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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 1996 Commission File Number: 1-10551
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OMNICOM GROUP INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-1514814
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
437 Madison Avenue, New York, NY 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 415-3600
Securities Registered Pursuant to Section 12(B) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, $.50 Par Value New York Stock Exchange
Securities Registered Pursuant to Section 12(G) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
At March 14, 1997, there were 81,081,151 shares of Common Stock
outstanding; the aggregate market value of the voting stock held by
nonaffiliates at March 14, 1997 was approximately $4,070,322,000.
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 14, 1997
Common Stock, $.50 Par Value 81,081,151
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 19, 1997 are
incorporated by reference into Part III of this Report.
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<PAGE>
OMNICOM GROUP INC.
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Index to Annual Report on Form 10-K
Year Ended December 31, 1996
<TABLE>
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PAGE
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PART I
Item 1. Business ............................................................... 1
Item 2. Properties.............................................................. 5
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... 7
Item 6. Selected Financial Data................................................. 8
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 8
Item 8. Financial Statements and Supplementary Data............................. 11
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................. 11
PART III
Item 10. Directors and Executive Officers of the Registrant...................... 12
Item 11. Executive Compensation.................................................. 12
Item 12. Security Ownership of Certain Beneficial Owners and Management.......... 12
Item 13. Certain Relationships and Related Transactions.......................... 12
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 7, 1997.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ....... 13
</TABLE>
<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, public relations, and interactive marketing. 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 1996 and 1995, 51% and 53%, respectively, of the Omnicom
Group's billings came from its non-U.S. operations.
According to the unaudited industry-wide figures published in 1996 by the
trade journal Advertising Age, Omnicom Group Inc. was ranked as the second
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 two independent agencies,
Cline, Davis & Mann and Goodby, Silverstein & Partners, certain marketing
service and specialty advertising companies through its Diversified Agency
Services division ("DAS"), and certain interactive marketing companies through
Communicade.
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, Hungary, Italy, Malaysia, Mexico, the Netherlands, Peru,
Poland, Portugal, Puerto Rico, Russia, Singapore, Spain, Sweden, Taiwan,
Thailand and the United Kingdom; through affiliates located in Argentina,
Australia, Chile, Costa Rica, Croatia, the Czech Republic, Egypt, El Salvador,
Guatemala, Honduras, India, Israel, Kuwait, Lebanon, New Zealand, Nicaragua,
Norway, Panama, the Philippines, Romania, Saudi Arabia, the Slovak Republic,
Turkey, the United Kingdom, the United Arab Emirates and Venezuela; and through
a joint venture in Japan. The BBDO Worldwide Network uses the services of
associate agencies in Colombia, the Dominican Republic, Ecuador, Indonesia,
Korea, Pakistan and Uruguay.
1
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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 and San
Francisco, California; Dallas, Texas; Chicago, Illinois; and Seattle,
Washington; and through Griffin Bacal Inc., which is headquartered in New York.
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, Latvia, 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 Miami, Florida and in Brazil, Chile, Costa Rica, 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 Argentina, Bahrain, Bangladesh, Belize,
Bolivia, the Dominican Republic, Egypt, Guam, Indonesia, Ireland, Israel,
Kuwait, Lebanon, Montenegro, Morocco, Nicaragua, Oman, Pakistan, Paraguay, Peru,
Puerto Rico, Russia, Saudi Arabia, Serbia, Slovenia, South Africa, Trinidad, the
United Arab Emirates, Uruguay and Vietnam. 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
Ketchum Advertising in Pittsburgh, Pennsylvania and San Francisco, California;
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, Brazil, China, Denmark, France, Germany,
Greece, Hong Kong, Italy, the Netherlands, Portugal, Singapore, South Africa,
Spain, Thailand and the United Kingdom; and through affiliates located in
Argentina, Chile, Hungary, the Netherlands, Norway, Poland, Sweden and
Switzerland. The TBWA International Network uses the services of associate
agencies in Austria, Cyprus, the Czech Republic, India, Israel, Japan, the
Middle East, Norway, Russia, South Korea and Zimbabwe.
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 directory advertising. Specialty
advertising includes: financial, healthcare, multicultural and recruitment
advertising. DAS also operates independent consumer advertising and media buying
agencies.
DAS agencies headquartered in the United States include: Gerstman & Meyers,
Harrison & Star, Interbrand Schechter, Kallir, Philips, Ross, Ketchum Healthcare
Communications, Lyons/Lavey/Nickel/Swift, Merkley Newman Harty, RC
Communications, The Rodd Group and Shain Colavito Pensabene Direct in New York;
Bernard Hodes Advertising, Doremus & Company, Gavin Anderson & Company
Worldwide, Ketchum Public Relations Worldwide, Porter Novelli and Rapp Collins
Worldwide, all in various cities and headquartered in New York; Alcone Marketing
Group headquartered in Irvine, California; TLP in Dallas, Texas; Baxter, Gurian
& Mazzei in Los Angeles, California; Clark & Weinstock in New York, New York and
Washington, D.C.; Corbett HealthConnect in Chicago, Illinois; Creative Media in
New York, New York and San Francisco, California; Millsport in Stamford,
Connecticut; Optima Direct in Vienna, Virginia; Ketchum Directory Advertising,
headquartered in Chicago, Illinois; The GMR Group in Fort Washington,
Pennsylvania; and Rainoldi, Kerzner & Radcliffe in San Francisco, California.
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DAS operates in the United Kingdom through subsidiaries which include
Colour Solutions, Countrywide Communications Group, CPM International, GPC
Market Access Group, Granby Marketing Services, Interbrand, MacMillan Davies
Hodes Advertising, MacMillan Davies Hodes Consultants, Paling Walters Targis,
Premier Magazines, Product Plus International, Smythe Dorward Lambert,
Specialist Publications, The Anvil Consultancy and WWAV Rapp Collins Group.
In addition, DAS operates internationally with subsidiaries and affiliates
in Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Colombia, Costa
Rica, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan,
Korea, Mexico, the Netherlands, Panama, Puerto Rico, Singapore, South Africa,
Spain, Sweden, Switzerland and Taiwan.
Communicade
The Omnicom Group has minority interests in six interactive marketing
agencies in the United States: AGENCY.COM Ltd., Razorfish, Inc. and Think New
Ideas, Inc., headquartered in New York; Red Sky Interactive and Organic Online,
Inc., in San Francisco, California; and Interactive Solutions Inc., in Boston,
Massachusetts.
Omnicom Group Inc.
As the parent company of BBDO Worldwide, DDB Needham Worldwide, TBWA
International, DAS, Communicade and two independent agencies, the Company,
through its wholly-owned subsidiary Omnicom Management Inc., provides a common
financial and administrative base for the operating groups. The Company oversees
the operations of each group through regular meetings with their respective
top-level management. The Company sets operational goals for each of the groups
and evaluates performance through the review of monthly operational and
financial reports. The Company provides its groups with centralized services
designed to coordinate financial reporting and controls, tax, treasury and real
estate planning, and to focus corporate development objectives. The Company also
develops consolidated services for its agencies and their clients such as
consolidated media buying arrangements.
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, Gillette, Hasbro, Henkel, Johnson &
Johnson, Mars, McDonald's, Nissan, PepsiCo, Pfizer, Sony, Visa and Volkswagen.
The Omnicom Group's ten largest clients accounted for approximately 20% of
1996 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 1996
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 by
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. Agencies bill 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.
3
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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 198 people on the
Omnicom Group's staff were employed in research during the year and the Omnicom
Group's domestic research expenditures approximated $34,816,000. 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
Communicade, and the other independent agencies have enabled the Omnicom Group
to represent competing clients.
BBDO Worldwide, DDB Needham Worldwide, TBWA International, DAS,
Communicade and the independent agencies 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, 1996, the Omnicom Group,
excluding unconsolidated companies, employed approximately 22,700 persons, of
which approximately 10,400 were employed in the United States and approximately
12,300 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.
4
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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 32,000 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 171,000 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, Boston, Chicago, Dallas, Detroit, Houston, Irvine, Los
Angeles, Mahwah, Minneapolis, New York, Philadelphia, Pittsburgh, San Francisco,
San Jose, Seattle, St. Louis and Washington, D.C. and at various other locations
occupy approximately 2,877,000 sq. ft. of space under leases with varying
expiration dates.
International
The Company's international subsidiaries in Australia, Austria, Belgium,
Brazil, 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
No matters were submitted to a vote of security holders during 1996.
