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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended: December 31, 1994 Commission File Number: 1-10551
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OMNICOM GROUP INC.
(Exact name of registrant as specified in its charter)
New York 13-1514814
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
437 Madison Avenue, New York, NY 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 415-3600
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, $.50 Par Value New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: NONE
Indicate by check mark 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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
At March 15, 1995, there were 36,115,328 shares of Common Stock
outstanding; the aggregate market value of the voting stock held by
nonaffiliates at March 15, 1995 was approximately $1,947,100,000.
Indicate the number of shares outstanding of each of the registrant's
classes of stock, as of the latest practicable date.
Class Outstanding at March 15, 1995
Common Stock, $.50 Par Value 36,115,328
Preferred Stock, $1.00 Par Value NONE
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Registrant's definitive proxy statement relating to its
annual meeting of shareholders scheduled to be held on May 22, 1995 are
incorporated by reference into Part III of this Report.
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OMNICOM GROUP INC.
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Index to Annual Report on Form 10-K
Year Ended December 31, 1994
Page
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PART I
Item 1. Business ..................................................................................... 1
Item 2. Properties.................................................................................... 4
Item 3. Legal Proceedings............................................................................. 5
Item 4. Submission of Matters to a Vote of Security Holders........................................... 5
Executive Officers of the Company....................................................................... 5
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters......................... 6
Item 6. Selected Financial Data....................................................................... 7
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................................... 7
Item 8. Financial Statements and Supplementary Data................................................... 10
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure........................................................................ 10
PART III
Item 10. Directors and Executive Officers of the Registrant............................................ 11
Item 11. Executive Compensation........................................................................ 11
Item 12. Security Ownership of Certain Beneficial Owners and Management................................ 11
Item 13. Certain Relationships and Related Transactions................................................ 11
The information called for by Items 10, 11, 12 and 13, to the extent not included in this document, is
incorporated herein by reference to such information to be included under the captions "Election of
Directors," "Executive Compensation," "Directors' Compensation" and "Certain Transactions with Management" in
the Company's definitive proxy statement which is expected to be filed by April 7, 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ............................. 12
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PART I
Item 1. Business
Omnicom Group Inc., through its wholly and partially-owned companies
(hereinafter collectively referred to as the "Agency" or "Company"), operates
advertising agencies which plan, create, produce and place advertising in
various media such as television, radio, newspaper and magazines. The Agency
offers its clients such additional services as marketing consultation, consumer
market research, design and production of merchandising and sales promotion
programs and materials, direct mail advertising, corporate identification, and
public relations. The Agency offers these services to clients worldwide on a
local, national, pan-regional or global basis. Operations cover the major
regions of North America, the United Kingdom, Continental Europe, the Middle
East, Africa, Latin America, the Far East and Australia. In 1994 and 1993, 54%
and 52%, respectively, of the Agency's billings came from its non-U.S.
operations. (See "Financial Statements and Supplementary Data")
According to the unaudited industry-wide figures published in the trade
journal, Advertising Age, in 1994 Omnicom Group Inc. was ranked as the third
largest advertising agency group worldwide.
The Agency operates three separate, independent agency networks: The BBDO
Worldwide Network, the DDB Needham Worldwide Network and the TBWA International
Network. The Agency also operates independent agencies, Altschiller & Company
and Goodby, Silverstein & Partners, and certain marketing service and specialty
advertising companies through Diversified Agency Services ("DAS").
The BBDO Worldwide, DDB Needham Worldwide and TBWA International Networks
General
BBDO Worldwide, DDB Needham Worldwide and TBWA International, by themselves
and through their respective subsidiaries and affiliates, independently operate
advertising agency networks worldwide. Their primary business is to create
marketing communications for their clients' goods and services across the total
spectrum of advertising and promotion media. Each of the agency networks has its
own clients and competes with each other in the same markets.
The BBDO Worldwide, DDB Needham Worldwide and TBWA International agencies
typically assign to each client a group of advertising specialists which may
include account managers, copywriters, art directors and research, media and
production personnel. The account manager works with the client to establish an
overall advertising strategy for the client based on an analysis of the client's
products or services and its market. The group then creates and arranges for the
production of the advertising and/or promotion and purchases time, space or
access in the relevant media in accordance with the client's budget.
BBDO Worldwide Network
The BBDO Worldwide Network operates in the United States through BBDO
Worldwide which is headquartered in New York and has full-service offices in New
York, New York; Los Angeles and San Francisco, California; Atlanta, Georgia;
Chicago, Illinois; Detroit, Michigan; and Minneapolis, Minnesota.
The BBDO Worldwide Network operates internationally through subsidiaries in
Austria, Belgium, Brazil, Canada, China, Croatia, Denmark, Finland, France,
Germany, Greece, Hong Kong, Italy, Malaysia, Mexico, the Netherlands, Peru,
Poland, Portugal, Puerto Rico, Russia, Singapore, Spain, Sweden, Taiwan,
Thailand and the United Kingdom; and through affiliates located in Argentina,
Australia, Chile, Costa Rica, the Czech Republic, Egypt, El Salvador, Guatemala,
Honduras, Hungary, India, Israel, Lebanon, Kuwait, New Zealand, Norway, Panama,
the Philippines, Romania, Saudi Arabia, the Slovak Republic, Switzerland,
Turkey, the United Kingdom, United Arab Emirates and Venezuela; and through a
joint venture in Japan. The BBDO Worldwide Network uses the services of
associate agencies in Colombia, Dominican Republic, Ecuador, Indonesia, Korea,
Nicaragua, Pakistan and Uruguay.
DDB Needham Worldwide Network
The DDB Needham Worldwide Network operates in the United States through DDB
Needham Worldwide which is headquartered in New York and has full-service
offices in New York, New York; Los Angeles, California; Dallas, Texas; Chicago,
Illinois; and Seattle, Washington; and through Griffin Bacal Inc. which is
headquartered in New York.
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The DDB Needham Worldwide Network operates internationally through
subsidiaries in Australia, Austria, Belgium, Bulgaria, Canada, China, the Czech
Republic, Denmark, France, Germany, Greece, Hong Kong, Hungary, Italy, Japan,
Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal,
Singapore, the Slovak Republic, Spain, Sweden, Taiwan, Thailand and the United
Kingdom; and through affiliates located in Brazil, Costa Rica, Egypt, Estonia,
Finland, Germany, India, Korea, Malaysia, Switzerland and Thailand. The DDB
Needham Worldwide Network uses the services of associate agencies in Miami,
Florida and in Argentina, Bahrain, Belize, Bolivia, Chile, Colombia, Dominican
Republic, Ecuador, El Salvador, Guatemala, Honduras, Indonesia, Ireland, Israel,
Kuwait, Lebanon, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Romania,
Russia, Saudi Arabia, Slovenia, South Africa, Trinidad, Turkey, United Arab
Emirates, Uruguay and Venezuela. Griffin Bacal Inc. operates internationally
through subsidiaries in Canada and the United Kingdom and through a branch in
Mexico.
TBWA International Network
TBWA International B.V., a corporation organized under the laws of the
Netherlands, is the holding company for the TBWA International Network.
The TBWA International Network operates in the United States through TBWA
Advertising and Graf Bertel Buczek which are both headquartered in New York, New
York and through TBWA Wolfe Freeman Advertising, Inc. in St. Louis, Missouri.
The TBWA International Network operates internationally through
subsidiaries in Belgium, Denmark, France, Germany, Greece, Italy, the
Netherlands, South Africa, Spain and the United Kingdom; and through affiliates
located in Mexico, Portugal, South Africa, Sweden and Switzerland. The TBWA
International Network uses the services of associate agencies in Austria, the
Czech Republic, Hungary, India, Japan, the Middle East, the Netherlands, Norway,
Poland and Turkey.
Diversified Agency Services
DAS is the Company's Marketing Services and Specialty Advertising division
whose agencies' mission is to provide customer driven marketing communications
coordinated to the client's benefit. The division offers marketing services
including sales promotion, public relations, direct and database marketing,
corporate and brand identity, graphic arts, merchandising/point-of-purchase
promotion; and specialty advertising including financial, healthcare and
recruitment advertising.
DAS agencies headquartered in the United States include: Harrison, Star,
Wiener & Beitler, Inc., Interbrand Schechter Inc., Kallir, Philips, Ross, Inc.,
RC Communications, Inc., Merkley Newman Harty Inc., Lyons/Lavey/Nickel/Swift,
Inc. and Shain Colavito Pensabene Direct, Inc., in New York; Doremus & Company,
Gavin Anderson & Company Worldwide, Inc., Porter Novelli, Inc., Bernard Hodes
Advertising, Inc. and Rapp Collins Worldwide Inc., all in various cities and
headquartered in New York; Baxter, Gurian & Mazzei, Inc., in Beverly Hills,
California; Frank J. Corbett, Inc., in Chicago, Illinois; Thomas A. Schutz Co.,
Inc. in Morton Grove, Illinois; The GMR Group, in Fort Washington, Pennsylvania;
Optima Direct Inc., in Vienna, Virginia; Rainoldi, Kerzner & Radcliffe, Inc., in
San Francisco, California and Alcone Sims O'Brien, Inc., in Irvine, California
and Mahwah, New Jersey.
DAS operates in the United Kingdom through subsidiaries which include
Colour Solutions Ltd., Countrywide Communications Group Ltd., CPM International
Ltd., European Political Consultancy Group Ltd., Granby Marketing Services Ltd.,
Interbrand (UK) Ltd., MacMillan Davies Advertising, Ltd., MacMillan Davies
Consultants, Ltd., Paling Ellis/KPR, Ltd., Premier Magazines Ltd., Product Plus
London Ltd., Specialist Publications (UK) Ltd., The Anvil Consultancy Ltd. and
WWAV Rapp Collins Group, Ltd.
In addition, DAS operates internationally with subsidiaries and affiliates
in Australia, Belgium, Canada, France, Germany, Hong Kong, Ireland, Italy,
Japan, Korea, Mexico, South Africa and Spain.
Omnicom Group Inc.
As the parent company of BBDO Worldwide, DDB Needham Worldwide, TBWA
International, the DAS Group, Goodby, Silverstein & Partners and Altschiller &
Company, the Company, through its wholly-owned subsidiary Omnicom Management
Inc. provides a common financial and administrative base for the operating
groups. The Company oversees the operations of each group through regular
meetings with their respective top-level management. The Company sets
operational goals for each of the groups and evaluates performance through the
2
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review of monthly operational and financial reports. The Company provides its
groups with centralized services designed to coordinate financial reporting and
controls, real estate planning and to focus corporate development objectives.
The Company develops consolidated services for its agencies and their clients.
For example, the Company participated in forming The Media Partnership, which
consolidates certain media buying activities in Europe in order to obtain cost
savings for clients.
Clients
The clients of the Agency include major industrial, financial and service
industry companies as well as smaller, local clients. Among its clients are
Anheuser-Busch, Apple Computer, Chrysler Corporation, Delta Airlines, Gillette,
GTE, Henkel, McDonald's, PepsiCo., Visa U.S.A., Volkswagen and The Wm. Wrigley
Jr. Company.
The Agency's ten largest clients accounted for approximately 18% of 1994
billings. The majority of these have been clients for more than ten years. The
Agency's largest client accounted for less than 5% of 1994 billings.
Revenues
Commissions charged on media billings are the primary source of revenues
for the Agency. Commission rates are not uniform and are negotiated with the
client. In accordance with industry practice, the media source typically bills
the Agency for the time or space purchased and the Agency bills its client for
this amount plus the commission. The Agency typically requires that payment for
media charges be received from the client before the Agency makes payments to
the media. In some instances a member of the Omnicom Group, like other
advertising agencies, is at risk in the event that its client is unable to pay
the media.
The Agency's advertising networks also generate revenues in arranging for
the production of advertisements and commercials. Although, as a general matter,
the Agency does not itself produce the advertisements and commercials, the
Agency's creative and production staff directs and supervises the production
company. The Agency bills the client for production costs plus a commission. In
some circumstances, certain production work is done by the Agency's personnel.
In some cases, fees are generated in lieu of commissions. Several different
fee arrangements are used depending on client and individual agency needs. In
general, fee charges relate to the cost of providing services plus a markup. The
DAS Group primarily charges fees for its various specialty services, which vary
in type and scale, depending upon the service rendered and the client's
requirements.
Advertising agency revenues are dependent upon the marketing requirements
of clients and tend to be highest in the second and fourth quarters of the
fiscal year.
Other Information
For additional information concerning the contribution of international
operations to commissions and fees and net income see Note 5 of the Notes to
Consolidated Financial Statements.
The Agency is continuously developing new methods of improving its research
capabilities, to analyze specific client requirements and to assess the impact
of advertising. In the United States, approximately 146 people on the Agency's
staff were employed in research during the year and the Agency's domestic
research expenditures approximated $20,395,000. Substantially all such expenses
were incurred in connection with contemporaneous servicing of clients.
The advertising business is highly competitive and accounts may shift
agencies with comparative ease, usually on 90 days' notice. Clients may also
reduce advertising budgets at any time for any reason. An agency's ability to
compete for new clients is affected in some instances by the policy, which many
advertisers follow, of not permitting their agencies to represent competitive
accounts in the same market. As a result, increasing size may limit an agency's
potential for securing certain new clients. In the vast majority of cases,
however, the separate, independent identities of BBDO Worldwide, DDB Needham
Worldwide, TBWA International, the independent agencies within the DAS Group,
Goodby, Silverstein & Partners and Altschiller & Company have enabled the Agency
to represent competing clients.
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BBDO Worldwide, DDB Needham Worldwide, TBWA International, the DAS Group,
Goodby, Silverstein & Partners and Altschiller & Company have sought, and as
part of the Agency's operating segments will seek, new business by showing
potential clients examples of advertising campaigns produced and by explaining
the variety of related services offered. The Agency competes in the United
States and internationally with a multitude of full service and special service
agencies. In addition to the usual risks of the advertising agency business,
international operations are subject to the risk of currency exchange
fluctuations, exchange control restrictions and to actions of governmental
authorities.
Employees
The business success of the Agency is, and will continue to be, highly
dependent upon the skills and creativity of its creative, research, media and
account personnel and their relationships with clients. The Agency believes its
operating groups have established reputations for creativity and marketing
expertise which attract, retain and stimulate talented personnel. There is
substantial competition among advertising agencies for talented personnel and
all agencies are vulnerable to adverse consequences from the loss of key
individuals. Employees are generally not under employment contracts and are free
to move to competitors of the Agency. The Company believes that its compensation
arrangements for its key employees, which include stock options, restricted
stock and retirement plans, are highly competitive with those of other
advertising agencies. As of December 31, 1994, the Agency, excluding
unconsolidated companies, employed approximately 16,100 persons, of which
approximately 6,700 were employed in the United States and approximately 9,400
were employed in its international offices.
Government Regulation
The advertising business is subject to government regulation, both within
and outside the United States. In the United States, federal, state and local
governments and their agencies and various consumer groups have directly or
indirectly affected or attempted to affect the scope, content and manner of
presentation of advertising. The continued activity by government and by
consumer groups regarding advertising may cause further change in domestic
advertising practices in the coming years. While the Company is unable to
estimate the effect of these developments on its U.S. business, management
believes the total volume of advertising in general media in the United States
will not be materially reduced due to future legislation or regulation, even
though the form, content, and manner of presentation of advertising may be
modified. In addition, the Company will continue to ensure that its management
and operating personnel are aware of and are responsive to the possible
implications of such developments.
Item 2. Properties
Substantially all of the Company's offices are located in leased premises.
The Company has continued a program to consolidate leased premises. Management
has obtained subleases for most of the premises vacated. Where appropriate,
management has established reserves for the difference between the cost of the
leased premises that were vacated and anticipated sublease income.
Domestic
The Company's corporate office occupies approximately 25,000 sq. ft. of
space at 437 Madison Avenue, New York, New York under a lease expiring in the
year 2010.
BBDO Worldwide occupies approximately 285,000 sq. ft. of space at 1285
Avenue of the Americas, New York, New York under a lease expiring in the year
2012, which includes options for additional growth of the agency.
DDB Needham Worldwide occupies approximately 162,000 sq. ft. of space at
437 Madison Avenue, New York, New York under leases expiring in the year 2010,
which include options for additional growth of the agency.
TBWA International occupies approximately 61,000 sq. ft. of space at 292
Madison Avenue, New York, New York under a lease expiring in the year 2005,
which includes options for additional growth of the agency.
The Agency's other full-service offices in Atlanta, Beverly Hills, Chicago,
Dallas, Detroit, Irvine, Los Angeles, Mahwah, Minneapolis, Morton Grove, New
York, San Francisco, Seattle and St. Louis and service offices at various other
locations occupy approximately 1,798,000 sq. ft. of space under leases with
varying expiration dates.
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International
The Company's international subsidiaries in Australia, Austria, Belgium,
Canada, China, the Czech Republic, Denmark, Finland, France, Germany, Greece,
Hong Kong, Hungary, Ireland, Italy, Japan, Malaysia, Mexico, the Netherlands,
New Zealand, Norway, the Philippines, Poland, Portugal, Puerto Rico, Singapore,
the Slovak Republic, South Africa, Spain, Sweden, Taiwan, Thailand and the
United Kingdom occupy premises under leases with various expiration dates.
Item 3. Legal Proceedings
The Agency has no material pending legal proceedings, other than ordinary
routine litigation incidental to its business.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the last
quarter of 1994.
Executive Officers of the Company
The individuals named below are Executive Officers of the Company:
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Name Position Age
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Bruce Crawford.............. President, Chief Executive Officer of Omnicom Group Inc. 66
Fred J. Meyer .............. Chief Financial Officer of Omnicom Group Inc. 64
Dennis E. Hewitt............ Treasurer of Omnicom Group Inc. 50
Dale A. Adams............... Controller of Omnicom Group Inc. 36
Raymond E. McGovern......... Secretary, General Counsel of Omnicom Group Inc. 67
Allen Rosenshine............ Chairman, Chief Executive Officer of BBDO Worldwide Inc. 56
James A. Cannon ............ Vice Chairman, Chief Financial Officer of BBDO Worldwide Inc. 56
Keith L. Reinhard........... Chairman, Chief Executive Officer of DDB Needham Worldwide Inc. 60
William G. Tragos........... Chairman, Chief Executive Officer of TBWA International B.V. 60
John D. Wren................ Chairman, Chief Executive Officer of Diversified Agency Services 42
</TABLE>
Dennis E. Hewitt was promoted to Treasurer of the Companyicn Jof BByO
Worldwide Inc. 56 James A. Cannon ............ Vice Chairman, Chief Financial
Offid to Controller of the Company in July 1992. Mr. Adams joined the Company in
July 1991 after ten years with Coopers & Lybrand, where he served as a general
practice manager from 1987 until joining the Company.
Raymond E. McGovern has served as Secretary and General Counsel of the
Company since September 1986, having previously served as Secretary and General
Counsel of BBDO Worldwide Inc. (then named BBDO International, Inc.) for more
than 10 years.
Similar information with respect to the remaining Executive Officers of the
Company will be found in the Company's definitive proxy statement expected to be
filed April 7, 1995.
The Executive Officers of the Company are elected annually following the
Annual Meeting of the Shareholders of their respective employers.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Price Range of Common Stock and Dividend History
The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "OMC". The table below shows the range of reported last sale prices
on the New York Stock Exchange Composite Tape for the Company's common stock for
the periods indicated and the dividends paid per share on the common stock for
such periods.
Dividends Paid
Per Share of
High Low Common Stock
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1993
First Quarter ..................... 47 1/2 38 3/8 $ .310
Second Quarter .................... 47 1/4 38 1/4 .310
Third Quarter ..................... 46 1/4 37 .310
Fourth Quarter .................... 46 1/2 41 1/2 .310
1994
First Quarter ..................... 49 7/8 43 3/4 .310
Second Quarter .................... 49 1/2 44 7/8 .310
Third Quarter ..................... 51 1/2 48 .310
Fourth Quarter .................... 53 3/4 49 .310
The Company is not aware of any restrictions on its present or future
ability to pay dividends. However, in connection with certain borrowing
facilities entered into by the Company and its subsidiaries (see Note 7 of the
Notes to Consolidated Financial Statements), the Company is subject to certain
restrictions on its current ratio, the ratio of net cash flow to consolidated
indebtedness, and the ratio of total consolidated indebtedness to total
consolidated capitalization.
On January 23, 1995 the Board of Directors declared a regular quarterly
dividend of $.31 per share of common stock, payable April 4, 1995 to holders of
record on March 20, 1995.
Approximate Number of Equity Security Holders
Approximate Number of
Record Holders
Title of Class on March 15, 1995
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Common Stock, $.50 par value.......................... 2,557
Preferred Stock, $1.00 par value ..................... None
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Item 6. Selected Financial Data
The following table sets forth selected financial data of the Company and
should be read in conjunction with the consolidated financial statements which
begin on page F-1.
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(Dollars in Thousands Except Per Share Amounts)
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1994 1993 1992 1991 1990
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For the year:
Commissions and fees................... $1,756,205 $1,516,475 $1,385,161 $1,236,158 $1,178,233
Income before change
in accounting principles............. 108,134 85,345 65,498 57,052 52,009
Net income ............................ 80,125 85,345 69,298 57,052 52,009
Earnings per common share before
change in accounting principles:
Primary.............................. 3.15 2.79 2.31 2.08 2.01
Fully diluted........................ 3.07 2.62 2.20 2.01 1.94
Cumulative effect of change in
accounting principles:
Primary.............................. (0.81) -- 0.14 -- --
Fully diluted........................ (0.81) -- 0.11 -- --
Earnings per common share after
change in accounting principles:
Primary.............................. 2.34 2.79 2.45 2.08 2.01
Fully diluted........................ 2.34 2.62 2.31 2.01 1.94
Dividends declared per common
share................................ 1.24 1.24 1.21 1.10 1.07
At year end:
Total assets........................... 2,852,204 2,289,863 1,951,950 1,885,894 1,748,529
Long-term obligations:
Long-term debt....................... 187,338 278,312 235,129 245,189 278,960
Deferred compensation and
other liabilities................... 95,973 56,933 51,919 31,355 25,365
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
In 1994, domestic revenues from commissions and fees increased 11.4
percent. The effect of acquisitions, net of divestitures, accounted for a 1.4
percent increase. The remaining 10.0 percent increase was due to net new
business gains and higher spending from existing clients.
In 1993, domestic revenues from commissions and fees increased 9.0 percent.
The effect of acquisitions, net of divestitures, accounted for a 3.9 percent
increase. The remaining 5.1 percent increase was due to net new business gains
and higher spending from existing clients.
In 1992, domestic revenues increased 2 percent, primarily as a result of
net new business gains and higher spending from existing clients.
In 1994, international revenues increased 20.3 percent. The effect of
acquisitions, net of divestitures, accounted for an 8.7 percent increase in
international revenues. The weakening of the U.S. dollar increased international
revenues by 2.3 percent. The remaining 9.3 percent increase was due to net new
business gains and higher spending from existing clients.
In 1993, international revenues increased 10.0 percent. The effect of the
acquisition of TBWA International B.V. and several marketing services companies
in the United Kingdom, net of divestitures, accounted for an 18.1 percent
increase in international revenues. The strengthening of the U.S. dollar against
several major international currencies relevant to the Company's non-U.S.
operations decreased revenues by 11.7 percent. The increase in revenues, due to
net new business gains and higher spending from existing clients, was 3.6
percent.
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In 1992, international revenues increased 25 percent, of which the effect
of the acquisition of McKim Baker Lovick BBDO in Canada and the purchase of
additional shares in several companies which were previously affiliates of the
Company accounted for 14 percent. The remaining increase was due to net new
business gains and higher spending from existing clients. Currency exchange
rates did not significantly impact the revenues for the year.
In 1994, worldwide operating expenses increased 15.2 percent. Acquisitions,
net of divestitures during the year, accounted for a 5.4 percent increase in
worldwide operating expenses. The weakening of the U.S dollar increased
worldwide operating expenses by 1.2 percent. The remaining increase was caused
by normal salary increases and growth in out-of-pocket expenditures to service
the increased revenue base. Net currency exchange gains did not significantly
impact operating expenses for the year.
In 1993, worldwide operating expenses increased 8.8 percent. Acquisitions,
net of divestitures during the year, accounted for an 11.7 percent increase in
worldwide operating expenses. The strengthening of the U.S. dollar against
several international currencies decreased worldwide operating expenses by 5.9
percent. The remaining increase was caused by normal salary increases and growth
in out-of-pocket expenditures to service the increased revenue base. Net
currency exchange gains did not significantly impact operating expenses for the
year.
In 1992, worldwide operating expenses increased 12.5 percent. Acquisitions,
net of divestitures during the year, accounted for 5.0 percent of the increase.
The special charge accounted for 0.5 percent of the increase. The remaining
increase was caused by normal salary increases and growth in out-of-pocket
expenditures to service the increased revenue base. Net currency exchange gains
did not significantly impact total operating expenses for the year.
Interest expense in 1994 decreased by $6.4 million. This decrease reflects
lower average borrowings and interest rates on borrowings, primarily due to the
conversion of the Company's 6.5% Convertible Subordinated Debentures in July
1994 and the full year effect of the conversion of the Company's 7% Convertible
Subordinated Debentures in October 1993. Interest and dividend income decreased
by $2.7 million in 1994. This decrease was primarily due to lower average funds
invested during the year and declining interest rates in certain countries.
Interest expense in 1993 was comparable to 1992. Interest and dividend
income decreased in 1993 by $2.2 million. This decrease was primarily due to
lower average amounts of cash and marketable securities invested during the year
and lower average interest rates on amounts invested.
Interest expense in 1992 was comparable to 1991. Interest and dividend
income decreased by $1.4 million in 1992. This decrease was primarily due to
lower average funds invested during the year and declining interest rates in
certain countries.
In 1994, the effective tax rate decreased to 40.9 percent. The decrease
reflects a lower international effective tax rate primarily caused by fewer
international operating losses with no associated tax benefit and tax planning
strategies implemented in certain non-U.S. countries.
In 1993, the effective tax rate decreased to 42.0 percent. This decrease
primarily reflects a lower international effective tax rate caused by fewer
international operating losses with no associated tax benefit, partially offset
by an increased domestic federal tax rate.
In 1992, the effective tax rate of 43.6 percent was comparable to the 1991
effective tax rate of 44 percent.
In 1994, consolidated net income before the change in accounting principle
increased by 26.7 percent. This increase was the result of revenue growth,
margin improvement and an increase in equity income, partially offset by an
increase in minority interest expense. Operating margin, which excludes net
interest expense, increased to 11.7 percent in 1994 from 11.2 percent in 1993.
This increase was the result of greater growth in commission and fee revenue
than the growth in operating expenses. The increase in equity income was
primarily due to the acquisition of certain minority interests and improved net
income at companies which are less than 50 percent owned. The increase in
minority interest expense was primarily due to greater earnings by companies
where minority interests exist and the additional minority interests resulting
from acquisitions. In 1994, the incremental impact of divestitures, net of
acquisitions, accounted for a 1.7 percent decrease in consolidated net income,
while the weakening of the U.S dollar against several international currencies
increased consolidated net income by 1.1 percent.
8
<PAGE>
In 1993, consolidated net income increased 23.2 percent. This increase is
the result of revenue growth, margin improvement, an increase in equity income
and a decrease in minority interest expense. Operating margin increased to 11.2
percent in 1993 from 10.6 percent in 1992. This increase was the result of
greater growth in commission and fee revenue than the growth in operating
expenses. The increase in equity income was the result of improved net income at
companies which are less than 50 percent owned. The decrease in minority
interest expense was primarily due to the acquisition of certain minority
interests in 1993 and lower earnings by companies in which minority interests
exist. In 1993, the incremental impact of acquisitions, net of divestitures,
accounted for 0.8 percent of the increase in consolidated net income, while the
strengthening of the U.S. dollar against several international currencies
decreased consolidated net income by 5.7 percent.
Consolidated net income increased 21 percent in 1992. This increase was the
result of revenue growth and margin improvement. Operating margin, after the
first quarter special charge discussed below, decreased to 10.6 percent in 1992
from 10.9 percent in 1991. This decrease was the result of the special charge
offset by greater growth in commissions and fees than the growth in operating
expenses. In 1992, the incremental impact of acquisitions, net of divestitures,
accounted for 6 percent of the increase in consolidated net income.
