================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
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, 1995 Commission File Number: 1-10551
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
------------------- ---------------------
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. [ ]
At March 15, 1996, there were 74,539,342 shares of Common Stock
outstanding; the aggregate market value of the voting stock held by
nonaffiliates at March 15, 1996 was approximately $3,075,040,000.
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, 1996
Common Stock, $.50 Par Value 74,539,342
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 20, 1996 are
incorporated by reference into Part III of this Report.
================================================================================
<PAGE>
OMNICOM GROUP INC.
------------------
Index to Annual Report on Form 10-K
Year Ended December 31, 1995
Page
----
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 Transaction.................... 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," "Common
Stock Ownership of Management," "Directors' Compensation" and "Executive
Compensation" in the Company's definitive proxy statement which is expected to
be filed by April 8, 1996.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K............................................. 12
<PAGE>
PART I
Item 1. Business
Omnicom Group Inc., through its wholly and partially-owned companies
(hereinafter collectively referred to as the "Company" or the "Omnicom Group"),
operates advertising agencies which plan, create, produce and place advertising
in various media such as television, radio, newspaper and magazines. The Omnicom
Group 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 Omnicom Group 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
1995 and 1994, 53% and 51%, respectively, of the Omnicom Group's billings came
from its non-U.S. operations.
According to the unaudited industry-wide figures published in 1995 by the
trade journal Advertising Age, Omnicom Group Inc. was ranked as the third
largest advertising agency group worldwide.
The Omnicom Group operates as three separate, independent agency networks:
The BBDO Worldwide Network, the DDB Needham Worldwide Network and the TBWA
International Network. The Omnicom Group also operates an independent agency,
Goodby, Silverstein & Partners, and certain marketing service and specialty
advertising companies through its Diversified Agency Services division ("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, California; Miami, Florida; Atlanta, Georgia;
Chicago, Illinois; Detroit, Michigan; and Minneapolis, Minnesota.
The BBDO Worldwide Network operates internationally through subsidiaries
in Austria, Belgium, Brazil, Canada, China, 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, Croatia, the Czech Republic, Egypt, El Salvador, Guatemala,
Honduras, Hungary, India, Israel, Kuwait, Lebanon, New Zealand, Nicaragua,
Norway, Panama, the Philippines, Romania, Saudi Arabia, the Slovak Republic,
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,
Pakistan and Uruguay.
DDB Needham Worldwide Network
The DDB Needham Worldwide Network operates in the United States through The
DDB Needham Worldwide Communications Group, 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.
1
<PAGE>
The DDB Needham Worldwide Network operates internationally through
subsidiaries in Australia, Austria, Belgium, Bulgaria, Canada, China, Colombia,
the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong
Kong, Hungary, Italy, Japan, Mexico, the Netherlands, New Zealand, Norway, the
Philippines, Poland, Portugal, Romania, Singapore, the Slovak Republic, Spain,
Sweden, Taiwan, Thailand and the United Kingdom; and through affiliates located
in Brazil, Chile, Costa Rica, Egypt, El Salvador, Germany, Guatemala, Honduras,
India, Korea, Malaysia, Panama, Switzerland, Turkey and Venezuela. The DDB
Needham Worldwide Network uses the services of associate agencies in Miami,
Florida and in Argentina, Bahrain, Belize, Bolivia, Dominican Republic, Ecuador,
Indonesia, Ireland, Israel, Kuwait, Lebanon, Nicaragua, Paraguay, Peru, Puerto
Rico, Russia, Saudi Arabia, Slovenia, South Africa, Trinidad, United Arab
Emirates and Uruguay. Griffin Bacal Inc. operates internationally through
subsidiaries in Canada and the United Kingdom and through a branch in Mexico.
TBWA International Network
The TBWA International Network operates in North America through TBWA
Chiat/Day which is headquartered in New York and has full-service offices in New
York, New York; Los Angeles, California; and St. Louis, Missouri, through Graf
Bertel Buczek in New York, New York and through TBWA Chiat/Day Canada in
Toronto, Canada. The TBWA International Network also operates in North America
through its affiliate, TBWA Chiat/Day Mexico.
The TBWA International Network operates internationally through
subsidiaries in Australia, Belgium, Denmark, France, Germany, Greece, Italy, the
Netherlands, Portugal, South Africa, Spain and the United Kingdom; and through
affiliates located in Argentina, Chile, Russia, South Africa, Sweden,
Switzerland and Zimbabwe. 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 Omnicom Group's Marketing Services and Specialty Advertising
Division. The DAS mission is to provide the best customer driven marketing
communications coordinated for the clients' benefit. Marketing services include
promotion, public relations, public affairs, direct/database marketing, branding
consultancy, graphic arts, sports marketing and merchandising/point-of-purchase;
and specialty advertising includes financial, healthcare, hispanic and
recruitment advertising.
DAS agencies headquartered in the United States include: Harrison Star
Wiener & Beitler, Inc., Interbrand Schechter Inc., Kallir, Philips, Ross, Inc.,
Lyons/Lavey/Nickel/Swift, Inc., Merkley Newman Harty, Inc., RC Communications,
Inc., The Rodd Group and Shain Colavito Pensabene Direct, Inc. in New York;
Bernard Hodes Advertising, Inc., Doremus & Company, Gavin Anderson & Company
Worldwide, Inc., Porter/Novelli, Inc. and Rapp Collins Worldwide Inc., all in
various cities and headquartered in New York; Alcone Marketing Group in Irvine,
California and Mahwah, New Jersey; Baxter, Gurian & Mazzei, Inc., in Beverly
Hills, California; Corbett HealthConnect Inc., in Chicago, Illinois; Millsport
in Stamford, Connecticut; Optima Direct Inc., in Vienna, Virginia; Ross Roy
Communications, Inc., headquartered in Bloomfield Hills, Michigan; The GMR
Group, Inc., in Fort Washington, Pennsylvania; Thomas A. Schutz Co., Inc. in
Morton Grove, Illinois; and Rainoldi, Kerzner & Radcliffe, Inc., in San
Francisco, California.
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 Walters Targis Ltd., Premier Magazines Ltd., Product
Plus International 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 Argentina, Australia, Belgium, Brazil, Canada, Chile, Colombia, Costa Rica,
France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Mexico, Singapore,
South Africa and Spain.
Omnicom Group Inc.
As the parent company of BBDO Worldwide, DDB Needham Worldwide, TBWA
International, the DAS Group and Goodby, Silverstein & Partners, the Company,
through its wholly-owned subsidiary Omnicom Management Inc., provides a common
financial and administrative base for the operating groups. The Company oversees
2
<PAGE>
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 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 Omnicom Group include major industrial, financial and
service industry companies as well as smaller, local clients. Among its largest
clients are Anheuser-Busch, Chrysler Corporation, Gillette, GTE, Hasbro, Henkel,
McDonald's, Nissan, PepsiCo., Seagrams, Visa and Volkswagen.
The Omnicom Group's ten largest clients accounted for approximately 21% of
1995 commissions and fees. The majority of these have been clients for more than
ten years. The Omnicom Group's largest client accounted for less than 6% of 1995
commissions and fees.
Revenues
Commissions charged on media billings represent a significant proportion of
revenues for the Omnicom Group. 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
Omnicom Group bills its client for this amount plus the commission. The Omnicom
Group 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 Omnicom Group's advertising networks also generate revenues in
arranging for the production of advertisements and commercials. Although, as a
general matter, the Omnicom Group does not itself produce the advertisements and
commercials, the Omnicom Group'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 Omnicom Group's personnel.
In many 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 companies primarily charge fees for their 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 Omnicom Group 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 193 people on the
Omnicom Group's staff were employed in research during the year and the Omnicom
Group's domestic research expenditures approximated $27,095,000. 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 and
Goodby, Silverstein & Partners have enabled the Omnicom Group to represent
competing clients.
3
<PAGE>
BBDO Worldwide, DDB Needham Worldwide, TBWA International, the DAS Group
and Goodby, Silverstein & Partners have sought, and as part of the Omnicom
Group'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 Omnicom Group 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 Omnicom Group 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 Company 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 Omnicom Group. 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, 1995, the Omnicom Group,
excluding unconsolidated companies, employed approximately 19,400 persons, of
which approximately 8,500 were employed in the United States and approximately
10,900 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 actively manages its obligations and, where appropriate,
consolidates its 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 27,000 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 170,000 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 Chiat/Day occupies approximately 58,000 sq. ft. of space at 180 Maiden
Lane, New York, New York under a lease expiring in the year 2016, which includes
options for additional growth of the agency.
Offices in Atlanta, Beverly Hills, Chicago, Dallas, Detroit, Irvine, Los
Angeles, Mahwah, Minneapolis, Morton Grove, New York, San Francisco, Seattle and
St. Louis and at various other locations occupy approximately 2,309,000 sq. ft.
of space under leases with varying expiration dates.
4
<PAGE>
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, 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 Company 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
A Special Meeting of the Shareholders of the Company was held on Tuesday,
November 28, 1995 to consider and vote upon a proposal to approve an amendment
to the Company's Restated Certificate of Incorporation increasing the number of
authorized shares of Common Stock, par value $.50 per share, from 75,000,000 to
150,000,000 to allow the Company to issue additional shares from time to time
for stock splits, stock dividends and other corporate purposes. The proposal was
approved with 30,983,982 affirmative votes being cast, 115,834 negative votes
being cast, and 59,237 abstentions.
No other matters were submitted to a vote of security holders during the
last quarter of 1995.
Executive Officers of the Company
The individuals named below are Executive Officers of the Company and,
except as indicated below, have held their current positions during the last
five years:
<TABLE>
Name Position Age
---- -------- ---
<S> <C> <C>
Bruce Crawford....... Chairman & Chief Executive Officer of Omnicom Group 67
John D. Wren......... President of Omnicom Group and Chairman & Chief Executive Officer 43
of Diversified Agency Services
Fred J. Meyer ....... Chief Financial Officer of Omnicom Group 65
Dennis E. Hewitt..... Treasurer of Omnicom Group 51
Dale A. Adams........ Controller of Omnicom Group 37
Barry J. Wagner...... Secretary & General Counsel of Omnicom Group 55
Allen Rosenshine..... Chairman & Chief Executive Officer of BBDO Worldwide 57
James A. Cannon ..... Vice Chairman & Chief Financial Officer of BBDO Worldwide 57
Keith L. Reinhard.... Chairman & Chief Executive Officer of The DDB Needham 61
Worldwide Communications Group
William G. Tragos.... Chairman & Chief Executive Officer of TBWA International 61
</TABLE>
John D. Wren was appointed President of Omnicom Group in September, 1995.
Mr. Wren was appointed Chief Executive Officer of Diversified Agency Services in
May 1993. Mr. Wren had served as President of Diversified Agency Services since
February 1992, having previously served as its Executive Vice President and
General Manager.
Dennis E. Hewitt was promoted to Treasurer of the Company in January 1994.
Mr. Hewitt joined the Company in May 1988 as Assistant Treasurer.
Dale A. Adams was promoted 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.
Barry J. Wagner was promoted to Secretary & General Counsel of the Company
in May 1995. Mr. Wagner was previously Assistant Secretary of the Company.
Similar information with respect to the remaining Executive Officers of the
Company, who are all directors of the Company, can be found in the Company's
definitive proxy statement expected to be filed April 8, 1996.
The Executive Officers of the Company are elected annually following the
Annual Meeting of the Shareholders of their respective employers.
5
<PAGE>
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. All sales prices and per share amounts have been adjusted to
reflect a two-for-one stock split in the form of a 100% stock dividend effective
December 15, 1995.
Dividends Paid
Per Share of
High Low Common Stock
---- ---- --------------
1994
First Quarter.................. 24 15/16 21 7/8 $.155
Second Quarter................. 24 3/4 22 7/16 .155
Third Quarter.................. 25 3/4 24 .155
Fourth Quarter................. 26 7/8 24 1/2 .155
1995
First Quarter.................. 28 7/16 25 .15
Second Quarter................. 30 13/16 27 1/16 .155
Third Quarter.................. 33 29 5/16 .175
Fourth Quarter................. 37 1/4 31 3/16 .175
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, the ratio of total consolidated indebtedness to total consolidated
capitalization and on its ability to make investments in and loans to affiliates
and unconsolidated subsidiaries.
On January 31, 1996 the Board of Directors declared a regular quarterly
dividend of $.175 per share of common stock, payable April 3, 1996 to holders of
record on March 15, 1996.
Approximate Number of Equity Security Holders
Approximate Number of
Record Holders
Title of Class on March 15, 1996
-------------- ---------------------
Common Stock, $.50 par value...................... 3,479
Preferred Stock, $1.00 par value ................. None
6
<PAGE>
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. As discussed in the notes to the consolidated financial
statements, during 1995 the Company completed certain acquisitions which were
accounted for under the pooling of interests method of accounting. Accordingly,
the information set forth in the following table includes the results of these
companies for all periods presented.
<TABLE>
(Dollars in Thousands Except Per Share Amounts)
-----------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
For the year:
Commissions and fees.................. $2,257,536 $1,907,795 $1,688,960 $1,600,326 $1,435,977
Income before change
in accounting principles........... 139,955 111,495 65,568 59,650 48,457
Net income ........................... 139,955 83,486 65,568 56,250 48,457
Earnings per common share before
changes in accounting principles:
Primary............................ 1.89 1.58 1.03 1.01 0.84
Fully diluted...................... 1.85 1.54 1.01 0.86 0.84
Cumulative effect of changes in accounting principles:
Primary............................ -- (0.40) -- (0.06) --
Fully diluted...................... -- (0.40) -- (0.06) --
Earnings per common share after changes in accounting principles:
Primary............................ 1.89 1.18 1.03 0.95 0.84
Fully diluted...................... 1.85 1.18 1.01 0.81 0.84
Dividends declared per common
share.............................. 0.66 0.62 0.62 0.60 0.55
At year end:
Total assets.......................... 3,527,677 3,040,211 2,465,408 2,266,733 2,196,969
Long-term obligations:
Long-term debt..................... 290,379 199,487 301,044 324,133 335,220
Deferred compensation and
other liabilities................ 122,623 150,291 113,197 102,814 82,948
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
In 1995, domestic revenues from commissions and fees increased 12.8
percent. The effect of acquisitions, net of divestitures, accounted for a 1.5
percent increase. The remaining 11.3 percent increase was due to net new
business gains and higher spending from existing clients.
In 1994, domestic revenues from commissions and fees increased 7.0 percent.
The effect of acquisitions, net of divestitures, accounted for a 1.2 percent
increase. The remaining 5.8 percent increase was due to net new business gains
and higher spending from existing clients.
In 1993, domestic revenues from commissions and fees increased 5.3 percent.
The effect of acquisitions, net of divestitures, accounted for a 3.2 percent
increase. The remaining 2.1 percent increase was due to net new business gains
and higher spending from existing clients.
In 1995, international revenues increased 24.3 percent. The effect of
acquisitions, net of divestitures, accounted for a 5.9 percent increase in
international revenues. The weakening of the U.S. dollar increased international
revenues by 6.7 percent. The remaining 11.7 percent increase was due to net new
business gains and higher spending from existing clients.
In 1994, international revenues increased 20.2 percent. The effect of
acquisitions, net of divestitures, accounted for an 8.5 percent increase in
international revenues. The weakening of the U.S. dollar increased international
revenues by 2.3 percent. The remaining 9.4 percent increase was due to net new
business gains and higher spending from existing clients.
7
<PAGE>
In 1993, international revenues increased 5.9 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 a 14.0 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 11.1 percent. The increase in revenues due to
net new business gains and higher spending from existing clients was 3.0
percent.
In 1995, worldwide operating expenses increased 17.4 percent. Acquisitions,
net of divestitures during the year, accounted for a 3.9 percent increase in
worldwide operating expenses. The weakening of the U.S dollar increased
worldwide operating expenses by 3.2 percent. The remaining 10.3 percent increase
was caused by normal salary increases and growth in out-of-pocket expenditures
to service the increased revenue base. Net foreign exchange gains did not
significantly impact operating expenses for the year.
In 1994, worldwide operating expenses increased 10.2 percent. Acquisitions,
net of divestitures during the year, accounted for a 4.8 percent increase in
worldwide operating expenses. The weakening of the U.S dollar increased
worldwide operating expenses by 1.1 percent. The remaining 4.3 percent increase
was caused by normal salary increases and growth in out-of-pocket expenditures
to service the increased revenue base, partially offset by the elimination of
the special charge recorded in 1993. Net foreign exchange gains did not
significantly impact operating expenses for the year.
In 1993, worldwide operating expenses increased 5.8 percent. During the
year, the Company recorded a special charge of $22.7 million associated with the
restructuring of certain real estate operating leases, including the write-off
of fixed assets abandoned in conjunction with lease terminations. The special
charge accounted for a 1.6 percent increase in operating expenses. Acquisitions,
net of divestitures during the year, accounted for an 8.5 percent increase in
worldwide operating expenses. The strengthening of the U.S. dollar against
several international currencies decreased worldwide operating expenses by 5.0
percent. The remaining increase was caused by normal salary increases and growth
in out-of-pocket expenditures to service the increased revenue base. Net foreign
exchange gains did not significantly impact operating expenses for the year.