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>
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Name Position Age
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Bruce Crawford............ Chairman of Omnicom Group 68
John D. Wren.............. Chief Executive Officer & President of Omnicom Group and
Chairman & Chief Executive Officer of Diversified Agency Services 44
Fred J. Meyer ............ Chief Financial Officer of Omnicom Group 66
Dennis E. Hewitt.......... Treasurer of Omnicom Group 52
Barry J. Wagner........... Secretary & General Counsel of Omnicom Group 56
Jonathan E. Ramsden....... Controller of Omnicom Group 32
Allen Rosenshine.......... Chairman & Chief Executive Officer of BBDO Worldwide 58
James A. Cannon .......... Vice Chairman & Chief Financial Officer of BBDO Worldwide 58
Keith L. Reinhard......... Chairman & Chief Executive Officer of DDB Needham
Worldwide 62
William G. Tragos......... Chairman & Chief Executive Officer of TBWA International 62
</TABLE>
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John D. Wren was appointed Chief Executive Officer of the Omnicom Group
effective January 1, 1997, succeeding Bruce Crawford in the position. Mr. Wren
was appointed President of the Omnicom Group and Chairman of Diversified Agency
Services 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.
Fred J. Meyer joined the Company in April 1988 as Chief Financial Officer.
Mr. Meyer was previously Senior Vice President and Chief Financial Officer of
CBS Inc.
Dennis E. Hewitt was promoted to Treasurer of the Company in January 1994.
Mr. Hewitt joined the Company in May 1988 as Assistant Treasurer.
Barry J. Wagner was promoted to Secretary & General Counsel of the Company
in May 1995. Mr. Wagner was previously Assistant Secretary of the Company.
Jonathan E. Ramsden was promoted to Controller of the Company in June 1996.
Mr. Ramsden joined the Company in March 1996 after nine years with Arthur
Andersen.
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 7, 1997.
The Executive Officers of the Company are elected annually following the
annual meeting of the shareholders of their respective employers.
6
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Price Range of Common Stock and Dividend History
The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "OMC". The table below shows the range of reported last sale prices
on the New York Stock Exchange Composite Tape for the Company's common stock for
the periods indicated and the dividends paid per share on the common stock for
such periods; the reported last sale price on March 14, 1997 was $51.
Dividends Paid
Per Share of
High Low Common Stock
----- ----- -------------
1995
First Quarter..................... 28 7/16 25 .155
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
1996
First Quarter..................... 45 35 5/8 .175
Second Quarter.................... 46 1/2 40 1/4 .175
Third Quarter..................... 47 3/4 39 1/8 .20
Fourth Quarter.................... 51 1/2 44 .20
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 the ratio of debt to cash flow, the ratio of total consolidated
indebtedness to total consolidated capitalization and its ability to make
investments in and loans to affiliates and unconsolidated subsidiaries.
On January 28, 1997 the Board of Directors declared a regular quarterly
dividend of $.20 per share of common stock, payable April 3, 1997 to holders of
record on March 14, 1997.
Approximate Number of Equity Security Holders
Approximate Number of
Record Holders
Title of Class on March 14, 1997
-------------- ---------------------
Common Stock, $.50 par value....................... 3,658
Preferred Stock, $1.00 par value .................. None
7
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Item 6. Selected Financial Data
The following table sets forth selected financial data of the Company and
should be read in conjunction with the consolidated financial statements which
begin on page F-1.
<TABLE>
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(Dollars in Thousands Except Per Share Amounts)
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1996 1995 1994 1993 1992
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For the year:
Commissions and fees................ $2,641,667 $2,257,536 $1,907,795 $1,688,960 $1,600,326
Income before changes
in accounting principles......... 176,329 139,955 111,495 65,568 59,650
Net income.......................... 176,329 139,955 83,486 65,568 56,250
Earnings per common share before
changes in accounting principles:
Primary.......................... 2.29 1.89 1.58 1.03 1.01
Fully diluted.................... 2.25 1.85 1.54 1.01 0.86
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.......................... 2.29 1.89 1.18 1.03 0.95
Fully diluted.................... 2.25 1.85 1.18 1.01 0.81
Dividends declared per common
share............................ 0.75 0.66 0.62 0.62 0.60
At year end:
Total assets........................ 4,055,943 3,527,677 3,040,211 2,465,408 2,266,733
Long-term obligations:
Long-term debt................... 204,744 290,379 199,487 301,044 324,133
Deferred compensation and
other liabilities.............. 124,739 122,623 150,291 113,197 102,814
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
In 1996, domestic revenues from commissions and fees increased 23.9
percent. The effect of acquisitions, net of divestitures, accounted for a 7.4
percent increase. The remaining 16.5 percent increase was due to the growth of
existing businesses, including net new business gains and higher net spending
from existing clients.
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 the growth of
existing businesses, including net new business gains and higher net 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 the growth of
existing businesses, including net new business gains and higher net spending
from existing clients.
In 1996, international revenues increased 10.3 percent. The effect of
acquisitions, net of divestitures, accounted for a 3.2 percent increase in
international revenues. Changes in the foreign exchange value of the U.S. dollar
decreased international revenues by 3.4 percent. The remaining 10.5 percent
increase was due to the growth of existing businesses, including net new
business gains and higher net 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 the
growth of existing businesses, including net new business gains and higher net
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
8
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revenues by 2.3 percent. The remaining 9.4 percent increase was due to the
growth of existing businesses, including net new business gains and higher net
spending from existing clients.
In 1996, worldwide operating expenses increased 16.5 percent.
Acquisitions, net of divestitures during the year, accounted for a 4.9 percent
increase in worldwide operating expenses. Changes in the foreign exchange value
of the U.S. dollar decreased worldwide operating expenses by 1.6 percent. The
remaining 13.2 percent increase was caused by increases in employee
compensation, including relatively higher levels of bonus and incentive
compensation and severance payments, 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 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 special charges recorded in 1993 related to the restructuring of
certain real estate operating leases, including the write off of fixed assets
abandoned in conjunction with lease terminations. Net foreign exchange gains did
not significantly impact operating expenses for the year.
Net interest expense in 1996 decreased $6.9 million, due primarily to
lower average interest rates on borrowings and the conversion of the 4.5%/6.25%
Step-Up Convertible Subordinated Debentures in September 1996.
Net interest expense in 1995 was comparable to net interest expense in
1994. The effect of higher average borrowings during the year was offset by the
effect of higher average amounts of cash and marketable securities invested
during the year.
Net interest expense in 1994 decreased by $4.4 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, partially offset by lower average funds available for
investment during the year and declining interest rates in certain countries.
In 1996, the effective tax rate increased to 40.5 percent. This increase
reflects an increase in the effective rate of state and local taxes.
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 1996, consolidated net income increased 26.0 percent. This increase was
the result of revenue growth and margin improvement. Operating margin, which
excludes net interest expense, increased to 12.4 percent in 1996 from 12.0
percent in 1995 as a result of greater growth in commission and fee revenue than
the growth in operating expenses. In 1996, the impact of acquisitions, net of
divestitures, resulted in a 2.7 percent increase in consolidated net income,
while changes in the foreign exchange value of the U.S. dollar decreased
consolidated net income by 2.4 percent.
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
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 companies in which minority interests
9
<PAGE>
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 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.
At December 31, 1996, accounts receivable less allowance for doubtful
accounts, increased by $52.2 million from December 31, 1995. At December 31,
1996, accounts payable and other accrued liabilities increased by $335.5 million
and $97.3 million, respectively, from December 31, 1995. 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 timing of payments to media and other suppliers in 1996
compared to 1995.
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, Germany, France, the Netherlands, Canada, Spain, and Australia.
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. 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.
At December 31, 1996 and 1995, the Company had forward foreign exchange
contracts outstanding with an aggregate notional principal amount of $301
million and $325 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, 1996 no swap agreements were outstanding. At December 31,
1995, the Company had executed interest rate swap contracts with banks which
became effective during 1996. These contracts consisted 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; 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 were to
convert a portion of the Company's floating rate debt to a fixed rate. During
1996, these interest rate swap contracts were terminated.
10
<PAGE>
At December 31, 1996 and 1995, 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 $196.3 million during 1996 to $510.3
million at December 31, 1996. 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 and repay debt obligations.
On July 12, 1996, the Company issued a Notice of Redemption for the
outstanding 4.5%/6.25% Step-Up Convertible Subordinated Debentures with a
scheduled maturity in 2000. Prior to the September 5, 1996 redemption date, the
debenture holders elected to convert all of their outstanding debentures into
common stock of the Company at a conversion price of $27.44 per common share.
On March 1, 1996, the Company issued Deutsche Mark 100 million Floating
Rate Bonds (approximately $68 million at the March 1, 1996 exchange rate) due
March 1, 1999. 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%.
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 are unsecured, unsubordinated obligations of the issuer and are
unconditionally and irrevocably guaranteed by the Company. The bonds bear
interest at a per annum rate equal to Deutsche Mark three month LIBOR plus
0.65%.
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, the 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, 1996, the Company had $475
million in such unsecured committed lines of credit, comprised of a $360
million, five year revolving credit agreement expiring June 30, 2001, and $115
million in lines of credit, principally outside of the United States. Of the
$475 million in unsecured committed lines, $5 million were used at December 31,
1996. Management believes the aggregate lines of credit available to the Company
are adequate to support its short-term cash requirements for dividends, capital
expenditures and maintenance of working capital.