At December 31, 1994, accounts receivable increased by $238.4 million from
December 31, 1993. This increase was primarily due to acquisitions and an
increased volume of activity resulting from business growth.
At December 31, 1994, accounts payable increased by $367.7 million from
December 31, 1993. This increase was primarily due to acquisitions, an increased
volume of activity resulting from business growth, and differences in the dates
on which payments to media and other suppliers became due in 1994 compared to
1993.
At December 31, 1992, the translation, into U.S. dollars, of the assets and
liabilities of the Company's international subsidiaries decreased cumulative
translation adjustment by $70.9 million compared to December 31, 1991. This
decrease was primarily the result of a stronger U.S. dollar exchange rate for
certain international currencies at December 31, 1992 as compared to December
31, 1991.
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 112 "Employers' Accounting for
Postemployment Benefits." The cumulative after tax effect of the adoption of
this statement decreased net income by $28.0 million.
In 1992, the Company adopted two new accounting principles which had a net
favorable cumulative after tax effect of $3.8 million. At the same time, the
Company recorded a special charge to provide for future losses related to
certain leased property. The combination of the favorable impact of the adoption
of the new accounting principles and the after tax impact of the special charge
had no effect on 1992 consolidated net income.
The Company's international operations are subject to the risk of currency
exchange rate fluctuations. This risk is generally limited to the net income of
the operations as the revenues and expenses of the operations are generally
denominated in the same currency. When economically beneficial to do so, the
Company or its international operations enter into hedging transactions to
minimize the risk of adverse currency exchange rate fluctuations on the net
income of the operation. The Company's major international markets are the
United Kingdom, France, Germany, the Netherlands, Spain, Italy and Canada. The
Company's operations are also subject to the risk of interest rate fluctuations.
As part of managing the Company's exposure to changes in currency exchange
and market interest rates, the Company periodically enters into derivative
financial instruments with major well known banks acting as principal
counterparty.
In order to minimize counterparty risk, the Company only enters into
derivative contracts with major well known banks that have credit ratings equal
to or better than the Company's. Additionally, these contracts contain
provisions for net settlement. As such, the contracts settle based on the spread
between the currency rates and interest rates contained in the contracts and the
current market rates. This minimizes the risk of an insolvent counterparty being
unable to pay the Company and, at the same time, having the creditors of the
counterparty demanding the notional principal amount from the Company.
The Company's derivative activities are limited in volume and confined to
risk management activities related to the Company's worldwide operations. A
reporting system is in place which evaluates the impact on the Company's
earnings resulting from changes in interest rates, currency exchange rates and
other relevant market risks. This system is structured to enable senior
management to initiate prompt remedial action, if appropriate.
9
<PAGE>
At December 31, 1994, the Company had forward exchange contracts
outstanding with an aggregate notional principal amount of $346 million, most of
which were denominated in the Company's major international market currencies.
These contracts effectively hedge certain of the Company's assets and
liabilities which are recorded in a currency different from that in which they
will settle. The terms of these contracts are generally three months or less.
The Company had no other derivative contracts outstanding at December 31,
1994.
At December 31, 1993, the Company had entered into various cross currency
interest rate swap transactions. The notional principal amount of these swap
transactions totaled $70.6 million comprising contracts denominated in German
Deutsche Marks, French Francs, Australian Dollars and Spanish Pesetas. The swaps
were principally used to reduce the Company's risk related to currency
fluctuations and to convert the effective interest rate on borrowings of certain
international subsidiaries from fixed rates to a lower floating U.S. interest
rate. In addition, the Company had one U.S. dollar interest rate swap
outstanding at December 31, 1993 with a notional principal amount of $50
million, for the purpose of converting a portion of the floating U.S. interest
rates mentioned previously to fixed interest rates. These contracts were closed
out during 1994 for a gain of $2.4 million which is being amortized into income
over the original term of the swap agreements.
The current economic conditions in the Company's major markets would
indicate varying growth rates in advertising expenditures in 1995. The Company
anticipates relatively favorable growth rates in its major international
markets.
Capital Resources and Liquidity
Cash and cash equivalents increased $53 million during 1994 to $228 million
at December 31, 1994. The Company's positive net cash flow provided by operating
activities was enhanced by an improvement in the relationship between the
collection of accounts receivable and the payment of obligations to media and
other suppliers. After annual cash outlays for dividends paid to shareholders
and minority interests and the repurchase of the Company's common stock for
employee programs, the balance of the cash flow was used to fund acquisitions,
make capital expenditures and repay debt obligations.
On June 1, 1994, the Company issued a Notice of Redemption for its 6.5%
Convertible Subordinated Debentures due 2004. Prior to the July 27,1994
redemption date, debenture holders elected to convert all of their outstanding
debentures into common stock of the Company at a conversion price of $28.00 per
common share.
The Company maintains relationships with a number of banks worldwide, which
have extended unsecured committed lines of credit in amounts sufficient to meet
the Company's cash needs. At December 31, 1994, the Company had $370 million in
committed lines of credit, comprised of a $250 million revolving credit
agreement expiring on June 30, 1997 and $120 million in unsecured credit lines,
principally outside of the United States. Of the $370 million in committed
lines, $32 million were used at December 31, 1994. Management believes the
aggregate lines of credit available to the Company are adequate to support its
short-term cash requirements for dividends, capital expenditures and maintenance
of working capital.
On January 4, 1995, an indirect wholly-owned subsidiary of the Company
issued Deutsche Mark 200 million Floating Rate Bonds (approximately $130
million), due January 5, 2000. The bonds bear interest at a per annum rate equal
to Deutsche Mark three month LIBOR plus 0.65%.
The Company anticipates that the year end cash position, together with the
future cash flows from operations and funds available under existing credit
facilities and borrowings will be adequate to meet its long-term cash
requirements as presently contemplated.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data required by this item
appear beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
10
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to the directors of the Company is incorporated by
reference to the Company's definitive proxy statement expected to be filed by
April 7, 1995. Information regarding the Company's executive officers is set
forth in Part I of this Form 10-K.
Item 11. Executive Compensation
Incorporated by reference to the Company's definitive proxy statement
expected to be filed by April 7, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference to the Company's definitive proxy statement
expected to be filed by April 7, 1995.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to the Company's definitive proxy statement
expected to be filed by April 7, 1995.
11
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
<TABLE>
<CAPTION>
Page
----
<S> <C>
(a) 1. Financial Statements:
Report of Management............................................................................. F-1
Report of Independent Public Accountants......................................................... F-2
Consolidated Statements of Income for the three years ended December 31, 1994.................... F-3
Consolidated Balance Sheets at December 31, 1994 and 1993........................................ F-4
Consolidated Statements of Shareholders' Equity for the three years
ended December 31, 1994........................................................................ F-5
Consolidated Statements of Cash Flows for the three years
ended December 31, 1994........................................................................ F-6
Notes to Consolidated Financial Statements....................................................... F-7
Quarterly Results of Operations (Unaudited)...................................................... F-18
2. Financial Statement Schedules:
For the three years ended December 31, 1994:
Schedule VIII--Valuation and Qualifying Accounts............................................... S-1
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements
or notes thereto.
3. Exhibits:
(3)(i) Articles of Incorporation.
Incorporated by reference to the 1986 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 31,
1987.
(ii) By-laws.
Incorporated by reference to the 1987 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 31,
1988.
(4) Instruments Defining the Rights of Security Holders, Including
Indentures.
4.1 Copy of Registrant's 4.5%/6.25% Step-Up Convertible Subordinated
Debentures due 2000, filed as Exhibit 4.3 to Omnicom Group
Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993, is incorporated herein by reference.
4.2 Copy of Subscription Agreement, dated December 14, 1994 by and
among the Registrant, BBDO Canada Inc. and Morgan Stanley GMBH
and the other Managers listed therein, in connection with the
issuance of DM 200,000,000 Floating Rate Bonds of 1995 due
January 5, 2000 of BBDO Canada Inc., including form of Guaranty
by Registrant.
4.3 Paying Agency Agreement dated January 4, 1995 by and among the
Registrant, BBDO Canada Inc. and Morgan Stanley GMBH in
connection with the issuance of DM 200,000,000 Floating Rate
Bonds of 1995 due January 5, 2000 of BBDO Canada Inc.
12
<PAGE>
(10) Material Contracts.
Management Contracts, Compensatory Plans, Contracts or
Arrangements.
10.1 Standard Form of Severance Compensation Agreement incorporated
by reference to BBDO International Inc.'s Form S-1 Registration
Statement filed with the Securities and Exchange Commission on
September 28, 1973, is incorporated herein by reference.
10.2 Copy of Registrant's 1987 Stock Plan, filed as Exhibit 10.26 to
Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, is incorporated herein by
reference.
10.3 Copy of Registrant's Profit-Sharing Retirement Plan dated May
16, 1988, filed as Exhibit 10.24 to Omnicom Group Inc.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1988,
is incorporated herein by reference.
10.4 Copy of Employment Agreement dated March 20, 1989, between Peter
I. Jones and Boase Massimi Pollitt plc, filed as Exhibit 10.22
to Omnicom Group Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, is incorporated herein by
reference.
10.5 Standard Form of the Registrant's 1988 Executive Salary
Continuation Plan Agreement, filed as Exhibit 10.24 to Omnicom
Group Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, is incorporated herein by reference.
10.6 Standard Form of the Registrant's Indemnification Agreement with
members of Registrant's Board of Directors, filed as Exhibit
10.25 to Omnicom Group Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, is incorporated herein by
reference.
10.7 Copy of DDB Needham Worldwide Joint Savings Plan, effective as
of May 1, 1989, filed as Exhibit 10.26 to Omnicom Group Inc.'s
Annual Report on Form 10-K for the fiscal year ended December
31, 1989, is incorporated herein by reference.
10.8 Amendment to Registrant's Profit-Sharing Retirement Plan, listed
as Exhibit 10.3 above, adopted February 4, 1991, filed as
Exhibit 10.28 to Omnicom Group Inc.'s Annual Report on Form 10-K
for the fiscal year ended December 31, 1990, is incorporated
herein by reference.
10.9 Amendment to Registrant's Profit-Sharing Retirement Plan listed
as Exhibit 10.3 above, adopted on December 7, 1992, filed as
Exhibit 10.13 to Omnicom Group Inc.'s Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, is incorporated
herein by reference.
10.10 Amendment to Registrant's Profit-Sharing Retirement Plan listed
as Exhibit 10.3 above, adopted on July 1, 1993, filed as Exhibit
10.10 to Omnicom Group Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, incorporated herein by
reference.
10.11 Copy of Severance Agreement dated July 6, 1993, between Keith
Reinhard and DDB Needham Worldwide Inc., filed as Exhibit 10.11
to Omnicom Group Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, incorporated herein by
reference.
10.12 Copy of Employment Agreement dated May 26, 1993, between William
G. Tragos and TBWA International B.V., filed as Exhibit 10.13 to
Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, incorporated herein by reference.
10.13 Copy of Deferred Compensation Agreement dated October 12, 1984,
between William G. Tragos and TBWA Advertising Inc., filed as
Exhibit 10.14 to Omnicom Group Inc.'s Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, incorporated herein
by reference.
13
<PAGE>
10.14 Amendments to Registrant's 1987 Stock Plan, listed as Exhibit
10.2 above, approved by the Registrant's shareholders on May 24,
1994.
Other Material Contracts.
10.15 Copy of $250,000,000 Second Amended and Restated Credit
Agreement, dated as of July 15, 1994, between Omnicom Finance
Inc., Swiss Bank Corporation and the financial institutions
party thereto, filed as Exhibit 10.16 to Omnicom Group Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994, is incorporated herein by reference.
(21) Subsidiaries of the Registrant......................... S-2
(23) Consents of Experts and Counsel.
23.1 Consent of Independent Public Accountants.............. S-12
(24) Powers of Attorney from Bernard Brochand, Robert J. Callander,
Leonard S. Coleman, Jr., John R. Purcell, Gary L. Roubos,
Quentin I. Smith, Jr., Robin B. Smith, and Egon P. S. Zehnder.
(27) Financial Data Schedule (filed in electronic format only).
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of the year
ended December 31, 1994.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
OMNICOM GROUP INC.
Date: March 28, 1995
By: /s/ FRED J. MEYER
-------------------------------
Fred J. Meyer
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ BRUCE CRAWFORD President and Chief March 28, 1995
-------------------------------------------- Executive Officer and Director
(Bruce Crawford)
/s/ FRED J. MEYER Chief Financial Officer March 28, 1995
-------------------------------------------- and Director
(Fred J. Meyer)
/S/ DALE A. ADAMS Controller (Principal March 28, 1995
-------------------------------------------- Accounting Officer)
(Dale A. Adams)
/s/ RAYMOND E. MCGOVERN Secretary and General March 28, 1995
-------------------------------------------- Counsel
(Raymond E. McGovern)
/s/ BERNARD BROCHAND* Director March 28, 1995
--------------------------------------------
(Bernard Brochand)
/s/ ROBERT J. CALLANDER* Director March 28, 1995
--------------------------------------------
(Robert J. Callander)
/s/ JAMES A. CANNON Director March 28, 1995
--------------------------------------------
(James A. Cannon)
/s/ LEONARD S. COLEMAN, JR.* Director March 28, 1995
--------------------------------------------
(Leonard S. Coleman, Jr.)
/s/ PETER I. JONES Director March 28, 1995
--------------------------------------------
(Peter I. Jones)
/s/ JOHN R. PURCELL* Director March 28, 1995
--------------------------------------------
(John R. Purcell)
/s/ KEITH L. REINHARD Director March 28, 1995
--------------------------------------------
(Keith L. Reinhard)
/s/ ALLEN ROSENSHINE Director March 28, 1995
--------------------------------------------
(Allen Rosenshine)
/s/ GARY L. ROUBOS* Director March 28, 1995
--------------------------------------------
(Gary L. Roubos)
/s/ QUENTIN I. SMITH, JR.* Director March 28, 1995
--------------------------------------------
(Quentin I. Smith, Jr.)
/s/ ROBIN B. SMITH* Director March 28, 1995
--------------------------------------------
(Robin B. Smith)
/s/ WILLIAM G. TRAGOS Director March 28, 1995
--------------------------------------------
(William G. Tragos)
/s/ JOHN D. WREN Director March 28, 1995
--------------------------------------------
(John D. Wren)
/s/ EGON P.S. ZEHNDER* Director March 28, 1995
--------------------------------------------
(Egon P.S. Zehnder)
*By /s/ BRUCE CRAWFORD
--------------------------------------------
Bruce Crawford
Attorney-in-fact
</TABLE>
15
<PAGE>
REPORT OF MANAGEMENT
The management of Omnicom Group Inc. is responsible for the integrity of
the financial data reported by Omnicom Group and its subsidiaries. Management
uses its best judgment to ensure that the financial statements present fairly,
in all material respects, the consolidated financial position and results of
operations of Omnicom Group. These financial statements have been prepared in
accordance with generally accepted accounting principles.
The system of internal controls of Omnicom Group, augmented by a program of
internal audits, is designed to provide reasonable assurance that assets are
safeguarded and records are maintained to substantiate the preparation of
accurate financial information. Underlying this concept of reasonable assurance
is the premise that the cost of control should not exceed the benefits derived
therefrom.
The financial statements have been audited by independent public
accountants. Their report expresses an independent informed judgment as to the
fairness of management's reported operating results and financial position. This
judgment is based on the procedures described in the second paragraph of their
report.
The Audit Committee meets periodically with representatives of financial
management, internal audit and the independent public accountants to assure that
each is properly discharging their responsibilities. In order to ensure complete
independence, the Audit Committee communicates directly with the independent
public accountants, internal audit and financial management to discuss the
results of their audits, the adequacy of internal accounting controls and the
quality of financial reporting.
/s/ BRUCE CRAWFORD /s/ FRED J. MEYER
-------------------------------------- -----------------------------------
Bruce Crawford Fred J. Meyer
President and Chief Executive Officer Chief Financial Officer
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Omnicom Group Inc.:
We have audited the accompanying consolidated balance sheets of Omnicom
Group Inc. (a New York corporation) and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Omnicom Group Inc. and
subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
As discussed in Note 13 to the consolidated financial statements, effective
January 1, 1994, the Company changed its methods of accounting for
postemployment benefits and certain investments in debt and equity securities.
Effective January 1, 1992, the Company changed its methods of accounting for
income taxes and postretirement benefits other than pensions.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule on page S-1 is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
February 20, 1995
F-2
<PAGE>
<TABLE>
<CAPTION>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
(Dollars in Thousands
Except Per Share Data)
--------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
COMMISSIONS AND FEES.......................................... $ 1,756,205 $1,516,475 $1,385,161
OPERATING EXPENSES:
Salaries and Related Costs............................... 1,009,069 879,808 798,189
Office and General Expenses.............................. 542,538 467,468 433,884
Special Charge........................................... -- -- 6,714
--------- --------- ---------
1,551,607 1,347,276 1,238,787
--------- --------- ---------
OPERATING PROFIT.............................................. 204,598 169,199 146,374
NET INTEREST EXPENSE:
Interest and Dividend Income............................. (11,928) (14,628) (16,810)
Interest Paid or Accrued................................. 34,770 41,203 40,888
--------- --------- ---------
22,842 26,575 24,078
--------- --------- ---------
INCOME BEFORE INCOME TAXES
AND CHANGE IN ACCOUNTING
PRINCIPLES................................................. 181,756 142,624 122,296
INCOME TAXES.................................................. 74,337 59,871 53,268
--------- --------- ---------
INCOME AFTER INCOME TAXES AND BEFORE
CHANGE IN ACCOUNTING PRINCIPLES............................. 107,419 82,753 69,028
EQUITY IN AFFILIATES.......................................... 18,322 13,180 9,598
MINORITY INTERESTS............................................ (17,607) (10,588) (13,128)
--------- --------- ---------
INCOME BEFORE CHANGE IN
ACCOUNTING PRINCIPLES....................................... 108,134 85,345 65,498
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLES....................................... (28,009) -- 3,800
--------- --------- ---------
NET INCOME.................................................... $ 80,125 $ 85,345 $ 69,298
========= ========= =========
NET INCOME PER COMMON SHARE:
Income Before Change in
Accounting Principles:
Primary................................................. $ 3.15 $ 2.79 $ 2.31
Fully Diluted........................................... $ 3.07 $ 2.62 $ 2.20
Cumulative Effect of Change
in Accounting Principles:
Primary................................................. $ (0.81) -- $ 0.14
Fully Diluted........................................... $ (0.81) -- $ 0.11
Net Income:
Primary................................................. $ 2.34 $ 2.79 $ 2.45
Fully Diluted........................................... $ 2.34 $ 2.62 $ 2.31
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
December 31,
(Dollars in Thousands)
--------------------------
1994 1993
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................................... $ 228,251 $ 174,833
Investments available-for-sale, at market, which approximates cost........... 28,383 38,003
Accounts receivable, less allowance for doubtful accounts of
$19,278 and $17,298 (Schedule VIII)...................................... 1,139,882 901,434
Billable production orders in process, at cost............................... 65,115 59,415
Prepaid expenses and other current assets.................................... 140,304 100,791
---------- ----------
Total Current Assets....................................................... 1,601,935 1,274,476
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost, less
accumulated depreciation and amortization of $221,491 and $188,868........... 172,153 160,543
INVESTMENTS IN AFFILIATES ...................................................... 164,524 112,232
INTANGIBLES, less accumulated amortization of $133,572 and $93,105............... 758,460 603,494
DEFERRED TAX BENEFITS............................................................ 21,104 18,522
DEFERRED CHARGES AND OTHER ASSETS ............................................... 134,028 120,596
---------- ----------
$2,852,204 $2,289,863
========== ==========
L I A B I L I T I E S A N D S H A R E H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES:
Accounts payable............................................................. $1,425,829 $1,058,095
Current portion of long-term debt............................................ 3,576 21,892
Bank loans .................................................................. 8,939 26,155
Advance billings............................................................. 148,036 90,422
Other accrued taxes.......................................................... 63,025 32,953
Other accrued liabilities.................................................... 274,308 254,378
Accrued taxes on income...................................................... 51,667 29,974
Dividends payable............................................................ 11,262 10,349
---------- ----------
Total Current Liabilities.................................................. 1,986,642 1,524,218
---------- ----------
LONG-TERM DEBT ................................................................. 187,338 278,312
DEFERRED COMPENSATION AND OTHER LIABILITIES ..................................... 95,973 56,933
MINORITY INTERESTS .............................................................. 41,549 28,214
COMMITMENTS AND CONTINGENT LIABILITIES (Note 10)
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 7,500,000 shares authorized, none
issued................................................................... -- --
Common stock, $.50 par value, 75,000,000 shares authorized,
38,643,165 and 35,071,932 shares issued in 1994 and 1993, respectively... 19,322 17,536
Additional paid-in capital................................................... 356,199 252,408
Retained earnings............................................................ 325,321 287,416
Unamortized restricted stock................................................. (25,631) (21,807)
Cumulative translation adjustment............................................ (27,671) (65,257)
Treasury stock, at cost, 2,511,187 and 1,901,977 shares in 1994 and
1993, respectively....................................................... (106,838) (68,110)
---------- ----------
Total Shareholders' Equity.............................................. 540,702 402,186
---------- ----------
$2,852,204 $2,289,863
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
F-4
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
Common Stock Additional Unamortized Cumulative Total
---------------------- Paid-in Retained Restricted Translation Treasury Shareholders'
Shares Par Value Capital Earnings Stock Adjustment Stock Equity
---------- --------- -------- --------- ----------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1991, as
previously reported........... 30,221,806 $15,111 $153,548 $219,181 $(10,977) $ 33,037 $(43,682) $366,218
Pooling of interests adjustment.. 159,720 80 91 (6,062) (5,891)
---------- ------- -------- -------- -------- --------- -------- --------
Balance January 1, 1992, as
restated...................... 30,381,526 15,191 153,639 213,119 (10,977) 33,037 (43,682) 360,327
Net income....................... 69,298 69,298
Dividends declared............... (33,628) (33,628)
Amortization of restricted shares 5,993 5,993
Shares issued under employee
stock plans................... 1,227 (10,323) 16,691 7,595
Shares issued for acquisitions... 150,168 75 220 295
Retirement of shares............. (143,101) (71) (3,416) 3,487 --
Cumulative translation adjustment (70,906) (70,906)
Repurchases of shares............ (30,082) (30,082)
---------- ------- -------- -------- -------- --------- -------- -------
Balance December 31, 1992, as
previously reported........... 30,388,593 15,195 155,086 245,373 (15,307) (37,869) (53,586) 308,892
Pooling of interests adjustment.. 1,349,260 674 124 (6,309) (1,834) (7,345)
---------- ------- -------- -------- -------- --------- -------- -------
Balance January 1, 1993, as
restated...................... 31,737,853 15,869 155,210 239,064 (15,307) (39,703) (53,586) 301,547
Net income....................... 85,345 85,345
Dividends declared............... (36,993) (36,993)
Amortization of restricted shares 7,096 7,096
Shares issued under employee
stock plans................... 5,709 (13,596) 15,413 7,526
Shares issued for acquisitions... 7,303 21,948 29,251
Conversion of 7% Debentures...... 3,334,079 1,667 84,186 85,853
Cumulative translation adjustment (25,554) (25,554)
Repurchases of shares............ (51,885) (51,885)
---------- ------- -------- -------- -------- --------- -------- -------
Balance December 31, 1993........ 35,071,932 17,536 252,408 287,416 (21,807) (65,257) (68,110) 402,186
Net income....................... 80,125 80,125
Dividends declared............... (42,220) (42,220)
Amortization of restricted shares 9,535 9,535
Shares issued under employee
stock plans................... 4,474 (13,359) 16,796 7,911
Shares issued for acquisitions... 1,103 11,932 13,035
Conversion of 6.5% Debentures.... 3,571,233 1,786 98,214 100,000
Cumulative translation adjustment 37,586 37,586
Repurchases of shares............ (67,456) (67,456)
---------- ------- -------- -------- -------- --------- -------- --------
Balance December 31, 1994........ 38,643,165 $19,322 $356,199 $325,321 $(25,631) $(27,671) $(106,838) $540,702
========== ======= ======== ======== ======== ======== ========= ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-5
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in Thousands)
---------------------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income ................................................................ $ 80,125 $ 85,345 $ 69,298
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of tangible assets ........................ 37,767 34,574 33,706
Amortization of intangible assets ....................................... 25,012 18,950 16,102
Minority interests ...................................................... 17,342 10,588 13,128
Earnings of affiliates in excess of dividends received .................. (10,484) (6,823) (3,765)
(Increase) decrease in deferred taxes ................................... (6,443) 2,197 (921)
Provisions for losses on accounts receivable ............................ 7,864 4,742 2,545
Amortization of restricted shares ....................................... 9,535 7,096 5,993
Increase in accounts receivable ......................................... (138,031) (35,416) (29,360)
Decrease (increase) in billable production .............................. 2,439 6,665 (8,318)
(Increase) decrease in other current assets ............................. (27,564) 19,949 (12,011)
Increase in accounts payable ............................................ 262,403 73,389 81,697
Increase (decrease) in other accrued liabilities ........................ 54,989 (3,498) 26,185
Increase (decrease) in accrued taxes on income .......................... 16,457 1,918 (3,830)
Other ................................................................... 7,814 (10,479) (8,753)
-------- --------- ---------
Net Cash Provided By Operating Activities .................................... 339,225 209,197 181,696
-------- --------- ---------
Cash Flows From Investing Activities:
Capital Expenditures ...................................................... (38,529) (33,646) (34,881)
Payments for purchases of equity interests in subsidiaries
and affiliates, net of cash acquired .................................... (150,660) (80,577) (59,651)
Proceeds from sales of equity interests in subsidiaries and
affiliates .............................................................. 499 558 1,840
Payments for purchases of investments available-for-sale
and other investments ................................................... (8,153) (49,733) (5,353)
Proceeds from sales of investments available-for-sale
and other investments ................................................... 24,149 17,396 30,504
-------- --------- ---------
Net Cash Used In Investing Activities ........................................ (172,694) (146,002) (67,541)
-------- --------- ---------
Cash Flows From Financing Activities:
Net repayments under lines of credit ...................................... (21,931) (14,167) (9,302)
Proceeds from issuances of debt obligations ............................... 33,293 147,283 7,836
Repayment of principal of debt obligations ................................ (28,832) (31,980) (41,371)
Share transactions under employee stock plans ............................. 7,911 7,526 7,594
Dividends and loans to minority stockholders .............................. (8,061) (8,033) (9,128)
Dividends paid ............................................................ (41,307) (35,470) (32,623)
Purchase of treasury shares ............................................... (67,456) (51,885) (30,082)
-------- --------- ---------
Net Cash (Used in) Provided by Financing Activities .......................... (126,383) 13,274 (107,076)
-------- --------- ---------
Effect of exchange rate changes on cash and cash
equivalents ............................................................. 13,270 (14,095) (8,331)
-------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents ......................... 53,418 62,374 (1,252)
Cash and Cash Equivalents At Beginning of Period ............................. 174,833 112,459 113,711
-------- --------- ---------
Cash and Cash Equivalents At End of Period ................................... $ 228,251 $ 174,833 $ 112,459
========= ========= =========
Supplemental Disclosures:
Income taxes paid .......................................................... $ 66,480 $ 58,893 $ 58,292
========= ========= =========
Interest paid .............................................................. $ 26,972 $ 38,290 $ 32,729
========= ========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-6
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Recognition of Commission and Fee Revenue. Substantially all revenues are
derived from commissions for placement of advertisements in various media and
from fees for manpower and for production of advertisements. Revenue is
generally recognized when billed. Billings are generally rendered upon
presentation date for media, when manpower is used, when costs are incurred for
radio and television production and when print production is completed.
Principles of Consolidation. The accompanying consolidated financial
statements include the accounts of Omnicom Group Inc. and its domestic and
international subsidiaries (the "Company"). All significant intercompany
balances and transactions have been eliminated.
Reclassifications. Certain prior year amounts have been reclassified to
conform with the 1994 presentation.
Billable Production. Billable production orders in process consist
principally of costs incurred in producing advertisements and marketing
communications for clients. Such amounts are generally billed to clients when
costs are incurred for radio and television production and when print production
is completed.
