash flows as a measure of
liquidity. EBITDA for the nine months ended September 30, 1998 and for the
1998 year is before $234,449 of non-cash compensation charges taken at the
time of our initial public offering in May 1998. EBITDA for 1997 and 1996 is
before $11,925 and $11,096, respectively, of non-cash charges primarily
related to impairment write-downs which are included in other charges. For a
discussion of other charges and recapitalization-related charges for the
years ended December 31, 1998, 1997 and 1996, see notes 4, 6 and 9 to the
audited consolidated financial statements incorporated by reference in this
prospectus.

(4) Working capital balances are significantly impacted by the seasonal media
spending patterns of advertisers, including the timing of payments made to
media and other suppliers on behalf of clients as well as the timing of cash
collection from clients to fund each expenditure.

(5) Total assets as of September 30, 1999 include net deferred tax assets of
$145,926 consisting primarily of federal, state and foreign net operating
loss carryforwards.

(6) Total debt includes current and non-current loans and installment notes,
which are discussed in notes 14 and 15 to the audited consolidated financial
statements incorporated by reference in this prospectus.

(7) From the date of completion of the recapitalization of Y&R in 1996 and
through the date of completion of the IPO, all outstanding shares of common
stock, exclusive of shares of common stock held in a restricted stock trust
under our restricted stock plan, were redeemable, subject to restrictions,
at the option of the stockholder. Accordingly, all of these shares of common
stock were recorded at their redemption values and classified as mandatorily
redeemable equity securities at December 31, 1997 and 1996. For a discussion
of the mandatorily redeemable equity securities, see note 17 to the audited
consolidated financial statements incorporated by reference in this
prospectus.

<PAGE>

SELLING STOCKHOLDERS

The following table sets forth the name of each selling stockholder and
information regarding the beneficial ownership of the common stock and options
to purchase common stock by the selling stockholders as of November 16, 1999,
and as adjusted to reflect the sale of shares of common stock in the offering.
The information in the table below has been calculated in accordance with Rule
13d-3 under the Securities Exchange Act of 1934 . Except as described below, the
persons named in the table have sole voting and investment power with respect to
all shares of common stock shown as beneficially owned by them.

In connection with the offering, the H&F investors have notified Y&R that
they intend to exercise options to purchase 2,530,260 shares of common stock for
a total exercise price of $19.4 million and to distribute all of the shares of
Y&R common stock owned by them, other than the shares to be sold by them in the
offering, to some of their limited partners and to individuals and entities that
control the H&F investors.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
---------------------------------- ------------------------------
SHARES AND SHARES SHARES AND
VESTED VESTED BEING VESTED VESTED
OPTIONS OPTIONS PERCENT OFFERED OPTIONS OPTIONS PERCENT
------------ ----------- --------- ----------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Hellman & Friedman Capital

Partners III, L.P.(1) ..................... 6,157,027 2,311,590 8.6% 4,749,971 -- -- --
H&F Orchard Partners III, L.P.(1) .......... 448,632 168,270 * 370,390 -- -- --
H&F International Partners III, L.P.(1)..... 134,561 50,400 * 111,082 -- -- --
</TABLE>
- ----------
* Less than one percent.

(1) Hellman & Friedman Capital Partners III, L.P., H&F Orchard Partners III,
L.P. and H&F International Partners III, L.P. have notified Y&R that they
intend to distribute an aggregate of 1,407,056, 78,242 and 23,479 shares of
common stock, respectively, to some of their limited partners and to
individuals and entities that control the H&F investors. The H&F investors
also intend to exercise all options to purchase shares of Y&R common stock
held by them on or before the date of the offering.

<PAGE>

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement, dated
November 17, 1999 (the "Underwriting Agreement"), the Underwriters named below
(the "Underwriters"), who are represented by Bear, Stearns & Co. Inc. ("Bear
Stearns"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Salomon
Smith Barney Inc. ("SSB"), Banc of America Securities LLC, Goldman, Sachs & Co.,
ING Barings LLC, Merrill Lynch & Co., Morgan Stanley & Co. Incorporated and
Thomas Weisel Partners LLC (the "Representatives"), have severally agreed to
purchase from the selling stockholders the respective number of shares of common
stock set forth opposite their names below.

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ------------------------------------------------------------------ -----------------
<S> <C>
Bear, Stearns & Co. Inc. ..................................... 1,046,987
Donaldson, Lufkin & Jenrette Securities Corporation .......... 1,046,986
Salomon Smith Barney Inc. .................................... 1,046,986
Banc of America Securities LLC ............................... 348,414
Goldman, Sachs & Co. ......................................... 348,414
ING Barings LLC .............................................. 348,414
Merrill Lynch, Pierce, Fenner & Smith Incorporated. .......... 348,414
Morgan Stanley & Co. Incorporated ............................ 348,414
Thomas Weisel Partners LLC. .................................. 348,414
---------
Total ...................................................... 5,231,443
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of common stock
offered by this prospectus are subject to approval by their counsel of legal
matters and to other conditions set forth in the Underwriting Agreement. The
Underwriters are obligated to purchase and accept delivery of all the shares of
common stock offered hereby, other than those shares covered by the
over-allotment option described below, if any are purchased.