On January 3, 1997, the Company issued $218.5 million of 41/4% Convertible
Subordinated Debentures with a scheduled maturity in 2007. The debentures are
convertible into common stock of the Company at a conversion price of $63.00 per
share subject to adjustment in certain events. Debenture holders have the right
to require the Company to redeem the debentures on January 3, 2003 at a price of
112.418%, or upon the occurrence of a Fundamental Change, as defined in the
indenture agreement, at the prevailing redemption price. The Company may redeem
the debentures, as a whole or in part, on or after December 29, 2000 initially
at 108.324% and at increasing prices thereafter to 112.418% until January 2,
2003 and 100% thereafter. Unless the debentures are redeemed, repaid or
converted prior thereto, the debentures will mature on January 3, 2007 at their
principal amount. The proceeds of this issuance are being used for general
corporate purposes including 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 (including the 41/4% Convertible Subordinated Debentures) will be
adequate to meet its long-term cash requirements as presently contemplated.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data required by this item
appear beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
11
<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 7, 1997. Information regarding the
Company's executive officers is set forth in Part I of this Form 10-K.
Item 11. Executive Compensation
Incorporated by reference to the Company's definitive proxy statement
expected to be filed by April 7, 1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference to the Company's definitive proxy statement
expected to be filed by April 7, 1997.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to the Company's definitive proxy statement
expected to be filed by April 7, 1997.
12
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
<TABLE>
<CAPTION>
Page
----
<S> <C>
(a)1. Financial Statements:
Report of Management................................................................ F-1
Report of Independent Public Accountants............................................ F-2
Consolidated Statements of Income for the three years ended December 31, 1996....... F-3
Consolidated Balance Sheets at December 31, 1996 and 1995........................... F-4
Consolidated Statements of Shareholders' Equity for the three years
ended December 31, 1996.......................................................... F-5
Consolidated Statements of Cash Flows for the three years
ended December 31, 1996.......................................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
Quarterly Results of Operations (Unaudited)......................................... F-20
2. Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts for the three years
ended December 31, 1996 ......................................................... S-1
</TABLE>
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). Incorporated by
reference to Omnicom Group Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1995.
(ii) By-laws.
Incorporated by reference to Omnicom Group Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1987.
(4) Instruments Defining the Rights of Security Holders,
Including Indentures.
4.1 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.
4.2 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 year ended December 31, 1994, is incorporated
herein by reference.
4.3 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 filed as Exhibit 4.4 to Omnicom Group Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1995, is
incorporated herein by reference.
13
<PAGE>
4.4 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
filed as Exhibit 4.5 to Omnicom Group Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1995, is
incorporated herein by reference.
4.5 Indenture dated January 3, 1997 between the Registrant and
The Chase Manhattan Bank, as trustee, in connection with the
issuance of 41/4% Convertible Subordinated Debentures due
2007 filed as Exhibit 4.2 to Omnicom Group Inc.'s Form S-3
Registration Statement No. 333-22589, is incorporated herein
by reference.
4.6 Form of Debentures (included in Exhibit 4.5 above) filed as
Exhibit 4.3 to Omnicom Group Inc.'s Form S-3 Registration
Statement No. 333-22589, is incorporated herein by
reference.
4.7 Registration Rights Agreement dated as of January 3, 1997
between the Registrant and Morgan Stanley & Co. Incorporated
related to the Registrant's 41/4% Convertible Subordinated
Debentures due 2007 filed as Exhibit 4.4 to Omnicom Group
Inc.'s Form S-3 Registration Statement No. 333-22589, is
incorporated herein by reference.
(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
year ended December 31, 1987, is incorporated herein by
reference.
10.2 Amendments to Registrant's 1987 Stock Plan, filed as Exhibit
10.2 to Omnicom Group Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1994, is incorporated herein by
reference.
10.3 Copy of Registrant's Profit-Sharing Retirement Plan dated
May 16, 1988, filed as Exhibit 10.24 to Omnicom Group Inc.'s
Annual Report on Form 10-K for the 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 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 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 year ended December 31, 1993, is
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 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 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 year ended
December 31, 1989, is incorporated herein by reference.
14
<PAGE>
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 year ended December 31, 1993, is
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 year ended December 31, 1993, is incorporated
herein by reference.
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 year ended December 31, 1993, is
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 $360,000,000 Credit Agreement, dated May 10, 1996,
between Omnicom Finance Inc., Omnicom Finance Limited, ABN
AMRO Bank N.V., Chase Securities Inc. and the financial
institutions party thereto, filed as Exhibit 10.15 to
Omnicom Group Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, is incorporated herein by
reference.
10.15 Copy of Amendment No. 1 dated December 27, 1996, to the
Omnicom $360,000,000 Credit Agreement dated May 10, 1996,
listed as Exhibit 10.14 above.
(21) Subsidiaries of the Registrant............................. S-2
(23) Consents of Experts and Counsel.
23.1 Consent of Arthur Andersen LLP............................. S-15
(24) Powers of Attorney from Bernard Brochand, Robert J.
Callander, James A. Cannon, Leonard S. Coleman, Jr., John R.
Murphy, John R. Purcell, Keith L. Reinhard, Allen
Rosenshine, Gary L. Roubos, Quentin I. Smith, Jr., 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, 1996.
15
<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 24, 1997
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.
Signature Title Date
--------- ----- ----
/s/ BRUCE CRAWFORD Chairman and Director March 24, 1997
- --------------------------------
(Bruce Crawford)
/s/ JOHN D. WREN Chief Executive Officer March 24, 1997
- -------------------------------- and President and Director
(John D. Wren)
/s/ FRED J. MEYER Chief Financial Officer March 24, 1997
- --------------------------------
(Fred J. Meyer)
/s/ JONATHAN E. RAMSDEN Controller (Principal March 24, 1997
- -------------------------------- Accounting Officer)
(Jonathan E. Ramsden)
/s/ BARRY J. WAGNER Secretary and March 24, 1997
- -------------------------------- General Counsel
(Barry J. Wagner)
/s/ BERNARD BROCHAND* Director March 24, 1997
- --------------------------------
(Bernard Brochand)
/s/ ROBERT J. CALLANDER* Director March 24, 1997
- --------------------------------
(Robert J. Callander)
/s/ JAMES A. CANNON* Director March 24, 1997
- --------------------------------
(James A. Cannon)
/s/ LEONARD S. COLEMAN, JR.* Director March 24, 1997
- --------------------------------
(Leonard S. Coleman, Jr.)
/s/ JOHN R. MURPHY* Director March 24, 1997
- --------------------------------
(John R. Murphy)
/s/ JOHN R. PURCELL * Director March 24, 1997
- --------------------------------
(John R. Purcell)
/s/ KEITH L. REINHARD* Director March 24, 1997
- --------------------------------
(Keith L. Reinhard)
/s/ ALLEN ROSENSHINE* Director March 24, 1997
- --------------------------------
(Allen Rosenshine)
/s/ GARY L. ROUBOS* Director March 24, 1997
- --------------------------------
(Gary L. Roubos)
/s/ QUENTIN I. SMITH, JR.* Director March 24, 1997
- --------------------------------
(Quentin I. Smith, Jr.)
/s/ WILLIAM G. TRAGOS* Director March 24, 1997
- --------------------------------
(William G. Tragos)
/s/ EGON P.S. ZEHNDER* Director March 24, 1997
- --------------------------------
(Egon P.S. Zehnder)
*By /s/ BARRY J. WAGNER
- --------------------------------
Barry J. Wagner
Attorney-in-fact
16
<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 and separately with the
independent public accountants, internal audit and financial management to
discuss the results of their audits, the adequacy of internal accounting
controls and the quality of financial reporting.