Interest expense in 1995 increased $2.8 million, reflecting higher average
borrowings during the year. Interest and dividend income increased in 1995 by
$1.7 million. This increase was attributable to higher average amounts of cash
and marketable securities invested during the year.
Interest expense in 1994 decreased by $6.6 million. This decrease reflects
lower average interest rates on borrowings, primarily due to the conversion of
the Company's 7% Convertible Subordinated Debentures in October 1993 and the
conversion of the Company's 6.5% Convertible Subordinated Debentures in July
1994. Interest and dividend income decreased by $2.2 million in 1994. This
decrease was primarily due to lower average funds available for investment
during the year and declining interest rates in certain countries.
Interest expense in 1993 decreased by $4.3 million, reflecting lower
average borrowings during the year. Interest and dividend income decreased in
1993 by $3.1 million. This decrease was primarily due to lower average amounts
of cash and marketable securities invested during the year.
In 1995, the effective tax rate decreased to 40.1 percent. The decrease
reflects a reduction in the effect of nondeductible goodwill amortization and a
decrease in the effective rate of state and local taxes.
In 1994, the effective tax rate decreased to 41.2 percent. The decrease
reflects a reduction in losses of domestic and international subsidiaries
without tax benefit, a reduction in the effective rate of state and local taxes
and a reduction in the effect of nondeductible goodwill amortization, offset by
the elimination of nontaxable proceeds from life insurance policies.
In 1993, the effective tax rate increased to 48.1 percent. The increase
reflects increased losses of domestic subsidiaries without tax benefit and an
increase in the domestic federal tax rate, partially offset by nontaxable
proceeds from life insurance policies and a lower international effective tax
rate.
In 1995, consolidated net income increased 25.5 percent compared to 1994
consolidated net income before the adoption of SFAS 112. 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 12.0 percent in 1995 from 11.3
percent in 1994 as a result of greater growth in commission and fee revenue than
the growth in operating expenses. The increase in equity income was primarily
due to increased earnings of the Company's existing equity affiliates. The
increase in minority interest expense was caused by higher earnings from
8
<PAGE>
companies in which minority interests exist. In 1995, the impact of
divestitures, net of acquisitions, resulted in a 4.4 percent decrease in
consolidated net income, while the weakening of the U.S. dollar against several
international currencies increased consolidated net income by 3.4 percent.
In 1994, consolidated net income before the adoption of SFAS 112 increased
by 70.0 percent. This increase was the result of revenue growth, margin
improvement, an increase in equity income and a reduction in the effective tax
rate. Operating margin, which excludes net interest expense, increased to 11.3
percent in 1994 from 9.1 percent in 1993 as a result of greater growth in
commission and fee revenue than the growth in operating expenses. The increase
in equity income was primarily due to earnings from new equity affiliates and
was also due to improved net income at companies which are less than 50 percent
owned. In 1994, the impact of divestitures, net of acquisitions, resulted in a
2.3 percent decrease in consolidated net income, while the weakening of the U.S.
dollar against several international currencies increased consolidated net
income by 1.4 percent.
In 1993, consolidated net income increased 9.9 percent compared to 1992 net
income before changes in accounting principles. This increase was the result of
revenue growth, margin improvement, an increase in equity income and a decrease
in minority interest expense. Operating margin decreased to 9.1 percent in 1993
from 9.3 percent in 1992 as a result of lesser 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 1.0 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 6.6
percent.
At December 31, 1995, accounts receivable net of allowances for doubtful
accounts, increased by $290.7 million from December 31, 1994. At December 31,
1995, accounts payable and other accrued liabilities increased by $222.9 million
and $89.3 million, respectively, from December 31, 1994. These increases were
primarily due to an increased volume of activity resulting from business growth
and acquisitions during the year and, in the case of accounts payable,
differences in the dates on which payments to media and other suppliers became
due in 1995 compared to 1994.
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.
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 exposures to 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, 1995 and 1994, the Company had forward exchange contracts
outstanding with an aggregate notional principal amount of $325 million and $346
million, respectively, most of which were denominated in the Company's major
international market currencies. These contracts predominantly hedge certain of
the Company's intercompany receivables and payables 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.
At December 31, 1995, the Company had executed interest rate swap contracts
with banks which will become effective during 1996. These contracts consist of;
a $75 million notional principal amount U.S. dollar fixed to floating rate swap
relating to a portion of the Company's intercompany interest cash flows; and a
Deutsche Mark 76.6 million notional principal amount (approximately $53.3
million at the December 31, 1995 exchange rate) floating to fixed rate swap and
a $10 million notional principal amount U.S. dollar floating to fixed rate swap,
both of which will convert a portion of the Company's floating rate debt to a
fixed rate.
At December 31, 1995 and 1994, the Company had no other derivative
contracts outstanding.
The Company anticipates relatively favorable growth rates in its domestic
and international markets.
Capital Resources and Liquidity
Cash and cash equivalents increased $72.2 million during 1995 to $314.0
million at December 31, 1995. The Company's positive net cash flow provided by
operating activities was maintained, in part, by a continued favorable
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,
together with the proceeds from issuance of debt obligations, was used to fund
acquisitions, make capital expenditures, repay debt obligations and invest in
marketable securities.
On January 4, 1995, an indirect wholly-owned subsidiary of the Company
issued Deutsche Mark 200 million Floating Rate Bonds due January 5, 2000. The
bonds bear interest at a per annum rate equal to Deutsche Mark three month LIBOR
plus 0.65%.
On June 1, 1994, the Company issued a Notice of Redemption for the
outstanding $100 million of 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 $14.00 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, 1995, the Company had $374 million in
committed lines of credit, comprised of a $250 million, three year revolving
credit agreement and $124 million in unsecured credit lines, principally outside
of the United States. Of the $374 million in committed lines, $18 million were
used at December 31, 1995. 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.
The Company anticipates that the year end cash position, together with the
future cash flows from operations and funds available under existing credit
facilities will be adequate to meet its long-term cash requirements as presently
contemplated.
On March 1, 1996, the Company issued Deutsche Mark 100 million Floating
Rate Bonds (approximately $68 million). The bonds are unsecured, unsubordinated
obligations of the Company and bear interest at a per annum rate equal to
Deutsche Mark three month LIBOR plus 0.375%. The bonds will mature on March 1,
1999 and will be repaid at par. The proceeds of this issuance will be used for
general corporate purposes, including the reduction of outstanding commercial
paper debt.
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 and compliance
with Section 16 rules is incorporated by reference to the Company's definitive
proxy statement expected to be filed by April 8, 1996. 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 8, 1996.
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 8, 1996.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to the Company's definitive proxy statement
expected to be filed by April 8, 1996.
11
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Page
----
(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, 1995............................................ F-3
Consolidated Balance Sheets at December 31, 1995 and 1994........... F-4
Consolidated Statements of Shareholders' Equity for the three years
ended December 31, 1995............................................ F-5
Consolidated Statements of Cash Flows for the three years
ended December 31, 1995............................................ F-6
Notes to Consolidated Financial Statements.......................... F-7
Quarterly Results of Operations (Unaudited)......................... F-19
2.Financial Statement Schedules:
Report of Independent Public Accountants with regard to the
Consolidated Financial Statements of Chiat/Day Holdings, Inc....... S-1
Report of Independent Public Accountants with regard to the
Consolidated Financial Statements of Ross Roy Communications, Inc.. S-2
Schedule II--Valuation and Qualifying Accounts (for the three years
ended December 31, 1995).......................................... S-3
All other schedules are omitted because they are not applicable.
3.Exhibits:
(3)(i) Articles of Incorporation (as amended on November 28, 1995
and as restated for filing purposes).
(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, filed as Exhibit
4.2 to Omnicom Group Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1994, is incorporated herein by
reference.
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. filed
as Exhibit 4.3 to Omnicom Group Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1994, is
incorporated herein by reference.
12
<PAGE>
4.4 Copy of Subscription Agreement dated February 27, 1996 by
and among the Registrant, Morgan Stanley Bank AG and Morgan
Stanley & Co. International in connection with the issuance
of DM 100,000,000 Floating Rate Bonds of 1996 due March
1,1999.
4.5 Paying Agency Agreement dated March 1, 1996 by and among the
Registrant, Morgan Stanley Bank AG and Morgan Stanley & Co.
International in connection with the issuance of DM
100,000,000 Floating Rate Bonds of 1996 due March 1, 1999.
(10) Material Contracts.
Management Contracts, Compensatory Plans, Contracts or
Arrangements.
10.1 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.
10.2 Amendments to Registrant's 1987 Stock Plan, listed as
Exhibit 10.1 above, approved by the Registrant's
shareholders on May 24, 1994.
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 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.
10.5 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.
10.6 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.
10.7 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.
10.8 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.
10.9 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.
10.10 Copy of Severance Agreement dated July 6, 1993, between
Keith Reinhard and The DDB Needham Worldwide Communications
Group, Inc. (then known as 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.
10.11 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.
13
<PAGE>
10.12 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.
10.13 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.
Other Material Contracts.
10.14 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-4
(23) Consents of Experts and Counsel.
23.1 Consent of Arthur Andersen LLP........................ S-15
23.2 Consent of Coopers & Lybrand LLP...................... S-16
23.3 Consent of Deloitte & Touche LLP...................... S-17
(24) Powers of Attorney from Bernard Brochand, Robert J.
Callander, James A. Cannon, Leonard S. Coleman, Jr., Peter
I. Jones, John R. Purcell, Keith L. Reinhard, Allen
Rosenshine, Gary L. Roubos, Quentin I. Smith, Jr., Robin B.
Smith, William G. Tragos 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, 1995.
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 25, 1996
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 Chairman and Chief March 25, 1996
-------------------------------------------- Executive Officer and Director
(Bruce Crawford)
/s/ JOHN D. WREN President and Director March 25, 1996
--------------------------------------------
(John D. Wren)
/s/ FRED J. MEYER Chief Financial Officer March 25, 1996
-------------------------------------------- and Director
(Fred J. Meyer)
/S/ DALE A. ADAMS Controller (Principal March 25, 1996
-------------------------------------------- Accounting Officer)
(Dale A. Adams)
/s/ BARRY J. WAGNER Secretary and General March 25, 1996
-------------------------------------------- Counsel
(Barry J. Wagner)
/s/ BERNARD BROCHAND* Director March 25, 1996
--------------------------------------------
(Bernard Brochand)
/s/ ROBERT J. CALLANDER* Director March 25, 1996
--------------------------------------------
(Robert J. Callander)
/s/ JAMES A. CANNON* Director March 25, 1996
--------------------------------------------
(James A. Cannon)
/s/ LEONARD S. COLEMAN, JR.* Director March 25, 1996
--------------------------------------------
(Leonard S. Coleman, Jr.)
/s/ PETER I. JONES * Director March 25, 1996
--------------------------------------------
(Peter I. Jones)
/s/ JOHN R. PURCELL* Director March 25, 1996
--------------------------------------------
(John R. Purcell)
/s/ KEITH L. REINHARD* Director March 25, 1996
--------------------------------------------
(Keith L. Reinhard)
/s/ ALLEN ROSENSHINE * Director March 25, 1996
--------------------------------------------
(Allen Rosenshine)
/s/ GARY L. ROUBOS* Director March 25, 1996
--------------------------------------------
(Gary L. Roubos)
/s/ QUENTIN I. SMITH, JR.* Director March 25, 1996
--------------------------------------------
(Quentin I. Smith, Jr.)
/s/ ROBIN B. SMITH* Director March 25, 1996
--------------------------------------------
(Robin B. Smith)
/s/ WILLIAM G. TRAGOS* Director March 25, 1996
--------------------------------------------
(William G. Tragos)
/s/ EGON P.S. ZEHNDER* Director March 25, 1996
--------------------------------------------
(Egon P.S. Zehnder)
*By /s/ BARRY J. WAGNER
--------------------------------------------
Barry J. Wagner
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.
BRUCE CRAWFORD FRED J. MEYER
- ---------------------------------------- ------------------------------------
Bruce Crawford Fred J. Meyer
Chairman 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, 1995 and
1994, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1995. These financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits. Prior to
1995, we did not audit the financial statements of Chiat/Day Holdings, Inc. and
Ross Roy Communications, Inc., companies acquired during 1995 in two
transactions accounted for as poolings of interests, as discussed in Note 2.
Such statements are included in the consolidated financial statements of Omnicom
Group Inc. and account for total assets of 6% at December 31, 1994 and total
revenues of 7% and 11% for the years ended December 31, 1994 and 1993,
respectively, of the consolidated totals, after restatement to reflect certain
adjustments. The financial statements of Chiat/Day Holdings, Inc. and Ross Roy
Communications, Inc. prior to those adjustments were audited by other auditors
whose reports have been furnished to us and our opinion, insofar as it relates
to the amounts included for those entities, is based solely upon the reports of
the other auditors.
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 and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, 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,
1995 and 1994, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995 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 method of accounting for postemployment
benefits.