Treasury Stock. The Company accounts for treasury share purchases at cost.
The reissuance of treasury shares is accounted for at the average cost. Gains or
losses on the reissuance of treasury shares are generally accounted for as
additional paid-in capital.
Foreign Currency Translation. The Company's financial statements were
prepared in accordance with the requirements of Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation." Under this method,
net transaction gains of $4.0 million, $5.0 million and $8.1 million are
included in 1994, 1993 and 1992 net income, respectively.
Earnings Per Common Share. Primary earnings per share is based upon the
weighted average number of common shares and common share equivalents
outstanding during each year. Fully diluted earnings per share is based on the
above and if dilutive, adjusted for the assumed conversion of the Company's
Convertible Subordinated Debentures and the assumed increase in net income for
the after tax interest cost of these debentures. For the year ended December 31,
1994 the 4.5%/6.25% Step-Up Convertible Subordinated Debentures were assumed to
be converted for the full year; and the 6.5% Convertible Subordinated Debentures
were assumed to be converted through July 27, 1994, when they were converted
into common stock. For the year ended December 31, 1993, the 6.5% Convertible
Subordinated Debentures were assumed to be converted for the full year; the 7%
Convertible Subordinated Debentures were assumed to be converted through October
8, 1993 when they were converted into common stock; and the 4.5%/6.25% Step-Up
Convertible Subordinated Debentures were assumed to be converted from their
September 1, 1993 issuance date. For the year ended December 31, 1992, the 6.5%
and 7% Convertible Subordinated Debentures were assumed to be converted for the
full year. The number of shares used in the computations were as follows:
1994 1993 1992
---- ---- ----
Primary EPS computation .......... 34,369,200 30,607,900 28,320,400
Fully diluted EPS computation .... 38,949,600 37,563,500 35,332,400
For purposes of computing fully diluted earnings per share on net income
and the cumulative effect of the change in accounting principle, for the year
ended December 31, 1994, the Company's Convertible Subordinated Debentures were
not reflected in the computations as their inclusion would have been
anti-dilutive.
Severance Agreements. Arrangements with certain present and former
employees provide for continuing payments for periods up to 10 years after
cessation of their full-time employment in consideration for agreements by the
employees not to compete and to render consulting services in the post
employment period. Such payments, which are determined, subject to certain
conditions and limitations, by earnings in subsequent periods, are expensed in
such periods.
F-7
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Depreciation of Furniture and Equipment and Amortization of Leasehold
Improvements. Depreciation charges are computed on a straight-line basis or
declining balance method over the estimated useful lives of furniture and
equipment, up to 10 years. Leasehold improvements are amortized on a
straight-line basis over the lesser of the terms of the related lease or the
useful life of these assets.
Intangibles. Intangibles represent acquisition costs in excess of the fair
value of tangible net assets of purchased subsidiaries. Intangibles are
amortized on a straight-line basis over periods not exceeding forty years. Each
year, the intangibles are written off if, and to the extent, they are determined
to be impaired. Intangibles are considered to be impaired if the future
anticipated undiscounted income of the subsidiary is less than the net
unamortized cost of the intangibles.
Deferred Taxes. Deferred tax liabilities and tax benefits relate to the
recognition of certain revenues and expenses in different years for financial
statement and tax purposes.
Cash Flows. The Company's cash equivalents are primarily comprised of
investments in short-term interest-bearing deposits and money market instruments
with maturity dates of three months or less.
The following supplemental schedule summarizes the fair value of assets
acquired, cash paid, common shares issued and the liabilities assumed in
conjunction with the acquisition of equity interests in subsidiaries and
affiliates, for each of the three years ended December 31:
(Dollars in thousands)
1994 1993 1992
---- ---- ----
Fair value of non-cash assets acquired .... $265,865 $287,177 $173,974
Cash paid, net of cash acquired ........... (150,660) (80,577) (59,651)
Common shares issued ...................... (13,035) (21,906) 5,596
-------- -------- --------
Liabilities assumed ....................... $102,170 $184,694 $119,919
======== ======== ========
During 1994, the Company issued 3,571,233 shares of common stock upon
conversion of $100 million of its 6.5% Convertible Subordinated Debentures.
During 1993, the Company issued 3,334,079 shares of common stock upon conversion
of $85.9 million of its 7% Convertible Subordinated Debentures.
Concentration of Credit Risk. The Company provides advertising and
marketing services to a wide range of clients who operate in many industry
sectors around the world. The Company grants credit to all qualified clients,
but does not believe it is exposed to any undue concentration of credit risk to
any significant degree.
Derivative Financial Instruments. Gains and losses on derivative financial
instruments which are hedges of existing assets or liabilities are included in
the carrying amount of those assets or liabilities and are ultimately recognized
in income as part of those carrying amounts. Interest received and/or paid
arising from swap agreements which qualify as hedges are recognized in income
when the interest is receivable or payable. Derivative financial instruments
which do not qualify as hedges are revalued to the current market rate and any
gains or losses are recorded in income in the current period.
2. Acquisitions
During 1994 the Company made several acquisitions within the advertising
industry whose aggregate cost, in cash or by issuance of the Company's common
stock, totaled $190.4 million for net assets, which included intangible assets
of $221.5 million. Due to the nature of the advertising industry, companies
acquired generally have minimal tangible net assets. The majority of the
purchase price is paid for ongoing client relationships and other intangibles.
Included in both figures are contingent payments related to prior year
acquisitions totaling $32.2 million.
Pro forma combined results of operations of the Company as if the
acquisitions had occurred on January 1, 1993 do not materially differ from the
reported amounts in the consolidated statements of income for each of the two
years in the period ended December 31, 1994.
Certain acquisitions entered into in 1994 and prior years require payments
in future years if certain results are achieved. Formulas for these contingent
future payments differ from acquisition to acquisition. Contingent future
payments are not expected to be material to the Company's results of operations
or financial position.
F-8
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In May 1993, the Company completed its acquisition of a third agency
network, TBWA International B.V. The acquisition was accounted for as a pooling
of interests and, accordingly, the results of operations for TBWA International
B.V. have been included in these consolidated financial statements since January
1, 1993. Prior year consolidated financial statements were not restated as the
impact on such years was not material.
3. Bank Loans and Lines of Credit
Bank loans generally resulted from bank overdrafts of international
subsidiaries which are treated as loans pursuant to bank agreements. The
weighted average interest rate on the borrowings outstanding as of December 31,
1994 and 1993 was 9.1% and 6.5%. At December 31, 1994 and 1993, the Company had
unsecured committed lines of credit aggregating $370 million and $359 million,
respectively. The unused portion of credit lines was $338 million and $332
million at December 31, 1994 and 1993, respectively. The lines of credit are
generally extended at the banks' lending rates to their most credit worthy
borrowers. Material compensating balances are not required within the terms of
these credit agreements.
At December 31, 1993, the committed lines of credit included $200 million
under a two and one-half year revolving credit agreement. Due to the long term
nature of this credit agreement, borrowings under the agreement would be
classified as long-term debt. As of July 15, 1994, the $200 million revolving
credit agreement was replaced by a $250 million revolving credit agreement
expiring June 30, 1997. Borrowings under this credit agreement would also be
classified as long-term debt. There were no borrowings under these revolving
credit agreements at December 31, 1994 and 1993.
These revolving credit agreements include a facility for issuing commercial
paper backed by a bank letter of credit. During the years ended December 31,
1994, 1993 and 1992, the Company issued commercial paper with an average
original maturity of 33, 32 and 31 days, respectively. The Company had no
commercial paper borrowings outstanding as of December 31, 1994, 1993, and 1992.
The maximum outstanding during the year was $230 million, $194 million and $120
million, in 1994, 1993, and 1992, respectively. The gross amount of issuance and
redemption during the year was $1,587 million, $1,337 million and $1,012 million
in 1994, 1993 and 1992, respectively.
4. Employee Stock Plans
Under the terms of the Company's 1987 Stock Plan, as amended (the "1987
Plan"), 4,750,000 shares of common stock of the Company are reserved for
restricted stock awards and non-qualified stock options to key employees of the
Company.
Under the terms of the 1987 Plan, the option price may not be less than
100% of the market value of the stock at the date of the grant. Options become
exercisable 30% on each of the first two anniversary dates of the grant date
with the final 40% becoming exercisable three years from the grant date.
Under the 1987 Plan, 305,000, 285,000 and 242,500 non-qualified options
were granted in 1994, 1993 and 1992, respectively.
A summary of changes in outstanding options for the three years ended
December 31, 1994 is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Shares under option (at prices ranging
from $16.875 to $40.0625) --
Beginning of year................................ 1,072,400 998,000 1,043,900
Options granted (at prices ranging from
$35.0625 to $48.4375)............................. 305,000 285,000 242,500
Options exercised (at prices ranging
from $16.875 to $40.0625)......................... (183,400) (197,800) (274,200)
Options forfeited.................................... -- (12,800) (14,200)
--------- --------- ---------
Shares under option (at prices ranging
from $16.875 to $48.4375) -- End of year.......... 1,194,000 1,072,400 998,000
========= ========= =========
Shares exercisable................................... 633,750 562,650 443,400
Shares reserved...................................... 928,221 1,502,882 589,422
</TABLE>
F-9
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Under the 1987 Plan, 314,580 shares, 337,200 shares and 314,775 shares of
restricted stock of the Company were awarded in 1994, 1993 and 1992,
respectively.
All restricted shares granted under the 1987 Plan were sold at a price per
share equal to their par value. The difference between par value and market
value on the date of the sale is charged to shareholders' equity and then
amortized to expense over the period of restriction. Under the 1987 Plan, the
restricted shares become transferable to the employee in 20% annual increments
provided the employee remains in the employ of the Company.
Restricted shares may not be sold, transferred, pledged or otherwise
encumbered until the restrictions lapse. Under most circumstances, the employee
must resell the shares to the Company at par value if the employee ceases
employment prior to the end of the period of restriction. A summary of changes
in outstanding shares of restricted stock for the three years ended December 31,
1994 is as follows:
Years Ended December 31,
----------------------------------
1994 1993 1992
---- ---- ----
Beginning balance........................ 740,436 629,752 619,024
Amount granted......................... 314,580 337,200 314,775
Amount vested.......................... (230,603) (201,712) (278,942)
Amount forfeited....................... (42,331) (24,804) (25,105)
------- ------- --------
Ending balance........................... 782,082 740,436 629,752
======= ======= =======
The charge to operations in connection with these restricted stock awards
for the years ended December 31, 1994, 1993 and 1992 amounted to $9.5 million,
$7.1 million and $6.0 million, respectively.
5. Segment Reporting
The Company operates advertising agencies and offers its clients additional
marketing services and specialty advertising through its wholly-owned and
partially-owned businesses. A summary of the Company's operations by geographic
area as of December 31, 1994, 1993 and 1992, and for the years then ended is
presented below:
(Dollars in Thousands)
United
States International Consolidated
--------- ------------- ------------
1994
Commissions and Fees.............. $ 858,575 $ 897,630 $1,756,205
Operating Profit ................. 108,482 96,116 204,598
Net Income ....................... 32,593 47,532 80,125
Identifiable Assets............... 1,004,698 1,847,506 2,852,204
1993
Commissions and Fees.............. $ 770,611 $ 745,864 $1,516,475
Operating Profit ................. 92,095 77,104 169,199
Net Income ....................... 40,814 44,531 85,345
Identifiable Assets............... 827,032 1,462,831 2,289,863
1992
Commissions and Fees.............. $ 706,902 $ 678,259 $1,385,161
Operating Profit.................. 70,558 75,816 146,374
Net Income........................ 33,223 36,075 69,298
Identifiable Assets............... 675,508 1,276,442 1,951,950
F-10
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Investments in Affiliates
The Company has approximately 45 unconsolidated affiliates accounted for
under the equity method. The equity method is used when the Company has an
ownership of less than 50% and exercises significant influence over the
operating and financial policies of the affiliate. The following table
summarizes the balance sheets and income statements of the Company's
unconsolidated affiliates, primarily in Europe, Australia and Asia, as of
December 31, 1994, 1993, 1992, and for the years then ended:
(Dollars in Thousands)
1994 1993 1992
---- ---- ----
Current assets....................... $1,208,976 $308,741 $312,423
Non-current assets................... 146,899 73,772 64,901
Current liabilities.................. 1,196,807 235,389 259,508
Non-current liabilities.............. 162,328 29,596 8,302
Minority interests................... 9,699 1,149 1,110
Gross revenues....................... 568,171 290,814 288,416
Costs and expenses................... 451,688 238,039 243,661
Net income........................... 86,001 33,574 27,752
The increase in the summarized balance sheets and income statements of the
Company's unconsolidated affiliates in 1994 is due to the growth of the
Company's existing equity affiliates and the inclusion of Aegis Group plc, in
which the Company had acquired a minority interest. The Company's equity in the
net income of these affiliates amounted to $18.3 million, $13.2 million and $9.6
million for 1994, 1993 and 1992, respectively. The Company's equity in the net
tangible assets of these affiliated companies was approximately $65.8 million,
$58.1 million and $56.2 million at December 31, 1994, 1993 and 1992,
respectively. Included in the Company's investments in affiliates is the excess
of acquisition costs over the fair value of tangible net assets acquired. These
acquisition costs are being amortized on a straight-line basis over periods not
exceeding forty years.
7. Long-Term Debt
Long-term debt outstanding as of December 31, 1994 and 1993 consisted of
the following:
<TABLE>
<CAPTION>
(Dollars in Thousands)
1994 1993
---- ----
<S> <C> <C>
4.5%/6.25% Step-Up Convertible Subordinated Debentures with a
scheduled maturity in 2000.............................................. $143,750 $ 143,750
6.5% Convertible Subordinated Debentures with a scheduled maturity
in 2004................................................................. -- 100,000
Cross currency fixed to floating rate swaps, at floating LIBOR rates,
maturing at various dates through 1997 (Note 12)........................ -- 11,435
Sundry notes and loans payable to banks and others at rates from
6% to 25%, maturing at various dates through 2004...................... 47,164 35,518
Loan Notes, at various rates with a scheduled maturity in 1994............. -- 9,501
-------- --------
190,914 300,204
Less current portion....................................................... 3,576 21,892
-------- --------
Total long-term debt..................................................... $187,338 $278,312
======== ========
</TABLE>
F-11
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During the third quarter of 1993, the Company issued $143,750,000 of
4.5%/6.25% Step-Up Convertible Subordinated Debentures with a scheduled maturity
in 2000. The average annual interest rate through the year 2000 is 5.42%. The
debentures are convertible into common stock of the Company at a conversion
price of $54.88 per share subject to adjustment in certain events. The
debentures are not redeemable prior to September 1, 1996. Thereafter, the
Company may redeem the debentures initially at 102.984% and at decreasing prices
thereafter to 100% at maturity, in each case together with accrued interest. The
debentures also may be repaid at the option of the holder at anytime prior to
September 1, 2000 if there is a Fundamental Change, as defined in the debenture
agreement, at the repayment prices set forth in the debenture agreement, subject
to adjustment, together with accrued interest.
On June 1, 1994, the Company issued a Notice of Redemption for its 6.5%
Convertible Subordinated Debentures with a scheduled maturity in 2004. Prior to
the July 27, 1994 redemption date, debenture holders elected to convert all of
their outstanding debentures into common stock of the Company at a conversion
price of $28.00 per common share.
On August 9, 1993, the Company issued a Notice of Redemption for its 7%
Convertible Subordinated Debentures with a scheduled maturity in 2013. Prior to
the October 1993 redemption date, debenture holders elected to convert all of
their outstanding debentures into common stock of the Company at a conversion
price of $25.75 per common share.
In the third quarter of 1989, a wholly-owned subsidiary of the Company
issued interest bearing Loan Notes in connection with the acquisition of Boase
Massimi Pollitt plc. The Loan Notes were repaid on June 30, 1994 at their
nominal amount together with accrued interest.
On July 15, 1994, the Company amended and restated the revolving credit
agreement originally entered into in 1988. This $250 million revolving credit
agreement is with a consortium of banks and expires on June 30, 1997. This
credit agreement includes a facility for issuing commercial paper backed by a
bank letter of credit. The agreement contains certain financial covenants
regarding current ratio, ratio of total consolidated indebtedness to total
consolidated capitalization, ratio of net cash flow to consolidated
indebtedness, and limitation on investments in and loans to affiliates and
unconsolidated subsidiaries. At December 31, 1994 the Company was in compliance
with all of these covenants.
Aggregate maturities of long-term debt in the next five years are as
follows:
(Dollars in Thousands)
1995................................................ $ 3,576
1996................................................ 14,812
1997................................................ 2,043
1998................................................ 650
1999................................................ 460
On January 4, 1995, an indirect wholly-owned subsidiary of the Company
issued Deutsche Mark 200 million Floating Rate Bonds (approximately $130
million). The bonds are unsecured, unsubordinated obligations of the issuer and
are unconditionally and irrevocably guaranteed by the Company. The bonds bear
interest at a per annum rate equal to Deutsche Mark three month LIBOR plus 0.65%
and may be redeemed at the option of the issuer on January 5, 1997 or any
interest payment date thereafter at their principal amount plus any accrued but
unpaid interest. Unless redeemed earlier, the bonds will mature on January 5,
2000 and will be repaid at par. The proceeds of this issuance were used for
general corporate purposes, including the reduction of outstanding sundry notes
and loans payable to banks and other outstanding credit obligations.
F-12
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Income Taxes
Income before income taxes and the provision for taxes on income consisted
of the amounts shown below:
Years Ended December 31,
(Dollars in Thousands)
1994 1993 1992
---- ---- ----
Income before income taxes:
Domestic ......................... $ 85,992 $ 65,571 $ 47,535
International .................... 95,764 77,053 74,761
--------- --------- ---------
Totals ........................ $ 181,756 $ 142,624 $ 122,296
========= ========= =========
Provision for taxes on income:
Current:
Federal ....................... $ 30,645 $ 16,428 $ 17,143
State and local ............... 8,445 6,531 6,215
International ................. 36,138 35,071 29,067
--------- --------- ---------
75,228 58,030 52,425
--------- --------- ---------
Deferred:
Federal ....................... (4,922) 2,979 (3,702)
State and local ............... (1,285) 139 (1,375)
International ................. 5,316 (1,277) 5,920
--------- --------- ---------
(891) 1,841 843
--------- --------- ---------
Totals ................. $ 74,337 $ 59,871 $ 53,268
========= ========= =========
The Company's effective income tax rate varied from the statutory federal
income tax rate as a result of the following factors:
1994 1993 1992
---- ---- ----
Statutory federal income tax rate .............. 35.0% 35.0% 34.0%
State and local taxes on income, net of
federal income tax benefit ................. 2.6 3.0 2.6
International subsidiaries' tax rate (less than)
in excess of federal statutory rate ....... (0.8) 0.1 1.3
Losses of international subsidiaries
without tax benefit ........................ -- 0.2 1.0
Non-deductible amortization of goodwill ........ 4.3 3.9 3.7
Other .......................................... (0.2) (0.2) 1.0
---- ---- ----
Effective rate ................................. 40.9% 42.0% 43.6%
==== ==== ====
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes." Deferred income taxes are provided for the temporary difference between
the financial reporting basis and tax basis of the Company's assets and
liabilities. Deferred tax benefits result principally from recording certain
expenses in the financial statements which are not currently deductible for tax
purposes. Deferred tax liabilities result principally from expenses which are
currently deductible for tax purposes, but have not yet been expensed in the
financial statements.
The Company has recorded deferred tax benefits as of December 31, 1994 and
1993 of $56.6 million and $56.7 million, respectively.
The Company has recorded deferred tax liabilities as of December 31, 1994
and 1993 of $20.5 million and $29.3 million, respectively.
F-13
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Deferred tax benefits (liabilities) as of December 31, 1994 and 1993
consisted of the amounts shown below (dollars in millions):
1994 1993
---- ----
Acquisition liabilities .......................... $12.1 $13.0
Lease reserves ................................... 2.0 5.0
Severance and compensation reserves .............. 22.7 8.7
Tax loss carryforwards ........................... 3.7 9.6
Foreign currency transactions .................... (1.6) 0.5
Tax benefit leases ............................... (0.8) (4.5)
Amortization and depreciation .................... (2.4) (7.2)
Deductible intangibles ........................... (3.6) (2.1)
Other, net ....................................... 4.0 4.4
----- -----
$36.1 $27.4
===== =====
Net current deferred tax benefits as of December 31, 1994 and 1993 were
$15.0 million and $8.9 million, respectively and were included in prepaid
expenses and other current assets. Net non-current deferred tax benefits as of
December 31, 1994 and 1993 were $21.1 million and $18.5 million, respectively.
In 1993, legislation was enacted which increased the U.S. statutory tax
rate from 34% to 35%. The effect of statutory rate changes during 1994 and 1993
in federal, state, local and international jurisdictions was not material to net
income. There were no material valuation allowances recognized as of December
31, 1994 and 1993.
A provision has been made for additional income and withholding taxes on
the earnings of international subsidiaries and affiliates that will be
distributed.
9. Employee Retirement Plans
The Company's international and domestic subsidiaries provide retirement
benefits for their employees primarily through profit sharing plans. Company
contributions to the plans, which are determined by the boards of directors of
the subsidiaries, have been in amounts up to 15% (the maximum amount deductible
for federal income tax purposes) of total eligible compensation of participating
employees. Profit sharing expense amounted to $34.7 million, $25.8 million and
$20.8 million in 1994, 1993 and 1992, respectively.
Some of the Company's international subsidiaries have pension plans. These
plans are not required to report to governmental agencies pursuant to the
Employee Retirement Income Security Act of 1974 (ERISA). Substantially all of
these plans are funded by fixed premium payments to insurance companies who
undertake legal obligations to provide specific benefits to the individuals
covered. Pension expense amounted to $2.6 million, $2.4 million and $2.7 million
in 1994, 1993 and 1992, respectively.
Certain subsidiaries of the Company have an executive retirement program
under which benefits will be paid to participants or their beneficiaries over 15
years from age 65 or death. In addition, other subsidiaries have individual
deferred compensation arrangements with certain executives which provide for
payments over varying terms upon retirement, cessation of employment or death.
Some of the Company's domestic subsidiaries provide life insurance and
medical benefits for retired employees. Eligibility requirements vary by
subsidiary, but generally include attainment of a specified combined age plus
years of service factor. Effective January 1, 1992, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 106 "Employers'
Accounting For Post Retirement Benefits Other Than Pensions" ("SFAS No. 106").
SFAS No. 106 requires that the expected cost of post retirement benefits be
charged to expense during the years that the eligible employees render service.
The expense related to these benefits was not material to the 1994, 1993 and
1992 consolidated results of operations.
10. Commitments
At December 31, 1994, the Company was committed under operating leases,
principally for office space. Certain leases are subject to rent reviews and
require payment of expenses under escalation clauses. Rent expense was $138.0
million in 1994, $128.8 million in 1993 and $117.3 million in 1992 after
reduction by rents received from subleases of $10.2 million, $10.0 million and
F-14
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
$14.1 million, respectively. Future minimum base rents under terms of
noncancellable operating leases, reduced by rents to be received from existing
noncancellable subleases, are as follows:
(Dollars in Thousands)
Gross Rent Sublease Income Net Rent
---------- --------------- --------
1995 ............................. $116,474 $ 10,080 $106,394
1996 ............................. 107,973 8,577 99,396
1997 ............................. 95,624 5,907 89,717
1998 ............................. 82,107 4,628 77,479
1999 ............................. 75,772 3,998 71,774
Thereafter ....................... 417,994 13,716 404,278
Where appropriate, management has established reserves for the difference
between the cost of leased premises that were vacated and anticipated sublease
income.
11. Fair Value of Financial Instruments
During 1994 the Company adopted Statement of Financial Accounting Standards
No. 119 "Disclosure about Derivative Financial Instruments and Fair Value of
Financial Instruments."
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1994.
(Dollars in Thousands)
Carrying Fair
Amount Value
-------- --------
Cash, cash equivalents and investments available-for-sale $256,634 $256,634
Long-term investments .................................... 5,532 5,532
Long-term debt ........................................... 190,914 192,352
Financial Commitments:
Forward exchange contracts ............................ -- 123
Guarantees ............................................ -- 10,065
Letters of credit ..................................... -- 19,879
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash equivalents and investments available-for-sale:
Cash equivalents and investments available-for-sale consist principally of
investments in short-term, interest bearing instruments and are carried at fair
market value, which approximates cost.
Long-term investments:
Included in deferred charges and other assets are long-term investments
carried at cost, which approximates estimated fair value.
Long-term debt:
The fair value of the Company's convertible subordinated debenture issue
was determined by reference to quotations available in markets where that issue
is traded. These quotations primarily reflect the conversion value of the
debentures into the Company's common stock. These debentures are redeemable by
the Company, at prices explained in Note 7, which are less than the quoted
market prices used in determining the fair value. The fair value of the
Company's remaining long-term debt was estimated based on the current rates
offered to the Company for debt with the same remaining maturities.
Financial commitments:
The estimated fair value of derivative positions are based upon quotations
received from independent, third party banks and represent the net amount
payable to terminate the position, taking into consideration market rates and
F-15
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
counterparty credit risk. The fair values of guarantees, principally related to
affiliated companies, and letters of credit were based upon the face value of
the underlying instruments.
12. Financial Instruments and Market Risk
The Company periodically utilizes derivative financial instruments to
reduce certain market risks to which the Company is exposed. These market risks
primarily consist of the impact of changes in currency exchange rates on assets
and liabilities of non-U.S. operations and the impact of changes in interest
rates on debt. The Company's derivative activities are limited in volume and
confined to risk management activities. Senior management at the Company
actively participate in the quantification, monitoring and control of all
significant risks. A reporting system is in place which evaluates the impact on
the Company's earnings resulting from changes in interest rates, currency
exchange rates and other relevant market risks. This system is structured to
enable senior management to initiate prompt remedial action, if appropriate.
Adequate segregation of duties exists with regard to the execution, recording
and monitoring of derivative activities. Additionally, senior management reports
periodically to the Audit Committee of the Board of Directors concerning
derivative activities. Since 1993, the Audit Committee has established
limitations on derivative activities. These limitations have been reviewed
annually, most recently on March 23, 1995. The Audit Committee has reconfirmed,
for the year 1995, the limitations originally established in 1993.
At December 31, 1994, the Company had no swap agreements outstanding.
At December 31, 1993, the Company had cross currency swap agreements and a
U.S. dollar interest rate swap agreement outstanding with commercial banks as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
Aggregate Company Company
Notional Amount Receives Pays
--------------- -------- --------
<S> <C> <C> <C>
Cross currency fixed to floating rate swaps ............................ $70,600 8.97% 3.51%
U.S. dollar floating to fixed rate swap ................................ $50,000 3.22% 4.99%
</TABLE>
The cross currency swap agreements were comprised of contracts denominated in
German Deutsche Marks, French Francs, Australian Dollars and Spanish Pesetas.
These contracts effectively changed a portion of the Company's non-U.S. dollar
denominated debt to floating rate U.S. dollar denominated debt, which reduced
the Company's risk related to currency fluctuations and interest rates. The U.S.
dollar interest rate swap agreement converted a portion of the Company's
floating rate debt to a fixed rate. These agreements were closed out during 1994
for a gain of $2.4 million which is being amortized into income over the
original term of the swap agreements.
The Company enters into forward exchange contracts to hedge certain assets
and liabilities which are recorded in a currency different from that in which
they will settle. Gains and losses on these positions are deferred and included
in the basis of the transaction upon settlement. The terms of these contracts
are generally three months or less. The table below summarizes by major currency
the notional principal amounts of the Company's forward exchange contracts
outstanding at December 31, 1994. The "buy" amounts represent the U.S. dollar
equivalent of commitments to purchase the respective currency, and the "sell"
amounts represent the U.S. dollar equivalent of commitments to sell the
respective currency.