/s/ JOHN D. WREN /s/ FRED J. MEYER
- -------------------------------------- ----------------------------------------
John D. Wren Fred J. Meyer
Chief Executive Officer and President 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, 1996 and
1995, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1996. 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.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Omnicom Group Inc. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 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-1 is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
February 18, 1997
F-2
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
(Dollars in Thousands
Except Per Share Data)
-------------------------------------
1996 1995 1994
---- ---- ----
COMMISSIONS AND FEES................... $2,641,667 $2,257,536 $1,907,795
OPERATING EXPENSES:
Salaries and Related Costs........ 1,555,553 1,305,087 1,102,944
Office and General Expenses....... 759,541 681,544 588,747
---------- ---------- ----------
2,315,094 1,986,631 1,691,691
---------- ---------- ----------
OPERATING PROFIT....................... 326,573 270,905 216,104
NET INTEREST EXPENSE:
Interest and Dividend Income...... (12,725) (15,019) (13,295)
Interest Paid or Accrued.......... 34,067 43,271 40,485
---------- ---------- ----------
21,342 28,252 27,190
---------- ---------- ----------
INCOME BEFORE INCOME TAXES
AND CHANGE IN ACCOUNTING
PRINCIPLE......................... 305,231 242,653 188,914
INCOME TAXES........................... 123,639 97,386 77,927
---------- ---------- ----------
INCOME AFTER INCOME TAXES AND BEFORE
CHANGE IN ACCOUNTING PRINCIPLE...... 181,592 145,267 110,987
EQUITY IN AFFILIATES................... 20,510 20,828 18,322
MINORITY INTERESTS..................... (25,773) (26,140) (17,814)
---------- ---------- ----------
INCOME BEFORE CHANGE IN
ACCOUNTING PRINCIPLE................ 176,329 139,955 111,495
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE................ -- -- (28,009)
---------- ---------- ----------
NET INCOME............................. $ 176,329 $ 139,955 $ 83,486
========== ========== ==========
NET INCOME PER COMMON SHARE:
Income Before Change in
Accounting Principle:
Primary........................ $ 2.29 $ 1.89 $ 1.58
Fully Diluted.................. $ 2.25 $ 1.85 $ 1.54
Cumulative Effect of Change
in Accounting Principle:
Primary........................ $ -- $ -- $ (0.40)
Fully Diluted.................. $ -- $ -- $ (0.40)
Net Income:
Primary........................ $ 2.29 $ 1.89 $ 1.18
Fully Diluted.................. $ 2.25 $ 1.85 $ 1.18
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)
---------------------------
1996 1995
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................................... $ 510,267 $ 313,999
Investments available-for-sale, at market, which approximates cost........... 12,841 21,474
Accounts receivable, less allowance for doubtful accounts of
$25,642 and $23,352 (Schedule II)........................................ 1,555,411 1,503,212
Billable production orders in process, at cost............................... 156,667 106,115
Prepaid expenses and other current assets.................................... 189,799 161,235
---------- ----------
Total Current Assets......................................................... 2,424,985 2,106,035
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost, less
accumulated depreciation and amortization of $301,102 and $259,664............ 221,655 200,473
INVESTMENTS IN AFFILIATES ...................................................... 223,918 200,216
INTANGIBLES, less accumulated amortization of $198,880 and $157,863.............. 1,000,312 832,698
DEFERRED TAX BENEFITS............................................................ 79,828 70,242
DEFERRED CHARGES AND OTHER ASSETS ............................................... 105,245 118,013
---------- ----------
$4,055,943 $3,527,677
========== ==========
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............................................................. $2,070,026 $1,734,500
Current portion of long-term debt............................................ 4,160 2,934
Bank loans .................................................................. 4,612 18,097
Advance billings............................................................. 151,539 245,516
Accrued taxes on income...................................................... 66,409 41,756
Other accrued taxes.......................................................... 72,424 66,167
Other accrued liabilities.................................................... 477,753 380,407
Dividends payable............................................................ 16,153 13,067
---------- ----------
Total Current Liabilities.................................................... 2,863,076 2,502,444
---------- ----------
LONG-TERM DEBT ................................................................. 204,744 290,379
DEFERRED COMPENSATION AND OTHER LIABILITIES ..................................... 124,739 122,623
MINORITY INTERESTS .............................................................. 62,706 60,724
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,
86,288,507 and 79,842,976 shares issued in 1996 and 1995, respectively... 43,144 39,921
Additional paid-in capital................................................... 554,511 390,984
Retained earnings............................................................ 419,072 299,704
Unamortized restricted stock................................................. (39,445) (30,739)
Cumulative translation adjustment............................................ 3,490 (26,641)
Treasury stock, at cost, 5,859,936 and 5,184,814 shares in 1996 and
1995, respectively....................................................... (180,094) (121,722)
---------- ----------
Total Shareholders' Equity............................................... 800,678 551,507
---------- ----------
$4,055,943 $3,527,677
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
F-4
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Common Stock Additional Unamortized Cumulative Total
--------------------- Paid-in Retained Restricted Translation Treasury Shareholders'
Shares Par Value Capital Earnings Stock Adjustment Stock Equity
--------- --------- --------- -------- ----------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 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,
as previously reported.......... 79,842,976 39,921 390,984 299,704 (30,739) (26,641) (121,722) 551,507
Pooling of interests adjustment
related to acquisition of
Ketchum Communications
Holdings, Inc. .................. 1,206,853 604 5,685 436 6,725
---------- ------- -------- -------- -------- -------- --------- --------
Balance January 1, 1996,
as restated...................... 81,049,829 40,525 396,669 300,140 (30,739) (26,641) (121,722) 558,232
Net income.......................... 176,329 176,329
Dividends declared.................. (57,397) (57,397)
Amortization of restricted shares .. 13,895 13,895
Share transactions under employee
stock plans...................... 7,329 (22,601) 26,893 11,621
Shares issued for acquisitions ..... 9,382 17,808 27,190
Conversion of 4.5%/6.25% Step-Up
Debentures....................... 5,238,678 2,619 141,131 143,750
Cumulative translation adjustment .. 30,131 30,131
Repurchases of shares............... (103,073) (103,073)
---------- ------- -------- -------- -------- -------- --------- --------
Balance December 31, 1996........... 86,288,507 $43,144 $554,511 $419,072 $(39,445) $ 3,490 $(180,094) $800,678
========== ======= ======== ======== ======== ======== ========= ========
</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)
--------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income........................................................... $176,329 $ 139,955 $ 83,486
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of tangible assets................. 50,970 45,879 41,308
Amortization of intangible assets................................ 34,849 28,250 25,046
Minority interests............................................... 25,773 26,140 17,549
Earnings of affiliates in excess of dividends received........... (5,068) (5,682) (10,484)
(Increase) decrease in deferred tax benefits..................... (4,081) 2,400 (3,272)
Provision for losses on accounts receivable...................... 7,911 6,024 9,788
Amortization of restricted shares................................ 13,895 10,713 9,535
Decrease (increase) in accounts receivable....................... 31,511 (259,560) (139,194)
Increase in billable production.................................. (20,546) (22,442) (4,735)
Increase in other current assets................................. (21,132) (7,040) (27,166)
Increase in accounts payable..................................... 243,885 180,850 258,371
(Decrease) increase in other accrued liabilities................. (68,426) 107,087 77,476
Increase (decrease) in accrued taxes on income................... 20,718 (12,808) 17,752
Other............................................................ 7,437 (13,177) 4,703
-------- -------- --------
Net Cash Provided by Operating Activities ............................. 494,025 226,589 360,163
-------- -------- --------
Cash Flows From Investing Activities:
Capital expenditures................................................ (48,777) (49,568) (43,983)
Purchases of equity interests in subsidiaries
and affiliates, net of cash acquired............................. (178,861) (118,784) (150,660)
Sales of equity interests in subsidiaries and affiliates............ 52,861 15,278 499
Purchases of investments available-for-sale and
other investments................................................ (14,840) (14,200) (8,154)
Sales of investments available-for-sale and
other investments................................................ 25,775 21,496 24,165
-------- -------- --------
Net Cash Used in Investing Activities ................................. (163,842) (145,778) (178,133)
-------- -------- --------
Cash Flows From Financing Activities:
Net (repayments) borrowings under lines of credit................... (16,114) 6,883 (25,033)
Proceeds from issuances of debt obligations......................... 78,752 135,162 36,161
Repayment of principal of debt obligations.......................... (20,485) (67,718) (35,815)
Share transactions under employee stock plans....................... 11,621 5,681 7,911
Dividends and loans to minority stockholders........................ (24,154) (15,498) (8,062)
Dividends paid...................................................... (54,311) (45,935) (41,307)
Purchase of treasury shares........................................ (103,073) (34,654) (67,456)
-------- -------- --------
Net Cash Used in Financing Activities ................................ (127,764) (16,079) (133,601)
Effect of exchange rate changes on cash and cash
equivalents...................................................... (6,151) 7,470 13,244
-------- -------- --------
Net Increase in Cash and Cash Equivalents ............................. 196,268 72,202 61,673
Cash and Cash Equivalents at Beginning of Period ...................... 313,999 241,797 180,124
-------- -------- --------
Cash and Cash Equivalents at End of Period ............................ $510,267 $ 313,999 $ 241,797
======== ======== ========
Supplemental Disclosures:
Income taxes paid................................................... $112,155 $ 109,241 $ 46,034
======== ======== ========
Interest paid....................................................... $ 34,640 $ 36,482 $ 37,895
======== ======== ========
</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, public relations,
and interactive marketing are offered to clients. These services are offered 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.