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-3 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, based on our audits and the reports of other auditors,
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, 1996 (except for Note 14
as to which the date is March 1, 1996)
F-2
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in Thousands
Except Per Share Data)
------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
COMMISSIONS AND FEES............................. $2,257,536 $1,907,795 $1,688,960
OPERATING EXPENSES:
Salaries and Related Costs.................. 1,305,087 1,102,944 988,566
Office and General Expenses................. 681,544 588,747 524,435
Special Charge.............................. -- -- 22,714
--------- --------- ---------
1,986,631 1,691,691 1,535,715
--------- --------- ---------
OPERATING PROFIT................................. 270,905 216,104 153,245
NET INTEREST EXPENSE:
Interest and Dividend Income................ (15,019) (13,295) (15,538)
Interest Paid or Accrued.................... 43,271 40,485 47,105
--------- --------- ---------
28,252 27,190 31,567
--------- --------- ---------
INCOME BEFORE INCOME TAXES
AND CHANGE IN ACCOUNTING
PRINCIPLE................................... 242,653 188,914 121,678
INCOME TAXES..................................... 97,386 77,927 58,485
--------- --------- ---------
INCOME AFTER INCOME TAXES AND BEFORE
CHANGE IN ACCOUNTING PRINCIPLE................. 145,267 110,987 63,193
EQUITY IN AFFILIATES............................. 20,828 18,322 13,180
MINORITY INTERESTS............................... (26,140) (17,814) (10,805)
--------- --------- ---------
INCOME BEFORE CHANGE IN
ACCOUNTING PRINCIPLE........................... 139,955 111,495 65,568
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE........................... -- (28,009) --
--------- --------- ---------
NET INCOME....................................... $ 139,955 $ 83,486 $ 65,568
========= ========= =========
NET INCOME PER COMMON SHARE:
Income Before Change in
Accounting Principle:
Primary.................................. $ 1.89 $ 1.58 $ 1.03
Fully Diluted............................ $ 1.85 $ 1.54 $ 1.01
Cumulative Effect of Change
in Accounting Principle:
Primary.................................. $ -- $ (0.40) $ --
Fully Diluted............................ $ -- $ (0.40) $ --
Net Income:
Primary.................................. $ 1.89 $ 1.18 $ 1.03
Fully Diluted............................ $ 1.85 $ 1.18 $ 1.01
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-3
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
<TABLE>
<CAPTION>
December 31,
(Dollars in Thousands)
---------------------------
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................................... $ 313,999 $ 241,797
Investments available-for-sale, at market, which approximates cost........... 21,474 28,425
Accounts receivable, less allowance for doubtful accounts of
$23,352 and $23,528 (Schedule II)........................................ 1,503,212 1,212,501
Billable production orders in process, at cost............................... 106,115 82,357
Prepaid expenses and other current assets.................................... 161,235 148,958
---------- ----------
Total Current Assets......................................................... 2,106,035 1,714,038
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost, less
accumulated depreciation and amortization of $259,664 and $238,468........... 200,473 192,450
INVESTMENTS IN AFFILIATES ...................................................... 200,216 164,524
INTANGIBLES, less accumulated amortization of $157,863 and $133,848.............. 832,698 758,973
DEFERRED TAX BENEFITS............................................................ 70,242 65,064
DEFERRED CHARGES AND OTHER ASSETS ............................................... 118,013 145,162
---------- ----------
$3,527,677 $3,040,211
========== ==========
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............................................................. $1,734,500 $1,511,610
Current portion of long-term debt............................................ 2,934 23,537
Bank loans .................................................................. 18,097 10,640
Advance billings............................................................. 245,516 215,181
Accrued taxes on income...................................................... 41,756 52,989
Other accrued taxes.......................................................... 66,167 63,238
Other accrued liabilities.................................................... 380,407 291,072
Dividends payable............................................................ 13,067 11,262
---------- ----------
Total Current Liabilities.................................................... 2,502,444 2,179,529
---------- ----------
LONG-TERM DEBT ................................................................. 290,379 199,487
DEFERRED COMPENSATION AND OTHER LIABILITIES ..................................... 122,623 150,291
MINORITY INTERESTS .............................................................. 60,724 42,738
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, 150,000,000 shares authorized,
79,842,976 and 79,262,232 shares issued in 1995 and 1994, respectively... 39,921 39,631
Additional paid-in capital................................................... 390,984 381,770
Retained earnings............................................................ 299,704 207,488
Unamortized restricted stock................................................. (30,739) (25,631)
Cumulative translation adjustment............................................ (26,641) (28,254)
Treasury stock, at cost, 5,184,814 and 5,022,374 shares in 1995 and
1994, respectively....................................................... (121,722) (106,838)
---------- ----------
Total Shareholders' Equity............................................... 551,507 468,166
---------- ----------
$3,527,677 $3,040,211
========== ==========
</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
<TABLE>
<CAPTION>
Three Years Ended December 31, 1995
(Dollars in Thousands)
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, 1992......... 63,546,510 $31,773 $172,474 $143,955 $(15,307) $(38,200) $(53,586) $241,109
Pooling of interests adjustment
related to acquisition of
TBWA International............ 2,698,520 1,349 (551) (6,309) (1,834) (7,345)
---------- ------ ------- ------- ------- ------- -------- -------
Balance January 1, 1993,
as restated 66,245,030 33,122 171,923 137,646 (15,307) (40,034) (53,586) 233,764
Net income....................... 65,568 65,568
Dividends declared............... (36,992) (36,992)
Amortization of
restricted shares 7,096 7,096
Share transactions under
employee stock plans.......... (627,754) (314) 19,542 (13,596) 15,413 21,045
Shares issued for acquisitions 7,303 21,948 29,251
Conversion of 7% Debentures...... 6,668,158 3,334 82,519 85,853
Cumulative translation
adjustment ................... (25,780) (25,780)
Repurchases of shares............ (51,885) (51,885)
---------- ------ ------- ------- ------- ------- -------- -------
Balance December 31, 1993........ 72,285,434 36,142 281,287 166,222 (21,807) (65,814) (68,110) 327,920
Net income....................... 83,486 83,486
Dividends declared............... (42,220) (42,220)
Amortization of restricted
shares ....................... 9,535 9,535
Share transactions under employee
stock plans................... (165,668) (83) 2,952 (13,359) 16,796 6,306
Shares issued for acquisitions 1,103 11,932 13,035
Conversion of 6.5% Debentures.... 7,142,466 3,572 96,428 100,000
Cumulative translation
adjustment ................... 37,560 37,560
Repurchases of shares............ (67,456) (67,456)
---------- ------ ------- ------- ------- ------- -------- -------
Balance December 31, 1994........ 79,262,232 39,631 381,770 207,488 (25,631) (28,254) (106,838) 468,166
Net income....................... 139,955 139,955
Dividends declared............... (47,739) (47,739)
Amortization of restricted shares 10,713 10,713
Share transactions under employee
stock plans................... 580,744 290 8,205 (15,821) 17,111 9,785
Shares issued for acquisitions .. 1,009 2,659 3,668
Cumulative translation
adjustment ................... 1,613 1,613
Repurchases of shares............ (34,654) (34,654)
---------- ------- -------- -------- -------- -------- --------- --------
Balance December 31, 1995........ 79,842,976 $39,921 $390,984 $299,704 $(30,739) $(26,641) $(121,722) $551,507
========== ======= ======== ======== ======== ======== ========= ========
</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)
-----------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income.......................................................... $139,955 $ 83,486 $ 65,568
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of tangible assets.................. 45,879 41,308 40,092
Amortization of intangible assets................................. 28,250 25,046 19,034
Minority interests................................................ 26,140 17,549 10,805
Earnings of affiliates in excess of dividends received............ (5,682) (10,484) (6,823)
Decrease (increase) in deferred taxes............................. 2,400 (3,272) (669)
Provisions for losses on accounts receivable...................... 6,024 9,788 7,690
Amortization of restricted shares................................. 10,713 9,535 7,096
Increase in accounts receivable................................... (259,560) (139,194) (16,481)
(Increase) decrease in billable production........................ (22,442) (4,735) 6,129
(Increase) decrease in other current assets....................... (7,040) (27,166) 20,000
Increase in accounts payable...................................... 180,850 258,371 61,105
Increase (decrease) in other accrued liabilities.................. 107,087 77,476 (18,769)
(Decrease) increase in accrued taxes on income.................... (12,808) 17,752 1,187
Other............................................................. (13,177) 4,703 18,066
-------- --------- ---------
Net Cash Provided By Operating Activities ............................ 226,589 360,163 214,030
-------- --------- ---------
Cash Flows From Investing Activities:
Capital expenditures................................................. (49,568) (43,983) (33,646)
Purchases of equity interests in subsidiaries
and affiliates, net of cash acquired............................. (118,784) (150,660) (80,577)
Sales of equity interests in subsidiaries and
affiliates....................................................... 15,278 499 558
Purchases of investments available-for-sale and
other investments................................................. (14,200) (8,154) (49,733)
Sales of investments available-for-sale and
other investments................................................ 21,496 24,165 17,396
-------- --------- ---------
Net Cash Used In Investing Activities ................................. (145,778) (178,133) (146,002)
-------- --------- ---------
Cash Flows From Financing Activities:
Net borrowings (repayments) under lines of credit................... 6,883 (25,033) (14,167)
Proceeds from issuances of debt obligations......................... 135,162 36,161 149,593
Repayment of principal of debt obligations.......................... (67,718) (35,815) (49,664)
Share transactions under employee stock plans....................... 5,681 7,911 7,526
Dividends and loans to minority stockholders........................ (15,498) (8,062) (8,033)
Dividends paid...................................................... (45,935) (41,307) (35,470)
Purchases of treasury shares....................................... (34,654) (67,456) (51,885)
-------- --------- ---------
Net Cash Used in Financing Activities ................................ (16,079) (133,601) (2,100)
-------- --------- ---------
Effect of exchange rate changes on cash and cash
equivalents....................................................... 7,470 13,244 (14,199)
-------- --------- ---------
Net Increase in Cash and Cash Equivalents ............................. 72,202 61,673 51,729
Cash and Cash Equivalents At Beginning of Period ...................... 241,797 180,124 128,395
-------- --------- ---------
Cash and Cash Equivalents At End of Period ............................ $313,999 $ 241,797 $ 180,124
======== ========= =========
Supplemental Disclosures:
Income taxes paid.................................................... $109,241 $ 46,034 $ 50,995
======== ========= =========
Interest paid........................................................ $ 36,482 $ 37,895 $ 41,432
======== ========= =========
</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. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business. Omnicom Group Inc., through its wholly and partially-owned
companies, operates advertising agencies which plan, create, produce and place
advertising in various media such as television, radio, newspaper and magazines.
Additional services such 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 are offered to clients. These services are offered to clients
worldwide on a local, national, pan-regional or global basis.
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.
Restatements and Reclassifications. During 1995, the Company completed
certain acquisitions which were accounted for under the pooling of interests
method of accounting, as discussed in Note 2. Accordingly, the Company's
consolidated financial statements and notes to consolidated financial statements
have been restated to include the results of these companies for all periods
presented. On December 15, 1995, the Company completed a two-for-one stock split
in the form of a 100% stock dividend; as such all prior year balances have been
restated to give retroactive effect to the split. In addition, certain prior
year amounts have been reclassified to conform with the 1995 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 million, $4.0 million and $4.4 million are included
in 1995, 1994 and 1993 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,
1995 the 4.5%/6.25% Step-Up Convertible Subordinated Debentures were assumed to
be converted for the full year. 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. The number of shares used in the computations
were as follows:
1995 1994 1993
---- ---- ----
Primary EPS computation .......... 74,375,300 70,764,800 63,827,900
Fully diluted EPS computation .... 79,913,100 79,925,700 77,739,200
F-7
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
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. The intangible values
associated with the Company's business consist predominantly of two types; the
value of the worldwide agency networks, and the value of ongoing client
relationships. The Company's worldwide agency networks have been operating for
an average of over sixty years and intangibles associated with enhancing network
value are intended to enhance the long term value of the networks. Client
relationships in the advertising industry are typically long term in nature and
the Company's largest clients have on average been clients for approximately
thirty years. As such, intangibles are amortized on a straight-line basis
principally over a period of 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 cash flows
arising from the use of the intangibles 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 overnight interest-bearing deposits and money market instruments
with original 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:
<TABLE>
<CAPTION>
(Dollars in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Fair value of non-cash assets acquired ... $129,425 $265,865 $287,177
Cash paid, net of cash acquired .......... (118,784) (150,660) (80,577)
Common shares issued ..................... (3,668) (13,035) (21,906)
------- -------- --------
Liabilities assumed ...................... $ 6,973 $102,170 $184,694
======= ======== ========
</TABLE>
During 1994, the Company issued 7,142,466 shares of common stock upon
conversion of $100 million of its 6.5% Convertible Subordinated Debentures.
During 1993, the Company issued 6,668,158 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. Derivative financial instruments consist
principally of forward exchange contracts and interest rate swaps. In order for
derivative financial instruments to qualify for hedge accounting the following
criteria must be met: (a) the hedging instrument must be designated as a hedge;
(b) the hedged exposure must be specifically identifiable and expose the Company
F-8
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
to risk; and (c) it must be highly probable that a change in fair value of the
derivative financial instrument and an opposite change in the fair value of the
hedged exposure will have a high degree of correlation. The majority of the
Company's derivative activity relates to forward exchange contracts. The Company
executes these contracts in the same currency as the hedged exposure, whereby
100% correlation is achieved. 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.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2. ACQUISITIONS
In August 1995, the Company completed the acquisitions of Ross Roy
Communications and Chiat/Day Holdings. Both transactions were accounted for
under the pooling of interests method of accounting. Accordingly, the Company's
financial statements have been restated to include the results of Ross Roy
Communications and Chiat/Day Holdings for all periods presented. A total of
2,556,646 shares were issued in connection with these acquisitions.
In May 1993, the Company completed its acquisition of a third agency
network, TBWA International. The acquisition was accounted for as a pooling of
interests and, accordingly, the results of operations for TBWA International
have been included in these consolidated financial statements since January 1,
1993.
During 1995 the Company made several other acquisitions within the
advertising industry whose aggregate cost, in cash or by issuance of the
Company's common stock, totaled $125.2 million for net assets, which included
intangible assets of $108.7 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 to
enhance the Company's worldwide agency networks and marketing service companies.
Included in both figures are contingent payments related to prior year
acquisitions totaling $45.0 million. Pro forma combined results of operations of
the Company as if these acquisitions had occurred on January 1, 1994 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, 1995.
Certain acquisitions entered into in 1995 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.
3. BANK LOANS AND LINES OF CREDIT
Bank loans primarily comprised 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,
1995 and 1994 was 6.5% and 9.0%, respectively. At December 31, 1995 and 1994,
the Company had unsecured committed lines of credit aggregating $374 million and
$390 million, respectively. The unused portion of credit lines was $356 million
at both December 31, 1995 and 1994. 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, 1995 and 1994, the committed lines of credit included $250
million under a three year revolving credit agreement expiring June 30, 1997.
Due to the long term nature of this credit agreement, borrowings under the
agreement would be classified as long-term debt. There were no borrowings under
the revolving credit agreement at December 31, 1995 and 1994.
F-9
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The revolving credit agreement includes a facility for issuing commercial
paper backed by a bank letter of credit. During the years ended December 31,
1995, 1994 and 1993, the Company issued commercial paper with an average
original maturity of 31, 33 and 32 days, respectively. The Company had no
commercial paper borrowings outstanding as of December 31, 1995, 1994, and 1993.
The maximum outstanding during the year was $210 million, $230 million and $194
million, in 1995, 1994, and 1993, respectively. The gross amount of issuance and
redemption during the year was $1,211 million, $1,587 million and $1,337 million
in 1995, 1994 and 1993, respectively.
4. EMPLOYEE STOCK PLANS
Under the terms of the Company's 1987 Stock Plan, as amended (the "1987
Plan"), 13,100,000 shares of common stock of the Company have been reserved for
restricted stock awards and non-qualified stock options to key employees of the
Company. The remaining number of such reserved shares was 4,083,000 at December
31, 1995.
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, 830,000, 610,000 and 570,000 non-qualified options
were granted in 1995, 1994 and 1993, respectively.
A summary of changes in outstanding options for the three years ended
December 31, 1995 is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Shares under option (at prices ranging
from $8.4375 to $24.2188) --
Beginning of year................................. 2,388,000 2,144,800 1,996,000
Options granted (at prices ranging from
$25.875 to $32.4063).............................. 830,000 610,000 570,000
Options exercised (at prices ranging
from $8.4375 to $24.2188)......................... (255,600) (366,800) (395,600)
Options forfeited.................................... -- -- (25,600)
--------- --------- ---------
Shares under option (at prices ranging
from $8.4375 to $32.4063)-- End of year........... 2,962,400 2,388,000 2,144,800
========= ========= =========
Shares exercisable................................... 1,507,400 1,267,500 1,125,300
</TABLE>
Under the 1987 Plan, 612,168 shares, 629,160 shares and 674,400 shares of
restricted stock of the Company were awarded in 1995, 1994 and 1993,
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.
F-10
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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,
1995 is as follows:
Years Ended December 31,
1995 1994 1993
---- ---- ----
Beginning balance............... 1,564,164 1,480,872 1,259,504
Amount granted................ 612,168 629,160 674,400
Amount vested................. (490,422) (461,206) (403,424)
Amount forfeited.............. (38,910) (84,662) (49,608)
--------- --------- ---------
Ending balance.................. 1,647,000 1,564,164 1,480,872
========= ========= =========
The charge to operations in connection with these restricted stock awards
for the years ended December 31, 1995, 1994 and 1993 amounted to $10.7 million,
$9.5 million and $7.1 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, 1995, 1994 and 1993, and for the years then
ended is presented below:
<TABLE>
<CAPTION>
Dollars in Thousands)
-------------------------------------------
United
States International Consolidated
------ ------------- ------------
<S> <C> <C> <C>
1995
Commissions and Fees.......... $1,117,226 $1,140,310 $ 2,257,536
Operating Profit ............. 139,927 130,978 270,905
Net Income ................... 69,906 70,049 139,955
Identifiable Assets........... 1,316,521 2,211,156 3,527,677
1994
Commissions and Fees.......... $ 990,774 $ 917,021 $ 1,907,795
Operating Profit ............. 125,762 90,342 216,104
Net Income ................... 41,381 42,105 83,486
Identifiable Assets........... 1,169,966 1,870,245 3,040,211
1993
Commissions and Fees.......... $ 925,988 $ 762,972 $ 1,688,960
Operating Profit.............. 82,873 70,372 153,245
Net Income.................... 25,259 40,309 65,568
Identifiable Assets........... 930,089 1,484,652 2,414,741
</TABLE>
F-11
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. INVESTMENTS IN AFFILIATES
The Company has in excess of 60 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, 1995, 1994, 1993, and for the years then ended:
Dollars in Thousands)
1995 1994 1993
---- ---- ----
Current assets.............. $1,399,700 $1,208,976 $308,741
Non-current assets.......... 147,093 146,899 73,772
Current liabilities......... 1,400,349 1,196,807 235,389
Non-current liabilities..... 149,781 162,328 29,596
Minority interests.......... 8,015 9,699 1,149
Gross revenues.............. 702,639 568,171 290,814
Costs and expenses.......... 582,850 451,688 238,039
Net income.................. 79,262 86,001 33,574
The increase in the summarized balance sheets and income statements of the
Company's unconsolidated affiliates in 1995 and 1994 is due to the inclusion of
new equity affiliates and the growth of the Company's existing equity
affiliates. The Company's equity in the net income of these affiliates amounted
to $20.8 million, $18.3 million and $13.2 million for 1995, 1994 and 1993,
respectively. The Company's equity in the net tangible assets of these
affiliated companies was approximately $76.7 million, $65.8 million and $58.1
million at December 31, 1995, 1994 and 1993, 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 excess acquisition costs are
being amortized on a straight-line basis principally over a period of forty
years.
7. LONG-TERM DEBT
Long-term debt outstanding as of December 31, 1995 and 1994 consisted of
the following:
<TABLE>
<CAPTION>
(Dollars in Thousands)
1995 1994
---- ----
<S> <C> <C>
4.5%/6.25% Step-Up Convertible Subordinated Debentures with
a scheduled maturity in 2000..................................... $143,750 $143,750
Deutsche Mark 200 million Floating Rate Bonds, with a scheduled
maturity in 2000, interest at DM three month LIBOR plus 0.65%.... 139,220 --
Sundry notes and loans payable to banks and others at rates from
6% to 25%, maturing at various dates through 2004............... 10,343 79,274
-------- --------
293,313 223,024
Less current portion................................................ 2,934 23,537
-------- --------
Total long-term debt.............................................. $290,379 $199,487
======== ========
</TABLE>
F-12
<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 $27.44 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 January 4, 1995, an indirect wholly-owned subsidiary of the Company
issued Deutsche Mark 200 million Floating Rate Bonds. The bonds are unsecured,
unsubordinated obligations of the issuer and are unconditionally and irrevocably
guaranteed by the Company. The bonds bear interest at a 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.