(Dollars in thousands)
Notional Principal Amount
-----------------------------
Currency Company Buys Company Sells
-------- ------------ -------------
German Deutsche Mark ..................... $ 18,380 $ 82,509
French Franc ............................. 61,345 22,364
U.S. Dollar .............................. 32,146 12,220
Dutch Guilder ............................ 20,644 14,574
Spanish Peseta ........................... 12,653 17,831
Belgian Franc ............................ 10,429 6,469
Canadian Dollar .......................... 765 7,970
Hong Kong Dollar ......................... 4,021 4,017
Other .................................... 7,433 9,947
-------- --------
Total ................................ $167,816 $177,901
======== ========
F-16
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The derivative financial instruments existing at December 31, 1994 and 1993
were entered into for the purpose of hedging certain specific currency and
interest rate risks. As a result of these financial instruments, the Company
reduced financial risk in exchange for foregoing any gain (reward) which might
have occurred if the markets moved favorably. In using derivative financial
instruments, management exchanged the risks of the financial markets for
counterparty risks. In order to minimize counterparty risk the Company only
enters into contracts with major well known banks that have credit ratings equal
to or better than the Company's. Additionally, these contracts contain
provisions for net settlement. As such, the contracts settle based on the spread
between the currency rates and interest rates contained in the contracts and the
current market rates. This minimizes the risk of an insolvent counterparty being
unable to pay the Company the notional principal amount owed to the Company and,
at the same time, having the creditors of the counterparty demanding the
notional principal amount from the Company.
13. Adoption of New Accounting Principles and Special Charge
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS No. 112"). This Statement establishes accounting standards for
employers who provide benefits to former or inactive employees after employment
but before retirement (referred to in this Statement as "postemployment
benefits"). Those benefits include, but are not limited to, salary continuation,
supplemental unemployment benefits, severance benefits, disability-related
benefits, job training and counseling, and continuation of benefits such as
health care benefits and life insurance coverage. The cumulative after tax
effect of the adoption of SFAS No. 112 resulted in a reduction to net income of
$28.0 million.
Effective January 1, 1994, the Company also adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS No. 115"). This Statement addresses the accounting and
reporting for investments in equity securities that have readily determinable
fair values and for all investments in debt securities. In compliance with SFAS
No. 115, the Company classifies these investments as investments
available-for-sale. At December 31, 1994, the Company's investments consisted
principally of time deposits with financial institutions. These investments,
with scheduled maturities of less than one year, are valued at estimated fair
value, which approximates cost. These investments are generally redeemed at face
value upon maturity and, as such, gains or losses on disposition are immaterial.
There are no material unrealized holding gains or losses as of December 31,
1994.
Effective January 1, 1992, the Company adopted SFAS No. 106 and SFAS No.
109. The cumulative after tax effect of the adoption of these Statements
increased net income by $3.8 million, substantially all of which related to SFAS
No. 109. Due to the continued weakening of the commercial real estate market in
certain domestic and international locations and the reorganization of certain
operations, the Company provided a special charge of $6.7 million pretax for
losses related to future lease costs.
F-17
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
QUARTERLY RESULTS OF OPERATIONS (Unaudited)
The following table sets forth a summary of the unaudited quarterly
results of operations for the two years ended December 31, 1994 and 1993, in
thousands of dollars except for per share amounts.
<TABLE>
<CAPTION>
First Second Third Fourth
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Commissions & Fees
1994..................................... $376,538 $425,198 $422,274 $532,195
1993..................................... 339,139 381,758 339,531 456,047
Income Before Income Taxes
1994..................................... 31,592 58,227 29,855 62,082
1993..................................... 24,738 49,274 19,581 49,031
Income Taxes
1994..................................... 13,163 23,808 12,314 25,052
1993..................................... 10,390 20,678 8,228 20,575
Income After Income Taxes
1994..................................... 18,429 34,419 17,541 37,030
1993..................................... 14,348 28,596 11,353 28,456
Equity in Affiliates
1994..................................... 2,089 3,863 3,432 8,938
1993..................................... 1,692 2,674 1,769 7,045
Minority Interests
1994..................................... (1,598) (4,784) (2,823) (8,402)
1993..................................... (1,584) (4,008) (276) (4,720)
Income Before Change
in Accounting Principle
1994.................................... 18,920 33,498 18,150 37,566
1993.................................... 14,456 27,262 12,846 30,781
Cumulative Effect of Change
in Accounting Principle
1994..................................... (28,009) -- -- --
1993..................................... -- -- -- --
Net Income
1994..................................... (9,089) 33,498 18,150 37,566
1993..................................... 14,456 27,262 12,846 30,781
Primary Earnings Per Share Before
Change in Accounting Principle
1994..................................... 0.58 1.02 0.52 1.04
1993..................................... 0.50 0.90 0.43 0.95
Fully Diluted Earnings Per Share Before
Change in Accounting Principle
1994..................................... 0.58 0.95 0.52 1.02
1993..................................... 0.49 0.82 0.43 0.87
</TABLE>
F-18
<PAGE>
Schedule VIII
OMNICOM GROUP INC. AND SUBSIDIARIES
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 31, 1994
<TABLE>
<CAPTION>
====================================================================================================================================
Column A Column B Column C Column D Column E
------------------------------------------------------------------------------------------------------------------------------------
Additions Deductions
--------- ----------------------------------
Balance at Charged Removal of Balance
Beginning to Costs Uncollectible Translation at End of
Description of Period and Expenses Receivables (1) Adjustments Period
------------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Valuation accounts deducted from
assets to which they apply--
allowance for doubtful accounts:
December 31, 1994 ...................... $17,298 $ 7,864 $ 6,489 $ (605) $19,278
December 31, 1993 ...................... 12,825 4,742 (686) 955 17,298
December 31, 1992 ...................... 15,634 2,545 4,092 1,262 12,825
</TABLE>
----------
(1) Net of acquisition date balances in allowance for doubtful accounts of
companies acquired of $1,330, $4,581, and $589 in 1994, 1993, and 1992,
respectively.
S-1
Dated December 14, 1994
BBDO CANADA INC.
- and -
OMNICOM GROUP INC.
- and -
MORGAN STANLEY GMBH
and the other Managers
-------------------------------------------------
SUBSCRIPTION AGREEMENT
DM 200,000,000
Floating Rate Bonds of 1995 due January 5, 2000
-----------------------------------------------
HENGELER MUELLER WEITZEL WIRTZ
Frankfurt am Main
<PAGE>
-2-
SUBSCRIPTION AGREEMENT dated December 14, 1994
between
(1) BBDO CANADA INC. (the "Issuer"),
(2) OMNICOM GROUP INC. (the "Guarantor"), and
(3) MORGAN STANLEY GMBH (the "Lead Manager"),
CITIBANK AKTIENGESELLSCHAFT,
KIDDER PEABODY INTERNATIONAL PLC,
MERRILL LYNCH BANK AG,
SCHWEIZERISCHER BANKVEREIN (DEUTSCHLAND) AG
(together with the Lead Manager, the "Managers").
The parties hereby record the arrangements between them in respect of an issue
of DM 200,000,000 Floating Rate Bonds of 1995 due January 5, 2000 of the Issuer
(the "Bonds") to be guaranteed by the Guarantor.
ss. 1 Agreement to Issue; the Bonds;
the Agreements
(1) The Issuer agrees to issue the Bonds on January 4, 1995 (the "Closing
Date"), and the Guarantor agrees to issue the Guarantee on the Closing Date.
(2) The terms and conditions applicable to the Bonds are set forth in the Terms
and Conditions of the Bonds (the "Conditions") attached hereto as Schedule 1.
The Bonds will initially be represented by a single temporary global note
payable to bearer without interest coupons (the "Temporary Global Bond")
substantially in the form set out in Schedule 2. The Temporary Global Bond will
be deposited with Deutscher Kassenverein AG, Frankfurt am Main ("DKV"), as
common depositary (in such capacity the "Common Depositary") for Morgan Guaranty
Trust Company of New York, Brussels office, as operator of the Euroclear System
("Euroclear") and Cedel S.A. ("Cedel"). On or after the date (the "Exchange
Date") which is 40 days after the Closing Date and upon presentation of
certificates of non-US and non-Canadian beneficial ownership, the Temporary
Global Bond will be exchangeable for a single permanent global note payable to
bearer without interest coupons (the "Permanent Global Bond") substantially in
the form set out in Schedule 3. The Permanent Global Bond will be deposited with
DKV. Definitive certificates representing individual Bonds and interest coupons
will not be issued.
(3) The guarantee to be given by the Guarantor ("the Guarantee") shall be
substantially in the form set out in Schedule 4.
<PAGE>
-3-
(4) Concurrently with the signing of this Agreement the Issuer and the Guarantor
are entering into an agency agreement (the "Agency Agreement") with Morgan
Stanley GmbH as issuing and paying agent (the "Paying Agent").
This Agreement and the Agency Agreement are together referred to as the
"Agreements".
ss. 2 Purchase
(1) Each of the Managers agrees to purchase on the Closing Date at the issue
price of 99.48% of the principal amount of the Bonds (the "Issue Price") such
principal amount of Bonds as corresponds to its commitment as set out in
Schedule 5.
(2) The rights and obligations of the Managers under this Agreement are several
and not joint. Each of the Managers shall acquire sole title to the Bonds
subscribed by it and there shall be no joint or fractional co-ownership in the
Bonds by the Managers.
ss. 3 Disclosure
The Issuer and the Guarantor confirm that they have prepared an Offering
Memorandum in the English language dated January 4, 1995 (the "Offering
Memorandum") in relation to the Bonds and hereby authorize the Managers to
distribute the Offering Memorandum in connection with the offering and sale of
the Bonds, copies of it in preliminary or draft form having already been
distributed with the consent of the Issuer and the Guarantor.
ss. 4 Stabilization
(1) To the extent permitted by applicable laws, the Lead Manager for its own
account may over-allot and effect transactions in the open market or otherwise
in connection with the distribution of the Bonds with a view to stabilizing or
maintaining the market price of the Bonds at levels other than those which might
otherwise prevail. In doing so the Lead Manager shall act as principal and not
as agent of the Issuer or the Guarantor. The Issuer shall not in any event be
obligated to issue more than DM 200,000,000 in principal amount of the Bonds.
(2) As between the Issuer, the Guarantor and the Lead Manager, any loss
resulting from stabilization shall be borne, and any profit arising therefrom
shall be retained, by the Lead Manager.
<PAGE>
-4-
ss. 5 Selling Terms
(1) Each Manager agrees to be bound by the terms and provisions set out in
Schedule 6.
(2) Each Manager agrees to indemnify the Issuer and the Guarantor and each other
Manager, and each of their respective directors, officers and employees, against
any loss, liability, cost, expense, claim or action (including all reasonable
costs, charges or expenses paid or incurred in disputing or defending any of the
foregoing) which any of them may incur or which may be made against any of them
arising out of, in relation to or in connection with, any failure by such
Manager to observe the terms and provisions set out in Schedule 6.
ss. 6 Listing
(1) The Issuer confirms that it has authorised the Lead Manager to make or cause
to be made an application for the Bonds to be listed on the Luxembourg Stock
Exchange (the "Stock Exchange").
(2) Each of the Issuer and the Guarantor agrees to supply to the Lead Manager
for delivery to the Stock Exchange copies of the Offering Memorandum and such
other documents, information and undertakings as may be required for the purpose
of obtaining such listing.
(3) The Issuer and the Guarantor, jointly and severally, agree to use their best
endeavours to maintain such listing for as long as any of the Bonds are
outstanding and to pay all fees and supply all further documents, information
and undertakings and publish all advertisements or other material as may be
necessary or advisable for such purpose. However, if such listing becomes
impossible, the Issuer and the Guarantor will obtain, and each will thereafter
use its best endeavours to maintain a quotation for, or listing of, the Bonds on
such other stock exchange as is commonly used for the quotation or listing of
debt securities as they may, with the approval of the Lead Manager, decide.
ss. 7 Warranties of the Issuer and the Guarantor
(1) The Issuer and the Guarantor, jointly and severally, warrant to the
Managers and each of them that:-
(a) each of them is duly incorporated and validly existing under the laws of
Ontario and the State of New York, respectively, with full power and authority
to conduct its business as described in the Offering Memorandum;
<PAGE>
-5-
(b) the Agreements have been duly authorised, executed and delivered by the
Issuer and the Guarantor and constitute valid, legally binding and enforceable
obligations of the Issuer and the Guarantor;
(c) the Bonds have been duly authorised by the Issuer and, when duly executed,
authenticated, issued and delivered, will constitute valid, legally binding and
enforceable obligations of the Issuer;
(d) the Guarantee has been duly authorised by the Guarantor and, when duly
executed and delivered, will constitute valid, legally binding and enforceable
obligations of the Guarantor;
(e) all consents or approvals of, or registrations or filings with, or other
action by any court, governmental authority or regulatory body required for the
execution and delivery of the Agreements, the issue of the Bonds, the giving of
the Guarantee, the carrying out of the other transactions contemplated by the
Agreements or the compliance by the Issuer and the Guarantor with the terms of
the Bonds, the Guarantee and the Agreements, as the case may be, have been, or
will have been by the Closing Date, obtained and are, or will be, in full force
and effect on the Closing Date;
(f) the execution and delivery of the Agreements, the issue of the Bonds, the
giving of the Guarantee, the carrying out of the other transactions contemplated
by the Agreements and compliance with their terms do not and will not (i)
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the articles of incorporation, charter, by-laws (or
other comparable corporate charter documents) of the Issuer or the Guarantor, or
any indenture, trust deed, mortgage or other agreement or instrument to which
the Issuer or the Guarantor or any of their respective subsidiaries is a party
or by which any of them or any of their respective properties is bound, or (ii)
infringe any existing applicable law, rule, regulation, judgment, order or
decree of any governmental authority or court, domestic or foreign, having
jurisdiction over the Issuer, the Guarantor or any of their respective
properties;
(g) the Offering Memorandum, as of the date hereof, is accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and the
Offering Memorandum will be, as of the Closing date, accurate in all material
respects and will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances existing at the
<PAGE>
-6-
Closing Date, not misleading, provided, however, that the Issuer and the
Guarantor make no representation or warranty as to statements or omissions from
the list of Managers on the cover page of the Offering Memorandum, or under the
caption "Subscription and Sale; Selling Restrictions" in the Offering
Memorandum, which statements were made in reliance upon and in conformity with
information furnished in writing to the Issuer and the Guarantor by the Managers
specifically for inclusion therein;
(h) (i) the financial statements of the Issuer for the two years ended December
31, 1993 and 1992 were prepared in accordance with generally accepted accounting
principles from time to time approved by the Canadian Institute of Chartered
Accountants consistently applied, except as disclosed therein, and present
fairly the financial position of the Issuer as at the dates, and the results of
operations and changes in financial position of the Issuer for the periods, in
respect of which they have been prepared, and (ii) since the date of the last
audited financial statements of the Issuer there has been no change (nor any
development or event involving a prospective change of which the Issuer is, or
might reasonably be expected to be, aware) which is materially adverse to the
condition (financial or other), results of operations or general affairs of the
Issuer;
(i) (i) the consolidated financial statements of the Guarantor and its
consolidated subsidiaries taken as a whole (the "Consolidated Group") for the
three years ended December 31, 1993, 1992 and 1991 and the nine month periods
ended September 30, 1994 and 1993 were prepared in accordance with accounting
principles generally accepted in, and pursuant to the relevant laws of the
United States of America consistently applied, except as disclosed therein, and
present fairly the financial position of the Guarantor and of the Consolidated
Group as at the dates, and the results of operations and changes in financial
position of the Guarantor and of the Consolidated Group for the periods, in
respect of which they have been prepared, and (ii) since the date of the last
audited consolidated financial statements of the Consolidated Group there has
been no change (nor any development or event involving a prospective change of
which the Guarantor is, or might reasonably be expected to be, aware) which is
materially adverse to the condition (financial or other), results of operations
or general affairs of the Guarantor or of the Consolidated Group respectively;
(j) there are no pending actions, suits or proceedings against the Issuer or the
Guarantor or any of their respective subsidiaries or any of their respective
properties which, if determined adversely to the Issuer or the Guarantor or any
such subsidiary, could individually or in the aggregate have an adverse effect
on the condition (financial or
<PAGE>
-7-
other), results of operations or general affairs of the Issuer or the Guarantor
or the Consolidated Group or would materially adversely affect the ability of
the Issuer or the Guarantor to perform their obligations under the Agreements or
the Bonds or the Guarantee or which are otherwise material in the context of the
issue of the Bonds and, to the best of the Issuer's and the Guarantor's
knowledge, no such actions, suits or proceedings are threatened or contemplated;
(k) no event has occurred or circumstance arisen which, had the Bonds already
been issued, might (whether or not with the giving of notice and/or the passage
of time and/or the fulfilment of any other requirement) constitute an event of
early termination under the Conditions;
(l) neither the Issuer nor the Guarantor is an "investment company" within the
meaning of the U.S. Investment Company Act of 1940, as amended; and
(m) neither the Issuer nor the Guarantor nor their respective affiliates nor any
persons acting on its or their behalf have engaged or will engage in any
directed selling efforts (as defined in Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act")) with respect to the
Bonds and it and they have complied and will comply with the offering
restrictions requirement of such Regulation.
(2) The Issuer and the Guarantor jointly and severally undertake to indemnify
each Manager and its directors, officers and employees, and any affiliate of
such Manager (each an "indemnified person"), against any loss, liability, cost,
expense, claim or action (including all reasonable costs, charges and expenses
paid or incurred in disputing or defending any of the foregoing), which such
Manager may incur or which may be made against it arising out of, in relation to
or in connection with, any inaccuracy or alleged inaccuracy of any of the
warranties contained in subsection (1) or in connection with any inaccurate
statement or alleged inaccurate statement contained in the Offering Memorandum
or any omission or alleged omission to state therein a material fact necessary
to make the statements therein not misleading. The Issuer and the Guarantor
expressly acknowledge that they shall not be released from such obligation by
reason of the fact that the Lead Manager has assisted in the drafting of the
Offering Memorandum. The Issuer and the Guarantor shall not indemnify any
indemnified person in respect of any inaccuracy or alleged inaccuracy of any of
the warranties as to statements in or omissions from the list of the Managers on
the cover page of the Offering Memorandum or the statements under the caption
"Subscription and Sale; Selling Restrictions" in the Offering Memorandum.
<PAGE>
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ss. 8 Agreements of the Issuer and the Guarantor
The Issuer and the Guarantor, jointly and severally agree with the Managers
that:-
(a) the Issuer, failing whom the Guarantor, will bear and pay all stamp and
other taxes and duties (including interest and penalties) payable pursuant to
the laws applicable in Canada, the United States of America and the Federal
Republic of Germany on or in connection with the issue and purchase by the
Managers of the Bonds and the execution or delivery of the Agreements and the
Guarantee;
(b) the Issuer and the Guarantor shall notify the Lead Manager on behalf of the
Managers if, at any time prior to payment of the net subscription amount to the
Issuer, anything occurs which renders or may render untrue or incorrect in any
respect any of the warranties given by the Issuer or the Guarantor; and
(c) if at any time prior to completion, in the view of the Lead Manager, of the
distribution of the Bonds any event shall occur as a result of which, in the
judgement of the Issuer or the Guarantor, it is necessary to amend or supplement
the Offering Memorandum (as then amended or supplemented) in order to make the
statements therein, in the light of the circumstances when the Offering
Memorandum is delivered, not misleading, the Issuer and the Guarantor shall
forthwith prepare and furnish, at their own expense, to the Managers either
amendments to the Offering Memorandum or supplemental information so that the
statements in the Offering Memorandum as so amended or supplemented will not, in
the light of the circumstances when the Offering Memorandum is delivered, be
misleading.
ss. 9 Closing Conditions
(1) The Managers shall be obligated to pay for, and take delivery of the Bonds
only (A) if: (i) as of the Closing Date, the warranties and agreements of the
Issuer and the Guarantor herein contained are true and correct in all material
respects and have been duly complied with (to the extent that such compliance is
due on or before the Closing Date), (ii) subsequent to the date hereof and as of
the Closing Date, there shall not have occurred any downgrading, nor shall any
notice have been given of (1) any intended or potential downgrading or (2) any
review or possible change that does not indicate an improvement in the rating,
accorded any of the outstanding debt securities of the Issuer or the Guarantor
by either Moody's Investor Services, Inc. or Standard & Poor's Rating Group, and
(B) subject to:
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(a) receipt by the Lead Manager on behalf of the Managers on the Closing Date
of a certificate of the Issuer dated the Closing Date and signed on behalf
of the Issuer certifying that as of the Closing Date, the warranties
contained in ss. 7(1) are true and correct as if made on the Closing Date
and that the Issuer has complied with all agreements herein contained (to
the extent that such compliance is due on or before the Closing Date);
(b) receipt by the Lead Manager on behalf of the Managers on the Closing Date
of a certificate of the Guarantor dated the Closing Date and signed on
behalf of the Guarantor certifying that as of the Closing Date, the
warranties contained in ss. 7(1) are true and correct as if made on the
Closing Date and that the Guarantor has complied with all agreements
herein contained (to the extent that such compliance is due on or before
the Closing Date);
(c) receipt by the Lead Manager on behalf of the Managers on the Closing Date
of legal opinions dated the Closing Date, in the form agreed, from:
(i) Gowling Strathy & Henderson, legal advisers to the Issuer and the
Guarantor as to Canadian law;
(ii) Davis and Gilbert, legal advisers to the Issuer and the Guarantor as
to U.S. law;
(iii)Davis Polk & Wardwell, legal advisers to the Managers as to U.S. law;
and
(iv) Hengeler Mueller Weitzel Wirtz, legal advisers to the Managers as to
German law;
(d) receipt by the Lead Manager not later than two Frankfurt banking days
before the Closing Date of the Guarantee duly executed on behalf of the
Guarantor for delivery on the Closing Date;
(e) receipt by the Lead Manager on behalf of the Managers not later than two
Frankfurt banking days before the Closing Date of the Permanent Global
Bond duly executed by and on behalf of the Issuer for delivery to DKV on
or after the Exchange Date;
(f) receipt by the Lead Manager on behalf of the Managers not later than three
Frankfurt banking days before the Closing Date of the documents listed in
Schedule 7;
(g) the Stock Exchange having agreed on or before the Closing Date to list the
Bonds;
<PAGE>
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(h) receipt by the Lead Manager on behalf of the Managers not later than two
Frankfurt banking days before the Closing Date of the duly executed
Temporary Global Bond, for authentication and delivery pursuant to ss. 10;
and
(i) receipt by the Lead Manager on behalf of the Managers of a copy of the
Agency Agreement as executed, delivered and exchanged by the parties
thereto.
(2) The Lead Manager on behalf of the Managers may, at its discretion and upon
terms as it deems appropriate, waive compliance with the whole or any part of
subsection (1).
ss. 10 Delivery and Payment
Not later than 10:00 a.m. (Frankfurt time) on the Closing Date (or such other
time on the Closing Date as may be agreed between the Lead Manager on behalf of
the Managers and the Issuer) the Issuer will issue and deliver to the Managers
or their order the Temporary Global Bond duly executed and authenticated, to be
held as agreed between the Issuer, the Lead Manager and the Common Depository.
Against such delivery the Managers shall pay, or cause payment of, the net
subscription amount (being the Issue Price pursuant to ss. 2(1) less the
commissions pursuant to ss. 11(1) and less the Expenses Amount pursuant to ss.
11(2)) in Deutsche Mark to such account maintained in the Federal Republic of
Germany as the Issuer may specify to the Lead Manager not later than five days
before the Closing Date.
ss. 11 Commissions and Expenses
(1) The Issuer, failing whom the Guarantor, shall pay to the Managers on the
Closing Date total commissions of 0.45 % of the principal amount of the Bonds in
consideration of the obligations of the Managers to purchase the Bonds.
(2) In addition to the commissions payable pursuant to subsection (1) and to its
own expenses in connection with the issue, sale and offering of the Bonds, the
Issuer, failing whom the Guarantor, shall pay to the Lead Manager on the Closing
Date a lump sum amount (the "Expenses Amount") as separately agreed upon between
the Issuer and the Lead Manager in lieu of reimbursement of the following
expenses and fees (including value added tax thereon, if any): (a) all expenses
incurred in connection with the preparation, printing and delivery of the
Offering Memorandum, the Agreements, the Temporary Global Bond, the Permanent
Global Bond, the Guarantee and all other documents relating to the issue,
subscription and offering of the Bonds, (b) the fees and expenses incurred in
connection with the obtaining and maintaining of the listing of the Bonds on the
Stock Exchange, including the costs of all necessary publications, if any,
<PAGE>
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(c) all expenses incurred in connection with the services of the legal advisers
to the Managers in Canada, the United States of America and the Federal Republic
of Germany in connection with the issue and subscription of the Bonds, (d) all
expenses incurred in connection with all advertising in relation to the issue
and offering of the Bonds on which the Issuer and the Lead Manager may agree,
(e) all other expenses which the Managers have incurred or will incur in
connection with the issue, purchase and offering of the Bonds, and (f) the fees
and expenses (including value added tax thereon) of the Paying Agent and any
further paying agents in connection with the preparation and signing of the
Agreements, the issue of the Bonds and the performance of their duties under the
Agency Agreement.
ss. 12 Termination
(1) The Lead Manager on behalf of the Managers may, by written notice to the
Issuer given at any time prior to payment of the the net subscription amount for
the Bonds, terminate this Agreement:
(a) if in the opinion of the Lead Manager, circumstances shall be such as:
(i) to prevent or to a material extent restrict payment for the Bonds in the
manner contemplated in this Agreement; or
(ii) to a material extent prevent or restrict settlement of transactions in the
Bonds in the market or otherwise; or
(b) if in the opinion of the Lead Manager, there shall have been:
(i) any change in national or international political, legal, tax or
regulatory conditions; or
(ii) any calamity or emergency,
which has in its view caused a substantial deterioration in the price and/or
value of the Bonds.
(2) Upon such termination no party shall be under any liability to any other in
respect of this Agreement, except that (a) all indemnity provisions in this
Agreement shall continue in full force and effect, and (b) the Issuer and the
Guarantor shall remain liable under ss. 11 for the payment of the lower of (i)
the Expenses Amount or (ii) the costs and expenses already incurred or incurred
in consequence of such termination.
<PAGE>
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ss. 13 Communications
(1) Any document or information furnished or supplied in accordance with this
Agreement shall, if not otherwise provided for herein, either be in the German
or English language.
(2) All communications required to be given or given hereunder shall be given
by airmail letter or by telex, cable or facsimile transmission.
(3) Subject to written notice of change of address, all communications
hereunder shall be given to the following addresses:
(a) If to the Issuer:
BBDO Canada Inc.
2 Bloor Street West
Toronto, Ontario M4W 3R6
Canada
Telefax: 416 960 1618
Attention: Chief Financial Officer
(b) If to the Guarantor:
Omnicom Group Inc.
437 Madison Avenue
New York, N.Y. 10022
U.S.A.
Telefax: 212 415 3530
Attention: Chief Financial Officer
(c) If to the Managers:
Morgan Stanley GmbH
Rahmhofstra(beta)e 2 - 4
60313 Frankfurt am Main
Federal Republic of Germany
Telefax: 69 2166 1399
Telex: 412 648
Attention New Issues Department
ss. 14 The Schedules; Severability
(1) Schedules 1 to 7 form part of this Agreement.
(2) Should any provision of this Agreement be or become invalid in whole or in
part, the other provisions of this Agreement shall remain in force. Any invalid
provision shall be replaced by a valid provision which accomplishes as far as
<PAGE>
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legally possible the economic effects of the invalid provision.
ss. 15 Governing Law and Place of Performance
(1) This Agreement shall in all respects be governed by and construed in
accordance with German law.
(2) Place of performance for the obligations of all parties hereto shall be
Frankfurt am Main.
ss. 16 Place of Jurisdiction
(1) Any action or other legal proceedings arising out of or in connection with
this Agreement ("Proceedings") shall be brought in the District Court
(Landgericht) in Frankfurt am Main. The Issuer and the Guarantor hereby appoint
Wei(beta) & Hasche, Rechtsanwalte, Brienner Stra(beta)e 11/V, D-80333 Munich, as
their agent for service of process with respect to any proceedings brought
before any German court.
(2) Subsection (1) shall not limit the right of any of the Managers to bring
Proceedings against the Issuer and/or the Guarantor arising out of or in
connection with this Agreement in any competent court of law.
ss. 17 Counterparts
This Agreement is executed in ten counterparts in the English language. With
respect to Schedules 1 through 4 the German language version shall be binding.