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
include the operating 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 adjusted to
give retroactive effect to the split. In addition, certain prior year amounts
have been reclassified to conform with the 1996 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 $1.5 million, $0.4 million and $4.0 million are
included in 1996, 1995 and 1994 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,
1996, the 4.5%/6.25% Step-Up Convertible Subordinated Debentures were assumed to
be converted through September 5, 1996, when they were converted into common
stock. 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. The number of shares used
in the computations were as follows:
1996 1995 1994
---- ---- ----
Primary EPS computation ......... 77,071,300 74,375,300 70,764,800
Fully diluted EPS computation ... 80,747,400 79,913,100 79,925,700
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 lives 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
down 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 and to differences between the tax and book basis of
assets and liabilities recorded in connection with acquisitions.
Cash Flows. The Company's cash equivalents are primarily comprised of
investments in overnight interest-bearing deposits, commercial paper and money
market instruments with original maturity dates of three months or less.
The following supplemental schedule summarizes the fair value of non-cash
assets acquired, cash paid, common shares issued and the liabilities assumed in
conjunction with the acquisition of equity interests in subsidiaries and
affiliates, for each of the three years ended December 31:
(Dollars in thousands)
1996 1995 1994
---- ---- ----
Fair value of non-cash assets acquired $401,655 $129,425 $265,865
Cash paid, net of cash acquired (178,861) (118,784) (150,660)
Common shares issued (33,915) (3,668) (13,035)
-------- -------- --------
Liabilities assumed $188,879 $ 6,973 $102,170
======== ======== ========
During 1996, the Company issued 5,238,678 shares of common stock upon
conversion of $143,750,000 of its 4.5%/6.25% Step-Up Convertible Subordinated
Debentures. During 1994, the Company issued 7,142,466 shares of common stock
upon conversion of $100 million of its 6.5% 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 foreign 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 to risk; and (c) it must be highly probable that a change in fair
F-8
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 foreign
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 May 1996, the Company completed the acquisition of Ketchum
Communications Holdings, Inc. ("Ketchum"). The acquisition was accounted for as
a pooling-of-interests and accordingly, the results of operations of Ketchum
have been included in the consolidated financial statements since January 1,
1996. Prior year consolidated financial statements were not restated as the
impact on such years was not material. A total of 1,206,853 shares were issued
in connection with this acquisition.
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. Due to the aggregate
materiality of these acquisitions, the Company's financial statements were
restated to include the operating results of Ross Roy Communications and
Chiat/Day Holdings for all periods prior to the acquisition date. A total of
2,556,646 shares were issued in connection with these acquisitions.
During 1996, 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 $237.6 million for net assets, which included
intangible assets of $208.2 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 $78.7 million. Pro forma combined results of operations of
the Company as if these acquisitions had occurred on January 1, 1995 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, 1996.
Certain acquisitions entered into in 1996 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,
1996 and 1995 was 6.6% and 6.5%, respectively. At December 31, 1996 and 1995,
the Company had unsecured committed lines of credit aggregating $475 million and
$374 million, respectively. The unused portion of credit lines was $470 million
and $356 million at December 31, 1996 and 1995, respectively. The lines of
credit are generally extended at the banks' lending rates to their most credit
worthy borrowers. Material compensating balances are not required within the
terms of these credit agreements.
At December 31, 1995, the committed lines of credit included $250 million
under a three year revolving credit agreement expiring June 30, 1997. As of May
10, 1996, the $250 million revolving credit agreement was replaced by a $360
million revolving credit agreement expiring June 30, 2001. Due to the long term
F-9
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
nature of this credit agreement, borrowings under the agreement would be
classified as long term debt. There were no borrowings under these revolving
credit agreements at December 31, 1996 and 1995.
The revolving credit agreements include a facility for issuing commercial
paper backed by a bank letter of credit. During the years ended December 31,
1996, 1995 and 1994, the Company issued commercial paper with an average
original maturity of 26, 31 and 33 days, respectively. The Company had no
commercial paper borrowings outstanding as of December 31, 1996, 1995 and 1994.
The maximum outstanding during the year was $230 million, $210 million and $230
million, in 1996, 1995 and 1994, respectively. The gross amount of issuance and
redemption during the year was $1,710 million, $1,211 million and $1,587 million
in 1996, 1995 and 1994, 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 2,629,000 at December
31, 1996.
Stock Options. Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock Based Compensation," is effective for the Company's
fiscal year ended December 31, 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 method of accounting for
employee stock options and similar instruments. During the initial periods of
disclosure, the effects on net income may not be representative of the effects
in future years due to the transitional provisions included in SFAS No. 123.
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.
A summary of the status of the Company's stock option plan for the three
years ended December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------------------------------
1996 1995 1994
------------------------- --------------------------- ---------------------------
Weighted Weighted Weighted
Average Average Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
------ -------------- ------ -------------- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Shares under option,
beginning of year................ 2,962,400 $20.37 2,388,000 $17.50 2,144,800 $14.82
Options granted..................... 940,000 39.59 830,000 26.35 610,000 24.22
Options exercised................... (523,500) 16.53 (255,600) 12.91 (366,800) 13.01
-------- -------- --------
Shares under option,
end of year...................... 3,378,900 26.32 2,962,400 20.37 2,388,000 17.50
========= ========= =========
Options exercisable at
year-end......................... 1,613,900 1,507,400 1,267,500
</TABLE>
The weighted average fair value of options granted during 1996 and 1995
was $9.30 and $6.79 per option, respectively. The fair value of each option
grant has been estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions:
1996 1995
---- ----
Expected option lives.................... 5 years 5 years
Risk free interest rate.................. 5.64% - 5.99% 5.95% - 7.14%
Expected volatility...................... 18.8% - 19.5% 20.9% - 25.7%
Dividend yield........................... 1.7% 2.2%
F-10
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Using compensation cost for the Company's stock option plan, determined
based on the estimated fair value at the grant date for options granted in 1996
and 1995 consistent with the provisions of SFAS No. 123, the effect on the
Company's net income and income per share would have been as follows:
Dollars in Thousands
Except Per Share Data
----------------------
1996 1995
---- ----
Net income, as reported........................... $176,329 $139,955
Net income, pro forma............................. 172,849 138,570
Primary income per share, as reported............. 2.29 1.89
Primary income per share, pro forma............... 2.25 1.87
Fully diluted income per share, as reported....... 2.25 1.85
Fully diluted income per share, pro forma......... 2.21 1.83
The following table summarizes information about options outstanding and
options exercisable at December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------- -------------------------------
Weighted Average
Range Of Exercise Options Remaining Weighted Average Options Weighted Average
Prices (in dollars) Outstanding Contractual Life Exercise Price Exercisable Exercise Price
--------------- ------------ -------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
10.16 to 11.53 120,000 3 years $11.30 120,000 $11.30
11.63 to 11.75 192,000 4 years 11.67 192,000 11.67
11.75 145,000 5 years 11.75 145,000 11.75
17.53 234,000 6 years 17.53 234,000 17.53
20.03 414,900 7 years 20.03 414,900 20.03
24.22 542,000 8 years 24.22 298,000 24.22
25.88 to 32.41 791,000 9 years 26.37 210,000 26.43
39.44 to 42.38 940,000 10 years 39.59 -- --
-------- ---------
3,378,900 1,613,900
========= =========
</TABLE>
Restricted Shares. A summary of changes in outstanding shares of
restricted stock for the three years ended December 31, 1996 is as follows:
Years Ended December 31,
------------------------------------------
1996 1995 1994
---- ---- ----
Beginning balance ........... 1,647,000 1,564,164 1,480,872
Amount granted ............ 568,308 612,168 629,160
Amount vested ............. (515,112) (490,422) (461,206)
Amount forfeited .......... (42,438) (38,910) (84,662)
--------- --------- ---------
Ending balance .............. 1,657,758 1,647,000 1,564,164
========= ========= =========
All restricted shares granted under the 1987 Plan were sold at a price per
share equal to their par value. The difference between par value and market
value on the date of the sale is charged to shareholders' equity and then
amortized to expense over the period of restriction. Under the 1987 Plan, the
restricted shares become transferable to the employee in 20% annual increments
provided the employee remains in the employ of the Company.
Restricted shares may not be sold, transferred, pledged or otherwise
encumbered until the restrictions lapse. Under most circumstances, the employee
must resell the shares to the Company at par value if the employee ceases
employment prior to the end of the period of restriction.
The charge to operations in connection with these restricted stock awards
for the years ended December 31, 1996, 1995 and 1994 amounted to $13.9 million,
$10.7 million and $9.5 million, respectively.