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 $14.00 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 $12.875 per common share.
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 expiring 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
limitations on investments in and loans to affiliates and unconsolidated
subsidiaries. At December 31, 1995 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)
1996............................................. $2,934
1997............................................. 2,939
1998............................................. 1,418
1999............................................. 478
2000............................................. 283,269
F-13
<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)
----------------------------------
1995 1994 1993
---- ---- ----
Income before income taxes:
Domestic..................... $107,536 $90,064 $ 43,577
International................ 135,117 98,850 78,101
-------- -------- --------
Totals.................... $242,653 $188,914 $121,678
======== ======== ========
Provision for taxes on income:
Current:
Federal................... $ 29,143 $ 31,500 $ 15,495
State and local........... 9,837 8,708 8,054
International............. 57,463 38,855 35,407
-------- -------- --------
96,443 79,063 58,956
-------- -------- --------
Deferred:
Federal..................... 2,089 (5,167) 667
State and local............. (1,481) (1,285) 139
International............... 335 5,316 (1,277)
-------- -------- --------
943 (1,136) (471)
-------- -------- --------
Totals............... $ 97,386 $ 77,927 $ 58,485
======== ======== ========
The Company's effective income tax rate varied from the statutory federal
income tax rate as a result of the following factors:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate....................... 35.0% 35.0% 35.0%
State and local taxes on income, net of
federal income tax benefit........................... 2.2 2.6 4.6
International subsidiaries' tax rates
in excess of federal statutory rate................. 0.1 0.2 0.1
Non-deductible amortization of goodwill................. 3.4 4.1 4.6
Losses of domestic subsidiaries without tax benefit..... -- -- 6.6
Nontaxable proceeds from life insurance policies........ -- -- (2.6)
Other................................................... (0.6) (0.7) (0.2)
---- ---- ----
Effective rate.......................................... 40.1% 41.2% 48.1%
==== ==== ====
</TABLE>
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, 1995 and
1994 of $125.1 million and $111.1 million, respectively, related principally to
tax deductible intangibles, leasehold amortization, restricted stock
amortization, severance and compensation, leases and accrued expenses.
The Company has recorded deferred tax liabilities as of December 31, 1995
and 1994 of $33.2 million and $27.9 million, respectively, related principally
to furniture and equipment depreciation and tax lease recognition.
F-14
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Deferred tax benefits (liabilities) as of December 31, 1995 and 1994
consisted of the amounts shown below (dollars in millions):
1995 1994
---- ----
Deductible intangibles..................... $37.9 $31.5
Acquisition liabilities.................... 16.1 12.1
Lease reserves............................. 8.3 3.0
Severance and compensation reserves........ 28.8 24.7
Tax loss carryforwards..................... 6.0 7.8
Amortization and depreciation.............. (2.3) (3.3)
Other, net................................. (2.9) 7.4
----- -----
$91.9 $83.2
===== =====
Net current deferred tax benefits as of December 31, 1995 and 1994 were
$21.7 million and $18.1 million, respectively, and were included in prepaid
expenses and other current assets. Net non-current deferred tax benefits as of
December 31, 1995 and 1994 were $70.2 million and $65.1 million, respectively.
In 1993, legislation was enacted which increased the U.S. statutory tax
rate from 34% to 35%. The effect of this rate change and other statutory rate
changes in various state, local and international jurisdictions was not material
to net income.
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 defined contribution 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. Expense associated with these plans
amounted to $41.7 million, $36.6 million and $26.8 million in 1995, 1994 and
1993, respectively.
The Company's pension plans are primarily international. 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 $4.4 million, $0.8 million and $1.1 million in 1995, 1994
and 1993, respectively.
Certain subsidiaries of the Company have executive retirement programs
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. The expense related to these benefits was not material
to the 1995, 1994 and 1993 consolidated results of operations.
10. COMMITMENTS AND CONTINGENT LIABILITIES
At December 31, 1995, 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 $169.1
million in 1995, $152.6 million in 1994 and $149.7 million in 1993 after
reduction by rents received from subleases of $11.1 million, $10.2 million and
$10.0 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:
F-15
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
Gross Rent Sublease Income Net Rent
---------- --------------- --------
1996......................... 146,491 10,969 135,522
1997......................... 130,992 8,462 122,530
1998......................... 108,904 5,862 103,042
1999......................... 94,412 4,800 89,612
2000......................... 88,575 3,627 84,948
Thereafter................... 503,788 9,458 494,330
Where appropriate, management has established reserves for the difference
between the cost of leased premises that were vacated and anticipated sublease
income.
The Company is involved in various routine legal proceedings incident to
the ordinary course of its business. The Company believes that the outcome of
all pending legal proceedings and unasserted claims in the aggregate will not
have a material adverse effect on its results of operations, consolidated
financial position or liquidity.
11. 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, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
----------------------- ------------------------
(Dollars in Thousands) (Dollars in Thousands)
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Cash, cash equivalents and
investments available-for-sale.... $335,473 $335,473 $270,222 $270,222
Long-term investments............... 7,520 7,520 5,597 5,597
Long-term debt...................... 293,313 346,860 223,024 224,461
Financial Commitments:
Interest rate swaps............... -- 378 -- --
Forward exchange contracts........ -- 251 -- 123
Guarantees........................ -- 7,688 -- 0,065
Letters of credit................... -- 1,996 -- 19,879
</TABLE>
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 majority of the Company's remaining long-term debt is primarily
floating rate debt and consequently the carrying amount approximates fair value.
Financial Commitments:
The estimated fair value of derivative positions are based upon quotations
received from independent, third party banks and represent the net amount
F-16
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
payable to terminate the position, taking into consideration market rates and
counterparty credit risk. The fair value 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 utilizes derivative financial instruments predominantly 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 21, 1996. The Audit Committee has reconfirmed,
for the year 1996, the limitations originally established in 1993.
At December 31, 1995 the following swap agreements were outstanding:
<TABLE>
<CAPTION>
Maturity Aggregate Company Company
Date Notional Amount Receives Pays
------------ ------------------ --------------- ---------
(Amounts in thousands)
<S> <C> <C> <C> <C>
U.S. dollar fixed to floating rate swap..... January 1997 $75,000 8.27% U.S. Prime
Deutsche Mark ("DM") floating to
fixed rate swap.......................... January 1997 DM 76,640 3 mo. DM LIBOR 3.79%
U.S. dollar floating to fixed rate swap..... October 2006 $10,000 6 mo. US LIBOR 6.51%
</TABLE>
The $75 million swap relates to a portion of the Company's intercompany
interest cash flows. The DM 76.6 million (approximately $53.3 million at the
December 31, 1995 exchange rate) and the $10 million swap agreements convert a
portion of the Company's floating rate debt to a fixed rate.
There were no swap agreements outstanding at December 31, 1994.
The Company enters into forward exchange contracts predominantly to hedge
intercompany receivables and payables 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. At December 31, 1995, the
aggregate amount of intercompany receivables and payables subject to this hedge
program was $306 million. The table below summarizes by major currency the
notional principal amounts of the Company's forward exchange contracts
outstanding at December 31, 1995. 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
-------- ------------ -------------
French Franc............................. $75,472 $43,283
U.S. Dollar.............................. 6,228 43,770
German Mark.............................. 3,394 39,063
Hong Kong Dollar......................... 2,246 30,583
Australian Dollar........................ 11,247 --
Spanish Peseta........................... 4,632 9,902
Belgium Franc............................ 9,583 81
Dutch Guilder............................ 8,463 3,292
Greek Drachma............................ -- 5,120
Other.................................... 12,549 16,367
-------- --------
Total............................. $133,814 $191,461
======== ========
F-17
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The derivative financial instruments existing at December 31, 1995 and
1994 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 risk. 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
The Company intends to adopt SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of" in 1996. The
Company does not anticipate that the effect of such adoption will be material to
the carrying value of such assets.
The Company intends to adopt SFAS No. 123, "Accounting for Stock-Based
Compensation" in 1996. As permitted by SFAS No. 123, the Company intends to
continue to apply the accounting provisions of APB Opinion No. 25, "Accounting
for Stock Issued to Employees" and to make annual pro forma disclosures of the
effect of adopting the fair value based method of accounting for employee stock
options and similar instruments.
Effective January 1, 1994, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits". 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 million.
Effective January 1, 1994, the Company also adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". 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, 1995, 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, 1995.
14. SUBSEQUENT EVENT
On March 1, 1996, the Company issued Deutsche Mark 100 million Floating
Rate Bonds (approximately $68 million). The bonds are unsecured, unsubordinated
obligations of the Company and bear interest at a per annum rate equal to
Deutsche Mark three month LIBOR plus 0.375%. The bonds will mature on March 1,
1999 and will be repaid at par. The proceeds of this issuance will be used for
general corporate purposes, including the reduction of outstanding commercial
paper debt.
F-18
<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, 1995 and 1994, in
thousands of dollars except for per share amounts. As discussed in the notes to
the consolidated financial statements, during 1995 the Company completed certain
acquisitions which were accounted for under the pooling of interests method of
accounting. Accordingly, the information set forth in the following table
includes the results of these companies for all periods presented. In addition,
information set forth in the following table has been restated to give
retroactive effect to a two-for-one stock split completed in December 1995.
<TABLE>
<CAPTION>
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
Commissions & Fees
1995.................................. $499,086 $570,263 $537,666 $650,521
1994.................................. 413,127 462,894 456,396 575,378
Income Before Income Taxes
1995.................................. 43,984 77,288 38,667 82,714
1994................................. 33,226 60,188 30,904 64,596
Income Taxes
1995.................................. 18,028 31,356 15,467 32,535
1994................................. 13,735 24,748 12,747 26,697
Income After Income Taxes
1995.................................. 25,956 45,932 23,200 50,179
1994.................................. 19,491 35,440 18,157 37,899
Equity in Affiliates
1995.................................. 2,213 6,141 3,736 8,738
1994.................................. 2,089 3,863 3,432 8,938
Minority Interests
1995.................................. (2,984) (8,542) (3,258) (11,356)
1994.................................. (1,741) (4,794) (2,882) (8,397)
Income Before Change
in Accounting Principle
1995.................................. 25,185 43,531 23,678 47,561
1994.................................. 19,839 34,509 18,707 38,440
Cumulative Effect of Change
in Accounting Principle
1995.................................. -- -- -- --
1994.................................. (28,009) -- -- --
Net Income
1995.................................. 25,185 43,531 23,678 47,561
1994................................. (8,170) 34,509 18,707 38,440
Primary Earnings Per Share Before
Change in Accounting Principle
1995.................................. 0.34 0.58 0.32 0.64
1994................................. 0.29 0.51 0.26 0.52
Fully Diluted Earnings Per Share Before
Change in Accounting Principle
1995.................................. 0.34 0.57 0.32 0.62
1994.................................. 0.29 0.47 0.26 0.51
</TABLE>
F-19
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Shareholders and Board of Directors
Chiat/Day Holdings, Inc.
We have audited the consolidated balance sheets of Chiat/Day Holdings,
Inc. and Subsidiaries as of October 31, 1994 and 1993, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for the years then ended (not included herein). 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 consolidated financial position of Chiat/Day
Holdings, Inc. and Subsidiaries as of October 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
The consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1, the Company's
debt under its Senior Note and Senior Subordinated Note totaling $18,750,000 is
due in 1995, which combined with its working capital and stockholders' deficits
at October 31, 1994, raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans as to this matter are discussed
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
COOPERS & LYBRAND LLP
Sherman Oaks, California
April 7, 1995
S-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Ross Roy Communications, Inc.
Bloomfield Hills, Michigan
We have audited the consolidated balance sheets of Ross Roy Communications,
Inc.(formerly known as Ross Roy Group, Inc.) as of December 31, 1994, and the
related consolidated statements of operations, common stock subject to
repurchase obligations and accumulated deficit and cash flows for each of the
two years in the period ended December 31, 1994 (not presented separately
herein). These consolidated financial statements are the responsibility of the
Corporation'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, such consolidated financial statements present fairly, in
all material respects, the financial position of the Corporation as of December
31, 1994 and 1993, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Detroit, Michigan
March 9, 1995
S-2
<PAGE>
Schedule II
OMNICOM GROUP INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 31, 1995
<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(2):
December 31, 1995....................... $23,528 $6,024 $6,964 $(764) $23,352
December 31, 1994....................... 19,986 9,788 6,852 (606) 23,528
December 31, 1993....................... 12,842 7,690 (409) 955 19,986
</TABLE>
- --------------
(1) Net of acquisition date balances in allowance for doubtful accounts of
companies acquired of $463, $1,330, and $4,581 in 1995, 1994, and 1993,
respectively.
(2) During 1995, the Company completed certain acquisitions which were
accounted for under the pooling of interests method of accounting.
Information in the schedule includes balances for these companies for all
periods presented.
S-3
CERTIFICATE OF INCORPORATION
OF
OMNICOM GROUP INC.
(As restated for filing purposes pursuant to
Item 601(b)(3)(i) of Regulation S-K)
FIRST: The name of the corporation is Omnicom Group Inc.
SECOND: The purposes for which the corporation is formed is to engage in
any lawful act or activity for which corporations may be organized under the New
York Business Corporation Law, provided that the corporation will not engage in
any act or activity requiring the consent or approval of any state official,
department, board, agency or other body without such consent or approval first
being obtained.
THIRD: The office of the corporation in the State of New York shall be
located in the County of New York.
FOURTH: The total number of shares of stock which the corporation will have
authority to issue is 157,500,000 shares. Of these, 150,000,000 shares are
classified as Common Stock, par value $.50 per share, and 7,500,000 shares are
classified as Preferred Stock, par value $1.00 per share.
The Board of Directors is authorized to divide the 7,500,000 shares of
Preferred Stock from time to time into one or more series, and to determine or
change by resolution for each series its designation, the number of shares of
the series and the powers, preferences and rights, and the qualifications,
limitations or restrictions of the shares of the series. The resolution or
resolutions of the Board of Directors providing for the division of Preferred
Stock into series within a class may include the following provisions:
(1) The distinctive designation of each series and the maximum number of
shares of each series which may be issued, which number may be increased (except
where otherwise provided by the Board of Directors in creating the series) or
decreased (but not below the number of shares of the series then outstanding)
from time to time by action of the Board of Directors;
(2) Whether the holders of shares of each series are entitled to vote and
if so the matters on which they are entitled to vote, the number of votes to
which the holder of each share is entitled, and whether the shares of the series
are to be voted separately or together with shares of other series;
(3) The dividends to which holders of shares of each series will be
entitled; any restrictions, conditions or limitations upon the payment of those
<PAGE>
dividends; whether the dividends will be cumulative and, if cumulative, the date
or dates from which the dividends will be cumulative;
(4) Whether the shares of one or more series will be subject to redemption,
and if so, whether redemption will be mandatory or optional, and if optional, at
whose option, the manner of selecting shares for redemption, the redemption
price and the manner of redemption;
(5) The amount payable on shares of each series if there is a liquidation,
dissolution or winding up of the corporation, which amount may vary at different
dates and depending upon whether the liquidation, dissolution or winding up is
voluntary or involuntary;
(6) The obligation, if any, of the Corporation to maintain a purchase,
retirement or sinking fund for shares of each series;
(7) Whether the shares of one or more series will be convertible into, or
exchangeable for, any other types of securities, either at the option of the
holder or of the corporation, and if so, the terms of the conversions or
exchanges;
(8) Any other provisions regarding the powers, preferences and rights, and
the qualifications, limitations or restrictions, of each series which are not
inconsistent with applicable law.
All shares of a series of Preferred Stock will be identical with each other
in all respects, except that shares of any one series issued at different times
may differ as to the dates from which dividends on those shares shall be
cumulative.
FIFTH: No holder of any of the shares of any class of the corporation shall
be entitled as of right to subscribe for, purchase, or otherwise acquire any
shares of any class of the corporation which the corporation proposes to issue
or any rights or options which the corporation proposes to grant for the
purchase of shares of any class of the corporation or for the purchase of any
shares, bonds, securities, or obligations of the corporation which are
convertible into or exchangeable for, or which carry any rights, to subscribe
for, purchase, or otherwise acquire shares of any class of the corporation; and
any and all of such shares, bonds, securities or obligations of the corporation,
whether now or hereafter authorized or created, may be issued, or may be
reissued or transferred if the same have been reacquired and have treasury
status, and any and all of such rights and options may be granted by the Board
of Directors to such persons, firms, corporations and associations, and for such
lawful consideration, and on such terms, as the Board of Directors in its
discretion may determine, without first offering the same, or any part thereof,
to any said holder. Without limiting the generality of the foregoing stated
denial of any and all preemptive rights, no holder of shares of any class of the
2
<PAGE>
corporation shall have any preemptive rights in respect of the matters,
proceedings, or transactions specified in subparagraphs (1) to (6), inclusive,
of paragraph (e) of Section 622 of the Business Corporation Law.
SIXTH: The duration of the corporation shall be perpetual.