The English translations of such Schedules are for convenience only. One
executed counterpart each is issued to the Issuer, the Guarantor and to each of
the Managers. Each executed counterpart shall be an original.
This Agreement has been entered into on the date first above written.
<PAGE>
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BBDO CANADA INC.
By: Quattro
OMNICOM GROUP INC.
By: Hewitt
MORGAN STANLEY GMBH
By: Wirth Brugger
CITIBANK AKTIENGESELLSCHAFT
KIDDER PEABODY INTERNATIONAL PLC
MERRILL LYNCH BANK AG
SCHWEIZERISCHER BANKVEREIN (DEUTSCHLAND) AG
By: Brugger
(by virtue of powers of attorney)
<PAGE>
Schedule 1
(English Translation)
TERMS AND CONDITIONS OF THE BONDS
ss.1 Form and Denomination
(1) The issue of BBDO Canada Inc. (the "Issuer") in the aggregate principal
amount of two hundred million Deutsche Marks (DM 200,000,000) is divided into
20,000 bonds payable to bearer in the principal amount of DM 10,000 each (the
"Bonds") and ranking pari passu among themselves.
(2) The Bonds shall be represented initially by a single temporary global
bond (the "Temporary Global Bond") payable to bearer, without interest coupons,
which will be deposited with a common depositary outside the United States of
America for Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System ("Euroclear") and Cedel societe anonyme
("Cedel") on or about January 4, 1995. The Issuer shall exchange the Temporary
Global Bond for a permanent global bond (the "Permanent Global Bond"), payable
to bearer, without interest coupons, on or after the date (the "Exchange Date")
which is 40 days after January 4, 1995, upon receipt by the Issuer, or its
agent, of a certificate (a "Certificate of Non-U.S. and Non-Canadian Beneficial
Ownership") signed by Euroclear or Cedel, as the case may be, which certificate
must be based on written certifications provided to it and signed by its account
holders, in a form to be provided by the Issuer, or its agent, to the effect
that the beneficial interest in the Temporary Global Bond is owned by a person
that is not a "United States person" as defined in the U.S. Internal Revenue
Code of 1986, as amended, and regulations thereunder or a person who has
purchased for resale to any United States person and not a resident Canadian (as
defined in the Canada Business Corporations Act (Canada)) or a person who has
purchased for resale to any resident Canadian. Such certifications by the
account holders must be provided to Euroclear or Cedel, as the case may be, by
the date on which the exchange occurs and must be dated not earlier than 15 days
prior to the Exchange Date. The Issuer shall procure that the Permanent Global
Bond shall be so delivered in exchange for only that portion of the Temporary
Global Bond in respect of which there shall have been presented to the Issuer,
or its agent, a Certificate of Non-U.S. and Non-Canadian Beneficial Ownership. A
holder of Bonds (a "Bondholder") must exchange its share of the Temporary Global
Bond for an interest in the Permanent Global Bond before interest on Bonds can
be collected. Definitive certificates representing individual Bonds shall not be
issued.
(3) The Permanent Global Bond will be kept in custody by Deutscher
Kassenverein AG, Frankfurt am Main ("DKV") until all obligations of the Issuer
under the Bonds have been satisfied. The Bonds shall be transferable in the form
of co-ownership interests in accordance with the applicable rules of DKV, and
outside the Federal Republic of Germany, in accordance with the applicable rules
of Euroclear and Cedel.
ss.2 Status, Negative Pledge and Guarantee
(1) The Bonds constitute direct, unconditional, unsecured and
unsubordinated obligations of the Issuer and rank pari passu with all other
present and future unsecured and unsubordinated obligations of the Issuer,
except as otherwise provided by mandatory rules of law.
(2) As long as any Bonds are outstanding, but only up to the time all
amounts of principal and interest have been placed at the disposal of the Paying
Agent (as defined in ss.6(4)(a) of these Terms and Conditions of the Bonds), the
Issuer undertakes not to provide any security upon any or all of its present or
future assets for any other indebtedness represented by notes, bonds, debentures
or other securities issued pursuant to an offering by which such securities are
intended primarily to be publicly distributed outside the United States and
Canada without at the same time having the Bondholders share equally and
rateably in such security.
(3) Omnicom Group Inc. (the "Guarantor"), pursuant to a guarantee
agreement dated January 4, 1995 (the "Guarantee"), has unconditionally and
irrevocably guaranteed the due and punctual payment, in accordance with the
provisions of these Terms and Conditions of the Bonds, of the amounts
corresponding to the principal of and interest payable by the Issuer under the
Bonds. The Guarantee constitutes a contract in favour of the Bondholders from
time to time as third party beneficiaries pursuant to ss.328(1) of the German
<PAGE>
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Civil Code giving rise to the right of each such Bondholder to require
performance of the Guarantee directly from the Guarantor and to enforce the
Guarantee directly against the Guarantor. The Guarantee provides, inter alia,
that the obligations of the Guarantor thereunder shall extend to the obligations
of any New Issuer in respect of the Bonds by virtue of a substitution pursuant
to ss.10 of these Terms and Conditions of the Bonds. Copies of the Guarantee are
available free of charge at the specified offices of the Paying Agent and the
Luxembourg Paying Agent (as defined in ss.6 below).
ss.3 Interest
(1) The Bonds shall bear interest at the per annum rate equal to Deutsche
Mark LIBOR (as defined below) plus .65% as from January 4, 1995. Interest shall
be payable quarterly in arrears on each Interest Payment Date. Interest shall be
calculated on the basis of the actual number of days in the applicable Interest
Period divided by 360 days.
(2) The Bonds shall cease to bear interest as of the beginning of the day
on which they become due for redemption. Should the Issuer fail to redeem the
Bonds when due or, where the due date is a Saturday, Sunday or legal holiday at
the place of performance as set forth in ss.13 (2) of these Terms and Conditions
of the Bonds, on the next succeeding banking day, interest shall continue to
accrue beyond the due date until the actual redemption of the Bonds, but not
beyond the fourteenth day after a notice has been published by the Paying Agent
to the effect that the necessary funds for redemption have been provided to the
Paying Agent, at the rate of interest prevailing on the due date for redemption.
(3) "Deutsche Mark LIBOR" means, with respect to any Reset Date, as defined
below, the rate (expressed as a percentage per annum) for deposits in Deutsche
Marks for a three-month period that appears on Telerate Page 3570 (as defined
below) as of 11:00 a.m., London time, on the applicable Interest Determination
Date (as defined below). If such rate does not appear on Telerate Page 3750 as
of 11:00 a.m., London time, on the applicable Interest Determination Date, then
the Paying Agent will request the principal London office of each of four major
reference banks in the London interbank market selected by the Paying Agent to
provide such bank's offered quotation (expressed as a percentage per annum) to
prime banks in the London interbank market for deposits in Deutsche Marks for a
three-month period as of 11:00 a.m., London time, on such Interest Determination
Date and in a Representative Amount (as defined below). If at least two such
quotations are so provided, LIBOR will be the arithmetic mean of such
quotations. If fewer than two such quotations are provided, the Paying Agent
will request each of three major banks in New York City to provide such bank's
rate (expressed as a percentage per annum) for loans in Deutsche Marks to
leading European banks for a three-month period as of approximately 11:00 a.m.,
New York City time, on the applicable Interest Determination Date and in a
Representative Amount. If at least two such rates are so provided, LIBOR will be
the arithmetic mean of such rates. If fewer than two such rates are so provided,
the LIBOR will be LIBOR in effect of the preceding Reset Date.
(4) The annual rate of interest to which the rate is determined in
accordance with ss.3(1) above is equivalent for the purposes of the Interest Act
(Canada) to the rate so determined multiplied by the number of days in the
applicable calendar year and divided by 360.
"Interest Payment Date" shall mean each January 5, April 5, July 5 and
October 5, unless any such date would otherwise fall on a day which is not a
London Business Day, in which case the Interest Payment Date shall be the
immediately following London Business Day, unless it would thereby fall into the
next calendar month, in which case the Interest Payment Date shall be the
immediately preceding London Business Day.
"Interest Period" shall mean the period beginning on and including January
4, 1995 to but excluding the first Interest Payment Date and each successive
period from and including an Interest Payment Date to but excluding the next
Interest Payment Date.
"Interest Determination Date" shall mean the second London Business Day
preceding the Reset Date.
"London Business Day" shall mean any day on which dealings in deposits in
Deutsche Marks are transacted in the London interbank market.
"Representative Amount" means a principal amount of not less than DM
1,000,000 that is representative for a single transaction in the relevant market
at the relevant time.
<PAGE>
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"Reset Date" shall mean the first day of any Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for Deutsche Mark deposits).
All percentages resulting from any calculation in respect of the Bonds will
be rounded to the nearest one hundred thousandth of a percentage point (with
five one-millionths of a percentage point rounded upwards) (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all monetary amounts
used in or resulting from such calculation will be rounded to the nearest
pfennig (with one-half pfennig rounded upwards).
ss.4 Redemption and Purchase
(1) The Issuer undertakes to redeem the Bonds at their principal amount on
the Interest Payment Date falling in January, 2000.
(2) The Issuer may, at its option, redeem all of the Bonds, but not less
than all, at their principal amount on the Interest Payment Date falling in
January, 1997 or any Interest Payment Date thereafter together with the interest
accrued to the date of redemption, on giving not less than 60 days' notice by
publication in accordance with ss.12 of these Terms and Conditions of the Bonds.
(3) The Issuer may at any time purchase Bonds at any price in the open
market or otherwise and Bonds so purchased may be cancelled or resold.
ss.5 Redemption for Tax Reasons
If, as a result of any change of the legal provisions applicable in Canada
or any change in the application or official interpretation of such legal
provisions, which change becomes effective on or after January 4, 1995:
(a) the Issuer shall become obligated to pay additional amounts
pursuant to ss.7 of these Terms and Conditions of the Bonds, or
(b) the Guarantor shall become obligated to pay additional amounts
pursuant to the provisions of the Guarantee, in the event that the
Guarantor is called upon to pay, and effects payment, under the
Guarantee,
then the Issuer may at its option, on giving not less then 30 days notice by
publication pursuant to ss.12 of these Terms and Conditions of the Bonds, redeem
all, but not less than all, of the Bonds at their principal amount together with
unpaid interest accrued to the date of redemption; provided, however, that no
such redemption may be made as of a date which is more than three months before
the date on which the Issuer or the Guarantor shall become obligated to make
payments pursuant to subclauses (a) or (b) for the first time.
ss.6 Payments
(1) All payments of principal and interest in respect of the Bonds shall be
made in freely convertible and transferable legal tender of the Federal Republic
of Germany.
(2) All payments of principal and interest in respect of the Bonds shall be
made by the Issuer to the Paying Agent for on-payment to DKV. Payment to DKV or
to its order shall to the extent of the amounts so paid, constitute the
discharge of the Issuer from its corresponding liabilities under the Bonds.
(3) The Issuer may, solely at its option, deposit with the Local Court
(Amtsgericht) in Frankfurt am Main principal or interest not claimed by
Bondholders within 12 months after the respective due date even though the
respective Bondholders may not be in default of acceptance, with or without
waiver of the right to withdraw such deposit. Provided that, if the Issuer makes
such deposit(s) and waives its right to withdraw same, the affected Bondholders
shall have no claim against the Issuer or the Guarantor in respect thereof.
<PAGE>
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(4) (a) Morgan Stanley GmbH shall be the Paying Agent.
(b) The Issuer may at any time, by giving not less than 30 days'
notice by publication in accordance with ss.12 of these Terms and
Conditions of the Bonds, appoint another leading bank maintaining
its head office or a branch in Frankfurt am Main as paying agent.
(c) The Paying Agent may at any time resign from such office. Such
resignation shall become effective only upon the appointment by
the Issuer of a leading bank maintaining its head office or a
branch in Frankfurt am Main and the giving of not less than 30
days' notice of such appointment by publication in accordance with
ss.12 of these Terms and Conditions of the Bonds.
(5) The Paying Agent shall act exclusively as agent of the Issuer and does
not have any relationship of agency or trust with the Bondholders.
(6) So long as the Bonds are listed on the Luxembourg Stock Exchange, the
Issuer will maintain a paying agent in Luxembourg. The Luxembourg Paying Agent
will be Kredietbank S.A. Luxembourgeoise. The Issuer may at any time appoint
another paying agent in Luxembourg by giving not less than 30 days' notice by
publication in accordance with ss.12 of these Terms and Conditions of the Bonds.
ss.7 Taxes
All payments of principal and interest in respect of the Bonds shall be
made by the Issuer to the Paying Agent for on-payment to DKV without withholding
or deduction for or on account of any present or future taxes or other duties of
whatever nature imposed, levied or collected by or in Canada unless the Issuer
is required by law to make such withholding or deduction. In such event, the
Issuer shall pay such additional amounts of principal and interest as will be
necessary in order that DKV receives the same amounts of principal and interest
under the Bonds which it would have received had no such withholding or
deduction been required to be made; provided, however, that no such additional
amounts shall be payable to DKV insofar as such additional amounts would be
payable only because Bondholders for whom the payments of principal or interest
are designated have a relation to Canada other than the mere fact that they are
Bondholders.
ss.8 Presentation Period
The presentation period for the Bonds (ss.801(1) German Civil Code) shall
be ten years commencing on the date on which the Bonds are due for redemption.
ss.9 Early Termination
(1) Any Bondholder may declare his Bonds due and demand immediate repayment
thereof at their principal amount together with interest accrued to the date of
repayment if:
(a) the Issuer is in default for more than 30 days in the payment of
any amounts due in accordance with the Terms and Conditions of the
Bonds; or
(b) subject to the provisions of subsection (3) below, the Issuer
violates any other obligation under the Terms and Conditions of
the Bonds and such violation continues for more than 30 days after
receipt by the Paying Agent of a written reminder from a
Bondholder; or
(c) subject to the provisions of subsection (3) below, the Guarantor
violates any obligation under the Guarantee and such violation
continues for more than 30 days after the receipt by the Paying
Agent of a written reminder from a Bondholder; or
(d) subject to the provisions of subsection (3) below, any
indebtedness of the Issuer or the Guarantor from monies borrowed
exceeding in aggregate DM 35,000,000 (or equivalent in other
currency) shall not be paid when due or shall become due prior to
its stated maturity resulting from a default which permits any
creditor of the Issuer to accelerate such indebtedness; or
(e) any resolution or order is made which results in the dissolution,
winding-up or liquidation of the Issuer; or
(f) any resolution or order is made which results in the dissolution,
winding-up or liquidation of the Guarantor; or
<PAGE>
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(g) if the Issuer makes an authorized assignment into bankruptcy or if
a bankruptcy petition is filed or presented against the Issuer and
such petition is not defeated within 30 days, or if a receiver or
receiver and manager is appointed over all or substantially all of
the assets of the Issuer and such appointment is not terminated
within 30 days, or if the Issuer files a notice of intention or
files a proposal under the Bankruptcy and Insolvency Act (Canada)
or if the Issuer takes or proposes to take the benefit of any
provision of the Companies' Creditors Arrangement Act (Canada) as
now or hereafter in force; or
(h) if the Guarantor shall commence a voluntary case concerning itself
under Title 11 of the United States Code entitled "Bankruptcy," as
now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against
the Guarantor and the petition is not controverted within 10 days,
or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the
property of the Guarantor, or the Guarantor commences any other
proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect
relating to the Guarantor, or there is commenced against the
Guarantor any such proceeding which remains undismissed for a
period of 60 days, or the Guarantor is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Guarantor suffers any
appointment of any custodian or the like for it or all or
substantially all of its property to continue undischarged or
unstayed for a period of 60 days; or any corporate action is taken
by the Guarantor for the purpose of effecting any of the
foregoing.
The right to declare Bonds due shall terminate if the situation giving rise
to it has been cured before the right is exercised.
(2) Any notice declaring Bonds due shall be made by means of a written
notice to be delivered by hand or registered mail to the Paying Agent together
with proof that such Bondholder at the time of such notice is a holder of the
relevant Bonds by means of a certificate of the Bondholder's Custodian (as
defined in ss.13 below) pursuant to ss.13(5)(a) of these Terms and Conditions of
the Bonds.
(3) The events specified in subsection (1)(b), (c) and (d) above declaring
Bonds due, shall become effective only when the Paying Agent has received such
notices from holders of at least DM 35,000,000 in aggregate principal amount of
the Bonds.
ss.10 Substitution of Issuer
(1) The Issuer may at any time without the consent of the Bondholders
substitute in its stead either the Guarantor or any other company which is
directly or indirectly wholly-owned by the Issuer or the Guarantor (the "New
Issuer") as principal debtor in respect of any and all obligations arising under
or in connection with the Bonds if:
(a) the New Issuer assumes any and all obligations of the Issuer
arising under or in connection with the Bonds;
(b) other than in the case of the Guarantor being the New Issuer, the
Issuer, in a guarantee subject to the laws of the Federal Republic
of Germany which is satisfactory as to form and contents to the
Paying Agent, unconditionally and irrevocably guarantees the
obligations so assumed by the New Issuer;
(c) other than in the case of the Guarantor being the New Issuer, the
provision of the Guarantee pursuant to which the obligations of
the Guarantor under the Guarantee extend to the obligation of the
New Issuer in respect of the Bonds continues to be in full force
and effect;
(d) the New Issuer has obtained any and all authorizations required in
its country of domicile for such substitution and the fulfillment
of any and all obligations arising under or in connection with the
Bonds; and
<PAGE>
-6-
(e) the New Issuer is in the position to fulfill any and all payment
obligations arising under or in connection with the Bonds in
freely convertible and transferable legal tender of the Federal
Republic of Germany without being required to withhold or deduct
any taxes or other duties of whatever kind, and to transfer to the
Paying Agent any and all amounts required for such end.
Any such substitution may not be made if, as a result of the substitution,
the rating accorded by Moody's Investor Service, Inc. or Standard & Poor's
Rating Group to any debt securities issued or guaranteed by the Issuer or to the
Bonds is likely to be downgraded.
(2) Notice of any such substitution shall be given by publication in
accordance with ss.12 of these Terms and Conditions of the Bonds.
(3) In the event of such substitution any reference in these Terms and
Conditions of the Bonds to the Issuer shall from then on be a reference to the
New Issuer and any reference to Canada in ss.5 and ss.7 shall from then on be a
reference to the country or countries in which the New Issuer has its domicile
or residence for tax purposes. Further, in the event of such substitution the
following shall apply:
(a) In ss.7 of these Terms and Conditions of the Bonds, in addition to
the reference in the preceding sentence to the country or
countries in which the New Issuer has its domicile or residence
for tax purposes, an alternative reference shall be made to
Canada;
(b) In ss. 9(1)(c), (d) and (e) of these Terms and Conditions of the
Bonds in addition to the reference to the "Issuer", an alternative
reference shall be made to the original Issuer in its capacity as
guarantor.
ss.11 Further Issues
The Issuer reserves the right from time to time without the consent of the
Bondholders to issue additional Bonds with identical terms, so that the same
shall be consolidated, form a single issue with and increase the aggregate
principal amount of the Bonds. The term "Bonds" shall in the event of such an
increase, also comprise such additionally issued Bonds.
ss.12 Notices
All notices relating to the Bonds shall be published in the Bundesanzeiger
(German Federal Gazette) and, so long as the Bonds are listed on the Luxembourg
Stock Exchange, in the Luxemburger Wort.
ss.13 Governing Law and Miscellaneous
(1) The Bonds, both as to form and contents, and the rights and obligations
of the Bondholders, the Issuer, the Guarantor, and the Paying Agent shall in all
respects be governed by the law of the Federal Republic of Germany.
(2) Place of performance shall be Frankfurt am Main.
(3) Any action or other legal proceedings arising out of or in connection
with the Bonds ("Proceedings") shall be brought in the District Court
(Landgericht) in Frankfurt am Main. The Issuer hereby appoints Weiss & Hasche in
Munich with current address at Briennerstrasse 11/V, 80333 Munich, as its agent
for service of process with respect to any Proceedings brought before any German
court. The Bondholders may pursue their claims against the Issuer also in any
other court of competent jurisdiction.
(4) The German courts shall have exclusive jurisdiction over the annulment
of lost or destroyed Bonds.
(5) Any Bondholder may in any proceedings against the Issuer or to which
the Bondholder and the Issuer are parties protect and enforce in its own name
its rights arising under its Bonds on the basis of (a) a certificate issued by
its Custodian, as defined below, (i) stating the full name and address of the
Bondholder, (ii) specifying an aggregate principal amount of Bonds credited on
the date of such statement to such Bondholder's securities account maintained
with such Custodian and (iii) confirming that the Custodian has given a written
notice to DKV containing the information pursuant to (i) and (ii) and bearing an
acknowledgment of DKV and the relevant DKV accountholder and (b) a copy of the
<PAGE>
-7-
Global Bond certified as being a true copy by a duly authorized officer of DKV.
For purposes of the foregoing, "Custodian" means any bank or other financial
institution of recognized standing authorized to engage in securities custody
business with which the Bondholder maintains a securities account in respect of
any Bonds and includes DKV, Cedel and Euroclear.
(6) For so long as any of the Bonds are represented by the Temporary Global
Bond or the Permanent Global Bond held on behalf of Morgan Guaranty Trust
Company of New York, Brussels office, as operator of Euroclear and/or Cedel,
each person who is for the time being shown in the records of Euroclear and/or
Cedel as the holder of a particular nominal amount of such Bonds (in which
regard any certificate or other document issued by Euroclear or Cedel as to the
nominal amount of such Bonds standing to the account of any person shall be
conclusive and binding for all purposes save in the case of manifest error)
shall be treated by the Issuer and the Paying Agent as a holder of such nominal
amount of such Bonds for all purposes other than for the payment of principal
and interest on such Bonds. As against the Issuer and any Paying Agent, the
right to any such principal and interest shall be vested solely in the bearer of
the Temporary Global Bond and the Permanent Global Bond pursuant to the Terms
and Conditions. The Temporary Global Bond and the Permanent Global Bond shall
only be transferable in accordance with the regulations of Euroclear and/or
Cedel, as the case may be.
<PAGE>
Schedule 2
FORM OF THE TEMPORARY GLOBAL BOND
THIS BOND HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. SUBJECT
TO CERTAIN EXCEPTIONS, THE BONDS MAY NOT BE OFFERED OR SOLD
OR DELIVERED WITHIN THE UNITED STATES OR TO U.S. PERSONS.
THIS BOND IS NOT QUALIFIED FOR SALE IN CANADA. THIS BOND
MAY NOT BE OFFERED OR SOLD DIRECTLY OR INDIRECTLY IN CANADA
OR ANY PROVINCE OR TERRITORY THEREOF.
THIS BOND IS A TEMPORARY GLOBAL BOND, WITHOUT COUPONS,
EXCHANGEABLE FOR A PERMANENT GLOBAL BOND, WITHOUT COUPONS.
THE TERMS AND CONDITIONS OF THE BONDS ATTACHED HERETO APPLY
TO THIS BOND EXCEPT FOR PROVISIONS REFERRING TO THE
PERMANENT GLOBAL BOND.
BBDO CANADA INC.
DM 200,000,000
TEMPORARY GLOBAL BEARER BOND
for Deutsche Mark Floating Rate Bonds of 1995 due January 5, 2000 (the "Bonds")
in an aggregate principal amount of two hundred million Deutsche Mark (DM
200,000,000) divided into
20,000 Bonds in the principal amount of DM 10,000 each
unconditionally and irrevocably
guaranteed by
OMNICOM GROUP INC.
BBDO Canada Inc. (the "Issuer") hereby undertakes to pay to the bearer hereof
upon presentation and surrender of this Temporary Global Bond on the maturity
date of the Bonds the principal sum represented by this Temporary Global Bond or
a portion or portions hereof, in freely convertible and transferable legal
tender of the Federal Republic of Germany.
Until this Temporary Global Bond is exchanged for Bonds represented by the
permanent global bond in the form attached hereto (the "Permanent Global Bond"),
the holder hereof shall not be entitled to receive any payments of interest in
respect of the Bonds.
<PAGE>
-2-
On or after the date which is 40 days after the date hereof (the "Exchange
Date"), the Bonds represented by this Temporary Global Bond may be exchanged in
whole or in part (free of charge) for Bonds represented by a Permanent Global
Bond in the form attached hereto upon notice being given by Morgan Guaranty
Trust Company of New York, Brussels office, as operator of the Euroclear System
("Euroclear") and/or Cedel, societe anonyme ("Cedel") acting on the instructions
of any holder of an interest in this Temporary Global Bond.
The Issuer shall procure that Bonds represented by the Permanent Global Bond
shall be so delivered in exchange for only those Bonds represented by this
Temporary Global Bond in respect of which there shall have been presented to
Morgan Stanley GmbH as agent for the Issuer (the "Agent") by Euroclear or Cedel
a certificate substantially to the following effect:
"BBDO CANADA INC.
Deutsche Mark 200,000,000
Floating Rate Bonds of 1995
due January 5, 2000
(the "Securities")
This is to certify that, based solely on certifications we have received in
writing, by tested telex or by electronic transmission from member organizations
appearing in our records as persons being entitled to a portion of the principal
amount set forth below (our "Member Organizations") substantially to the effect
set forth in the Temporary Global Security in respect of the Securities, as of
the date hereof ________ principal amount of the above-captioned Securities (i)
is owned by persons that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States Federal income taxation regardless of its
source ("United States persons"), (ii) is owned by United States persons that
(a) are foreign branches of United States financial institutions (as defined in
U.S. Treasury Regulations Section 1.165 - 12(c)(1)(v) ("financial institutions")
purchasing for their own account or for resale, or (b) acquired the Securities
through foreign branches of United States financial institutions and who hold
the Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such United States financial
institution has agreed, on its own behalf or through its agent, that we may
advise the Issuer or the Issuer's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
<PAGE>
-3-
1986, as amended, and the regulations thereunder), or (iii) is owned by United
States or foreign financial institutions for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or
foreign financial institutions described in clause (iii) above (whether or not
also described in clause (i) or (ii)) have certified that they have not acquired
the Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in Section 230.903(c)(3)
of Regulation S under the Securities Act of 1933, as amended (the "Act"), then
this is also to certify with respect to the principal amount of Securities set
forth above that, except as set forth below, we have received in writing, by
tested telex or by electronic transmission, from our Member Organizations
entitled to portion of such principal amount, certifications with respect to
such portion, substantially to the effect set forth in the Agency or other
Agreement.
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
any portion of the Temporary Global Security excepted in such certifications and
(ii) that as of the date hereof we have not received any notification from any
of our Member Organizations to the effect that the statements made by such
Member Organizations with respect to any portion of the part submitted herewith
for exchange (or, if relevant, exercise of any rights or collection of any
interest)) are no longer true and cannot be relied upon as the date hereof.
We further certify that none of the Securities are beneficially owned by
residents of the Province of Ontario or any other Province or Territory of
Canada.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States and of the Provinces of Canada or any Territory thereof including the
Province of Ontario. In connection therewith, if administrative or legal
proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification to any interested party in such proceedings.
Dated: _____________ 199 *
<PAGE>
-4-
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Brussels office, as operator of the
Euroclear System]
or
[CEDEL societe anonyme]
By: ________________
---------------
* Not earlier than the Exchange Date."
Any person who would, but for the provisions hereof, otherwise be entitled to
receive a Bond or Bonds represented by the Permanent Global Bond shall not be
entitled to require the exchange of an appropriate part of this Temporary Global
Bond for such Bond or Bonds unless and until he shall have delivered or caused
to be delivered to Euroclear or Cedel, as the case may be, a certificate or
certificates in substantially the form set out below. Copies of the form of
certificate will be available at the offices of Euroclear in Brussels, Cedel in
Luxembourg and each of the paying agents.
"BBDO CANADA INC.