F-11
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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, 1996, 1995 and 1994, and for the years then
ended is presented below:
<TABLE>
<CAPTION>
(Dollars in Thousands)
---------------------------------------------
United
States International Consolidated
------ ------------- ------------
<S> <C> <C> <C>
1996
Commissions and Fees........................... $1,384,424 $1,257,243 $2,641,667
Operating Profit .............................. 178,949 147,624 326,573
Net Income .................................... 95,195 81,134 176,329
Identifiable Assets............................ 1,661,877 2,394,066 4,055,943
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
</TABLE>
6. Investments in Affiliates
The Company has in excess of 65 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, 1996, 1995, 1994, and for the years then ended:
<TABLE>
<CAPTION>
(Dollars in Thousands)
------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current assets................................. $528,814 $1,399,700 $1,208,976
Non-current assets............................. 91,559 147,093 146,899
Current liabilities............................ 422,886 1,400,349 1,196,807
Non-current liabilities........................ 28,796 149,781 162,328
Minority interests............................. 2,134 8,015 9,699
Gross revenues................................. 525,404 702,639 568,171
Costs and expenses............................. 431,031 582,850 451,688
Net income..................................... 57,352 79,262 86,001
</TABLE>
The decrease in the summarized balance sheets and income statements of the
Company's unconsolidated affiliates in 1996 is due to the sale of the Company's
minority interest in Aegis Group plc, partially offset by the growth of the
Company's existing equity affiliates. The Company's equity in the net income of
these affiliates amounted to $20.5 million, $20.8 million and $18.3 million for
1996, 1995 and 1994, respectively. The Company's equity in the net tangible
assets of these affiliated companies was approximately $97.5 million, $76.7
F-12
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
million and $65.8 million at December 31, 1996, 1995 and 1994, 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 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, 1996 and 1995 consisted of
the following:
<TABLE>
<CAPTION>
(Dollars in Thousands)
1996 1995
---- ----
<S> <C> <C>
Deutsche Mark 200 million Floating Rate Bonds, with a scheduled
maturity in 2000, interest at DM three month LIBOR plus 0.65%........... $129,880 $139,220
Deutsche Mark 100 million Floating Rate Bonds, with a scheduled
maturity in 1999, interest at DM three month LIBOR plus 0.375%.......... 64,940 --
4.5%/6.25% Step-Up Convertible Subordinated Debentures with a
scheduled maturity in 2000.............................................. -- 143,750
Sundry notes and loans payable to banks and others at rates from
5.2% to 25%, maturing at various dates through 2004..................... 14,084 10,343
-------- --------
208,904 293,313
Less current portion....................................................... 4,160 2,934
-------- --------
Total long-term debt..................................................... $204,744 $290,379
======== ========
</TABLE>
On July 12, 1996, the Company issued a Notice of Redemption for its
4.5%/6.25% Step-Up Convertible Subordinated Debentures with a scheduled maturity
in 2000. Prior to the September 5, 1996 redemption date, the debenture holders
elected to convert all of their outstanding debentures into common stock of the
Company at a conversion price of $27.44 per common share.
On March 1, 1996, the Company issued Deutsche Mark 100 million Floating
Rate Bonds. 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.
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 $100
million 6.5% Convertible Subordinated Debentures with a scheduled maturity in
2004. Prior to the July 27, 1994 redemption date, the 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 May 10, 1996, the $250 million revolving credit agreement was replaced
by a $360 million revolving credit agreement. This $360 million revolving credit
agreement is with a consortium of banks and expires on June 30, 2001. This
credit agreement includes a facility for issuing commercial paper backed by a
bank letter of credit. The agreement contains certain financial covenants
regarding the ratio of total consolidated indebtedness to total consolidated
capitalization, the ratio of debt to cash flow, and a limitation on investments
in and loans to affiliates and unconsolidated subsidiaries. At December 31, 1996
the Company was in compliance with these covenants.
F-13
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Aggregate maturities of long-term debt in the next five years are as
follows:
(Dollars in Thousands)
1997............................................. $ 4,160
1998............................................. 5,363
1999............................................. 67,468
2000............................................. 130,595
2001............................................. 415
8. Income Taxes
Income before income taxes and the provision for taxes on income consisted
of the amounts shown below:
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in Thousands)
------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Income before income taxes:
Domestic..................................... $162,388 $107,536 $ 90,064
International................................ 142,843 135,117 98,850
-------- -------- --------
Totals..................................... $305,231 $242,653 $188,914
======== ======== ========
Provision for taxes on income:
Current:
Federal.................................... $ 49,394 $ 29,143 $ 31,500
State and local............................ 13,612 9,837 8,708
International.............................. 58,339 57,463 38,855
-------- -------- --------
121,345 96,443 79,063
-------- -------- --------
Deferred:
Federal.................................... 2,072 2,089 (5,167)
State and local............................ (120) (1,481) (1,285)
International.............................. 342 335 5,316
-------- -------- --------
2,294 943 (1,136)
-------- -------- --------
Totals..................................... $123,639 $ 97,386 $ 77,927
======== ======== ========
</TABLE>
The Company's effective income tax rate varied from the statutory federal
income tax rate as a result of the following factors:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<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............................ 2.9 2.2 2.6
International subsidiaries' tax rates (less than)
in excess of federal statutory rate................... (0.1) 0.1 0.2
Non-deductible amortization of goodwill................. 3.4 3.4 4.1
Other................................................... (0.7) (0.6) (0.7)
---- ---- ----
Effective rate.......................................... 40.5% 40.1% 41.2%
==== ==== ====
</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 and from differences between the tax and book basis of assets and
liabilites recorded in connection with acquisitions. Deferred tax liabilities
result principally from expenses which are currently deductible for tax
purposes, but have not yet been expensed in the financial statements.
F-14
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company has recorded deferred tax benefits as of December 31, 1996 and
1995 of $139.0 million and $125.1 million, respectively, related principally to
tax deductible intangibles, restricted stock amortization, severance and
compensation, leases and accrued expenses.
The Company has recorded deferred tax liabilities as of December 31, 1996
and 1995 of $38.5 million and $33.2 million, respectively, related principally
to furniture and equipment depreciation and tax lease recognition.
Deferred tax benefits (liabilities) as of December 31, 1996 and 1995
consisted of the amounts shown below (dollars in millions):
1996 1995
---- ----
Deductible intangibles......................... $ 46.5 $37.9
Acquisition liabilities........................ 15.9 16.1
Lease reserves................................. 8.4 8.3
Severance and compensation reserves............ 26.9 28.8
Tax loss carryforwards......................... 3.8 6.0
Amortization and depreciation.................. (2.9) (2.3)
Other, net..................................... 1.9 (2.9)
----- -----
$100.5 $91.9
====== =====
Net current deferred tax benefits as of December 31, 1996 and 1995 were
$20.7 million and $21.7 million, respectively, and were included in prepaid
expenses and other current assets. Net non-current deferred tax benefits as of
December 31, 1996 and 1995 were $79.8 million and $70.2 million, respectively.
The Company has concluded that it is probable that it will be able to realize
these net deferred tax benefits in future periods.
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. Expenses associated with these plans
amounted to $49.8 million, $41.7 million and $36.6 million in 1996, 1995 and
1994, 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 which undertake
legal obligations to provide specific benefits to the individuals covered.
Pension expense amounted to $4.6 million, $4.4 million and $0.8 million in 1996,
1995 and 1994, respectively.
Certain subsidiaries of the Company have executive retirement programs
under which benefits will be paid to participants or their beneficiaries over 15
years beginning at 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 1996, 1995 and 1994 consolidated results of operations.
F-15
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Commitments and Contingent Liabilities
At December 31, 1996, 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 $201.1
million in 1996, $169.1 million in 1995 and $152.6 million in 1994 after
reduction by rents received from subleases of $11.9 million, $11.1 million and
$10.2 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:
<TABLE>
<CAPTION>
(Dollars in Thousands)
Gross Rent Sublease Income Net Rent
---------- --------------- --------
<S> <C> <C> <C>
1997........................................... $165,530 10,065 155,465
1998........................................... 141,952 6,184 135,768
1999........................................... 119,477 5,372 114,105
2000........................................... 101,477 4,361 97,116
2001........................................... 94,189 3,675 90,514
Thereafter..................................... 482,391 9,255 473,136
</TABLE>
The present value of the gross future minimum base rents under
noncancellable operating leases is $792.3 million.
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 incidental 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, 1996 and 1995.
Amounts in parentheses represent liabilities.
<TABLE>
<CAPTION>
1996 1995
--------------------------- ---------------------------
(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 ... $523,108 $523,108 $335,473 $335,473
Long-term investments............... 5,946 5,946 7,520 7,520
Long-term debt...................... (208,904) (208,904) (293,313) (346,860)
Financial Commitments:
Interest rate swaps............... -- -- -- (378)
Forward foreign exchange
contracts....................... -- 206 -- (251)
Guarantees........................ -- (5,615) -- (7,688)
Letters of credit................. -- (8,730) -- (1,996)
</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.
F-16
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Long-term debt:
The majority of the Company's long-term debt is primarily floating rate
debt and consequently the carrying amount approximates fair value.
In 1995, the fair value of the Company's long-term debt included
convertible subordinated debentures. The fair value was determined by reference
to quotations available in markets where that issue was traded. These quotations
primarily reflected the conversion value of the debentures into the Company's
common stock. These debentures were redeemed by the Company during 1996 as
described in Note 7.