SEVENTH: The Secretary of State is designated as the agent of the
corporation upon whom process against the corporation may be served, and the
address to which the Secretary of State shall mail a copy of any process against
the corporation served upon him is: 909 Third Avenue, New York, N.Y. 10022.
EIGHTH: The number of directors shall be fixed by the By-Laws, or by action
of the shareholders or the Board of Directors under specific provisions of a
By-Law adopted by the shareholders entitled to vote in an election for
directors. If the shareholders are empowered by the By-Laws or by law to change
the number of directors constituting the entire Board of Directors, the
affirmative vote of holders of two-thirds in voting power of the outstanding
shares of stock of the corporation shall be required for the shareholders to
change the number of directors constituting the entire Board of Directors. The
directors will be divided into three classes, all of which classes will be as
nearly equal in number as possible, and none of which classes will include fewer
than three directors. The terms of office of the first class of directors
initially classified will expire at the 1987 annual meeting of shareholders,
that of the second class initially classified will expire at the 1988 annual
meeting of shareholders and that of the third class initially classified will
expire at the 1989 annual meeting of shareholders. At each annual meeting of
shareholders after the initial classification, directors to replace those whose
terms expire at an annual meeting will be elected to hold office until the third
succeeding annual meeting of shareholders. If after the directors are classified
the number of directors is changed (1) any newly created directorships or any
decrease in directorships will be so apportioned among the classes as to make
all the classes as nearly equal in number as possible, and (2) when the number
of directors is increased by the Board of Directors and any newly created
directorships are filled by the Board, there will be no classification of
additional directors until the next annual meeting of shareholders. If the
shareholders are empowered by the By-Laws or by law to remove a director (for
cause or otherwise), the exercise of that power will require the affirmative
vote of holders of two-thirds in voting power of the outstanding shares of stock
of the corporation.
NINTH: A director of the corporation shall not be personally liable to the
corporation or its shareholders for damages for breach of fiduciary duty as a
director, except where a judgment or other final adjudication adverse to a
director establishes that such director's acts or omissions were in bad faith or
involved intentional misconduct or knowing violation of law or where such
director personally gained in fact a financial profit or other advantage to
which such director was not legally entitled or where such director's acts
violated Section 719 of The New York Business Corporation Law. Any repeal or
3
<PAGE>
modification of this Article Ninth shall not adversely affect any right or
protection of a director of the corporation under this Article Ninth in respect
of any acts or omissions of such director which occurred prior to such repeal or
modification.
TENTH: The affirmative vote of holders of two-thirds in voting power of the
outstanding shares of stock of the corporation shall be required to approve (a)
the adoption, amendment or repeal of any provision of the By-Laws, or (b) the
amendment or repeal of Article Eighth or Article Ninth of this Certificate of
Incorporation.
ELEVENTH: Except as may otherwise be specifically provided in this
Certificate of Incorporation, no provision of this Certificate of Incorporation
is intended by the corporation to be construed as limiting, prohibiting, denying
or abrogating any of the general or specific powers or rights conferred under
the Business Corporation Law upon the corporation, upon its shareholders,
bondholders, and security holders, and upon its directors, officers, and other
corporate personnel, including in particular, the power of the corporation to
furnish indemnification to directors and officers in the capacities defined and
prescribed by the Business Corporation Law and defined and prescribed rights of
said persons to indemnification as the same are conferred by the Business
Corporation Law.
4
Dated February 27, 1996
OMNICOM GROUP INC.
- and -
MORGAN STANLEY BANK AKTIENGESELLSCHAFT
- and -
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
------------------------------------
SUBSCRIPTION AGREEMENT
DM 100,000,000
Floating Rate Bonds of 1996 due March 1, 1999
------------------------------------
HENGELER MUELLER WEITZEL WIRTZ
Frankfurt am Main
<PAGE>
SUBSCRIPTION AGREEMENT dated February 27, 1996
between
(1) OMNICOM GROUP INC. (the "Issuer"),
(2) MORGAN STANLEY BANK AKTIENGESELLSCHAFT (the "Lead Manager"),
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
(together with the Lead Manager, the "Managers").
The parties hereby record the arrangements between them in respect of an issue
of DM 100,000,000 Floating Rate Bonds of 1996 due March 1, 1999 of the Issuer
(the "Bonds").
ss. 1 Agreement to Issue; the Bonds; the Agreements
(1) The Issuer agrees to issue the Bonds on March l, 1996 (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 Bank, societe anonyme ("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 beneficial ownership, the Temporary
Global Bond will be exchanged 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. Upon request of a Bondholder any Bond held by such Bondholder and
represented by the Permanent Global Bond will be exchanged for definitive
certificates representing individual Bonds substantially in the form set out in
Schedule 4 with interest coupons attached substantially in the form set out in
Schedule 5.
(3) Concurrently with the signing of this Agreement the Issuer is entering into
an agency agreement (the "`Agency Agreement") with Morgan Stanley Bank AG as
issuing and paying agent (the "Paying Agent").
This Agreement and the Agency Agreement are together referred to as the
"Agreements".
2
<PAGE>
ss. 2 Purchase
(1) Each of the Managers agrees to purchase on the Closing Date at the issue
price of 99,87% 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 6.
(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 confirms that it has prepared an Offering Memorandum in the English
language dated February 27, 1996 (the "Offering Memorandum") in relation to the
Bonds and hereby authorizes 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.
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. The Issuer shall not in any event be obligated to issue
more than DM 100,000,000 in principal amount of the Bonds.
(2) As between the Issuer and the Lead Manager, any loss resulting from
stabilization shall be borne, and any profit arising therefrom shall be
retained, by the Lead Manager.
ss. 5 Selling Terms
(1) Each Manager agrees to be bound by the terms and provisions set out in
Schedule 7.
(2) Each Manager agrees to indemnify the Issuer and the respective 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 7.
3
<PAGE>
ss. 6 Listing
(1) The Issuer confirms that it has authorized 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) The Issuer 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 agrees to use its best endeavors 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 will obtain, and will thereafter use
its best endeavors 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
(1) The Issuer warrants to the Managers and each of them that:
(a) it is duly incorporated and validly existing under the laws of the State of
New York with full corporate power and authority to conduct its business as
described in the Offering Memorandum;
(b) the Agreements have been duly authorised, executed and delivered by the
Issuer and constitute valid, legally binding and enforceable obligations of the
Issuer;
(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) 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 carrying
out of the other transactions contemplated by the Agreements or the compliance
by the Issuer with the terms of the Bonds and the Agreements 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;
(e) the execution and delivery of the Agreements, the issue of the Bonds, 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
4
<PAGE>
Issuer, or any indenture, trust deed, mortgage or other agreement or instrument
to which the Issuer or any of its subsidiaries is a party or by which it or any
of its 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 or any of its
properties;
(f) 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 Closing Date, not misleading, provided,
however, that the Issuer makes 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 by the Managers
specifically for inclusion therein;
(g) (i) the consolidated financial statements of the Issuer and its consolidated
subsidiaries taken as a whole (the "Consolidated Group") for the three years
ended December 31, 1994, 1993 and 1992 and the nine month periods ended
September 30, 1995 and 1994 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 Issuer and of the Consolidated
Group as at the dates, and the results of operations and changes in financial
position of the Issuer and of the Consolidated Group for the periods, in respect
of which they have been prepared, and (ii) since the September 30, 1995 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
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 or of the Consolidated Group respectively;
(h) there are no pending actions, suits or proceedings against the Issuer or any
of its subsidiaries or any of its properties which, if determined adversely to
the Issuer or any such subsidiary, could individually or in the aggregate have
an adverse effect on the condition (financial or other), results of operations
or general affairs of the Issuer or the Consolidated Group or would materially
adversely affect the ability of the Issuer to perform its obligations under the
Agreements or the Bonds or which are otherwise material in the context of the
issue of the Bonds and, to the best of the Issuer's knowledge, no such actions,
suits or proceedings are threatened or contemplated;
(i) 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
5
<PAGE>
fulfillment of any other requirement) constitute an event of early termination
under the Conditions;
(j) the Issuer is not an "investment company" within the meaning of the U.S.
Investment Company Act of 1940, as amended; and
(k) neither the Issuer nor its 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 undertakes 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 expressly acknowledges that it
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
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.
ss. 8 Agreements of the Issuer
The Issuer agrees with the Managers that:
(a) the Issuer will bear and pay all stamp and other taxes and duties (including
interest and penalties) payable pursuant to the laws applicable in 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;
(b) the Issuer will 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; and
(c) if at any time prior to the closing any event shall occur as a result of
which, in the judgement of the Issuer, it is necessary to amend or supplement
the Offering Memorandum
6
<PAGE>
(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 shall forthwith prepare and furnish, at its 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 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 by either Moody's Investor
Services, Inc., Standard & Poor's Rating Group or Duff & Phelps Credit Rating
Co., and (B) subject to:
(a) receipt by the Lead Manager on behalf of the Managers or 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 legal opinions dated the Closing Date, in the form agreed, from:
(i) Davis and Gilbert, legal advisers to the Issuer as to U.S. law;
(ii) Hasche & Eschenlohr, legal advisers to the Issuer as to German law;
and
(iii) Hengeler Mueller Weitzel Wirtz, legal advisers to the Managers as to
German law;
(c) 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;
(d) 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;
7
<PAGE>
(e) 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 8;
(f) the Stock Exchange having agreed on or before the Closing Date to list the
Bonds; and
(g) 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 Depositary.
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 shall pay to the Managers on the Closing Date total commissions
of 0,325% 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 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
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, (c) all expenses incurred in
connection with the services of the legal advisers to the Managers in the United
States of America and the Federal Republic of Germany in connection with the
8
<PAGE>
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.
(3) The costs of printing definitive Bonds shall be borne by the Issuer.
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 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 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.
9
<PAGE>
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:
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 Bank AG
Rahmhofstrasse 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 8 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
legally possible the economic effects of the invalid provision.
10
<PAGE>
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 hereby appoints Hasche &
Eschenlohr, Rechtsanwalte, Briennerstrasse 11/V, D-80333 Munich, as its 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 arising out of or in connection with this
Agreement in any competent court of law.
ss. 17 Counterparts
This Agreement is executed in three counterparts in the English language. With
respect to Schedules 1, 3 to 5 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 and to each of the Managers. Each
executed counterpart shall be an original.
11
<PAGE>
This Agreement has been entered into on the date first above written.
OMNICOM GROUP INC.
By:
---------------------------------
MORGAN STANLEY BANK AKTIENGESELLSCHAFT
By:
---------------------------------
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
By:
---------------------------------
12
<PAGE>
Schedule 1
TERMS AND CONDITIONS OF THE BONDS
[To be taken from the Offering Memorandum]
13
<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 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.
OMNICOM GROUP INC.
DM 100,000,000
TEMPORARY GLOBAL BEARER BOND
for Deutsche Mark Floating Rate Bonds of 1996 due March 1, 1999 (the "Bonds") in
an aggregate principal amount of one hundred million Deutsche Mark (DM
100,000,000) divided into
10,000 Bonds in the principal amount of
DM 10,000 each.
Omnicom Group 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.
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
14
<PAGE>
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
Bank, 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 Bank AG as agent for the Issuer (the "Agent") by Euroclear or
Cedel a certificate substantially to the following effect:
"OMNICOM GROUP INC.
Deutsche Mark 100,000,000
Floating Rate Bonds of 1996
due March 1, 1999
(the "Securities")
This is to certify that, based solely on certifications we have received in
writing, by tested telex or by electronic transmission front 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
abovecaptioned 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)(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 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 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.
15
<PAGE>
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 understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States. 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__*
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Brussels office, as operator of the
Euroclear System]
or
[CEDEL BANK, societe anonyme]
By:
- ----------
* Not earlier than the Exchange Date.
16
<PAGE>
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.
"OMNICOM GROUP INC.
Deutsche Mark 100,000,000
Floating Rate Bonds of 1996 due March 1, 1999
("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
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 tile
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)
17
<PAGE>
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
(or, if relevant, exercise of any rights or collection of any interest) cannot
be made until we do so certify.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States. 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 Ellis certificate relates.
-----------------------------
- ----------
* Not earlier than 15 days prior to the Exchange Date.
18
<PAGE>
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: March 1, 1996
New York, N.Y.,
United States of America
OMNICOM GROUP INC.
By:
----------------------------
Authorized Officer
- --------------------------
Authentication Signature
for and on behalf of
Morgan Stanley Bank AG
19
<PAGE>
Schedule 3
FORM OF THE PERMANENT GLOBAL BOND
(English Translation)
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.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATION UNDER THE UNITED STATES INCOME TAX
LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(J)
AND 1287 (A) OF THE INTERNAL REVENUE CODE.
OMNICOM GROUP INC.
PERMANENT GLOBAL BEARER BOND
representing a principal amount of up to
DM 100,000,000
of the Deutsche Mark Floating Rate Bonds of 1996 due March 1, 1999 in an
aggregate principal amount of one hundred million Deutsche Mark (DM 100,000,000)
divided into
10,000 Bonds in the principal amount of DM 10,000 each.
This Permanent Global Bond represents up to 10,000 Bonds in the principal amount
of DM 10,000 each (the "Bonds"). Definitive certificates representing individual
Bonds with interest coupons shall be issued upon request of the holder of the
relevant Bonds from time to time.
This Permanent Global Bond has been issued by the Issuer as a bearer instrument
and been deposited with Deutscher Kassenverein AG ("DKV") in order to permit
delivery and transfer of the Bonds within the DKV depositary and clearing
system.
The actual number of Bonds exchanged for this Permanent Global Bond shall be
evidenced by the latest entry in the third column of Schedule I hereto,
20
<PAGE>
On an exchange of the whole of this Permanent Global Bond this Bond, shall be
surrendered to the Agent., On an exchange of part only of this Permanent Global
Bond, this Bond shall be endorsed to reflect the reduction of the principal
amount evidenced hereby.
The Issuer undertakes to pay to the bearer hereof, on the maturity date of the
Bonds, the principal sum of the Bonds represented by this Permanent Global Bond
and to pay interest or such principal sum, all in accordance with the Terms and
Conditions of the Bonds attached hereto.
The Bonds represented by this Permanent Global Bond were originally represented
by a Temporary Global Bond. Unless such Temporary Global Bond was exchanged in
whole on the issue hereof, a Note or Notes represented by such Temporary Global
Bond may be further exchanged, on the terms and conditions set out therein, for
a Bond or Bonds represented by this Permanent Global Bond.
The attached Terms and Conditions of the Bonds form part of this Permanent
Global Bond.
Dated: March 1, 1996
New York, N.Y.,
United States of America
OMNICOM GROUP INC.
Authorized Officer
Authentication Signature
for and on behalf of
Morgan Stanley Bank AG
21
<PAGE>
S C H E D U L E I to
Permanent Global Bond
SCHEDULE OF EXCHANGES
of Temporary Global Bond
for Bonds represented by the
Permanent Global Bond
- --------------------------------------------------------------------------------
Date Principal amount Aggregate principal amount Notation made on
exchanged for Bonds exchanged for Bonds behalf of the
represented by the represented by the Permanent Paying Agent
Permanent Global Bond Global Note following such
exchange
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
22
<PAGE>
Schedule 4
NON-BINDING ENGLISH TRANSLATION OF THE FORM OF THE
DEFINITIVE BONDS
WKN 131390
ISIN DE0001313906
[Coupon Date] DM 10,000
Deutsche Mark Floating Rate Bonds of 1996/1999
of
OMNICON GROUP INC.
NEW YORK, UNITED STATES OF AMERICA
DM 10,000 No. o
BEARERBOND
for ten thousand Deutsche Mark
(DM 10,000)
of the Deutsche Mark Floating Rate Bonds of 1996/1999 in the aggregate principal
amount of one hundred million Deutsche Mark
(DM 100,000,000)
divided into
10 000 Bonds of DM 10,000 each
Nos. 00 001 - 10 000,
Omnicom Group Inc. owes the bearer of this Bond
ten thousand Deutsche Mark.
This amount will bear interest at a rate of Deutsche Mark LIBOR plus 0.375 % and
will be repaid at maturity. Interest will be paid for a period of three months
in arrear on March 1, June 1, September 1 and December 1 of each year. The Terms
and Conditions of the Bonds printed on the reverse apply to this Bond.
New York, in [o] 199[o]
OMNICOM GROUP INC.
Control Signature
Any United States person who holds this obligation will be subject to
limitations under the United State income tax laws, including the limitations
provided in sections 165(j) and 1287(a) of the Internal Revenue Code.
23
<PAGE>
Schedule 5
NON-BINDING ENGLISH TRANSLATION OF THE FORM OF
INTEREST COUPON
1. Three-month Bearer Coubon attached to WKN 131390
Bearer Bond for DM 10,000 of the Coupon
Deutsche mark Floating Rate Bonds of No. o
1996/1999 payable on [o] in the amount [o]
of Deutsche Mark LIBOR plus 0.375 % at
the paying agents determined in
accordance with the Terms and Conditions
of the Notes. In the case of loss or
destruction of coupons, any right
according toss.804, subparagraph 1,
sentence 1, of the BGB (German Civil
Code) is excluded.
New York, [o] 199[o]
OMNICOM GROUP INC.