Deutsche Mark 200,000,000
Floating Rate Bonds of 1995 due January 5, 2000
(the "Securities")
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by persons that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of its source
("United States persons"), (ii) are owned by United States person(s) that (a)
are foreign branches of a United States financial institution (as defined in
U.S. Treasury Regulations Section 1.165-12(c)(l)(v)) ("financial institutions")
purchasing for their own account or for resale, or (b) acquired the Securities
through foreign branches of United States financial institutions and who hold
the Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may
advise the issuer or the issuer's agent that it will comply with the
<PAGE>
-5-
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the relations thereunder), or (iii) are owned by United
States or foreign financial institutions(s) for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a
United States or foreign financial institution described in clause (iii) above
(whether or not also described in clause (i) or (ii)) this is to further certify
that such financial institution has not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
If the Securities are of the category contemplated in Section 230.903(c)(3)
of Regulation S under the Securities Act of 1933, as amended (the "Act"), then
this is also to certify that, except as set forth below, (i) in the case of debt
securities, the Securities are beneficially owned by (a) non-U.S. person(s) or
(b) U.S. person(s) who purchased the Securities in transactions which did not
require registration under the Act; or (ii) in the case of equity securities,
the Securities are owned by (x) non-U.S. person(s) (and such persons(s) are not
acquiring the securities for the account or benefit of U.S. person(s))or (y)
U.S. persons(s) who purchased the Securities in a transaction which did not
require registration under the Act. If this certification is being delivered in
connection with the exercise of warrants pursuant to Section 230.902(m) of
Regulation S under the Act, then this is further to certify that, except as set
forth below, the Securities are being exercised by and on behalf of non-U.S.
person(s). As used in this paragraph the term "U.S. person" has the meaning
given to it by Regulation S under the Act.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia) and its "possessions" which
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date
on which you intend to submit your certification relating to the Securities held
by you for our account in accordance with your operating procedures if any
applicable statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification applies as of
such date.
This certification excepts and does not relate to U.S. __________ or such
interest in the above Securities in respect of which we are not able to certify
and as to which we understand exchange and delivery of definitive Securities
<PAGE>
-6-
(or, if relevant, exercise of any rights or collection of any interest) cannot
be made until we do so certify.
We further certify that none of the Securities are beneficially owned by
residents of the Province of Ontario or any other Province or Territory of
Canada.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States and of the Provinces of Canada or any Territory thereof including the
Province of Ontario. In connection therewith, if administrative or legal
proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification to any interested party in such proceedings.
Date: __________ 199_*
By:
-------------------------------------------
As, or as agent for, the beneficial owner(s) of the Securities to which
this certificate relates.
---------
* Not earlier than 15 days prior to the Exchange Date."
On an exchange of the whole of this Temporary Global Bond, this Bond shall be
surrendered to the Agent. On an exchange of part only of this Temporary Global
Bond, this Bond shall be endorsed to reflect the reduction of the principal
amount evidenced hereby.
The attached Terms and Conditions of the Bonds form part of this Temporary
Global Bond.
Dated: January 4, 1995
Toronto, Canada
BBDO CANADA INC.
By: _____________________
Authorized Officer
--------------------------
Authentication Signature
for and on behalf of
Morgan Stanley GmbH
<PAGE>
Schedule 4
FORM OF THE GUARANTEE
(English Translation)
GUARANTEE
of
OMNICOM GROUP INC.
in favour of
the holders of the DM 200,000,000 Floating Rate Bonds
of 1995 due January 5, 2000
(the "Bonds")
issued by
BBDO CANADA INC.
(the "Issuer")
WHEREAS:
Omnicom Group Inc. (the "Guarantor") wishes to guarantee by this Guarantee the
payment of principal and interest under the Bonds.
IT IS HEREBY AGREED as follows:
(1) The Guarantor unconditionally and irrevocably guarantees to the Bondholders
from time to time the due and punctual payment in freely negotiable and
convertible legal tender of the Federal Republic of Germany of the principal of,
and interest on, the Bonds, and any other amounts which are expressed to be
payable under the Bonds, in accordance with the Terms and Conditions of the
Bonds (the "Conditions"), as and when the same shall become due in accordance
with the Conditions.
(2) This Guarantee constitutes a direct, unconditional and unsecured obligation
of the Guarantor and ranks pari passu with all its other unsecured and
unsubordinated obligations, except for obligations accorded preference by
mandatory provisions of law.
The Guarantor agrees that this Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
all or any portion of the obligations must be restored by the Bondholders upon
the bankruptcy or reorganisation of the Issuer or similar proceedings for relief
of debtors under the laws of any jurisdiction hereinafter initiated by or
<PAGE>
-2-
against the Issuer, or as a result of or in connection with proceedings under
fraudulent conveyance law hereinafter initiated against the Issuer.
(3) All payments under this Guarantee shall be made free and clear of and
without deduction for any present and future tax, assessment or other
governmental charge imposed upon such payments by the United States of America
(the "United States") or any political subdivision or taxing authority thereof
or therein. If the Guarantor shall be required by law to deduct any tax,
assessment or other governmental charge from or in respect of any sum payable
under this Guarantee to any Bondholder, (i) the sum payable shall be increased
by such additional amounts (the "Additional Amounts"), as may be necessary, so
that after making all the required deductions, such Bondholder will receive an
amount equal to the sum it would have received had no such deduction been made,
(ii) the Guarantor shall make such deduction and (iii) the Guarantor shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with the applicable law. However, the Guarantor shall not be
required to make any such payment of Additional Amounts for or on account of:
(a) Any tax, assessment or other governmental charge which would not have been
imposed but for the existence of any present or former connection between
such Bondholder (or between a fiduciary, settlor or beneficiary of, or
possessor of a power over such Bondholder, if such Bondholder is an estate
or a trust; or a member or shareholder of such Bondholder, if such
Bondholder is a trust, a partnership or a corporation) and the United
States, the Commonwealth of Puerto Rice or any territory or possession of
the United States or area subject to its jurisdiction including, without
limitation, such Bondholder (or such fiduciary, settlor, beneficiary,
possessor, member or shareholder) being or having been a citizen or
resident thereof;
(b) Any estate, inheritance, gift, sales, transfer, personal property or any
similar tax, assessment or other governmental charge;
(c) Any tax, assessment or other governmental charge imposed by reason of such
Bondholder's past or present status (i) as a personal holding company or
foreign personal holding company with respect to the United States, (ii) as
a corporation which accumulates earnings to avoid United States federal
income tax, (iii) as a controlled foreign corporation with respect to the
United States, (iv) as the owner, actually or constructively, of ten
percent, or more of the total combined voting power of all classes of stock
of the Guarantor entitled to vote, (v) as a private foundation or other
exempt organization or (vi) as a bank receiving interest described
<PAGE>
-3-
in Section 881(c)3(A) of the United States Internal Revenue Code of 1986,
as amended;
(d) Any tax, assessment or other governmental charge that would not have been
imposed but for a failure to comply with any applicable certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or connection with the United States of
the holder or beneficial owner of a Bond if, without regard to any tax
treaty, such compliance is required by statute or regulation of the United
States as a precondition to relief or exemption from such tax, assessment
or other governmental charge;
(e) Any tax, assessment or governmental charge that would not have been so
imposed for the presentation by the Bondholder of the Bond for payment on a
date more than 30 days after the date on which such payment first becomes
due;
(f) Any tax, assessment or governmental charge that are payable otherwise than
by withholding by the Guarantor from the payment of the principal of or, as
the case may be, redemption amount in respect of or interest on the
relevant Bond; or
(g) Any combination of items (a), (b), (c), (d), (e) or (f) above;
nor shall Additional Amounts be paid (i) to any Bondholder who is not the
beneficial owner of the Bond if the beneficial owner thereof would not have been
entitled to payment of Additional Amounts had such beneficial owner been the
Bondholder, or (ii) to any Bondholder who is a United States person.
(4) The obligations of the Guarantor under this Guarantee (i) shall be separate
and independent from the obligations of the Issuer under the Bonds, (ii) shall
exist irrespective of the legality, validity, binding effect or enforceability
of the Bonds, and (iii) shall not be affected by any event, condition or
circumstance of whatever nature, whether factual or legal, save the full,
definitive and irrevocable satisfaction of any and all payment obligations
expressed to be assumed under the Bonds.
The Guarantor irrevocably waives any and all rights or claims to indemnity,
subrogation, reassessment, exoneration, reimbursement or contribution which it
had, has or hereafter may have in respect of any payment under this Guarantee
until the Bondholders are paid in full.
<PAGE>
-4-
(5) The obligations of the Guarantor under this Guarantee shall without any
further act or thing being required to be done or to occur extend to the
obligations of any New Issuer which is not the Guarantor arising in respect of
any Bond by virtue of a substitution pursuant to the applicable provisions of
the Conditions.
(6) This Guarantee and all agreements herein contained constitute a contract in
favour of the Bondholders from time to time as third party beneficiaries
pursuant to ss. 328(1) of the German Civil Code giving rise to the right of each
such holder to require performance of the obligations undertaken herein directly
from the Guarantor and to enforce such obligations directly against the
Guarantor.
(7) Morgan Stanley GmbH with which the agreements herein contained are made does
not act as fiduciary agent or in any similar capacity for the Bondholders.
(8) Terms used and not otherwise defined herein shall have the meanings
attributed to them in the Conditions.
(9) This Guarantee is governed by, and shall be construed in accordance with,
the laws of the Federal Republic of Germany.
(10) If any provision of this Guarantee is or shall become invalid in whole or
in part, the other provisions hereof shall remain in force. The invalid
provision shall be deemed substituted by a valid provision which accomplishes as
far as legally possible the economic purposes of the invalid provision.
(11) This Guarantee is written in the German language and translated into the
English language. The German language version shall be legally binding and
controlling in each and every respect.
(12) The original copy of this Guarantee shall be delivered to, and kept by,
Morgan Stanley GmbH.
(13) Place of performance for all obligations of the Guarantor hereunder is
Frankfurt am Main.
(14) Any action or other legal proceedings arising out of or in connection with
this Guarantee ("Proceedings") shall be brought in the District Court
(Landgericht) in Frankfurt am Main. The Guarantor hereby appoints Wei(beta) &
Hasche, Rechtsanwalte, Brienner Stra(beta)e 11/V, D-80333 Munich, as its agent
for service of process with respect to any Proceedings brought before any German
court. The Bondholders may pursue their claims against the Guarantor also in any
other court of competent jurisdiction.
<PAGE>
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(15) Any Bondholder may in any proceedings against the Guarantor or to which
such Bondholder and the Guarantor are parties protect and enforce in his own
name his rights arising under this Guarantee on the basis of a copy of this
Guarantee certified as being a true copy by a duly authorised officer of Morgan
Stanley GmbH, without the need for production in such proceedings of this
Guarantee.
January 4, 1995
OMNICOM GROUP INC.
We accept the terms of the above Guarantee without recourse, warranty or
liability.
January 4, 1995
MORGAN STANLEY GMBH
<PAGE>
Schedule 5
THE COMMITMENTS OF THE MANAGERS
Principal Amount
of Notes
DM
--
Morgan Stanley GmbH 175,000,000
Citibank Aktiengesellschaft 5,000,000
Kidder Peabody International PLC 5,000,000
Merrill Lynch Bank AG 5,000,000
Schweizerischer Bankverein
(Deutschland) AG 10,000,000
-----------
Total 200,000,000
===========
<PAGE>
Schedule 6
SELLING TERMS
In connection with the purchase, offering and sale of the Notes each of the
Managers represents that it has observed and undertakes that it will observe the
following restrictions on the offering and sale of the Notes and the
distribution of documents relating to the Notes:
(1) No action has been or will be taken in any jurisdiction by the Managers or
the Issuer that would permit a public offering of the Notes, or possession or
distribution of the Offering Memorandum, any amendment or supplement thereto
issued in connection with the offering of the Notes or any other offering
material, in any country or jurisdiction where action for that purpose is
required. Each Manager will comply with all applicable laws and regulations in
each jurisdiction in which it, directly or indirectly, purchases, offers, sells
or delivers the Notes or has in its possession or distributes the Offering
Memorandum, any amendment or supplement thereto or any other offering material,
in all cases at its own expense. No Manager is authorized to make any
representation or use any information in connection with the issue, subscription
and sale of the Notes other than as contained in the Offering Memorandum or any
amendment or supplement thereto.
(2) the Notes have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S under the Securities Act
or pursuant to an exemption from the registration requirements of the Securities
Act. Each of the Managers has offered and sold the Notes, and will offer and
sell the Notes (i) as part of their distribution at any time and (ii) otherwise
until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 of Regulation S under the
Securities Act. Accordingly, none of the Managers, their affiliates or any
persons acting on the Managers' or their affiliates' behalf have engaged or will
engage in any directed selling efforts with respect to the Notes, and the
Managers and their affiliates have complied and will comply with the offering
restrictions requirement of Regulation S. Each of the Managers agrees that, at
or prior to confirmation of sale of the Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Notes from any Manager during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
<PAGE>
-2-
and sold within the United States or to, or for the account or benefit of
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the offering
and the closing date, except in either case in accordance with Regulation S
under the Securities Act. Terms used above have the meaning given to them
by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Except as contemplated by this Agreement, the Managers have not entered and
will not enter into any contractual arrangement with respect to the distribution
or delivery of the Notes, except with their affiliates or with the prior written
consent of the Issuer.
(3) In addition, each of the Managers
(i) except to the extent permitted under U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D) (the "D Rules"), (a) has not offered or sold, and
during the restricted period will not offer or sell, Notes in bearer form
to a person who is within the United States or its possessions or to a
United States person, and (b) has not delivered and will not deliver within
the United States or its possessions definitive Notes in bearer form that
are sold during the restricted period;
(ii) represents and agrees that it has and throughout the restricted period
will have in effect procedures reasonably designed to ensure that its
employees or agents who are directly engaged in selling the Notes in bearer
form are aware that such Notes may not be offered or sold during the
restricted period to a person who is within the United States or its
possessions or to a United States person, except as permitted by the D
Rules;
(iii) if it is a United States person, represents that it is acquiring the
Notes in bearer form for purposes of resale in connection with their
original issuance and, if it retains Notes in bearer form for its own
account, will only do so in accordance with the requirements of U.S. Treas.
Reg. Section 1.163-5(c)(2)(i)(D)(6); and
(iv) with respect to each affiliate that acquires from any Manager Notes in
bearer form for the purpose of offering or selling such Notes during the
restricted period, agrees either (A) that it will repeat and confirm the
representations and agreements contained in clauses (i), (ii) and (iii) on
<PAGE>
-3-
behalf of such affiliate or (B) agrees that it will obtain from such
affiliate for the benefit of the Issuer the representations and agreements
contained in clauses (i), (ii) and (iii).
Terms used in this paragraph have the meanings given to them by the U.S.
Internal Revenue Code and regulations thereunder, including the D Rules.
(4) Each of the Managers represents and agrees that (i) it has not offered or
sold, and will not offer or sell, in the United Kingdom of Great Britain and
Northern Ireland (the "United Kingdom") by means of any document, any of the
Notes, other than to persons whose ordinary business it is to buy or sell shares
or debentures, whether as principal or agent or in circumstances which do not
constitute an offer to the public within the meaning of the Companies Act 1985
of the United Kingdom, (ii) it has complied, and will comply, with all
applicable provisions of the Financial Services Act 1986 of the United Kingdom
(the "Financial Services Act") with respect to anything done by it in relation
to the Notes in, from or otherwise involving the United Kingdom, (iii) it has
only issued or passed on and will only issue or pass on to any person in the
United Kingdom any document received by it in connection with the issue of the
Notes if that person is of a kind described in Article 9(3) of the Financial
Services Act (Investment Advertisements) (Exemptions) Order 1988 or is a person
to whom the document may otherwise lawfully be issued or passed on.
(5) the Notes are being issued under the "Euro-Securities" exemption as defined
in ss. 4(2) Wertpapier-Verkaufsprospektgesetz and accordingly a selling
prospectus in respect of the Notes has not been prepared. Each of the Managers
represents and agrees that it has not publicly promoted, and will not publicly
promote, the distribution of Notes.
(6) Each of the Managers acknowledges, represents and agrees that: (i) the
Notes are not qualified for sale in Canada; (ii) it has not and will not offer
or sell the Notes directly or indirectly in Canada or to, or for the account of,
any resident of Canada in contravention of the securities laws of Canada or any
province or territory thereof; (iii) there are restrictions on the transfer or
resale of the Notes to residents of Canada and no such transfer or resale should
take place except in strict compliance with the securities laws of Canada or the
province or territory of Canada in which such person is resident; and (iv) it is
unlikely that the Issuer will ever become a reporting issuer in any province or
territory of Canada.
<PAGE>
Schedule 7
DOCUMENTS TO BE FURNISHED PURSUANT TO ss. 9(1)(f)
(A) Documents relating to the Issuer:
1. Two certified copies of the Certificate and Articles of Incorporation
certified by the Director of the Companies Branch of the Ministry of
Consumer and Commercial Relations (Ontario).
2. a Certificate of Status issued by the Ministry of Consumer and Commercial
Relations (Ontario).
3. two certified copies of the By-laws of the Issuer certified by the
Secretary of the Issuer.
4. two certified copies of the resolutions of the Directors of the Issuer
authorizing the issuance of the Notes and the Agreements and the execution
and delivery thereof.
5. if applicable, powers of attorney by duly authorized officers of the Issuer
authorizing an appropriate officer or officers to execute and deliver on
behalf of the Issuer each of the Notes and the Agreements, and any and all
additional documents as may be necessary or appropriate to effectuate any
or all of the obligations of the Issuer pursuant to the Notes, the
Agreements or any ancillary documents.
6. a certificate of incumbency indicating the authority of each of the
officers of the Issuer executing the Notes, the Agreements or any ancillary
documents or any power of attorney (referred to in paragraph 5 above), on
behalf of the Issuer.
7. letter of appointment of Wei(beta) & Hasche, Rechtsanwalte, Brienner
Stra(beta)e 11/V, D-80333 Munich, as agent for service of process for the
Issuer in the Federal Republic of Germany.
(B) Documents relating to the Guarantor:
1. Two copies of the Certificate of Incorporation of the Guarantor certified
by the Secretary of the State of New York;
2. a certificate of the Secretary of the State of New York as to the good
standing of the Guarantor;
3. two copies of the By-laws of the Guarantor certified by the Secretary or
Assistant Secretary of the Guarantor;
<PAGE>
-2-
4. two certified copies of the resolutions of the Board of Directors of the
Guarantor authorizing the Notes, the execution and delivery of the
Agreements and the Guarantee, and performance of the Guarantor's
obligations thereunder;
5. if applicable, powers of attorney signed by duly authorised officers of the
Guarantor authorising an appropriate person or persons to execute and
deliver on behalf of the Guarantor the Agreements and the Guarantee, and
any other documents, notices, letters or other communications to be given
by the Guarantor in connection with the Notes;
6. a certificate of the Secretary or Assistant Secretary of the Guarantor as
to the incumbency of the officers of the Guarantor signing the documents or
any power or attorney provided for in paragraph 5 above on behalf of the
Guarantor;
7. letter of appointment of Wei(beta) & Hasche, Rechtsanwalte, Brienner
Stra(beta)e 11/V, D-80333 Munich, as agent for service of process for the
Guarantor in the Federal Republic of Germany.
<PAGE>
Dated January 4, 1995
BBDO CANADA INC.
- and -
OMNICOM GROUP INC.
- and -
MORGAN STANLEY GMBH
--------------------------------------------
PAYING AGENCY AGREEMENT
DM 200,000,000
Floating Rate Bonds of 1995 due January 5, 2000
--------------------------------------------
HENGELER MUELLER WEITZEL WIRTZ
Frankfurt am Main
<PAGE>
-2-
PAYING AGENCY AGREEMENT dated January 4, 1995
between
(1) BBDO CANADA INC. (the "Issuer"),
(2) OMNICOM GROUP INC. (the "Guarantor"), and
(3) MORGAN STANLEY GMBH as paying agent
(the "Bank").
The Issuer and the Guarantor and a syndicate of financial institutions (the
"Managers") under the lead management of the Bank have entered into a
Subscription Agreement (the "Subscription Agreement") dated December 14, 1994,
pursuant to which the Issuer has agreed to issue, and the Managers have agreed
to purchase, DM 200,000,000 Floating Rate Bonds of 1995 due January 5, 2000 (the
"Bonds") which will be guaranteed as to payment of all sums payable in respect
of the Bonds by the Guarantor.
ss. 1 Definitions
In this Agreement the terms defined in the Subscription Agreement and the Terms
and Conditions of the Bonds (the "Conditions") exhibited to the Subscription
Agreement in Schedule 1 thereof shall have the same meaning herein unless
otherwise required by the context, and "Paying Agent" means the Bank in its
capacity as Paying Agent in respect of the Bonds and any successor of the Bank
in such capacity appointed in accordance with ss. 6(3) of the Conditions,
"Luxembourg Paying Agent" means the financial institution mentioned in ss. 6(5)
of the Conditions in its capacity as paying agent in respect of the Bonds for
the time of its appointment and any other financial institution appointed from
time to time as paying agent in accordance with ss. 6(3) of the Conditions, and
(c) "Agents" means the Paying Agent and the Luxembourg Paying Agent.
ss. 2 Appointment of Agents
(1) Each of the Issuer and the Guarantor hereby appoint the Bank as its Paying
Agent in respect of the Bonds and the Guarantee and the Paying Agent accepts its
appointment hereunder.
The Paying Agent shall have the rights and duties set out in the Conditions and
in this Agreement and such rights and duties as are reasonably incidental
thereto.
(2) The Issuer and the Guarantor hereby ratify (i) the appointment by the Paying
Agent, in the name and on behalf of the Issuer and the Guarantor, of the
Luxembourg Paying Agent mentioned in ss. 6(5) of the Conditions and (ii) the
<PAGE>
-3-
making by the Paying Agent, in the name and on behalf of the Issuer and the
Guarantor, of the necessary arrangements with the Luxembourg Paying Agent
regarding its services as paying agent. The Paying Agent warrants to the Issuer
and the Guarantor that those arrangements are appropriate for the purpose and
that each Paying Agent has agreed to be liable to the Issuer and the Guarantor
in terms comparable to those set out in ss. 10(2) hereof.
ss. 3 The Bonds and the Guarantee
(1) Form. The Temporary Global Bond, the Permanent Global Bond (together the
"Global Bonds") and the Guarantee shall be substantially in the respective form
set out in the Subscription Agreement.
(2) The Global Bonds. The Global Bonds shall be signed manually on behalf of the
Issuer by two duly authorized signatories of the Issuer or by a duly authorized
attorney of the Issuer. The Issuer shall make the duly signed Global Bonds
available to the Paying Agent not later than two Frankfurt banking days before
the Closing Date. The Paying Agent shall authenticate the signed Temporary
Global Bond and deliver it, value the Closing Date, to Deutscher Kassenverein AG
for the account of the Managers. On or after the date which is 40 days after the
Closing Date the Paying Agent shall authenticate the Permanent Global Bond and
deliver it to Deutscher Kassenverein AG in accordance with the provisions of the
Temporary Global Bond and the Permanent Global Bond.
(3) The Guarantee. The Guarantor shall make available to the Paying Agent the
duly signed Guarantee for delivery on the Closing Date not later than two
Frankfurt banking days before the Closing Date. The Paying Agent shall hold the
Guarantee until all obligations under the Bonds and under the Guarantee have
been fulfilled, and thereafter for so long as any claim against the Issuer or
the Guarantor in relation to the Bonds or the Guarantee has been finally
adjudicated, settled or discharged. Upon the request of any Bondholder, the
Paying Agent shall make available to such Bondholder a copy of the Guarantee
certified by the Paying Agent to be a true copy of the original.
ss. 4 Payments
(1) Payment by Issuer and Guarantor. Not later than 10:00 a.m. (Frankfurt time)
on the respective due date for the payment of principal, interest or otherwise,
the Issuer, failing whom the Guarantor, shall pay to the Paying Agent in same
day funds the monies required for the payment of principal, interest or
otherwise in such currency as at the time of payment shall be legal tender in
the Federal Republic of Germany. The Issuer, failing whom the Guarantor, shall
<PAGE>
-4-
confirm to the Paying Agent not later than 10:00 a.m. (Frankfurt time) on the
second banking day in Frankfurt am Main before the respective due date for any
such payment that it has issued irrevocable payment instructions for such
payment to be made. The Paying Agent shall contact the Issuer and the Guarantor
not later than ten banking days before the respective due date with regard to
such payment. Any payment hereunder shall be made to a redemption account in
Frankfurt am Main as the Paying Agent may from time to time notify to the
Issuer. Such redemption account will bear no interest.
As used in this Agreement, "banking day" means any day on which banks are open
for business in Frankfurt am Main.
(2) Advances. If the monies required for the payment of principal, interest or
otherwise are not, or not fully, received by the Paying Agent at the time and in
the manner provided for in subsection (1) and if the Paying Agent has received
the confirmation mentioned in subsection (1), the Paying Agent shall be
entitled, but not in any event be obliged, to advance the necessary funds and to
charge interest on the amount of such advance at the rate applied by it from
time to time on overdraft facilities extended to prime borrowers. The Guarantor
hereby guarantees the repayment of any such advance extended to the Issuer.
(3) Notification. If the Paying Agent has not by 12:00 a.m. (Frankfurt time) on
the second banking day before the respective due date received the confirmation
referred to in subsection (1), it shall forthwith notify the Issuer and the
Guarantor thereof.
ss. 5 Cancellation
On the exchange of the whole of the Temporary Global Bond for Bonds represented
by the Permanent Global Bond the Paying Agent shall collect and cancel the
Temporary Global Bond. Upon full and final payment of principal, interest and
any other moneys payable in respect of the Bonds, the Paying Agent shall collect
and cancel the Permanent Global Bond. The Paying Agent shall deliver the
cancelled Global Bonds to the Issuer. The Paying Agent shall bear no further
responsibility for the Global Bonds so cancelled.
ss. 6 Notices
(1) At the request of the Issuer the Paying Agent shall cause to be published in
accordance with ss. 12 of the Conditions any notice to be given to the
Bondholders in accordance with the Conditions or necessary to comply with the
<PAGE>
-5-
requirements of any stock exchange on which the Bonds are listed.
(2) If the Paying Agent has not received the full amount of the monies payable
to the Bondholders in respect of the Bonds on or prior to the date on which such
monies are payable to it in accordance with ss. 4(1) and if such monies have not
been advanced by the Paying Agent under ss. 4(2), the Paying Agent shall notify
the Issuer and the Guarantor thereof and publish a notice thereof in accordance
with ss. 12 of the Conditions.
(3) If the Issuer shall elect to redeem the Bonds under ss. 5 of the Conditions
it shall not less than 30 days prior to the latest date for the publication of
the notice of redemption to be given to Bondholders, notify the Paying Agent of
such intention stating the date on which the Bonds are to be redeemed.
ss. 7 Documents
The Issuer shall provide to the Paying Agent for distribution among the Agents
(i) sufficient copies of the Guarantee, and (ii) sufficient copies of any other
document required by the Conditions, the Offering Memorandum or the Listing
Prospectus or any stock exchange on which the Bonds are listed to be available
for issue or delivery to, or inspection by, Bondholders. Upon request of any
person, the Paying Agent shall, and shall procure that the other Agents will,
make copies of the documents mentioned in (i) and (ii) so available to such
person.
ss. 8 Other Provisions
(1) No Agency or Trust Relationship. The Agents are acting solely as agents for
the Issuer and do not have any relationship of agency or trust with the
Bondholders. The Paying Agent shall be released from the restrictions set out in
ss. 181 German Civil Code.
(2) No Lien. The Paying Agent shall not, and shall procure that the other Agents
will not, have any lien, right of retention, right of set-off or similar right
in respect of any monies paid or payable to or by it hereunder against the
Issuer, the Guarantor, any Bondholder or any other person.
(3) No Liability for Interest. No Agent shall have any liability to any person
for interest on any monies held by it pursuant to this Agreement.
(4) Taking of Advise. The Paying Agent may consult on any legal matter with any
legal adviser satisfactory to it and any advise or written opinion of such legal
<PAGE>
-6-
adviser shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted to be taken by it hereunder in good faith
and in accordance with such advise or opinion.