Financial Commitments:
The estimated fair value of derivative positions are based upon quotations
received from independent, third party banks and represent the net amount
required 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 20, 1997. The Audit Committee has reconfirmed,
for the year 1997, the overall dollar limitations originally established in
1993.
There were no swap agreements outstanding at December 31, 1996.
At December 31, 1995 the following swap agreements were outstanding:
<TABLE>
<CAPTION>
Original
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 related 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 converted a
portion of the Company's floating rate debt to a fixed rate. These swaps were
terminated during 1996 at a $23 thousand charge to income.
The Company enters into forward foreign 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, 1996 and 1995, the aggregate amount of intercompany receivables and
payables subject to this hedge program was $287 million and $306 million,
respectively. The table below summarizes by major currency the notional
principal amounts of the Company's forward foreign exchange contracts
outstanding at December 31, 1996 and 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.
F-17
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
(Dollars in Thousands)
Notional Principal Amount
-------------------------
1996 1995
-------------------------------- ---------------------------------
Currency Company Buys Company Sells Company Buys Company Sells
-------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
German Mark...................... $ 53,901 $ 97,901 $ 3,394 $ 39,063
French Franc..................... 35,436 602 75,472 43,283
Hong Kong Dollar................. -- 20,291 2,246 30,583
Dutch Guilder.................... 19,285 -- 8,463 3,292
U.S. Dollar...................... 14,191 401 6,228 43,770
Spanish Peseta................... 12,304 332 4,632 9,902
Belgium Franc.................... 10,764 65 9,583 81
Greek Drachma.................... -- 8,186 -- 5,120
Singapore Dollar................. 2,145 5,925 -- 2,302
Australian Dollar................ 4,787 -- 11,247 --
Other............................ 9,081 5,766 12,549 14,065
-------- -------- -------- --------
Total...................... $161,894 $139,469 $133,814 $191,461
======== ======== ======== ========
</TABLE>
The derivative financial instruments existing during December 31, 1996 and
1995 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
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, 1996, 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, 1996.
F-18
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share".
Under SFAS No. 128, the presentation of Primary and Fully Diluted Earnings Per
Share will be replaced by Basic and Diluted Earnings Per Share. Adoption of SFAS
No. 128 is required for periods ending after December 15, 1997, at which time
restatement for prior periods will be necessary. Had the provisions of SFAS No.
128 been in effect as of December 31, 1996, the Company would have reported the
following earnings per share information:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Income Per Share Before Change in Accounting Principle:
Basic............................................................ $2.33 $1.91 $ 1.59
Diluted.......................................................... $2.25 $1.86 $ 1.54
Cumulative Effect of Change in Accounting Principle Per Share:
Basic............................................................ $ -- $ -- $(0.40)
Diluted.......................................................... $ -- $ -- $(0.40)
Net Income Per Share:
Basic............................................................ $2.33 $1.91 $ 1.19
Diluted.......................................................... $2.25 $1.86 $ 1.18
</TABLE>
14. Subsequent Event
On January 3, 1997, the Company issued $218,500,000 of 41/4% Convertible
Subordinated Debentures with a scheduled maturity in 2007. The debentures are
convertible into common stock of the Company at a conversion price of $63.00 per
share subject to adjustment in certain events. Debenture holders have the right
to require the Company to redeem the debentures on January 3, 2003 at a price of
112.418%, or upon the occurrence of a Fundamental Change, as defined in the
indenture agreement, at the prevailing redemption price. The Company may redeem
the debentures, as a whole or in part, on or after December 29, 2000 initially
at 108.324% and at increasing prices thereafter to 112.418% until January 2,
2003 and 100% thereafter. Unless the debentures are redeemed, repaid or
converted prior thereto, the debentures will mature on January 3, 2007 at their
principal amount. The proceeds of this issuance are being used for general
corporate purposes including working capital.
F-19
<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, 1996 and 1995, in
thousands of dollars except for per share amounts. As discussed in the notes to
consolidated financial statements, information for the first quarter of 1996 has
been restated from the amounts originally reported as a result of the
acquisition of Ketchum Communications Holdings, Inc. during 1996 which was
accounted for under the pooling of interests method of accounting. Also,
information for the first and second quarters of 1995 has been restated from the
amounts originally reported as a result of certain acquisitions during 1995
which were accounted for under the pooling of interests method of accounting. In
addition, the first, second and third quarters of 1995 have been restated to
give retroactive effect to a two-for-one stock split completed on December 15,
1995.
<TABLE>
<CAPTION>
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
Commissions & Fees
1996.................................. $591,601 $666,465 $631,772 $751,829
1995.................................. 499,086 570,263 537,666 650,521
Income Before Income Taxes
1996.................................. 55,015 95,101 55,160 99,955
1995................................. 43,984 77,288 38,667 82,714
Income Taxes
1996.................................. 22,271 38,426 22,236 40,706
1995................................. 18,028 31,356 15,467 32,535
Income After Income Taxes
1996.................................. 32,744 56,675 32,924 59,249
1995.................................. 25,956 45,932 23,200 50,179
Equity in Affiliates
1996.................................. 3,053 4,023 3,509 9,925
1995.................................. 2,213 6,141 3,736 8,738
Minority Interests
1996.................................. (4,884) (7,745) (4,200) (8,944)
1995.................................. (2,984) (8,542) (3,258) (11,356)
Net Income
1996.................................. 30,913 52,953 32,233 60,230
1995................................. 25,185 43,531 23,678 47,561
Primary Earnings Per Share
1996.................................. 0.41 0.70 0.42 0.75
1995................................. 0.34 0.58 0.32 0.64
Fully Diluted Earnings Per Share
1996.................................. 0.41 0.68 0.42 0.75
1995.................................. 0.34 0.57 0.32 0.62
</TABLE>
F-20
<PAGE>
Schedule II
OMNICOM GROUP INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 31, 1996
<TABLE>
<CAPTION>
====================================================================================================================
Column A Column B Column C Column D Column E
- --------------------------------------------------------------------------------------------------------------------
Additions Deductions
------------ -----------------------------
Balance at Charged Removal of Balance
Beginning to Costs Uncollectible Translation at End of
Description of Period and Expenses Receivables(1) Adjustments Period
====================================================================================================================
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Valuation accounts deducted from
assets to which they apply-- allowance
for doubtful accounts:
December 31, 1996........................ $23,352 $7,911 $5,211 $410 $25,642
December 31, 1995........................ 23,528 6,024 6,964 (764) 23,352
December 31, 1994 (2).................... 19,986 9,788 6,852 (606) 23,528
</TABLE>
- ----------
(1) Net of acquisition date balances in allowance for doubtful accounts of
companies acquired of $985, $463 and $1,330 in 1996, 1995, and 1994,
respectively.
(2) Information for 1994 has been restated from the amounts originally reported
for certain acquisitions during 1995 which were accounted for under the
pooling of interests method of accounting.
S-1
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of December 27, 1996, between OMNICOM FINANCE
INC., a corporation duly organized and validly existing under the laws of the
State of Delaware ("OFI"), and OMNICOM FINANCE LIMITED, a corporation duly
organized and validly existing under the laws of England (the "OFL" and,
together with OFI, individually, a "Borrower" and, collectively, the
"Borrowers"); each of the lenders that is a signatory hereto (individually, a
"Bank" and, collectively, the "Banks"); ABN AMRO BANK N.V., NEW YORK BRANCH,
acting as the maker of Swingline Loans (the "Swingline Lender") and ABN AMRO
BANK N.V., NEW YORK BRANCH, as agent for the Banks (in such capacity, together
with its successors in such capacity, the "Administrative Agent").
The Borrowers, the Banks, the Swingline Lender and the Administrative Agent
are parties to a Credit Agreement dated as of May 10, 1996 (as heretofore
modified and supplemented and in effect on the date hereof, the "Credit
Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit (by making of loans and issuing letters of credit) to be
made by said Banks to the Company in an aggregate principal or face amount not
exceeding $360,000,000. The Company, the Banks, the Swingline Lender and the
Administrative Agent wish to amend the Credit Agreement in certain respects, and
accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this Amendment No.
1, terms defined in the Credit Agreement are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Section 4 below, but effective as of the date hereof, the
Credit Agreement shall be amended as follows:
2.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
2.02. Section 6.03 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"At the time of each Credit Event (other than a Credit Event the
proceeds of which are applied exclusively to the payment of Unpaid Drawings
incurred on the date of such Credit Event) and also after giving effect
thereto (i) there
Amendment No. 1
<PAGE>
- 2 -
shall exist no Default and (ii) all representations and warranties
contained herein or in the other Credit Documents (except, after the date
hereof, the third sentence of Section 6(e) of the Guaranty) shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, other than representations and warranties stated to be
correct as of a date certain which shall have been true and correct in all
material respects on such date certain."