- -----------------------------
Any United States person who holds this obligation will be subject to
limitations under the United State income tax laws, including the limitations
provided in sections 165(j) and 1287(a) of the Internal Revenue Code.
24
<PAGE>
Schedule 6
THE COMMITMENTS OF THE MANAGERS
Principal Amount
of Notes
DM
Morgan Stanley Bank AG 80,000,000
Morgan Stanley & Co. International Limited 20,000,000
Total 100,000,000
===========
25
<PAGE>
Schedule 7
SELLING TERMS
In connection with the purchase, offering and sale of the Bonds 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 Bonds and the
distribution of documents relating to the Bonds:
(1) No action has been or will be taken by the Managers or the Issuer that would
permit a public offering of the Bonds, or possession or distribution of the
Offering Memorandum, any amendment or supplement thereto issued in connection
with the offering of the Bonds 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 Bonds 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 Bonds
other than as contained in the Offering Memorandum or any amendment or
supplement thereto.
(2) The Bonds 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 Bonds, and will offer and
sell the Bonds (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 Bonds, 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 Bonds, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Bonds 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 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
26
<PAGE>
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 Bonds, except with their affiliates or with the prior written
consent of the Issuer.
In addition, each of the Managers
(i) except to the extent permitted under U.S. Treas. Reg. Section
1.l63-5(c)(2)(i)(D) (the "D Rules"), (a) has not offered or sold, and
during the restricted period will not offer or sell, Bonds 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 Bonds 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 Bonds in bearer
form are aware that such Bonds 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
Bonds in bearer form for purposes of resale in connection with their
original issuance and, if it retains Bonds 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 Bonds in
bearer form for the purpose of offering or selling such Bonds 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
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.
27
<PAGE>
(3) Each of the Managers represents and agrees that:
(a) it has not offered or sold and, prior to the expiry of the period of
six months from the issue date of the Bonds, will not offer or sell
any Bonds to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal agent) for the purposes of
their business or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations
1995;
(b) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the
issue of the Bonds to a person who is of a kind described in Article
II (3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom such document may
otherwise lawfully be issued or passed on;
(c) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with regard to anything done by it in
relation to the Bonds in, from or otherwise involving the United
Kingdom.
As used herein, "United Kingdom" means the United Kingdom of Great Britain
and Northern Ireland.
(4) The Bonds 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 Bonds 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 Bonds.
28
<PAGE>
Schedule 8
DOCUMENTS TO BE FURNISHED PURSUANT TO ss. 9(1)(e)
1. Two copies of the Certificate of Incorporation of the Issuer 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 Issuer;
3. two copies of the By-laws of the Issuer certified by the Secretary or
Assistant Secretary of the Issuer;
4. two certified copies of the resolutions of the Board of Directors of the
Issuer authorizing the Notes and the execution and delivery of the
Agreements and performance of the Issuer's obligations thereunder;
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 the Secretary or Assistant Secretary of the Issuer as to
the incumbency of the officers of the Issuer signing the documents or any
power of attorney provided for in paragraph 5 above on behalf of the
Issuer;
7. letter of appointment of Hasche & Eschenlohr, Rechtsanwalte,
Briennerstrasse 11/V, D-80333 Munich, as agent for service of process for
the Issuer in the Federal Republic of Germany.
29
Dated February 27, 1996
OMNICOM GROUP INC.
- and -
MORGAN STANLEY BANK AKTIENGESELLSCHAFT
----------------------
PAYING AGENCY AGREEMENT
DM 100,000,000
Floating Rate Bonds of 1996 due March 1, 1999
----------------------
HENGELER MUELLER WEITZEL WIRTZ
Frankfurt am Main
<PAGE>
PAYING AGENCY AGREEMENT dated February 27, 1996
between
(1) OMNICOM GROUP INC. (the "Issuer"),
(2) MORGAN STANLEY BANK AKTIENGESELLSCHAFT as paying agent (the "Bank").
The Issuer 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 February 27, 1996, pursuant to which the Issuer
has agreed to issue, and the Managers have agreed to purchase, DM 100,000,000
Floating Rate Bonds of 1996 due March 1, 1999 (the "Bonds").
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(5) of the Conditions,
"Luxembourg Paying Agent" means the financial institution mentioned in ss. 6(7)
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(5) of the Conditions, and
"Agents" means the Paying Agent and the Luxembourg Paying Agent.
ss. 2 Appointment of Agents
(1) The Issuer hereby appoints the Bank as its Paying Agent in respect of the
Bonds 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 hereby ratifies (i) the appointment by the Paying Agent, in the
name and on behalf of the Issuer, of the Luxembourg Paying Agent mentioned in
ss. 6(7) of the Conditions and (ii) the making by the Paying Agent, in the name
and on behalf of the Issuer, of the necessary arrangements with the Luxembourg
Paying Agent regarding its services as paying agent. The Paying Agent warrants
to the Issuer that those arrangements are appropriate for the purpose and that
each Paying Agent has agreed to be liable to the Issuer in terms comparable to
those set out in ss. 10(2) hereof.
2
<PAGE>
ss. 3 The Bonds
(1) Form. The Temporary Global Bond, the Permanent Global Bond (together the
"Global Bonds") and the definitive Bonds with interest coupons attached 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 Definitive Bonds.
(a) Form. The definitive Bonds and interest coupons, if any, shall be executed
in facsimile on behalf of the Issuer by a duly authorized signatory of the
Issuer. The definitive Bonds and the interest coupons shall bear such letters,
numbers or other marks of identification as shall be determined by the duly
authorized signatory of the Issuer executing such Bonds and interest coupons, as
conclusively evidenced by his execution thereof.
(b) Notice. The Paying Agent shall promptly notify the Issuer of any request by
a Bondholder to exchange Bonds represented by the Permanent Global Bond for
definitive Bonds, whereupon the Issuer shall deliver to the Paying Agent
definitive Bonds in a principal amount equal to the principal amount of the
Bonds to be exchanged which shall be authenticated by the Paying Agent and
delivered to Deutscher Kassenverein AG for delivery to the Bondholders.
ss. 4 Payments
(1) Payment by Issuer. Not later than 10:00 a.m. (Frankfurt time) on the
respective due date for the payment of principal, interest or otherwise, the
Issuer 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
shall 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 not later than ten
banking days before the respective due date with regard to such payment. Any
3
<PAGE>
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 (l), 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.
(3) Notification. If the Paying Agent has not by 12:00 p.m. (Frankfurt time) on
the second banking day before the respective due date received the confirmation
referred to in subsection (l), it shall forthwith notify the Issuer 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. On the exchange of the whole of the Permanent Global Bond
for definitive Bonds or 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
canceled 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. 11 of the Conditions any notice to be given to the
Bondholders in accordance with the Conditions or necessary to comply with the
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 thereof and publish a notice thereof in accordance with ss. 11
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
4
<PAGE>
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
sufficient copies of any document required by the Conditions, the Offering
Memorandum 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 such documents 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, 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
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, definitive 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 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 shall have
no responsibility with respect to the apportionment of such monies as between
the Paying Agent and the other Agents.
5
<PAGE>
(2) Expenses. The Issuer 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 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 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 may incur or which may be made against it 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(5) and (7) of
the Conditions.
ss. 12 Communications
(1) Any document or information furnished or supplied under this Agreement shall
be in the English language.
(2) All communications given hereunder shall be given by letter, or by telex,
cable or facsimile transmission to be confirmed by letter.
6
<PAGE>
(3) Subject to written notice of change of address, all communications hereunder
shall be given to the following addresses:
(a) If to the Issuer:
Omnicom Group Inc.
437 Madison Avenue
New York, N.Y. 10022
U.S.A.
Telefax: 212 415 3530
Attention: Chief Financial Officer
(b) If to the Paying Agent:
Morgan Stanley Bank AG
RahmhofstraBe 2-4
60313 Frankfurt am Main
Federal Republic of Germany
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 shall pay all stamp or other documentary taxes or duties, if any, to
which this Agreement may be subject in the United States of America or the
Federal Republic of Germany.
ss. 15 Governing Law: Place of Performance
(1) This Agreement shall in all respects be governed by, and construed in
accordance with, the laws of the Federal Republic of Germany.
7
<PAGE>
(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 hereby appoints Hasche & Eschenlohr,
Rechtsanwalte, BriennerstraBe 11/V, D-80333 Munich, as its 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 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 two counterparts in the English language. One
executed counterpart is issued to each party hereto. Each executed counterpart
shall be an original.
OMNICOM GROUP INC.
By
------------------------------------
MORGAN STANLEY BANK AKTIENGESELLSCHAFT
By
------------------------------------
8
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") was
hereby amended, effective June 1, 1994 and subject to the approval of the
shareholders of Omnicom (which approval was obtained on May 22, 1995), as
follows:
A. Subsections (f), (g) and (h) of Section 7 are hereby deleted and the
following substitued 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 immediatly 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 immediatly 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
immediatly 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
[200,000] shares."
<TABLE>
<CAPTION>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
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%
The DDB Needham Worldwide 33%
Communications Group, Inc
Omnicom Management Inc. 34%
Goodby, Silverstein & Partners Holdings Inc...... California Registrant 100%
Goodby, Silverstein & Partners Inc............... California Goodby, Silverstein & Partners
Holdings Inc. 100%
C-D Acquisitions Inc............................. Delaware Registrant 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. 40%
Clemenger BBDO Ltd............................... Australia BBDO Worldwide Inc. 47%
Clemenger Sydney Pty. Ltd........................ Australia Clemenger BBDO Ltd. 47%
Clemenger Tasmania Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47%
Clemenger Brisbane Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47%
Intoto Advertising Pty. Ltd...................... Australia Clemenger BBDO Ltd. 21%
Clemenger Harvie Pty Ltd......................... Australia Clemenger BBDO Ltd. 47%
Clemenger Adelaide Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47%
Clemenger Melbourne Pty. Ltd..................... Australia Clemenger BBDO Ltd. 47%
Diversified Marketing Services Pty. Ltd.......... Australia Clemenger BBDO Ltd. 47%
Port Productions Pty. Ltd. (Melbourne)........... Australia Diversified Marketing Services Pty. Ltd. 35%
Clemenger Direct Pty. Ltd. (Sydney).............. Australia Diversified Marketing Services Pty. Ltd. 47%
Holt Group Pty. Ltd.............................. Australia Diversified Marketing Services Pty. Ltd. 47%
Clemenger Direct Pty. Ltd. (Melbourne)........... 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%
The Media Partnership............................ Austria TEAM/BBDO Werbeagentur Ges.m.b.H 25%
BBDO Belgium S.A................................. Belgium BBDO Worldwide Inc. 88%
Sponsoring & Event Marketing S.A................. Belgium BBDO Belgium S.A. 65%
Omnimedia S.A.................................... Belgium BBDO Belgium S.A. 44%
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. 70%
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%
Topolino S.A..................................... Belgium BBDO Belgium S.A. 45%
BBDO/Business Communications S.A................. Belgium BBDO Belgium S.A. 70%
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%
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%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Alberto H. Garnier, S.A.......................... Costa Rica BBDO Worldwide Inc. 20%
BBDO Zagreb...................................... Croatia BBDO Worldwide Inc. 40%
Impact/BBDO International Ltd.................... Cyprus BBDO Worldwide Inc. 44%
Mark/BBDO Ltd.................................... Czech Republic BBDO Worldwide Europe GmbH 45%
Media Direction Ltd.............................. Czech Republic BBDO Worldwide Europe GmbH 30%
BBDO Denmark A/S................................. Denmark BBDO Holding A/S 75%
BBDO Business Communications A/S................. Denmark BBDO Holding A/S 32%
BBDO Holding A/S................................. Denmark BBDO Worldwide Inc. 81%
Impact/BBDO...................................... Egypt Impact/BBDO International Ltd. 40%
Apex Publicidad, S.A............................. El Salvador Garnier/BBDO 10%
Bookkeeper Investment OY......................... Finland BBDO Worldwide Europe GmbH 100%
BBDO Helsinki OY................................. Finland Bookkeeper Investment OY 92%
La Compagnie S.A................................. France BBDO Worldwide Europe GmbH 100%
Nomad S.A........................................ France La Compagnie S.A. 60%
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. 37%
Optimum Media S.A................................ France La Compagnie S.A. 50%
DDB Needham Worldwide Communication S.A. 39%
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 Interactive GmbH............................ Germany BBDO GmbH 40%
KNSK/BBDO Werbeagentur Gmbh...................... Germany BBDO GmbH 40%
NOVUM Marketing- und Vertriebsberatung GmbH...... Germany BBDO GmbH 32%
The Media Partnership GmbH....................... Germany BBDO GmbH 20%
Stein Holding GmbH............................... Germany BBDO GmbH 80%
TEAM DIRECT Ges fur Direct Marketing GmbH........ Germany BBDO GmbH 60%
Boebel, Adam Werbeagentur GmbH................... Germany BBDO GmbH 34%
Sponsor Partners GmbH............................ Germany BBDO GmbH 39%
Media Direction GmbH............................. Germany BBDO GmbH 59%
HM1 Ges. f. Direktmarketing and Werbelogistik GmbH Germany BBDO GmbH 52%
BBDO Dusseldorf GmbH............................. Germany BBDO GmbH 80%
Hildmann & Schneider Werbeagentur GmbH.......... Germany BBDO GmbH 72%
BBDO Dusseldorf GmbH Werbeagentur................ Germany BBDO GmbH 80%
SELL BY TEL Telefon und Direktmarketing GmbH..... Germany BBDO GmbH 48%
Luders/BBDO Werbeagentur GmbH.................... Germany BBDO GmbH 39%
Claus Koch Corporate Communications GmbH......... Germany BBDO GmbH 30%
BBDO Media Team GmbH............................. Germany BBDO GmbH 80%
Hiel/BBDO GmbH................................... Germany BBDO GmbH 32%
K & K Kohtes & Klewes Kommunikation GmbH......... Germany BBDO GmbH 39%
Economia Holding GmbH (Hamburg).................. Germany BBDO GmbH 40%
BBDO GmbH........................................ Germany BBDO Worldwide Europe GmbH 80%
BBDO Worldwide Europe GmbH....................... Germany BBDO Worldwide Inc. 100%
Design and Grafikstudio "An der Alster" GmbH..... Germany Economia Holding GmbH (Hamburg) 32%
Manfred Baumann GmbH Hamburg..................... Germany Economia Holding GmbH (Hamburg) 40%
Economia Ges. f. Marketing and Werb. GmbH & Co KG GermanyEconomia Holding GmbH (Hamburg) 40%
Brodersen, Stampe und Partner Werbeagentur GmbH.. Germany Economia Holding GmbH (Hamburg) 40%
DCS GmbH......................................... Germany HM1 Ges. f. Direktmarketing and
Werbelogistik GmbH 52%
HM1 Heuser, Mayer & Partner Directmarketing GmbH. Germany HM1 Ges. f. Direktmarketing
and Werbelogistik GmbH 52%
K & K Kohtes & Klewes PR GmbH.................... Germany K & K Kohtes & Klewes Kommunikation GmbH 39%
K & K Kohtes & Klewes Kommunikation Dresden GmbH. Germany K & K Kohtes & Klewes Kommunikation GmbH 27%
K & K Kohtes & Klewes Kommunikation Frankfurt GmbH. Germany K & K Kohtes & Klewes Kommunikation GmbH 31%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Viamedia* Medienagentur fur Radio & TV GmbH...... Germany K & K Kohtes & Klewes Kommunikation GmbH 35%
PURE Informations Public Relations GmbH.......... Germany K & K Kohtes & Klewes Kommunikation GmbH 23%
K & K Kohtes, Klewes & Partner GmbH.............. Germany K & K Kohtes & Klewes Kommunikation GmbH 23%
Promotion Dynamics GmbH.......................... Germany Stein Holding GmbH 80%