(5) Document Believed to be Genuine. The Paying Agent shall be protected and
shall incur no liability for or in respect of any action taken or omitted to be
taken or loss suffered by it in reliance upon any Global Bond, notice, statement
or other paper or document reasonably believed by it to be genuine and to have
been presented or signed by the proper party or parties.
ss. 9 Commissions and Expenses
(1) Commissions. The Issuer, failing whom the Guarantor, shall in respect of the
services of the Agents pursuant to this Agreement pay to the Paying Agent the
commissions and fees as separately agreed between the Issuer and the Paying
Agent. The Issuer and the Guarantor shall have no responsibility with respect to
the apportionment of such monies as between the Paying Agent and the other
Agents.
(2) Expenses. The Issuer, failing whom the Guarantor, shall pay to the Paying
Agent all reasonable out-of-pocket expenses (including legal, publication,
insurance, telex and postage expenses) properly incurred by the Agents in
connection with their services. Subsection (1), sentence 2 shall apply
analogously.
ss. 10 Indemnities
(1) By Issuer. The Issuer, failing whom the Guarantor, shall indemnify each of
the Agents against any loss, liability, expense or claim (including all
reasonable expenses paid or incurred in disputing or defending any of the
foregoing) which it may incur or which may be made against it arising out of or
in relation to or in connection with its appointment or the performance of its
functions, except such as may result from a violation by it of its obligations
under or pursuant to this Agreement for which the Agent is responsible under
general provisions of German law.
(2) By Paying Agent. The Paying Agent shall indemnify the Issuer and the
Guarantor against any loss, liability, expense or claim (including, but not
limited to, all reasonable expenses paid or incurred in disputing or defending
any of the foregoing) which the Issuer or the Guarantor may incur or which may
<PAGE>
-7-
be made against them as a result of the violation by the Paying Agent of its
obligations under this Agreement for which it is responsible under general
provisions of German law.
ss. 11 Change of Agents
The change of Agents shall be governed by the provisions of ss. 6(3) and (5) of
the Conditions
ss. 12 Communications
(1) Any document or information furnished or supplied under this Agreement shall
be in the German or English language.
(2) All communications given hereunder shall be given by letter, or by telex,
cable or facsimile transmission to be confirmed by letter.
(3) Subject to written notice of change of address, all communications hereunder
shall be given to the following addresses:
(a) If to the Issuer:
BBDO Canada Inc.
2 Bloor Street West
Toronto, Ontario M4W 3R6
Canada
Telefax: 416 960 1618
Attention: Chief Financial Officer
with a copy to the Guarantor in accordance with the details given below.
(b) If to the Guarantor:
Omnicom Group Inc.
437 Madison Avenue
New York, N.Y. 10022
U.S.A.
Telefax: 212 415 3530
Attention: Chief Financial Officer
(c) If to the Paying Agent:
Morgan Stanley GmbH
Rahmhofstra(beta)e 2 - 4
60313 Frankfurt am Main
Federal Republic of Germany
<PAGE>
-8-
Telefax: 69 2166 1399
Telex: 412 648
Attention: New Issues Department
ss. 13 Severability. Should any provision of this Agreement be or become void in
whole or in part, the other provisions of this Agreement shall remain in force.
The void provision shall be deemed substituted by a valid provision which
accomplishes as far as legally possible the economic purposes of the void
provision.
ss. 14 Stamp Taxes. The Issuer, failing whom the Guarantor, shall pay all stamp
or other documentary taxes or duties, if any, to which this Agreement may be
subject in Canada, the United States of America or the Federal Republic of
Germany.
ss. 15 Governing Law;
Place of Performance and Jurisdiction
(1) This Agreement shall in all respects be governed by, and construed in
accordance with, the laws of the Federal Republic of Germany.
(2) Place of performance for the obligations of all parties hereto shall be
Frankfurt am Main.
ss. 16 Place of Jurisdiction
Any action or other legal proceedings arising out of or in connection with this
Agreement ("Proceedings") shall be brought in the District Court (Landgericht)
in Frankfurt am Main. The Issuer and the Guarantor hereby appoint Wei(beta) &
Hasche, Rechtsanwalte, Brienner Stra(beta)e 11/V, D-80333 Munich, as their
respective agent for service of process with respect to any proceedings brought
before any German court.
ss. 17 Conditionality
Except for the obligations of the Issuer and the Guarantor under ss. 14, the
rights and obligations of the parties hereunder shall be conditional on the
occurrence of the Closing under the Subscription Agreement.
ss. 18 Counterparts
This Agreement is executed in three counterparts in the English language. One
executed counterpart is issued to each party hereto. Each executed counterpart
shall be an original.
<PAGE>
-9-
BBDO CANADA INC.
By: Quattro
-------------
OMNICOM GROUP INC.
By: Hewitt
------------
MORGAN STANLEY GMBH
By: Wirth Brugger
<PAGE>
EXHIBIT 10.14
AMENDMENTS TO 1987 STOCK PLAN
Pursuant to resolutions adopted by the Board of Directors of Omnicom Group
Inc. ("Omnicom") on March 28, 1994, the Omnicom 1987 Stock Plan (the "Plan") is
hereby amended, effective June 1, 1994 and subject to the approval of the
shareholders of Omnicom, as set forth below.
A. Subsections (f), (g) and (h) of Section 7 are hereby deleted and the
following substituted therefor:
"(f) Retirement/Involuntary Termination of Employment of Holder of
Option. In the event of Termination of Employment of an Employee to whom an
Option has been granted by reason of his or her Retirement (other than for
Total Disability), or Involuntary Termination of Employment:
(i) if the date of such termination occurs before the expiration
of the Waiting Period of an Option, such Option(s) shall automatically
be cancelled and be of no further force or effect;
(ii) if the date of such termination occurs after the expiration
of the Waiting Period of an Option, such Option(s) may be exercised in
full only during the thirty-six month period immediately following the
date of such termination, but in no event may such Option(s) be
exercised after the expiration of the term specified in the Option.
(g) Total Disability of Holder of Option. In the event of Termination
of Employment of an Employee to whom an Option has been granted by reason
of his or her Total Disability, such Option(s) may be exercised in full
only during the thirty-six month period immediately following the date of
such termination, but in no event may such Option(s) be exercised after the
expiration of the term specified in the Option.
(h) Death of Holder of Option. In the event of Termination of
Employment of an Employee to whom an Option has been granted by reason of
his or her death, such Option(s) may be exercised in full only during the
thirty-six month period immediately following the date of death, but in no
event may such Option(s) be exercised after the expiration of the term
specified in the Option, provided, however, that such Option(s) may only be
exercised by those to whom such person's rights under the Option(s) have
passed by will or through the laws of descent and distribution. In the
event of the death of a former employee within the thirty-six month period
following his or her termination of employment by reason of Retirement,
Involuntary Termination of Employment or Total Disability, Option(s)
exercisable under subsections (f) and (g) of this Section 7 may only be
exercised by those to whom such person's rights under the Option(s) have
passed by will or through the laws of descent and distribution.
(i) The Committee shall have the authority to extend the
post-termination of employment exercise periods of outstanding options to
conform with the provisions of subsections (f), (g) and (h) of this Section
7."
B. Subsections (i) through (l) of Section 7 are hereby redesignated as
subsections (j) through (m).
C. A new subsection (n) is hereby added to Section 7 and reads as follows:
"(n) The maximum number of shares with respect to which options may be
granted by the Committee to any employee in any one calendar year shall be
100,000 shares."
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
Omnicom Group Inc................................ New York -- --
Omnicom International Inc........................ Delaware Registrant 100%
Omnicom Management Inc........................... Delaware Registrant 100%
Omnicom Finance Inc.............................. Delaware BBDO Worldwide Inc. 33%
DDB Needham Worldwide Inc. 33%
Omnicom Management Inc. 34%
Altschiller & Company Inc........................ New York Registrant 100%
Goodby, Silverstein & Partners Holdings Inc...... California Registrant 100%
Goodby, Silverstein & Partners Inc............... California Goodby, Silverstein & Partners Holdings Inc. 100%
Aegis Group plc.................................. United Kingdom Registrant 9%
BBDO Worldwide Inc............................... New York Registrant 100%
BBDO Atlanta, Inc................................ Georgia BBDO Worldwide Inc. 100%
BBDO Chicago, Inc................................ Delaware BBDO Worldwide Inc. 100%
BBDO Detroit, Inc................................ Delaware BBDO Worldwide Inc. 100%
BBDO International Inc........................... Delaware Omnicom International Inc. 100%
Baker Lovick, L.L.C.............................. Delaware BBDO Canada Inc. 99%
Omnicom Finance Limited 1%
RATTO/BBDO S.A................................... Argentina BBDO Worldwide Inc. 20%
Clemenger BBDO Ltd............................... Australia BBDO Worldwide Inc. 47%
Clemenger Perth Pty. Ltd......................... Australia Clemenger BBDO Ltd. 47%
Clemenger Pty. Ltd............................... Australia Clemenger BBDO Ltd. 47%
Diversified Marketing Services Pty. Ltd.......... Australia Clemenger BBDO Ltd. 47%
Holt Group Pty. Ltd. (Melbourne)................. Australia Diversified Marketing Services Pty. Ltd. 47%
Clemenger Adelaide Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47%
Holt Group Pty. Ltd. (Sydney).................... Australia Diversified Marketing Services Pty. Ltd. 47%
Clemenger Direct Pty. Ltd. (Melbourne)........... Australia Diversified Marketing Services Pty. Ltd. 47%
Clemenger Sydney Pty. Ltd........................ Australia Clemenger BBDO Ltd. 47%
Port Productions Pty. Ltd. (Melbourne)........... Australia Diversified Marketing Services Pty. Ltd. 35%
Clemenger Brisbane Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47%
Clemenger Direct Pty. Ltd. (Sydney).............. Australia Diversified Marketing Services Pty. Ltd. 47%
Clemenger Tasmania Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47%
Clemenger Melbourne Pty. Ltd..................... Australia Clemenger BBDO Ltd. 47%
Clemnet Pty. Ltd. (Australia).................... Australia Diversified Marketing Services Pty. Ltd. 47%
TEAM/BBDO Werbeagentur Ges. m.b.H................ Austria BBDO Worldwide Inc. 100%
TEAM/BBDO Werbeagentur Ges. m.b.H & Co. Kg....... Austria TEAM/BBDO Werbeagentur Ges.m.b.H 87%
Sponsoring & Event Marketing S.A................. Belgium BBDO Belgium S.A. 65%
Omnimedia S.A.................................... Belgium BBDO Belgium S.A. 44%
BBDO/Business Communications S.A................. Belgium BBDO Belgium S.A. 70%
Morael & Partners S.A............................ Belgium BBDO Belgium S.A. 61%
VVL/BBDO S.A..................................... Belgium BBDO Belgium S.A. 70%
Moors Bloomsbury................................. Belgium BBDO Belgium S.A. 61%
BBDO Belgium S.A................................. Belgium BBDO Worldwide Inc. 88%
N'Lil S.A........................................ Belgium BBDO Belgium S.A. 45%
Optimum Media Team S.A........................... Belgium BBDO Belgium S.A. 44%
DDB Needham Worldwide S.A. 46%
The Media Partnership............................ Belgium BBDO Belgium S.A. 22%
Topolino S.A..................................... Belgium BBDO Belgium S.A. 45%
RPV Comunicacoes Ltda............................ Brazil ALMAP/BBDO Comunicacoes Ltda. 60%
ALMAP/BBDO Comunicacoes Ltda..................... Brazil BBDO Publicidade, Ltda. 60%
BBDO Publicidade, Ltda........................... Brazil BBDO Worldwide Inc. 100%
McKim Communications Limited..................... Canada BBDO Canada Inc. 100%
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
The Gaylord Group Ltd............................ Canada BBDO Canada Inc. 70%
PNMD, Inc........................................ Canada BBDO Canada Inc. 49%
BBDO Canada Inc.................................. Canada BBDO Worldwide Inc. 100%
BBDO Chile, S.A.................................. Chile BBDO Worldwide Inc. 45%
BBDO/CNUAC Advertising Co. Ltd................... China BBDO Asia Pacific Ltd. 51%
Alberto H. Garnier, S.A.......................... Costa Rica BBDO Worldwide Inc. 20%
BBDO D.O.O Zagreb................................ Croatia BBDO Worldwide Inc. 60%
Impact/BBDO International Ltd.................... Cyprus BBDO Worldwide Inc. 44%
Mark/BBDO, joint stock company................... Czech Republic BBDO Worldwide Inc. 36%
Media Direction.................................. Czech Republic BBDO Worldwide Inc. 20%
BBDO Denmark A/S................................. Denmark BBDO Holding A/S 71%
BBDO Business Communications A/S................. Denmark BBDO Holding A/S 32%
J & J Business Communications A/S................ Denmark BBDO Business Communications A/S 32%
BBDO Holding A/S................................. Denmark BBDO Worldwide Inc. 81%
The Media Partnership A/S........................ Denmark BBDO Denmark A/S 16%
Impact/BBDO...................................... Egypt Impact/BBDO International Ltd. 40%
Apex/BBDO........................................ El Salvador Garnier/BBDO 10%
Bookkeeper Investment OY......................... Finland BBDO Worldwide Germany GmbH 100%
Avant/BBDO OY.................................... Finland Bookkeeper Investment OY 90%
AKT/BBDO OY...................................... Finland Bookkeeper Investment OY 91%
Bookkeeper Financing OY.......................... Finland Bookkeeper Investment OY 100%
La Compagnie S.A................................. France BBDO GmbH 100%
Nomad S.A........................................ France La Compagnie S.A. 60%
The Media Partnership ........................... France La Compagnie S.A. 17%
Proximite S.A.................................... France La Compagnie S.A. 64%
Directment S.A................................... France La Compagnie S.A. 45%
West End S.A..................................... France La Compagnie S.A. 100%
Realisation S.A.................................. France La Compagnie S.A. 50%
Optimum Media S.A................................ France La Compagnie S.A. 50%
DDB Needham Worldwide Communications S.A. 50%
Deslegan S.A..................................... France La Compagnie S.A. 40%
Reflexions S.A................................... France La Compagnie S.A. 55%
CLM/BBDO S.A..................................... France La Compagnie S.A. 100%
Agence Parisienne................................ France La Compagnie S.A. 100%
BBDO GmbH & Partner Kg........................... Germany BBDO GmbH 81%
HM1 Heuser, Mayer, Partner GmbH.................. Germany HM1 Gesellschaft fur Direktmarketing - 32%
Werbeagenter GmbH
Hildmann & Schneider GmbH....................... Germany BBDO GmbH & Partner Kg 77%
Stein Holding GmbH............................... Germany BBDO GmbH & Partner Kg 81%
M.I.D GmbH....................................... Germany BBDO GmbH & Partner Kg 40%
Boebel, Adam/GmbH................................ Germany BBDO GmbH & Partner Kg 36%
SELL BY TEL Telefon und Direktmarketing GmbH..... Germany BBDO GmbH & Partner Kg 28%
Sponsor Partners GmbH............................ Germany BBDO GmbH & Partner Kg 40%
Kohtes & Klewes GmbH............................. Germany BBDO GmbH & Partner Kg 35%
Claus Koch Corp. Communications GmbH............. Germany BBDO GmbH & Partner Kg 30%
Hiel/BBDO GmbH................................... Germany BBDO GmbH & Partner Kg 32%
BBDO Hamburg GmbH................................ Germany BBDO GmbH & Partner Kg 81%
The Media Partnership GmbH....................... Germany BBDO GmbH & Partner Kg 20%
TEAM DIRECT Ges fur Direct Marketing GmbH........ Germany BBDO GmbH & Partner Kg 60%
Art & Production Advertising Services GmbH....... Germany BBDO GmbH & Partner Kg 26%
BBDO Business Communications GmbH................ Germany BBDO GmbH & Partner Kg 64%
Media Direction GmbH............................. Germany BBDO GmbH & Partner Kg 35%
BBDO Dusseldorf GmbH............................. Germany BBDO GmbH & Partner Kg 79%
BBDO Dusseldorf GmbH Werbeagentur................ Germany BBDO GmbH & Partner Kg 81%
BBDO/TELECOM GmbH................................ Germany BBDO GmbH & Partner Kg 64%
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
Economia Holding GmbH (Hamburg).................. Germany BBDO GmbH & Partner Kg 40%
BBDO GmbH ....................................... Germany BBDO Worldwide Germany GmbH 100%
BBDO Worldwide Germany GmbH...................... Germany BBDO Worldwide Inc. 100%
Brodersen, Stampe, Partner GmbH.................. Germany Economia Holding GmbH (Hamburg) 40%
Manfred Baumann GmbH............................. Germany Economia Holding GmbH (Hamburg) 40%
Fotostudio as der Alster GmbH.................... Germany Economia Holding GmbH (Hamburg) 32%
Economia KG...................................... Germany Economia Holding GmbH (Hamburg) 40%
PURE Informations Public Relations GmbH.......... Germany Kohtes & Klewes GmbH 21%
K & K Kohtes, Klewes & Partner
Umweltkommunikation GmbH....................... Germany Kohtes & Klewes GmbH 20%
Stein Promotion Management Group GmbH............ Germany Stein Holding GmbH 64%
Promotion Dynamics GmbH.......................... Germany Stein Holding GmbH 81%
Stein Promotions GmbH............................ Germany Stein Holding GmbH 81%
DCS GmbH......................................... Germany HM1 Gesellschaft fur Direktmarketing - 32%
Werbeagenter GmbH
HM1 Gesellschaft fur Direktmarketing -
Werbeagenter GmbH.............................. Germany BBDO GmbH & Partner Kg 32%
BBDO Advertising S.A............................. Greece BBDO GmbH 80%
Infomercial Direct S.A........................... Greece BBDO Advertising S.A. 80%
Team/Athens S.A.................................. Greece BBDO Advertising S.A. 30%
Sponsoring Business Ltd.......................... Greece BBDO Advertising S.A. 80%
The Media Corp S.A.............................. Greece BBDO Advertising S.A. 80%
The Media Partnership S.A. ...................... Greece BBDO Advertising S.A. 20%
Cinemax S.A...................................... Greece BBDO Advertising S.A. 59%
Global S.A....................................... Greece BBDO Advertising S.A. 80%
Service 800 S.A.................................. Greece BBDO Advertising S.A. 32%
BBDO Business Communications S.A................. Greece BBDO Advertising S.A. 60%
IKON S.A......................................... Greece BBDO Advertising S.A. 39%
Point Zero S.A................................... Greece BBDO Advertising S.A. 25%
B/P/R Ltd........................................ Greece BBDO Advertising S.A. 80%
Grafis S.A....................................... Greece BBDO Advertising S.A. 50%
Lamda Alpha S.A.................................. Greece BBDO Advertising S.A. 21%
BBDO/Guatemala S.A............................... Guatemala Garnier/BBDO 30%
Zeus/BBDO........................................ Honduras Garnier/BBDO 10%
BBDO Hong Kong Ltd............................... Hong Kong BBDO Asia Pacific Ltd. 100%
BBDO Asia Pacific Ltd............................ Hong Kong BBDO Worldwide Inc. 100%
ADCOM BBDO Direct Limited........................ Hong Kong BBDO Hong Kong Ltd. 100%
Topreklam/BBDO Int'l Advtg. Agency Ltd........... Hungary BBDO Worldwide Inc. 35%
RK Swamy/BBDO Advertising Ltd.................... India BBDO Asia Pacific Ltd. 20%
Gitam/BBDO....................................... Israel BBDO Worldwide Inc. 20%
BBDO Italy SpA................................... Italy BBDO Worldwide Inc. 100%
The Media Partnership SpA........................ Italy BBDO Italy SpA 25%
Impact/BBDO...................................... Lebanon Impact/BBDO International Ltd. 44%
BBDO (Malaysia) Sdn Bhd.......................... Malaysia BBDO Asia Pacific Ltd. 70%
BBDO Mexico, S.A. de C.V......................... Mexico BBDO Worldwide Inc. 95%
Perik Landewe & Partners B.V..................... Netherlands BBDO BC B.V. 26%
Keja/Donia B.V................................... Netherlands BBDO Nederlands B.V. 50%
FHV/BBDO B.V..................................... Netherlands BBDO Nederlands B.V. 50%
Adviesburau Bennis B.V........................... Netherlands BBDO Nederlands B.V. 25%
BBK B.V.......................................... Netherlands BBDO Nederlands B.V. 24%
Signum B.V....................................... Netherlands BBDO Nederlands B.V. 50%
Bartels/Verdonk Impuls B.V....................... Netherlands BBDO Nederlands B.V. 50%
BBDO BC B.V...................................... Netherlands BBDO Nederlands B.V. 50%
Heliberg Beheer B.V.............................. Netherlands BBDO Nederlands B.V. 30%
BBDO Nederlands B.V.............................. Netherlands BBDO Worldwide Inc. 50%
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
Liberty Films B.V................................ Netherlands FHV/BBDO B.V. 50%
Media Direction Netherlands B.V.................. Netherlands FHV/BBDO B.V. 31%
The Media Partnership B.V........................ Netherlands FHV/BBDO B.V. 10%
Business PR B.V.................................. Netherlands BBDO Nederlands B.V. 50%
IPW De Personeelsstrategen B.V................... Netherlands Heliberg Beheer B.V. 30%
Adviesbureau Bennis Pauw en Partners BVBA........ Netherlands Adviesburau Bennis B.V. 25%
Grant Tandy B.V.................................. Netherlands BBDO Canada Inc. 100%
OFI Finance B.V.................................. Netherlands Registrant 66%
BBDO Canada Inc. 34%
Clemenger/BBDO Ltd. (N.Z.)....................... New Zealand Clemenger BBDO Ltd. 47%
Colenso Communications Ltd. (Auckland)........... New Zealand Clemenger/BBDO Ltd. (N.Z.) 47%
Colenso Communications Ltd. (Wellington)......... New Zealand Clemenger/BBDO Ltd. (N.Z.) 47%
HKM Advertising Ltd. (Auckland).................. New Zealand Clemenger/BBDO Ltd. (N.Z.) 47%
HKM Advertising Ltd. (Wellington)................ New Zealand Clemenger/BBDO Ltd. (N.Z.) 47%
BBDO/Nicaragua S.A............................... Nicaragua Garnier/BBDO 25%
Jenssen & Borkenhagen A/S........................ Norway BBDO GmbH 42%
Schroder Production A/S.......................... Norway Jenssen & Borkenhagen A/S 42%
Garnier/BBDO .................................... Panama BBDO Worldwide Inc. 50%
Campagnani/BBDO S.A.............................. Panama Garnier/BBDO 10%
BBDO Peru S.A.................................... Peru BBDO Worldwide Inc. 51%
PAC/BBDO Worldwide Inc........................... Philippines BBDO Asia Pacific Ltd. 30%
BBDO Warsaw...................................... Poland BBDO Worldwide Inc. 100%
The Media Partnership Lda........................ Portugal BBDO Portugal Agencia de Publicidade, Lda. 21%
Media Direction.................................. Portugal BBDO Portugal Agencia de Publicidade, Lda. 84%
BBDO Portugal Agencia de Publicidade, Lda........ Portugal BBDO Worldwide Inc. 84%
Consultores de Relaciones Corporativas, Inc...... Puerto Rico BBDO Puerto Rico Inc. 85%
Headline Public Relations & Promotions, Inc...... Puerto Rico BBDO Puerto Rico Inc. 85%
BBDO Puerto Rico Inc............................. Puerto Rico BBDO Worldwide Inc. 85%
Graffiti/BBDO.................................... Romania BBDO Worldwide Inc. 20%
BBDO Marketing................................... Russia BBDO Worldwide Inc. 100%
Impact/BBDO...................................... Saudi Arabia Impact/BBDO International Ltd. 44%
BBDO Singapore Pte Ltd........................... Singapore BBDO Asia Pacific Ltd. 100%
Mark/BBDO Ltd.................................... Slovak Republic Mark/BBDO, joint stock company 17%
The Media Partnership S.A........................ Spain BBDO Espana S.A. 23%
Tiempo/BBDO S.A.................................. Spain BBDO Espana S.A. 72%
Contrapunto S.A.................................. Spain BBDO Espana S.A. 67%
Tiempo/BBDO Madrid S.A........................... Spain BBDO Espana S.A. 70%
BBDO Espana S.A.................................. Spain BBDO Worldwide Inc. 90%
Media Direction Madrid, S.A...................... Spain Tiempo/BBDO Madrid S.A. 70%
Extension S.A. ................................. Spain Tiempo/BBDO S.A. 72%
DEC S.A. .................................. Spain Tiempo/BBDO S.A. 61%
Media Direction.................................. Spain Tiempo/BBDO S.A. 72%
Ehrenstrahle International A.B................... Sweden BBDO Worldwide Germany GmbH 84%
HLR/BBDO Reklambyra A.B.......................... Sweden BBDO Worldwide Germany GmbH 81%
Ehrenstrahle & Co. i Stockholm A.B............... Sweden Ehrenstrahle International A.B. 84%
Turnpik Filmproduction A.B....................... Sweden HLR/BBDO Reklambyra A.B. 81%
HLR/Broadcast Filmproduction A.B................. Sweden HLR/BBDO Reklambyra A.B. 81%
Box Direct Marketing A.B......................... Sweden HLR/BBDO Reklambyra A.B. 27%
Gester & Co. A.B................................. Sweden HLR/BBDO Reklambyra A.B. 23%
BBDO Taiwan Advertising Company Ltd.............. Taiwan BBDO Asia Pacific Ltd. 55%
Damask/BBDO Limited.............................. Thailand BBDO Asia Pacific Ltd. 50%
MEDIA +.......................................... Turkey Alice Marketing Communication Services 27%
FOCUS 4.......................................... Turkey Alice Marketing Communication Services 27%
Alice Marketing Communication Services........... Turkey BBDO Worldwide Inc. 30%
Impact/BBDO...................................... United Arab Emirates Impact/BBDO International Ltd. 44%
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
Abbott Mead Vickers.BBDO Ltd..................... United Kingdom BBDO Worldwide Inc. 25%
Ratto/BBDO Y Asociados........................... Uruguay David Ratto/BBDO S.A. 20%
BBDO/Venezuela................................... Venezuela BBDO Worldwide Inc. 50%
DDB Needham Worldwide Inc........................ New York Registrant 100%
Tracy-Locke Inc.................................. Texas Registrant 100%
DDB Needham Chicago, Inc......................... Delaware DDB Needham Worldwide Inc. 100%
DDB Needham Worldwide Partners, Inc.............. New York DDB Needham Worldwide Inc. 100%
Elgin Syferd/DDB Needham Inc..................... Washington DDB Needham Worldwide Inc. 100%
DDB Needham International Inc.................... Delaware Omnicom International Inc. 100%
Tracy-Locke Public Relations, Inc................ Texas Tracy-Locke Inc. 100%
The Focus Agency Inc............................. Delaware DDB Needham Chicago Inc. 100%
Puskar Gibbon Chapin Inc......................... Texas Tracy-Locke Inc. 100%
Griffin Bacal Inc................................ New York DDB Needham Worldwide Inc. 100%
Griffin Bacal International Inc.................. New York Griffin Bacal Inc. 100%
DDB Needham Worldwide Pty. Ltd. (Australia) ..... Australia DDB Needham Worldwide Partners, Inc. 100%
DDB Needham Brisbane Pty. Ltd.................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100%
Rapp & Collins Sydney Pty Ltd.................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100%
K & Z Marketing Group Pty Limited................ Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100%
DDB Needham Adelaide Pty. Ltd.................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100%
DDB Needham Sydney Pty. Ltd...................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100%
DDB Needham Melbourne Pty. Ltd................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100%
Salesforce Victoria Pty Ltd...................... Australia K & Z Marketing Group Pty Ltd. 100%
DDB Needham Heye & Partner Werbeagentur GmbH..... Austria DDB Needham Heye & Partner GmbH 53%
DDB Needham Heye & Partner GmbH.................. Austria DDB Needham Worldwide Partners, Inc. 55%
Heye & Partner GmbH 34%
The Media Partnership............................ Austria DDB Needham Heye & Partner Werbeagentur GmbH 13%
Heye & Partner Werbeagentur...................... Austria Heye & Partner GmbH 45%
DDB Needham Worldwide S.A. ...................... Belgium DDB Needham International Inc. 20%
DDB Needham Worldwide Inc. 26%
DDB Needham Worldwide Partners, Inc. 20%
Registrant 26%
DDB Needham Holding S.A.......................... Belgium DDB Needham Worldwide Inc. 1%
DDB Needham Worldwide Partners, Inc. 99%
T.M.P. S.A....................................... Belgium DDB Needham Worldwide S.A. 23%
Marketing Power Rapp & Collins S.A............... Belgium DDB Needham Worldwide S.A. 60%
Production 32 S.A................................ Belgium DDB Needham Worldwide S.A. 92%
Product Creation S.A............................. Belgium DDB Needham Worldwide S.A. 55%
DDB Needham Worldwide Brazil Ltda................ Brazil DDB Needham Worldwide Inc. 50%
Olympic DDB Needham Bulgaria..................... Bulgaria Olympic DDB Needham S.A. 51%