The Underwriters initially propose to offer the shares of common stock in
part directly to the public at the initial public offering price set forth on
the cover page of this prospectus and in part to certain dealers including the
Underwriters, at that price less a concession not in excess of $0.94 per share.
The Underwriters may allow, and such dealers may re-allow, to certain other
dealers a concession not in excess of $0.10 per share. After the initial
offering of the common stock, the public offering price and other selling terms
may be changed by the Representatives at any time without notice. The
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

Each of Matthew R. Barger, John M. Pasquesi, Brian M. Powers, Thomas F.
Steyer, Marco W. Hellman, Mitchell R. Cohen, Joseph M. Niehaus, The Tully M.
Friedman 1997 Charitable Lead Annuity Trust, The Jackson Street Trust and The
Tully M. Friedman Revocable Trust is an affiliate of the H&F investors, to whom
the H&F investors will distribute shares of Y&R common stock in connection with
the offering. These individuals and entities will grant to the Underwriters an
option, exercisable within 30 days after the date of this prospectus, to
purchase from time to time, in whole or in part, up to an aggregate of 284,000
shares of common stock (consisting of 30,000, 50,000, 11,000, 64,000, 42,000,
15,000, 15,000, 12,000, 20,000 and 25,000 shares, respectively), at the public
offering price less underwriting discounts and commissions. The Underwriters may
exercise this option solely to cover over-allotments, if any, made in connection
with the offering. To the extent that the Underwriters exercise this option,
each Underwriter will become obligated, subject to certain conditions, to
purchase its pro rata portion of these additional shares based on the
Underwriter's percentage underwriting commitment in the offering as indicated in
the preceding table.

The following table shows the per share and total underwriting discounts
to be paid to the Underwriters by the selling stockholders. These amounts are
shown assuming both no

<PAGE>
exercise and full exercise of the Underwriters' over-allotment option.
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
------------- --------------
<S> <C> <C>
Per share .......... $ 1.56 $ 1.56
Total .............. 8,181,977 8,626,153
</TABLE>
Y&R and the selling stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect of those liabilities.

Y&R has agreed to pay expenses incurred by the selling stockholders in
connection with the offering, other than the underwriting discount. Y&R
estimates that the expenses that it will bear in connection with the offering
will total approximately $550,000.

Certain affiliates of the H&F investors, who upon completion of the
offering collectively will hold an aggregate of 1,313,484 shares, have agreed
not to:

o offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of common stock or
any securities convertible into or exercisable or exchangeable for
common stock; or

o enter into any swap or other arrangement that transfers all or a
portion of the economic consequences associated with the ownership
of any common stock (regardless of whether any of these transactions
are to be settled by the delivery of common stock, or such other
securities, in cash or otherwise) for a period of 90 days after the
date of this prospectus without the prior written consent of Bear
Stearns, DLJ and SSB.

In addition, during this period, certain affiliates of the H&F Investors
have agreed not to make any demand for, or exercise any right with respect to,
the registration of any shares of common stock or any securities convertible
into or exercisable or exchangeable for common stock without the prior written
consent of Bear Stearns, DLJ and SSB.

Other than in the United States, no action has been taken by Y&R, the
selling stockholders or the Underwriters that would permit a public offering of
the shares of common stock offered by this prospectus in any jurisdiction where
action for that purpose is required. The shares of common stock offered by this
prospectus may not be offered or sold, directly or indirectly, nor may this
prospectus or any other offering material or advertisements in connection with
the offer and sale of any such shares of common stock be distributed or
published in any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that jurisdiction.
Persons into whose possession this prospectus comes are advised to inform
themselves about and to observe any restrictions relating to the offering and
the distribution of this prospectus. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any shares of common stock
offered by this prospectus in any jurisdiction in which such an offer or a
solicitation is unlawful.

In order to facilitate the offering, the Underwriters participating in
the offering may engage in transactions that stabilize, maintain or otherwise
affect the price of the common stock during and after the offering.
Specifically, the Underwriters may over-allot or otherwise create a short
position in the common stock for their own account by selling more shares of
common stock than have been sold to them by the selling stockholders. The
Underwriters may elect to cover this short position by purchasing shares of
common stock in the open market or by exercising the over-allotment option
granted to the Underwriters. In addition, the Underwriters may stabilize or
maintain the price of the common stock by bidding for or purchasing shares of
common stock in the open market and may impose penalty bids, under which selling
concessions allowed to syndicate members or other broker-dealers participating
in the offering are reclaimed if shares previously distributed in the offering
are repurchased in connection with stabilization transactions or otherwise. The
effect of these transactions may be to stabilize the market price of the common
stock at a level above that which might otherwise prevail in the open market.
The imposition of a penalty bid may also affect the price of the common stock to
the

<PAGE>

extent that it discourages resales of the common stock. No representation is
made as to the magnitude or effect of any stabilization or other transactions.
These transactions, if commenced, may be discontinued at any time.