Stein Promotions GmbH............................ Germany Stein Holding GmbH 80%
Stein Promotions Hamburg GmbH.................... Germany Stein Holding GmbH 80%
BBDO Advertising S.A............................. Greece BBDO Worldwide Europe GmbH 80%
Infomercial Direct S.A........................... Greece BBDO Advertising S.A. 80%
Team/Athens S.A.................................. Greece BBDO Advertising S.A. 40%
Sponsoring Business Ltd.......................... Greece BBDO Advertising S.A. 80%
SPO S.A.......................................... Greece BBDO Advertising S.A. 40%
The Media Corp S.A.............................. Greece BBDO Advertising S.A. 80%
Cinemax S.A...................................... Greece BBDO Advertising S.A. 59%
Media Direction S.A.............................. Greece BBDO Advertising S.A. 80%
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 23%
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 Advtg. Agency Ltd................. Hungary BBDO Worldwide Europe GmbH 35%
RK Swamy/BBDO Advertising Ltd.................... India BBDO Asia Pacific Ltd. 20%
Gitam/BBDO Ltd................................... Israel BBDO Worldwide Inc. 20%
BBDO Italy SpA................................... Italy BBDO Worldwide Inc. 100%
Impact/BBDO...................................... Lebanon Impact/BBDO International Ltd. 22%
BBDO (Malaysia) Sdn Bhd.......................... Malaysia BBDO Asia Pacific Ltd. 70%
BBDO Mexico, S.A. de C.V......................... Mexico BBDO Worldwide Inc. 80%
Keja/Donia B.V................................... Netherlands BBDO Nederlands B.V. 50%
FHV/BBDO B.V..................................... Netherlands BBDO Nederlands B.V. 50%
Bennis BPR B.V................................... Netherlands BBDO Nederlands B.V. 50%
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. 50%
BBDO Nederlands B.V.............................. Netherlands BBDO Worldwide Inc. 50%
Liberty Films B.V................................ Netherlands FHV/BBDO B.V. 50%
Media Direction Netherlands B.V.................. Netherlands FHV/BBDO B.V. 31%
BBDO Beheer B.V.................................. Netherlands BBDO Nederlands B.V. 50%
IPW Communicatie-adviesbureau ................... Netherlands Heliberg Beheer B.V. 50%
A27 B.V.......................................... Netherlands Heliberg Beheer B.V. 50%
Quadrant Communicatie B.V........................ Netherlands Signum B.V. 50%
Bruns van der Wijk B.V........................... Netherlands BBDO Nederlands B.V. 15%
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....................... New Zealand Clemenger/BBDO Ltd. (N.Z.) 47%
HKM Advertising Ltd.............................. New Zealand Clemenger/BBDO Ltd. (N.Z.) 47%
BBDO/Nicaragua S.A............................... Nicaragua Garnier/BBDO 25%
BBDO Oslo AS..................................... Norway BBDO Worldwide Europe GmbH 48%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
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%
Media Direction.................................. Portugal BBDO Portugal Agencia de Publicidade, Lda. 84%
BBDO Portugal Agencia de Publicidade, Lda........ Portugal BBDO Worldwide Europe GmbH 84%
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 A/O............................... Russia BBDO Worldwide Europe GmbH 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 Ltd. 22%
Tiempo/BBDO Madrid S.A........................... Spain BBDO Espana S.A. 65%
Contrapunto S.A.................................. Spain BBDO Espana S.A. 67%
Tiempo/BBDO S.A.................................. Spain BBDO Espana S.A. 77%
BBDO Espana S.A.................................. Spain BBDO Worldwide Inc. 90%
C.P. Comunicacion................................ Spain Contrapunto S.A. 62%
Media Direction Madrid, S.A...................... Spain Tiempo/BBDO Madrid S.A. 65%
DEC S.A.......................................... Spain Tiempo/BBDO S.A. 65%
Media Direction.................................. Spain Tiempo/BBDO S.A. 76%
Ehrenstrahle International A.B................... Sweden BBDO Worldwide Europe GmbH 95%
HLR & Co/BBDO Reklambyra AB...................... Sweden BBDO Worldwide Europe GmbH 81%
Ehrenstrahle & Co. i Stockholm A.B............... Sweden Ehrenstrahle International A.B. 95%
HLR/Broadcast Filmproduction A.B................. Sweden HLR/BBDO Reklambyra A.B. 81%
Hird & Co. Annonsbyra A.B........................ Sweden HLR/BBDO Reklambyra A.B. 42%
BBDO Taiwan Advertising Company Ltd.............. Taiwan BBDO Asia Pacific Ltd. 55%
Damask/BBDO Limited.............................. Thailand BBDO Asia Pacific Ltd. 80%
Alice Marketing Communication Services........... Turkey BBDO Worldwide Europe GmbH 30%
BBDO Istanbul.................................... Turkey Alice Marketing Communication Services 30%
Impact/BBDO..................................... United Arab Emirates Impact/BBDO International Ltd. 44%
Abbott Mead Vickers PLC.......................... United Kingdom BBDO Worldwide Inc. 30%
BBDO/Venezuela C.A............................... Venezuela BBDO Worldwide Inc. 50%
The DDB Needham Worldwide CommunicationsGroup,Inc. New York Registrant 100%
DDB Needham Chicago, Inc......................... Delaware The DDB Needham Worldwide
Communications Group,Inc 100%
The Focus Agency Inc............................. Delaware The DDB Needham Worldwide
Communications Group,Inc 100%
DDB Needham International Inc.................... Delaware Omnicom International Inc. 100%
DDB Needham Worldwide Partners, Inc.............. New York The DDB Needham Worldwide
Communications Group,Inc 100%
Griffin Bacal Inc................................ New York The DDB Needham Worldwide
Communications Group,Inc 100%
Tracy-Locke Inc.................................. Texas Registrant 100%
Focus Agency Limited Partnership................. Texas The Focus Agency Inc. 99%
C-D Acquisitions Inc. 1%
Puskar Gibbon Chapin Inc......................... Texas Tracy-Locke Inc. 100%
Elgin Syferd/DDB Needham Inc..................... Washington The DDB Needham Worldwide
Communications Group,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 Worldwide Pty Ltd................... Australia DDB Needham Worldwide Pty. Ltd.(Australia) 100%
DDB Needham Adelaide Pty. Ltd.................... Australia DDB Needham Worldwide Pty. Ltd.(Australia) 60%
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%
DDB Needham Finance Pty Ltd...................... Australia DDB Needham Worldwide Pty. Ltd.(Australia) 100%
Carr Clark & Associates Pty Ltd.................. Australia Rapp Collins Worldwide Pty Ltd. 100%
Salesforce Victoria Pty Ltd...................... Australia Rapp Collins Worldwide Pty Ltd. 100%
DDB Needham Heye & Partner Werbeagentur GmbH..... Austria DDB Needham Heye & Partner GmbH 53%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Heye & Partner Werbeagentur GmbH................. Austria Heye & Partner GmbH 45%
DDB Needham Heye & Partner GmbH.................. Austria DDB Needham Worldwide Partners, Inc. 55%
Heye & Partner GmbH 34%
The Media Partnership............................ Austria DDB Needham Heye & Partner 13%
Werbeagentur GmbH
DDB Needham Worldwide S.A........................ Belgium DDB Needham International Inc. 20%
The DDB Needham Worldwide 26%
Communications Group,Inc
DDB Needham Worldwide Partners, Inc. 20%
Registrant 26%
T.M.P. S.A....................................... Belgium DDB Needham Worldwide S.A. 23%
Omnimedia S.A.................................... Belgium DDB Needham Worldwide S.A. 46%
Marketing Power Rapp & Collins S.A............... Belgium DDB Needham Worldwide S.A. 60%
Production 32 S.A................................ Belgium DDB Needham Worldwide S.A. 92%
DDB Needham Worldwide Brazil Ltda................ Brazil The DDB Needham Worldwide
Communications Group,Inc 50%
Olympic DDB Needham Bulgaria..................... Bulgaria Olympic DDB Needham S.A. 63%
Omnicom Canada Inc............................... Canada Registrant 100%
Griffin Bacal Volny.............................. Canada Griffin Bacal Inc. 60%
ABM Zegers/DDB Needham Worldwide................. Chile DDB Needham Worldwide Partners, Inc. 40%
Beijing DDB Needham Advertising Co. Ltd.......... China DDB Needham Worldwide Ltd. 51%
Guangzhou DDB Advertising Ltd.................... China DDB Needham (China) Investment Ltd. 80%
DDB Needham Worldwide Ltda....................... Colombia DDB Needham Worldwide Partners, Inc. 80%
DDB Needham Costa Rica S.A....................... Costa Rica DDB Needham Worldwide Partners, Inc. 20%
DDB Needham WW Prague............................ Czech Republic DDB Needham Worldwide Partners, Inc. 58%
The Media Partnership A/S........................ Denmark DDB Needham Denmark A/S 6%
Rapp & Collins DDBN A/S.......................... Denmark DDB Needham Denmark A/S 49%
Administration ApS............................... Denmark DDB Needham Denmark A/S 8%
TBWA Reklamebureau A/S 6%
Rapp & Collins DDBN A/S 5%
BBDO Denmark A/S 8%
BBDO Business Communications A/S 7%
DDB Needham Denmark A/S.......................... Denmark DDB Needham Scandinavia A/S 70%
DDB Needham Scandinavia A/S...................... Denmark DDB Needham Worldwide Partners, Inc. 100%
Adcom/DDB Needham WW............................. El Salvador Panama Holding Co. 20%
Brand Sellers DDB Estonia AS..................... Estonia DDB Worldwide Helsinki Oy 58%
Brand Sellers DDB OY............................. Finland DDB Worldwide Helsinki Oy 67%
DDB Worldwide Helsinki Oy........................ Finland DDB Needham Scandinavia A/S 27%
DDB Needham Worldwide Partners, Inc. 40%
Datum Optimum Media Oy........................... Finland DDB Worldwide Helsinki Oy 36%
Diritto Rapp & Collins Oy........................ Finland DDB Worldwide Helsinki Oy 13%
DDB Lille S.A.................................... France DDB Needham Worldwide Communication S.A. 48%
DDB The Way S.A.................................. France DDB Needham Worldwide Communication S.A. 63%
DDB Atlantique................................... France DDB Needham Worldwide Communication S.A. 40%
Nacre S.A........................................ France DDB Needham Worldwide Communication S.A. 52%
TMPF S.A......................................... France DDB Needham Worldwide Communication S.A. 13%
TMPR S.A......................................... France TMPF S.A. 10%
Optimum DDB...................................... France DDB Needham Worldwide Communication S.A. 79%
Production 32 SNC................................ France DDB Needham Worldwide Communication S.A. 52%
SDMP S.A. 20%
DDB & Co......................................... France DDB Needham Worldwide Communication S.A. 55%
DDB Needham Worldwide Europe S.A................. France DDB Needham Worldwide Communication S.A. 79%
MODA S.A......................................... France DDB Needham Worldwide Communication S.A. 79%
SDMP S.A......................................... France DDB Needham Worldwide Communication S.A. 57%
Directing/Rapp & Collins......................... France DDB Needham Worldwide Communication S.A. 55%
DDB Trade SNC.................................... France DDB Needham Worldwide Communication S.A. 79%
Marketic Conseil S.A............................. France DDB Needham Worldwide Communication S.A. 49%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Piment S.A....................................... France DDB Needham Worldwide Communication S.A. 62%
Providence S.A................................... France MODA S.A. 79%
SFV S.A.......................................... France SDMP S.A. 20%
DDB Needham Worldwide Communication S.A. 52%
DDB Needham Worldwide Communication S.A.......... France Registrant 79%
DDB Needham Worldwide SNC........................ France DDB Needham Worldwide Communication S.A. 79%
Publiteam S.A.................................... France SDMP S.A. 20%
Louis XIV........................................ France DDB Needham Worldwide Communication S.A. 40%
SDMS............................................. France DDB Needham Worldwide Communication S.A. 21%
SDMP S.A. 19%
Printer.......................................... France DDB Needham Worldwide Communication S.A. 40%
SDMS 20%
Boxa Nova........................................ France SDMS 20%
DDB Needham Worldwide Communication S.A. 40%
Groupe 32 SNC.................................... France Production 32 SNC 37%
SFV S.A. 14%
Printer 18%
Rapp & Collins SNC............................... France Directing/Rapp & Collins 27%
Piment S.A. 31%
DDB CIE.......................................... France DDB Needham Worldwide Communication S.A. 78%
Hoffmann, Reiser, Schalt Frankfurt............... Germany Communication Management GmbH Dusseldorf 49%
Optimum Sponsoring Dusseldorf.................... Germany Jaschke Optimum Media Dusseldorf 26%
Jaschke Optimum Media Dusseldorf................. Germany Communication Management GmbH Dusseldorf 51%
Production 32 Dusseldorf......................... Germany Communication Management GmbH Dusseldorf 90%
Jahns, Rapp & Collins Dusseldorf................. Germany Communication Management GmbH Dusseldorf 50%
Heye & Partner GmbH 30%
Hering, Selby & Co. Hamburg...................... Germany Communication Management GmbH Dusseldorf 30%
Screen GmbH...................................... Germany Communication Management GmbH Dusseldorf 100%
The Media Partnership GmbH....................... Germany Communication Management GmbH Dusseldorf 25%
DDB Needham Beteiligungsgesellschaft GmbH........ Germany Communication Management GmbH Dusseldorf 75%
DDB Needham GmbH Dusseldorf...................... Germany Communication Management GmbH Dusseldorf 100%
Fritsch Heine Rapp & Collins GmbH................ Germany Communication Management GmbH Dusseldorf 87%
Heye & Partner GmbH.............................. Germany DDB Needham Worldwide Partners, Inc. 45%
Data Direct Rapp & Collins GmbH.................. Germany Fritsch Heine Rapp & Collins GmbH 87%
Heye Management Service GmbH..................... Germany Heye & Partner GmbH 23%
Print, Munchen GmbH.............................. Germany Heye & Partner GmbH 45%
Communication Management GmbH Dusseldorf......... Germany Registrant 100%
DDBN GmbH (Frankfurt)............................ Germany DDB Needham Beteiligungsgesellschaft GmbH 75%
Production Service (Ludwigsburg)................. Germany DDB Needham GmbH Dusseldorf 100%
Growth Enterprises Ltd........................... Gibraltar DDB Needham Worldwide Partners 51%
Olympic DDB Needham S.A.......................... Greece DDB Needham Worldwide Partners, Inc. 63%
Tempo Optimum Media Hellas S.A................... Greece Olympic DDB Needham S.A. 45%
Producta/TBWA 15%
Inno Rapp & Collins S.A.......................... Greece Olympic DDB Needham S.A. 32%
The Media Partnership S.A........................ Greece Olympic DDB Needham S.A. 16%
DDB Needham S.C.E................................ Greece Olympic DDB Needham S.A. 63%
Publinac/DDB Needham WW.......................... Guatemala Panama Holding Co. 11%
Adcom/DDB Needham WW............................. Honduras Panama Holding Co. 20%
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%
Diversified Agency Services Ltd.................. Hong Kong DDB Needham Asia Pacific Ltd. 100%
Window Creative Ltd.............................. Hong Kong DDB Needham Asia Pacific Ltd. 85%
DDB Needham Worldwide Ltd........................ Hong Kong DDB Needham Asia Pacific Ltd. 100%
BPR Advertising Company Limited.................. Hong Kong Bentley DDB Needham Public Relations, Ltd. 39%
DDB Needham Asia Pacific Ltd..................... Hong Kong DDB Needham Worldwide Partners, Inc. 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
DDB Needham (China) Investment Ltd............... Hong Kong DDB Needham Asia Pacific Ltd. 100%
Bernard Hodes Advertising (Hong Kong) Ltd........ Hong Kong Diversified Agency Services Ltd. 100%
DDB Needham Advertising Co. (Budapest)........... Hungary DDB Needham Heye & Partner 21%
Werbeagentur GmbH
DDB Needham Worldwide Partners, Inc. 40%
Lexington Bt.................................... Hungary DDB Needham Advertising Co. (Budapest) 31%
Madison 25%
Madison Bt....................................... Hungary DDB Needham Advertising Co. (Budapest) 51%
MUDRA Communications Ltd......................... India The DDB Needham Worldwide 10%
Communications Group,Inc
Verba DDB Needham S.R.L.......................... Italy DDB Needham Worldwide Partners, Inc. 85%
Auge S.R.L....................................... Italy Verba DDB Needham S.R.L. 43%
BBDO Italy SpA 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%
Dai Ichi Kikaku Rapp & Collins Direct
Marketing Co., Ltd. ............................. Japan Registrant 33%
DDB Needham Japan Inc............................ Japan The DDB Needham Worldwide 100%
Communications Group,Inc
DDB Needham DIK Korea............................ Korea DDB Needham Worldwide Partners, Inc. 25%
Brand Sellers DDB Baltic......................... Latvia DDB Worldwide Helsinki Oy 44%
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%
DDB Needham Holding B.V.......................... Netherlands DDB Needham Worldwide Partners, Inc. 100%
DDB B.V.......................................... Netherlands Registrant 100%
The Media Partnership............................ Netherlands DDB B.V. 19%
DDB Needham New Zealand Ltd...................... New Zealand DDB Needham Worldwide Ltd. 60%
DDB Needham Worldwide Ltd........................ New Zealand DDB Needham Worldwide Pty. Ltd. 100%
(Australia)
Media Management Ltd............................. New Zealand DDB Needham Worldwide Ltd. 100%
New Deal DDB Needham A/S......................... Norway DDB Needham Holding B.V. 2%
DDB Needham Worldwide Partners, Inc. 49%
Big Deal Film A/S................................ Norway New Deal DDB Needham A/S 51%
HMP DDB Needham A/S.............................. Norway New Deal DDB Needham A/S 26%
Pro Deal A/S..................................... Norway New Deal DDB Needham A/S 51%
Panama Holding Co................................ Panama DDB Needham Worldwide Partners, Inc. 50%
DDB Needham WW de Panama......................... Panama Panama Holding Co. 15%
AMA DDB Needham Worldwide Inc.................... Philippines DDB Needham Asia Pacific Ltd. 51%
DDB Needham Worldwide Warszawa................... Poland DDB Needham Worldwide Partners, Inc. 100%
Optimum Media Sp.Z.O.O........................... Poland DDB Needham Worldwide Partners, Inc. 70%
Tempo Media - Agencia de Melos, Publicidade SA... Portugal The Media Partnership 18%
The Media Partnership............................ Portugal DDB Needham Worldwide & Guerreiro 18%
Publicidade S.A.