Omnicom Canada Inc............................... Canada Registrant 100%
Griffin Bacal Volny.............................. Canada Griffin Bacal Inc. 60%
Beijing DDB Needham Advertising Co. Ltd.......... China DDB Needham Worldwide Ltd. 51%
DDB Needham WW Prague............................ Czech Republic DDB Needham Worldwide Partners, Inc. 64%
The Media Partnership A/S........................ Denmark DDB Needham Denmark A/S 4%
Rapp & Collins DDBN A/S.......................... Denmark DDB Needham Denmark A/S 36%
DDB Needham Denmark A/S.......................... Denmark DDB Needham Scandinavia A/S 70%
DDB Needham Scandinavia A/S...................... Denmark DDB Needham Worldwide Partners, Inc. 100%
Brand Sellers DDB Needham OY..................... Finland DDB Needham Scandinavia A/S 30%
DDB Lille S.A.................................... France DDB Needham Trade S.A. 51%
DDB The Way S.A.................................. France DDB Needham Trade S.A. 80%
JCR S.A.......................................... France DDB Needham Trade S.A. 51%
Intertitres S.A................................. France DDB Needham Worldwide Communication S.A. 50%
SDMP S.A. 14%
Nacre S.A........................................ France DDB Needham Worldwide Communication S.A. 51%
DDB En Reseau S.A................................ France DDB Needham Worldwide Communication S.A. 51%
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
Optimum DDB...................................... France DDB Needham Worldwide Communication S.A. 100%
Productions 32 S.N.C............................. France DDB Needham Worldwide Communication S.A. 66%
SDMP S.A. 20%
Orchestra S.A.................................... France DDB Needham Worldwide Communication S.A. 60%
DDB Needham Worldwide Europe S.A. .............. France DDB Needham Worldwide Communication S.A. 100%
MODA S.A......................................... France DDB Needham Worldwide Communication S.A. 100%
SDMP S.A......................................... France DDB Needham Worldwide Communication S.A. 57%
Directing/Rapp & Collins......................... France DDB Needham Worldwide Communication S.A. 60%
DDB Needham Trade S.A............................ France DDB Needham Worldwide Communication S.A. 100%
Marketic Conseil S.A............................. France DDB Needham Worldwide Communication S.A. 51%
Pigment S.A...................................... France DDB Needham Worldwide Communication S.A. 88%
Providence S.A................................... France MODA S.A. 100%
SFV S.A.......................................... France Productions 32 S.A. 86%
DDB Needham Worldwide Communication S.A.......... France Registrant 100%
DDB Needham Worldwide S.A. ...................... France Registrant 45%
DDB Needham Worldwide Communication S.A. 55%
AZ Editions S.A.................................. France SDMP S.A. 38%
Louis XIV........................................ France DDB Needham Worldwide Communication S.A. 51%
SDMS............................................. France DDB Needham Worldwide Communication S.A. 11%
SDMP S.A. 19%
S'Printer........................................ France DDB Needham Worldwide Communication S.A. 12%
SDMS 4%
SCPEH 50%
SCPEH............................................ France DDB Needham Worldwide Communication S.A. 51%
SDMS 15%
Boxa Nova........................................ France S'Printer 66%
DDB CIE.......................................... France DDB Needham Worldwide Communication S.A. 99%
Jaschke Optimum Media Dusseldorf................. Germany Communication Management GmbH Dusseldorf 50%
Production 32 Dusseldorf......................... Germany Communication Management GmbH Dusseldorf 89%
Jahns, Rapp & Collins Dusseldorf................. Germany Communication Management GmbH Dusseldorf 49%
Heye & Partner GmbH 30%
Screen GmbH...................................... Germany Communication Management GmbH Dusseldorf 99%
The Media Partnership GmbH....................... Germany Communication Management GmbH Dusseldorf 25%
Wensauer DDB Needham Beteiligungsgesellschaft GmbH Germany Communication Management GmbH Dusseldorf 82%
Wensauer DDB Needham GmbH Dusseldorf............. Germany Communication Management GmbH Dusseldorf 99%
Fritsch Heine Rapp & Collins GmbH................ Germany Communication Management GmbH Dusseldorf 85%
Heye & Partner GmbH.............................. Germany DDB Needham Worldwide Partners, Inc. 45%
Data Direct Rapp & Collins GmbH.................. Germany Fritsch Heine Rapp & Collins GmbH 85%
Print, Munchen GmbH.............................. Germany Heye & Partner GmbH 45%
Communication Management GmbH Dusseldorf......... Germany Registrant 99%
Camera Uno GmbH (Ludwigsburg).................... Germany Service Company GmbH (Ludwigsburg) 89%
Wensauer DDBN Werbeagentur GmbH (Frankfurt)...... Germany Wensauer DDB Needham Beteiligungsgesellschaft GmbH 82%
SV Studio Lichts ATZ GmbH........................ Germany Wensauer DDB Needham GmbH Dusseldorf 99%
Service Company GmbH (Ludwigsburg)............... Germany Wensauer DDB Needham GmbH Dusseldorf 99%
Griffin Bacal GmbH............................... Germany Griffin Bacal BV 100%
Olympic DDB Needham S.A.......................... Greece DDB Needham Holding S.A. 51%
Tempo Hellas S.A................................. Greece Olympic DDB Needham S.A. 51%
Inno Rapp & Collins S.A.......................... Greece Olympic DDB Needham S.A. 26%
The Media Partnership S.A........................ Greece Olympic DDB Needham S.A. 13%
Integreat S.A.................................... Greece Olympic DDB Needham S.A. 46%
Brilliant Shine Development Ltd.................. Hong Kong Bentley DDB Needham Public Relations, Ltd. 70%
Bentley DDB Needham Public Relations, Ltd........ Hong Kong DDB Needham Asia Pacific Ltd. 70%
Delta Group Ltd.................................. Hong Kong DDB Needham Asia Pacific Ltd. 100%
Doyle Dane Bernbach Hong Kong Ltd................ Hong Kong DDB Needham Asia Pacific Ltd. 100%
Window Creative Ltd.............................. Hong Kong DDB Needham Asia Pacific Ltd. 85%
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
DDB Needham Worldwide Ltd........................ Hong Kong DDB Needham Asia Pacific Ltd. 100%
DDB Needham Asia Pacific Ltd..................... Hong Kong DDB Needham Worldwide Partners, Inc. 100%
DDB Needham (China) Investment Ltd............... Hong Kong DDB Needham Asia Pacific Ltd. 100%
DDB Needham (China) Holding Ltd.................. Hong Kong DDB Needham Asia Pacific Ltd. 100%
DDB Needham Advertising Co. (Budapest)........... Hungary DDB Needham Heye & Partner Werbeagentur GmbH 21%
DDB Needham Worldwide Partners, Inc. 40%
Verba DDB Needham S.R.L.......................... Italy Registrant 85%
Auge S.R.L....................................... Italy Verba DDB Needham S.R.L. 43%
BBDO Italy SrL 50%
Verba PSA S.R.L.................................. Italy Verba DDB Needham S.R.L. 55%
Grafika S.R.L.................................... Italy Verba DDB Needham S.R.L. 85%
Nadler S.R.L..................................... Italy Verba DDB Needham S.R.L. 85%
TMP Italy S.R.L.................................. Italy Verba DDB Needham S.R.L. 21%
Rapp & Collins S.R.L............................. Italy Verba DDB Needham S.R.L. 68%
DDB Needham Japan Inc............................ Japan DDB Needham Worldwide Inc. 100%
DDB Needham DIK Korea............................ Korea DDB Needham Worldwide Partners, Inc. 25%
Naga DDB Needham Dik SDN BHD..................... Malaysia DDB Needham Asia Pacific Ltd. 30%
DDB Needham Worldwide S.A. de C.V................ Mexico Registrant 100%
Capitol Advice B.V............................... Netherlands DDB B.V. 100%
Rapp and Collins B.V............................. Netherlands DDB B.V. 100%
Bas van Wijk Project House B.V................... Netherlands DDB B.V. 100%
DDB Needham Holding B.V.......................... Netherlands DDB Needham Worldwide Partners, Inc. 100%
DDB B.V.......................................... Netherlands Registrant 100%
Griffin Bacal BV................................. Netherlands Griffin Bacal International Inc. 100%
DDB Needham New Zealand Ltd...................... New Zealand DDB Needham Worldwide Ltd. 70%
DDB Needham Worldwide Ltd........................ New Zealand DDB Needham Worldwide Pty. Ltd. (Australia) 100%
DDB Needham Holding Norway A/S................... Norway DDB Needham Holding B.V. 4%
DDB Needham Worldwide Partners, Inc. 96%
New Deal DDB Needham A/S......................... Norway DDB Needham Holding Norway A/S 51%
Pro Deal A/S..................................... Norway New Deal DDB Needham A/S 51%
AMA DDB Needham Worldwide Inc.................... Philippines DDB Needham Asia Pacific Ltd. 51%
DDB Needham Worldwide Warszawa................... Poland DDB Needham Worldwide Partners, Inc. 67%
The Media Partnership............................ Portugal DB Needham Worldwide & Guerreiro, Publicidade S.A. 17%
DDB Needham Worldwide & Guerreiro, Publicidade S.A. Portugal Registrant 70%
DDB Needham Worldwide GAF Pte. Ltd............... Singapore Doyle Dane Bernbach Hong Kong Ltd. 100%
DDB Needham Worldwide Bratislava................. Slovak Republic DDB Needham Worldwide Partners, Inc. 100%
Tandem/DDB Needham Worldwide, S.A................ Spain DDB Needham Worldwide Inc. 7%
Registrant 79%
Tandem/DDB Campmany Guasch, S.A.................. Spain Registrant 2%
Tandem/DDB Needham Worldwide S.A. 84%
Optimum Media S.A................................ Spain Tandem/DDB Campmany Guasch, S.A. 86%
Instrumens S.A................................... Spain Tandem/DDB Needham Worldwide S.A. 73%
Rapp & Collins S.A............................... Spain Tandem/DDB Needham Worldwide S.A. 77%
A Toda Copia S.A................................. Spain Tandem/DDB Needham Worldwide S.A. 86%
The Media Partnership S.A........................ Spain Tandem/DDB Needham Worldwide S.A. 21%
Paradiset DDB Needham A.B........................ Sweden Carlsson & Broman DDB Needham Worldwide A.B. 51%
Carlsson & Broman DDB Needham Worldwide A.B...... Sweden DDB Needham Worldwide Partners, Inc. 100%
DDB Needham Werbeagentur A.G..................... Switzerland DDB Needham Holding A.G. 100%
Seiler Zur DDB Needham A.G....................... Switzerland DDB Needham Holding A.G. 30%
DDB Needham Holding A.G.......................... Switzerland Registrant 100%
DDB Needham Worldwide Taiwan Ltd................. Taiwan DDB Needham Asia Pacific Ltd. 90%
Far East Advertising Co. Ltd..................... Thailand DDB Needham Asia Pacific Ltd. 10%
DDB Needham Worldwide Limited.................... Thailand DDB Needham Worldwide Partners, Inc. 51%
Far East Advertising Co. Ltd. 4%
Spaulding & Hawi Advertising Company, Ltd........ Thailand DDB Needham Worldwide Inc. 100%
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
Griffin Bacal Ltd................................ United Kingdom Griffin Bacal Inc. 100%
Baxter, Gurian & Mazzei, Inc..................... California Health & Medical Communications, Inc. 100%
Rainoldi, Kerzner & Radcliffe, Inc............... California Kallir, Philips, Ross Inc. 100%
Alcone Sims O'Brien, Inc......................... California Registrant 100%
Doremus & Company................................ Delaware BBDO Worldwide Inc. 100%
Doremus Printing Corp............................ Delaware Doremus & Company 100%
Porter Novelli Inc............................... Delaware Doremus & Company 100%
Lyons/Lavey/Nickel/Swift, Inc.................... Delaware Lavey/Wolff/Swift, Inc. 100%
Rapp Collins Worldwide Inc. (DE)................. Delaware Rapp Collins Worldwide Inc. (TX) 100%
Rapp Collins Agency Group Inc.................... Delaware Registrant 100%
Optima Direct Inc................................ Delaware Registrant 100%
Merkley Newman Harty, Inc........................ Delaware Registrant 100%
Thomas A. Schutz Co., Inc........................ Delaware Registrant 100%
Gavin Anderson & Company Worldwide Inc........... Delaware Registrant 100%
Bernard Hodes Advertising Inc.................... Delaware Registrant 100%
Frank J. Corbett, Inc............................ Illinois Health & Medical Communications, Inc. 100%
Rapp Collins Worldwide Inc. (IL)................. Illinois Rapp Collins Worldwide Inc. (TX) 100%
Brodeur & Partners Inc........................... Massachusetts Registrant 100%
RC Communications, Inc........................... New York BBDO Worldwide Inc. 98%
Health & Medical Communications, Inc............. New York BBDO Worldwide Inc. 100%
Gavin Anderson & Company Inc..................... New York Gavin Anderson & Company Worldwide Inc. 100%
Lavey/Wolff/Swift, Inc........................... New York Health & Medical Communications, Inc. 100%
Interbrand Schechter Inc......................... New York Registrant 100%
Health Science Communications Inc................ New York Registrant 100%
Kallir, Philips, Ross, Inc....................... New York Registrant 100%
Shain Colavito Penesabene Direct, Inc............ New York Registrant 100%
Harrison & Star, Inc............................. New York Registrant 100%
Harrison Star Wiener & Beitler Public Relations, Inc New York Registrant 100%
Rapp Collins Worldwide Inc. (TX)................. Texas Registrant 100%
TP Flower Unit Trust S.A. (Sydney)............... Australia Gavin Anderson & Co. (Australia) Ltd. 100%
Communications International Group S.A........... Belgium Diversified Agency Services Limited 100%
Market Access Europe S.A......................... Belgium European Political Consultancy Group Limited 100%
KPR S.A.......................................... Belgium Kallir, Philips, Ross, Inc. 100%
Promotess S.A.................................... Belgium Promotess Holdings S.A. 100%
Promotess Holdings S.A........................... Belgium Registrant 100%
Gavin Anderson & Co. (Australia) Ltd............. Cayman Islands Gavin Anderson & Company Worldwide Inc. 100%
Market Access France S.A......................... France European Political Consultancy Group Limited 100%
Gavin Anderson & Company (France) S.A............ France Gavin Anderson & Company Worldwide Inc. 100%
Product Plus (France) S.A........................ France Product Plus (London) Ltd. 83%
Gavin Anderson & Company Worldwide GmbH.......... Germany BBDO Worldwide Germany GmbH 100%
COGNIS Agentur fur Kommunikation GmbH............ Germany Diversified Agency Services Limited 51%
Gavin Anderson & Company (H.K.) Limited.......... Hong Kong Gavin Anderson & Company Worldwide Inc. 100%
Product Plus (Far East) Ltd...................... Hong Kong Product Plus (London) Ltd. 83%
Counter Products Marketing (Ireland) Ltd......... Ireland CPM International Limited 100%
Doremus & Company S.r.L.......................... Italy Doremus & Company 70%
Kabushiki Kaisha Interbrand Japan................ Japan Interbrand Group plc 100%
Interbrand Korea Inc............................. Korea Interbrand Group plc 100%
Rapp Collins Marcoa Mexico S.A. de C.V........... Mexico Rapp Collins Worldwide Inc. (TX) 100%
Interbrand International Holdings (I.I.H.) BV.... Netherlands Interbrand Group plc. 100%
Product Plus Iberica SA.......................... Spain Product Plus (London) Ltd. 83%
Billco Limited................................... United Kingdom BMP DDB Needham Worldwide Limited 97%
Outdoor Connection Limited....................... United Kingdom BMP DDB Needham Worldwide Limited 32%
Countrywide Communications North Limited......... United Kingdom Countrywide Communications Group Limited 76%
BMP Countrywide Limited.......................... United Kingdom Countrywide Communications Group Limited 72%
Countrywide Communications (London) Limited...... United Kingdom Countrywide Communications Group Limited 76%
</TABLE>
S-9
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
Countrywide Communications Limited............... United Kingdom Countrywide Communications Group Limited 76%
VandenBurg Marketing Limited..................... United Kingdom Countrywide Communications Group Limited 76%
Countrywide Communications (Scotland) Limited.... United Kingdom Countrywide Communications Group Limited 57%
Government Policy Consultants Limited............ United Kingdom Countrywide Communications Group Limited 43%
Vandisplay Limited............................... United Kingdom CPM International Limited 100%
David Douglass Associates Limited................ United Kingdom CPM International Limited 100%
CPM Field Marketing Limited...................... United Kingdom Davidson Pearce Group Limited 100%
Product Plus (London) Ltd........................ United Kingdom Davidson Pearce Group Limited 83%
Countrywide Communications Group Limited......... United Kingdom Diversified Agency Services Limited 76%
Marketing Data Services Limited.................. United Kingdom Diversified Agency Services Limited 100%
First City Public Relations Limited.............. United Kingdom Diversified Agency Services Limited 70%
Omnicom Finance Limited.......................... United Kingdom Diversified Agency Services Limited 100%
DAS Financial Services Limited................... United Kingdom Diversified Agency Services Limited 75%
BBDO Canada Inc. 25%
Bernard Hodes Advertising Limited................ United Kingdom Diversified Agency Services Limited 87%
Medi Cine International plc...................... United Kingdom Diversified Agency Services Limited 100%
WWAV Rapp Collins Group Limited.................. United Kingdom Diversified Agency Services Limited 100%
Gavin Anderson (UK) Limited...................... United Kingdom Diversified Agency Services Limited 90%
Vox Prism Cognis Limited......................... United Kingdom Diversified Agency Services Limited 100%
European Political Consultancy Group Limited..... United Kingdom Diversified Agency Services Limited 100%
Doremus & Company Limited........................ United Kingdom Diversified Agency Services Limited 100%
First City/BBDO Limited.......................... United Kingdom Diversified Agency Services Limited 60%
Omnicom UK Limited............................... United Kingdom Diversified Agency Services Limited 100%
Connect Public Affairs Limited................... United Kingdom European Political Consultancy Group Limited 100%
Market Access International Limited.............. United Kingdom European Political Consultancy Group Limited 100%
Market Access Limited............................ United Kingdom European Political Consultancy Group Limited 100%
HHL Contract Publishing Limited.................. United Kingdom Headway, Home and Law Publishing Group Ltd. 100%
Interbrand Consultants Limited................... United Kingdom Interbrand Group plc. 100%
Markforce Associates Limited..................... United Kingdom Interbrand Group plc. 100%
Access Opinions Limited.......................... United Kingdom Market Access Limited 100%
Interbrand Group plc............................. United Kingdom Omnicom UK Limited 100%
Granby Marketing Services Ltd.................... United Kingdom Omnicom UK Limited 100%
CPM International Limited........................ United Kingdom Omnicom UK Limited 100%
Davidson Pearce Group Limited.................... United Kingdom Omnicom UK Limited 100%
Specialist Publications (UK) Limited............. United Kingdom Omnicom UK Limited 100%
The Anvil Consultancy Limited.................... United Kingdom Omnicom UK Limited 100%
Premier Magazines Limited........................ United Kingdom Omnicom UK Limited 75%
Macmillan Davies Advertising Ltd................. United Kingdom Omnicom UK Limited 100%
Hoare Wilkins Limited............................ United Kingdom Omnicom UK Limited 100%
Colour Solutions Limited......................... United Kingdom Omnicom UK Limited 100%
BMP DDB Needham Worldwide Limited................ United Kingdom Omnicom UK Limited 97%
Solutions in Media Limited....................... United Kingdom Omnicom UK Limited 100%
Macmillan Davies Consultants Ltd................. United Kingdom Omnicom UK Limited 100%
Paling Ellis Cognis Limited...................... United Kingdom Omnicom UK Limited 100%
Headway, Home and Law Publishing Group Ltd....... United Kingdom Omnicom UK Limited 100%
Diversified Agency Services Limited.............. United Kingdom Registrant 100%
The Computing Group Limited...................... United Kingdom WWAV Rapp Collins Group Limited 100%
WWAV Rapp Collins Limited........................ United Kingdom WWAV Rapp Collins Group Limited 100%
WWAV Rapp Collins North Limited.................. United Kingdom WWAV Rapp Collins Group Limited 100%
HLB Limited...................................... United Kingdom WWAV Rapp Collins Group Limited 100%
Hooton Schofield Limited......................... United Kingdom WWAV Rapp Collins Group Limited 100%
TBWA International Inc. ......................... Delaware TBWA International B.V. 100%
TBWA Wolfe Freeman Advertising Inc. ............. Missouri TBWA Advertising, Inc. 80%
TBWA Advertising, Inc. .......................... New York TBWA International Inc. 100%
TBWA/GBD Holdings, Inc........................... New York TBWA Advertising, Inc. 100%
</TABLE>
S-10
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
--------- ------------- -------- ------------
<S> <C> <C> <C>
Beisler & Associates, Inc........................ New York TBWA Advertising, Inc. 100%
GBB Advertising Co............................... New York TBWA/GBD Holdings, Inc. 51%
TBWA S.A. (Brussels)............................. Belgium TBWA International B.V. 100%
TBWA Reklamebureau A/S........................... Denmark TBWA International B.V. 51%
TBWA S.A......................................... France TBWA International B.V. 100%
TBWA (Deutschland) Holding GmbH (Frankfurt)...... Germany TBWA International B.V. 100%
Eurospace Media GmbH............................. Germany TBWA (Deutschland) Holding GmbH (Frankfurt) 100%
TBWA Werbeagentur GmbH........................... Germany TBWA (Deutschland) Holding GmbH (Frankfurt) 100%
TBWA Dusseldorf GmbH............................. Germany TBWA Werbeagentur GmbH 100%
Graf Bertel Buczek GmbH.......................... Germany GBB Advertising Co. 51%
Producta/TBWA.................................... Greece Registrant 51%
TBWA Italia SpA (Milan).......................... Italy TBWA International B.V. 100%
Group Services S.r.L............................. Italy TBWA Italia SpA (Milan) 99%
Ma.Ma.Fin S.r.L.................................. Italy TBWA Italia SpA (Milan) 100%
Nadler & Larimer S.r.L (Milan)................... Italy Ma.Ma.Fin S.r.L. 60%
TBWA Italia SpA (Milan) 40%
TBWA International B.V........................... Netherlands Registrant 100%
Multicom/TBWA Advertising ....................... Netherlands TBWA Groep BV 100%
TBWA Campaign Company ........................... Netherlands TBWA Groep BV 100%
Direct Advertising Company B.V................... Netherlands TBWA Groep BV 100%
TISSA Holding B.V................................ Netherlands TBWA International B.V. 100%
TBWA Groep B.V................................... Netherlands TISSA Holding BV 100%
Hunt Lascaris TBWA Holdings (Pty) Ltd............ South Africa TBWA International B.V. 20%
Registrant 40%
Hunt Lascaris TBWA FMC (Pty) Ltd................. South Africa Hunt Lascaris TBWA Holdings (Pty) Ltd. 60%
Hunt Lascaris TBWA Cape (Pty) Ltd................ South Africa Hunt Lascaris TBWA Holdings (Pty) Ltd. 51%
TBWA Espana S.A.................................. Spain TBWA International B.V. 80%
TBWA International A.G........................... Switzerland TBWA International B.V. 100%
TBWA Holmes Knight Ritchie Ltd................... United Kingdom Floral Street Holdings Ltd. 100%
FSC Group Ltd.................................... United Kingdom TBWA Holmes Knight Ritchie Ltd. 100%
Floral Street Holdings Ltd....................... United Kingdom TBWA International B.V. 100%
</TABLE>
S-11
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 20, 1995 included in this Form 10-K into the
previously filed Registration Statement File Nos. 33-51493, 2-98222, 33-29375
and 33-37380 on Form S-8 of Omnicom Group Inc. and into the previously filed
Registration Statement File Nos. 33-29375, 33-37380, 33-52385, 33-54110,
33-62976, 33-63200, 33-62978, 33-61852, 33-50409, 33-50267, 33-50271, 33-50269,
33-50257, 33-45881, 33-54851 and 33-55235 on Form S-3 of Omnicom Group Inc.
ARTHUR ANDERSEN LLP
New York, New York
March 28, 1995
S-12
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of Omnicom
Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce
Crawford and Raymond E. McGovern, and each of them, his true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for
the fiscal year ending December 31, 1994, including any or all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, including specifically this Power of
Attorney, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated: March 28, 1995
/s/ BERNARD BROCHAND
------------------------------
Bernard Brochand
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of Omnicom
Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce
Crawford and Raymond E. McGovern, and each of them, his true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for
the fiscal year ending December 31, 1994, including any or all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, including specifically this Power of
Attorney, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated: March 28, 1995
/s/ ROBERT J. CALLANDER
------------------------------
Robert J. Callander
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of Omnicom
Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce
Crawford and Raymond E. McGovern, and each of them, his true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for
the fiscal year ending December 31, 1994, including any or all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, including specifically this Power of
Attorney, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated: March 28, 1995
/s/ LEONARD S. COLEMAN, JR.
------------------------------
Leonard S. Coleman, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of Omnicom
Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce
Crawford and Raymond E. McGovern, and each of them, his true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for
the fiscal year ending December 31, 1994, including any or all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, including specifically this Power of
Attorney, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated: March 28, 1995
/s/ JOHN R. PURCELL
------------------------------
John R. Purcell
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of Omnicom
Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce
Crawford and Raymond E. McGovern, and each of them, his true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for
the fiscal year ending December 31, 1994, including any or all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, including specifically this Power of
Attorney, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated: March 28, 1995
/s/ GARY L. ROUBOS
------------------------------
Gary L. Roubos
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of Omnicom
Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce
Crawford and Raymond E. McGovern, and each of them, his true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for
the fiscal year ending December 31, 1994, including any or all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, including specifically this Power of
Attorney, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated: March 28, 1995
/s/ QUENTIN I. SMITH, JR.
------------------------------
Quentin I. Smith, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of Omnicom
Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce
Crawford and Raymond E. McGovern, and each of them, his true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for
the fiscal year ending December 31, 1994, including any or all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, including specifically this Power of
Attorney, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated: March 28, 1995
/s/ ROBIN SMITH
------------------------------
Robin Smith
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of Omnicom
Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce
Crawford and Raymond E. McGovern, and each of them, his true and lawful
attorney-in-fact and agent, with full and several power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for
the fiscal year ending December 31, 1994, including any or all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, including specifically this Power of
Attorney, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated: March 28, 1995
/s/ EGON P.S. ZEHNDER
------------------------------
Egon P.S. Zehnder
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF OMNICOM GROUP INC. AND
SUBSIDIARIES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 228,251
<SECURITIES> 28,383
<RECEIVABLES> 1,159,160
<ALLOWANCES> 19,278
<INVENTORY> 0
<CURRENT-ASSETS> 1,601,935
<PP&E> 393,644
<DEPRECIATION> 221,491
<TOTAL-ASSETS> 2,852,204
<CURRENT-LIABILITIES> 1,986,642
<BONDS> 187,338
<COMMON> 19,322
0
0
<OTHER-SE> 521,380
<TOTAL-LIABILITY-AND-EQUITY> 2,852,204
<SALES> 0
<TOTAL-REVENUES> 1,756,205
<CGS> 0
<TOTAL-COSTS> 1,009,069
<OTHER-EXPENSES> 542,538
<LOSS-PROVISION> 7,864
<INTEREST-EXPENSE> 34,770
<INCOME-PRETAX> 181,756
<INCOME-TAX> 74,337
<INCOME-CONTINUING> 108,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 28,009
<NET-INCOME> 80,125
<EPS-PRIMARY> 3.15
<EPS-DILUTED> 3.07
</TABLE>