Thomas Weisel Partners LLC, one of the Representatives of the
underwriters, was organized and registered as a broker-dealer in December 1998.
Since December 1998, Thomas Weisel Partners LLC has been named as a lead or
co-manager on 79 filed public offerings of equity securities, of which 58 have
been completed, and has acted as a syndicate member in an additional 41 public
offerings of equity securities. Thomas Weisel Partners LLC does not have any
material relationship with us or any of our officers, directors or other
controlling persons, except with respect to its contractual relationship with us
pursuant to the underwriting agreement entered into in connection with this
offering.

Bear Stearns, DLJ and other Representatives from time to time perform
investment banking and other financial services for Y&R and its affiliates for
which they have received advisory or transaction fees, as applicable, plus
out-of-pocket expenses, of the nature and in amounts customary in the industry
for these financial services. Alan D. Schwartz, an Executive Vice President and
Head of the Investment Banking Department of Bear Stearns, is a member of Y&R's
board of directors.

LEGAL MATTERS

The validity of the shares of common stock offered by this prospectus
will be passed upon for Y&R by Cleary, Gottlieb, Steen & Hamilton, New York, New
York. Certain legal matters in connection with the offering will be passed upon
for the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York.

EXPERTS

The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of Young & Rubicam Inc. for the year
ended December 31, 1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

<PAGE>

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-3. This prospectus is a part of the registration statement
and does not contain all of the information set forth in the registration
statement. For further information with respect to Y&R and the common stock, you
should refer to the registration statement. Statements contained in this
prospectus as to the contents of any contract or other document referred to in
this prospectus are not necessarily complete. Where a contract or other document
is an exhibit to the registration statement, each of those statements is
qualified in all respects by the provisions of the exhibit, to which reference
is hereby made.

We are required to file annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission.
You may review the registration statement, as well as reports and other
information we have filed, without charge at the Commission's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies may also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates or at the Commission's web site
at http://www.sec.gov. These materials may also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005. For
further information on the operation of the public reference rooms, please call
1-800-SEC-0330. You may also review these statements at the regional offices of
the Commission at 7 World Trade Center, Suite 1300, New York, New York 10048 and
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois,
60661-2511.

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below.

o Y&R's Annual Report on Form 10-K for the year ended December 31,
1998;

o Y&R's Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1999, June 30, 1999 and September 30, 1999;

o The description of our common stock contained in Y&R's registration
statement (Registration No. 001-14093) on Form 8-A, and any
amendment or report filed for the purpose of updating that
description; and

o The description of our preferred share purchase rights contained in
Y&R's registration statement (Registration No. 001-14093) on Form
8-A, and any amendment or report filed for the purpose of updating
that description.

We also incorporate by reference any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the termination of the offering of common stock offered hereby.

We will provide without charge to each person, including any beneficial
owner, to whom this prospectus is delivered, upon written or oral request, a
copy of any or all of the documents incorporated by reference in this
prospectus, other than exhibits to those documents, unless the exhibits to those
documents are specifically incorporated by reference into those documents.
Requests for copies should be directed to Young & Rubicam Inc., 285 Madison
Avenue, New York, New York 10017, Attention: Investor Relations, telephone (212)
210-3000.

<PAGE>

================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ONLY THE SHARES OFFERED BY
THIS PROSPECTUS, BUT ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS
LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS
OF ITS DATE.

------------------------------------------------
TABLE OF CONTENTS
------------------------------------------------

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary ...................... 1
Risk Factors ............................ 7
Young & Rubicam Inc. .................... 14
Recent Developments ..................... 17
Use of Proceeds ......................... 17
Selected Consolidated Financial Data..... 18
Selling Stockholders .................... 20
Underwriting ............................ 21
Legal Matters ........................... 23
Experts ................................. 23
Available Information ................... 24
</TABLE>

================================================================================

YOUNG & RUBICAM INC.

5,231,443 SHARES
COMMON STOCK

--------------------------------
PROSPECTUS
--------------------------------

BEAR, STEARNS & CO. INC.

DONALDSON, LUFKIN & JENRETTE

SALOMON SMITH BARNEY

--------------------------------

BANC OF AMERICA SECURITIES LLC

GOLDMAN, SACHS & CO.

ING BARINGS

MERRILL LYNCH & CO.

MORGAN STANLEY DEAN WITTER

THOMAS WEISEL PARTNERS LLC

NOVEMBER 17, 1999
================================================================================