DDB Needham Worldwide & Guerreiro
Publicidade S.A. ............................. Portugal Registrant 70%
DDB Needham Worldwide GAF Pte. Ltd............... Singapore DDB Needham Asia Pacific Ltd. 100%
DDB Needham Worldwide Bratislava................. Slovak Republic DDB Needham Worldwide Partners, Inc. 74%
Tandem/DDB Needham Worldwide, S.A................ Spain The DDB Needham Worldwide 7%
Communications Group,Inc
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/Rapp & Collins S.A.................... Spain Tandem/DDB Needham Worldwide S.A. 86%
Screen SA (Barcelona)............................ Spain Screen GmbH 100%
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. 19%
Paradiset DDB Needham A.B........................ Sweden DDB Needham Worldwide Sweden AB 51%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
DDB Needham Worldwide Sweden AB.................. Sweden DDB Needham Worldwide Partners, Inc. 100%
Seiler Zur DDB AG................................ Switzerland DDB Needham Holding A.G. 30%
Quadri & Partner AG Zur.......................... Switzerland Heye & Partner GmbH 15%
DDB Needham Holding A.G.......................... Switzerland Registrant 100%
DDB Needham Worldwide Inc........................ Taiwan DDB Needham Asia Pacific Ltd. 90%
Spaulding & Hawi Advertising Company, Ltd........ Thailand The DDB Needham Worldwide 100%
Communications Group,Inc
Medina/Turgul DDB................................ Turkey DDB Needham Worldwide Partners, Inc. 30%
Griffin Bacal Ltd................................ United Kingdom Griffin Bacal Inc. 100%
Target/DDB Needham Worldwide..................... Venezuela DDB Needham Worldwide Partners, Inc. 40%
Baxter, Gurian & Mazzei, Inc..................... California Health & Medical Communications, Inc. 100%
Rainoldi, Kerzner & Radcliffe, Inc............... California Kallir, Philips, Ross Inc. 100%
Alcone Marketing Group, Inc...................... California Registrant 100%
Copithorne & Bellows Public Relations 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%
Premier Magazines Inc............................ Delaware Registrant 100%
Lyons/Lavey/Nickel/Swift, Inc.................... Delaware Lavey/Wolff/Swift, Inc. 100%
Rapp Collins Worldwide Inc. (DE)................. Delaware Rapp Collins Worldwide Holdings Inc. 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%
Rapp Collins Worldwide Limited Partnership....... Delaware Rapp Collins Worldwide Holdings Inc. 99%
Rapp Collins Worldwide GP Inc. 1%
Rapp Collins Worldwide GP Inc.................... Delaware Registrant 100%
Rapp Collins Worldwide Holdings Inc.............. Delaware Registrant 100%
Millsport L.L.C.................................. Delaware Premier Magazines Inc. 25%
Medi Cine, Inc................................... Delaware Health & Medical Communications, Inc. 100%
Frank J. Corbett, Inc............................ Illinois Health & Medical Communications, Inc. 100%
Rapp Collins Worldwide Inc. (IL)................. Illinois Rapp Collins Worldwide Holdings Inc. 100%
HRC Illinois Inc................................. Illinois Rapp Collins Worldwide Holdings Inc. 100%
Brodeur & Partners Inc........................... Massachusetts Registrant 100%
Ross Roy Communications, Inc..................... Michigan Registrant 100%
RR Realty, Inc................................... Michigan Ross Roy Communications, Inc. 100%
RR Bloomfield Limited Partnership................ Michigan RR Realty, Inc. 100%
Bloomfield Parkway Associates.................... Michigan RR Bloomfield Limited Partnership 50%
RC Communications, Inc........................... New York Registrant 99%
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 Pensabene 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 USA Inc........................... New York Registrant 100%
GMR Group Inc.................................... Pennsylvania Registrant 20%
MDI S.A.......................................... Argentina Registrant 25%
TP Flower Unit Trust S.A. (Sydney)............... Australia Gavin Anderson & Company Pty Ltd. 100%
Gavin Anderson & Company Pty Ltd................. Australia Gavin Anderson & Company Worldwide Inc. 100%
Communications International Group S.A........... Belgium Diversified Agency Services Limited 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Market Access Europe S.A......................... Belgium European Political Consultancy Group Limited 100%
KPR S.A.......................................... Belgium Kallir, Philips, Ross, Inc. 26%
Promotess CPM S.A................................ Belgium Promotess Holdings S.A. 100%
Promotess Holdings S.A........................... Belgium Diversified Agency Services Limited 100%
GPC International Holdings Inc................... Canada Registrant 20%
Info Works....................................... Canada Omnicom Canada Inc. 80%
Ross Roy Group of Canada Ltd..................... Canada Ross Roy Communications, Inc. 100%
Ross Roy Communications Canada Limited........... Canada Ross Roy Group of Canada Ltd. 67%
Rapp Collins Centro America SA................... Costa Rica Rapp Collins Worldwide Limited Partnership 50%
S.C.H. Consultants S.A........................... France European Political Consultancy Group Limited 45%
Gavin Anderson & Company (France) S.A............ France Gavin Anderson & Company Worldwide Inc. 80%
The Media Partnership Europe S.A................. France Omnicom UK Limited 48%
Product Plus (France) S.A........................ France Product Plus International Ltd. 83%
AZ Promotion - Moridis........................... France Omnicom UK Limited 40%
Hagt, Stock-Schroer & Partner GmbH............... Germany BBDO Worldwide Europe GmbH 30%
Gavin Anderson & Company Worldwide GmbH.......... Germany BBDO Worldwide Europe GmbH 92%
Targis Agentur fur Kommunikation GmbH............ Germany Diversified Agency Services Limited 51%
Advantage GmbH................................... Germany Doremus & Company 35%
Gavin Anderson & Company (H.K.) Limited.......... Hong Kong Gavin Anderson & Company Worldwide Inc. 100%
Doremus Hong Kong Ltd............................ Hong Kong Doremus & Company 100%
Product Plus (Far East) Ltd...................... Hong Kong Product Plus International Ltd. 83%
Contract Personnel Limited....................... Ireland CPM International Limited 100%
Counter Products Marketing (Ireland) Ltd......... Ireland CPM International Limited 100%
Kabushiki Kaisha Interbrand Japan................ Japan Interbrand Group plc 74%
Interbrand International Holdings (I.I.H.) BV 26%
Interbrand Korea Inc............................. Korea Interbrand Group plc 100%
Rapp Collins Marcoa Mexico S.A. de C.V........... Mexico Rapp Collins Worldwide Limited Partnership 100%
Interbrand International Holdings (I.I.H.) BV.... Netherlands Interbrand Group plc. 100%
Adding Cognis SL................................. Spain Diversified Agency Services Limited 40%
Product Plus Iberica SA.......................... Spain Product Plus International Ltd. 83%
Marketing Aplicado SA............................ Spain Omnicom UK Limited 40%
Outdoor Connection Limited....................... United Kingdom BMP DDB Needham Worldwide Limited 33%
Countrywide Communications North Limited......... United Kingdom Countrywide Communications Group Limited 83%
BMP Countrywide Limited.......................... United Kingdom Countrywide Communications Group Limited 79%
BMP DDB Needham Worldwide Limited 5%
Countrywide Communications (London) Limited...... United Kingdom Countrywide Communications Group Limited 83%
Countrywide Communications Limited............... United Kingdom Countrywide Communications Group Limited 83%
Countrywide Communications (Scotland) Limited.... United Kingdom Countrywide Communications Group Limited 63%
Countrywide Support Limited...................... United Kingdom Countrywide Communications Group Limited 83%
Government Policy Consultants Limited............ United Kingdom Countrywide Communications Group Limited 43%
Fulford Hanlon Ltd............................... United Kingdom Countrywide Communications Group Limited 17%
Affinity Consulting Limited...................... United Kingdom Countrywide Support Limited 25%
Vandisplay Limited............................... United Kingdom CPM International Limited 100%
CPM Field Marketing Limited...................... United Kingdom Davidson Pearce Group Limited 100%
Product Plus International Ltd................... United Kingdom Davidson Pearce Group Limited 83%
Countrywide Communications Group Limited......... United Kingdom Diversified Agency Services Limited 83%
First City Public Relations Limited.............. United Kingdom Diversified Agency Services Limited 80%
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 90%
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 Targis Limited......................... United Kingdom Diversified Agency Services Limited 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
European Political Consultancy Group Limited..... United Kingdom Diversified Agency Services Limited 100%
Doremus & Company Limited........................ United Kingdom Diversified Agency Services Limited 100%
Prism International Limited...................... United Kingdom Diversified Agency Services Limited 100%
First City/BBDO Limited.......................... United Kingdom Diversified Agency Services Limited 64%
Omnicom UK Limited............................... United Kingdom Diversified Agency Services Limited 100%
EAG Access Limited............................... United Kingdom European Political Consultancy Group Limited 50%
Market Access International Limited.............. United Kingdom European Political Consultancy Group Limited 100%
Coupon Information Limited....................... United Kingdom Granby Marketing Services Ltd. 50%
WWAV Rapp Collins Telebusiness Consultancy Ltd... United Kingdom WWAV Rapp Collins Group Limited 100%
Interbrand UK Limited............................ United Kingdom Interbrand Group plc. 100%
Markforce Associates Limited..................... United Kingdom Interbrand Group plc. 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%
Colour Solutions Limited......................... United Kingdom Omnicom UK Limited 100%
BMP DDB Needham Worldwide Limited................ United Kingdom Omnicom UK Limited 100%
Solutions in Media Limited....................... United Kingdom Omnicom UK Limited 100%
Paling Walters Targis Ltd........................ United Kingdom Omnicom UK Limited 100%
Macmillan Davies Advertising Ltd................. United Kingdom Prism International Ltd. 100%
Macmillan Davies Consultants Ltd................. United Kingdom Prism International Ltd. 100%
Diversified Agency Services Limited.............. United Kingdom Registrant 100%
The Computing Group Limited...................... United Kingdom WWAV Rapp Collins Group Limited 100%
Data Warehouse Ltd............................... United Kingdom WWAV Rapp Collins Group Limited 50%
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%
WWAV Rapp Collins Scotland Ltd................... United Kingdom WWAV Rapp Collins Group Limited 100%
Clark McKay Buckingham Ltd....................... United Kingdom WWAV Rapp Collins Group Limited 75%
TBWA International Inc........................... Delaware TBWA International B.V. 10%
Registrant 90%
TBWA Chiat/Day Inc............................... New York TBWA International Inc. 100%
TBWA Chiat/Day GBD Holdings, Inc................. New York TBW Chiat/Day Inc. 100%
GBB Advertising Co............................... New York TBWA Chiat/Day GBD Holdings, Inc. 51%
Whybin TBWA Pty Ltd.............................. Australia Registrant 51%
Auspace Media Pty Ltd............................ Australia Whybin TBWA Pty Ltd 26%
TBWA S.A. (Brussels)............................. Belgium TBWA International B.V. 100%
Concept+......................................... Belgium TBWA International B.V. 51%
Tissa S.A........................................ Belgium TBWA International B.V. 100%
Eurospace S.A.................................... Belgium TBWA S.A. (Brussels) 100%
TBWA Chiat/Day Canada............................ Canada TBWA Chiat/Day Inc. 100%
TBWA Reklamebureau A/S........................... Denmark Registrant 51%
TBWA S.A.(Paris)................................. 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%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
TBWA International B.V........................... Netherlands Registrant 100%
Multicom Direct Marketing & Advertising.......... Netherlands TBWA International B.V. 100%
TBWA Campaign Company............................ Netherlands TBWA International B.V. 100%
Dresme Van Dijk Partners......................... Netherlands TBWA International B.V. 100%
Campaign Divers.................................. Netherlands Dresme Van Dijk Partners 100%
TBWA/H Nethwork B.V.............................. Netherlands TBWA International B.V. 50%
TBWA Reclame & Marketing......................... Netherlands TBWA International B.V. 100%
EPG/TBWA Portugal................................ Portugal Registrant 65%
Hunt Lascaris TBWA Holdings (Pty) Ltd............ South Africa TBWA International B.V. 20%
Registrant 40%
GO AM-C Pty Ltd.................................. South Africa Hunt Lascaris TBWA Holdings (Pty) Ltd. 32%
Hunt Lascaris TBWA FMC (Pty) Ltd................. South Africa Hunt Lascaris TBWA Holdings (Pty) Ltd. 60%
Paroden Inv Holdings (Pty) Ltd................... South Africa TBWA International B.V. 50%
Hunt Lascaris TBWA Cape (Pty) Ltd................ South Africa Hunt Lascaris TBWA Holdings (Pty) Ltd. 51%
Schalit Shipley Nethwork......................... South Africa Registrant 20%
TBWA/ H Nethwork B.V. 10%
Paroden Inv Holdings (Pty) Ltd 20%
Rapp Collins S.A ................................ South Africa Registrant 80%
TBWA Espana S.A ................................. Spain TBWA International B.V. 80%
TBWA Sweden A.B.................................. Sweden Registrant 100%
GBBS/TBWA Zurich Werbeagentur A.G................ Switzerland TBWA International B.V. 19%
TBWA Ltd......................................... United Kingdom Floral Street Holdings Ltd. 100%
FSC Group Ltd.................................... United Kingdom TBWA Ltd. 100%
Floral Street Holdings Ltd....................... United Kingdom Diversified Agency Services Limited 100%
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 20 , 1996 (except for Note 14 as to which the date
is March 1, 1996) 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. and into the previously
filed Registration Statement File Nos. 33-60347, 33-60167 and 33-31619 on Form
S-4 of Omnicom Group Inc.
ARTHUR ANDERSEN LLP
New York, New York
March 25, 1996
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this annual report on Form 10-K of Omnicom
Group Inc. of our report dated April 7, 1995, which includes an explanatory
paragraph on the ability of the company to continue as a going concern, of our
audits of the consolidated financial statements of Chiat/Day Holdings, Inc. for
the two years ended October 31, 1994.
COOPERS & LYBRAND LLP
Sherman Oaks, California
March 25, 1996
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Annual Report on Form 10-K under the
Securities and Exchange Act of 1934 of Omnicom Group Inc. for the year ended
December 31, 1995 of our report dated March 9, 1995 regarding our audit of the
financial statements of Ross Roy Communications, Inc. as of December 31, 1994
and 1993 and for the two years in the period ended December 31, 1994 (not
presented separately herein).
DELOITTE & TOUCHE LLP
Detroit, Michigan
March 25, 1996
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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Bernard Brochand
Dated: March 25, 1996 -----------------------------
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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Robert J. Callander
Dated: March 25, 1996 -----------------------------
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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ James A. Cannon
Dated: March 25, 1996 -----------------------------
James A. Cannon
<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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Leonard S. Coleman, Jr.
Dated: March 25, 1996 -----------------------------
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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Peter I. Jones
Dated: March 25, 1996 -----------------------------
Peter I. Jones
<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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ John R. Purcell
Dated: March 25, 1996 -----------------------------
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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Keith L. Reinhard
Dated: March 25, 1996 -----------------------------
Keith L. Reinhard
<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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Allen Rosenshine
Dated: March 25, 1996 -----------------------------
Allen Rosenshine
<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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Gary L. Roubos
Dated: March 25, 1996 -----------------------------
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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Quentin I. Smith, Jr.
Dated: March 25, 1996 -----------------------------
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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Robin B. Smith
Dated: March 25, 1996 -----------------------------
Robin B. 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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ William G. Tragos
Dated: March 25, 1996 -----------------------------
William G. Tragos
<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 Barry J. Wagner, 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 ended December 31, 1995 including any or all amendments thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, including specifically this Power of Attorney, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agent 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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Egon P.S. Zehnder
Dated: March 25, 1996 -----------------------------
Egon P.S. Zehnder
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF OMNICOM GROUP INC. AND SUBSIDIARIES AS OF
AND FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 313,999
<SECURITIES> 21,474
<RECEIVABLES> 1,526,564
<ALLOWANCES> 23,352
<INVENTORY> 0
<CURRENT-ASSETS> 2,106,035
<PP&E> 460,137
<DEPRECIATION> 259,664
<TOTAL-ASSETS> 3,527,677
<CURRENT-LIABILITIES> 2,502,444
<BONDS> 290,379
0
0
<COMMON> 39,921
<OTHER-SE> 511,586
<TOTAL-LIABILITY-AND-EQUITY> 3,527,677
<SALES> 0
<TOTAL-REVENUES> 2,257,536
<CGS> 0
<TOTAL-COSTS> 1,305,087
<OTHER-EXPENSES> 681,544
<LOSS-PROVISION> 6,024
<INTEREST-EXPENSE> 43,271
<INCOME-PRETAX> 242,653
<INCOME-TAX> 97,386
<INCOME-CONTINUING> 139,955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139,955
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 1.85
</TABLE>