2.03. Exhibit A-1 to the Credit Agreement is hereby amended to read in its
entirety as Exhibit A-1 hereto.
Section 3. Representations and Warranties. The Company represents and
warrants to the Banks that the representations and warranties set forth in
Section 7 of the Credit Agreement are true and complete on the date hereof as if
made on and as of the date hereof and as if each reference in said Section 7 to
"this Agreement" included reference to this Amendment No. 1.
Section 4. Conditions Precedent. As provided in Section 2 above, the
amendments to the Credit Agreement set forth in said Section 2 shall become
effective, as of the date hereof, when this Amendment No. 1 shall have been
executed and delivered by each of the parties hereto and the Guarantor shall
have consented hereto by signing at the place below indicated.
Section 5. Miscellaneous. Except as herein provided, the Credit Agreement
shall remain unchanged and in full force and effect. This Amendment No. 1 may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same amendatory instrument and any of the parties hereto
may execute this Amendment No. 1 by signing any such counterpart. This Amendment
No. 1 shall be governed by, and construed in accordance with, the law of the
State of New York.
Amendment No. 1
<PAGE>
- 3 -
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be duly executed and delivered as of the day and year first above written.
OMNICOM FINANCE INC.
By _________________________
Title:
OMNICOM FINANCE LIMITED
By _________________________
Title:
BANKS
THE CHASE MANHATTAN BANK
By__________________________
Title:
THE NORTHERN TRUST COMPANY
By__________________________
Title:
SOCIETE GENERALE
By__________________________
Title:
ABN AMRO BANK N.V., NEW YORK BRANCH
By__________________________
Title:
By__________________________
Title:
Amendment No. 1
<PAGE>
- 4 -
CITIBANK, N.A.
By__________________________
Title:
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By__________________________
Title:
By__________________________
Title:
MARINE MIDLAND BANK
By__________________________
Title:
BANK OF AMERICA NATIONAL TRUST AND
BANKING ASSOCIATION
By__________________________
Title:
THE FUJI BANK, LIMITED
By__________________________
Title:
MELLON BANK, N.A.
By__________________________
Title:
Amendment No. 1
<PAGE>
- 5 -
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH
By__________________________
Title:
By__________________________
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By__________________________
Title:
WESTPAC BANKING CORPORATION
By__________________________
Title:
ABN AMRO BANK N.V., NEW YORK
BRANCH, as Administrative Agent
By__________________________
Title:
Acknowledgment and Consent:
OMNICOM GROUP INC.
By_________________________
Name:
Amendment No. 1
<PAGE>
EXHIBIT A-1
NOTICE OF BORROWING
[Date]
ABN AMRO Bank N.V., New York Branch
as Administrative Agent for the Banks
party to the Credit
Agreement referred to below
500 Park Avenue
New York, New York 10022
Attention: __________________________
Ladies and Gentlemen:
The undersigned, [Omnicom Finance Inc.][Omnicom Finance Limited], refers to
the Credit Agreement dated as of May 10, 1996 (as amended from time to time, the
"Credit Agreement", the terms defined therein being used herein as therein
defined), among the Borrowers referred to therein (including the undersigned),
certain Banks party thereto and ABN AMRO Bank N.V., New York Branch, as maker of
Swingline Loans referred to therein, as Letter of Credit Issuer and as
Administrative Agent for such Banks and hereby gives you notice, irrevocably,
pursuant to Section 2.03 of the Credit Agreement, that the undersigned hereby
requests a Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.03 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ___________, 19_
(ii) The aggregate principal amount of the Proposed Borrowing is
$_________________.
(iii) The Proposed Borrowing is to consist of [Base Rate Loans] [Eurodollar
Rate Loans].
(iv) The Proposed Borrowing is to be of [Tranche A] [Tranche B] Loans.
1[(iv) The initial Interest Period for the Proposed Borrowing is ____
months.]
- ----------
1 To be included for a Proposed Borrowing of Eurodollar Rate Loans.
Amendment No. 1
<PAGE>
EXHIBIT A-1
Page 2
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:
[(A) The representations and warranties contained in Section 7 of the
Credit Agreement are correct, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds thereof, as
though made on and as of such date.]
[(B) No Default or Event of Default has occurred and is continuing, or
would result from such Proposed Borrowing or from the application of the
proceeds thereof.]
[(C) The proceeds of the Proposed Borrowing will be applied
exclusively to the payment of Unpaid Drawings incurred on the date of such
Proposed Borrowing.]
Very truly yours,
[OMNICOM FINANCE INC.][OMNICOM FINANCE
LIMITED]
By____________________
Title:
- ----------
Either clauses (A) and (B) or clause (C) must be included; provided, that clause
(B) must be included with clause (C) if the Proposed Borrowing is of a
Eurodollar Rate Loan.
Amendment No. 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Omnicom Group Inc................................ New York -- --
AGENCY.COM Ltd................................... New York Communicade Inc. 40%
Razorfish, Inc................................... New York Communicade Inc. 40%
Cline Davis & Mann, Inc.......................... New York Registrant 100%
Omnicom International Inc........................ Delaware Registrant 100%
Omnicom Management Inc........................... Delaware Registrant 100%
Omnicom Finance Inc.............................. Delaware Registrant 100%
Omnicom International Holdings Inc............... Delaware Registrant 100%
Communicade Inc.................................. Delaware Registrant 100%
C-D Acquisitions Inc............................. Delaware Registrant 100%
Strategic Alliance Services Inc.................. Delaware Registrant 100%
Organic Online, Inc.............................. Delaware Communicade Inc. 20%
Think New Ideas Inc.............................. Delaware Communicade Inc. 16%
Goodby, Silverstein & Partners Holdings Inc...... California Registrant 100%
Goodby, Silverstein & Partners Inc............... California Goodby, Silverstein & Partners Holdings Inc. 100%
Red Sky Interactive.............................. California Communicade Inc. 40%
Interactive Solutions, Inc....................... Massachusetts Communicade Inc. 40%
Case Dunlap...................................... Texas CD Acquisition Corporation 49%
Integer Group.................................... Texas CD Acquisition Corporation 85%
Omnicom Finance Ltd.............................. United Kingdom Diversified Agency Services Ltd. 100%
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%
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%
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 Perth Pty. Ltd......................... Australia Clemenger BBDO Ltd. 21%
Clemenger Tasmania Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47%
Clemenger Brisbane 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%
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%
Palla, Koblinger & Partner GmbH.................. Austria TEAM/BBDO Werbeagentur Ges.m.b.H 20%
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. 61%
N'Lil S.A........................................ Belgium BBDO Belgium S.A. 45%
Optimum Media Team S.A........................... Belgium BBDO Belgium S.A. 44%
DDB Needham Worldwide S.A. 46%
The Media Partnership............................ Belgium BBDO Belgium S.A. 22%
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
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. 70%
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%
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%
BBDO Chile, S.A.................................. Chile BBDO Worldwide Inc. 45%
BBDO/CNUAC Advertising Co. Ltd................... China BBDO Asia Pacific Ltd. 51%
Alberto H. Garnier, S.A.......................... Costa Rica BBDO Worldwide Inc. 20%
BBDO Zagreb...................................... Croatia BBDO Worldwide Inc. 60%
Impact/BBDO International Ltd.................... Cyprus BBDO Worldwide Inc. 44%
Impact/BBDO Group Partnership.................... Cyprus Impact/BBDO International Ltd. 44%
Impact/BBDO Advertising & Marketing Ltd. 1%
Impact/BBDO Advertising & Marketing Ltd.......... Cyprus Impact/BBDO International Ltd. 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%
SEPIA A/S........................................ Denmark BBDO Denmark A/S 19%
The Media Partnership A/S........................ Denmark BBDO Denmark A/S 14%
Impact/BBDO Ltd.................................. Egypt Impact/BBDO International Ltd. 40%
Apex Publicidad, S.A............................. El Salvador Garnier/BBDO 15%
Bookkeeper Investment OY......................... Finland BBDO Worldwide Europe GmbH 93%
La Compagnie/BBDO S.A............................ France BBDO Worldwide Europe GmbH 100%
The Media Partnership ........................... France La Compagnie/BBDO S.A. 17%
West End S.A..................................... France La Compagnie/BBDO S.A. 100%
Proximite S.A.................................... France La Compagnie/BBDO S.A. 76%
Realisation S.A.................................. France La Compagnie/BBDO S.A. 97%
Deslegan S.A..................................... France La Compagnie/BBDO S.A. 40%
Reflexions S.A................................... France La Compagnie/BBDO S.A. 100%
BLL Looping...................................... France La Compagnie/BBDO S.A. 25%
CLM/BBDO S.A..................................... France La Compagnie/BBDO 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 64%
Boebel, Adam Werbeagentur GmbH................... Germany BBDO GmbH 34%
Art & Production Advertising Services GmbH....... Germany BBDO GmbH 52%
Sponsor Partners GmbH............................ Germany BBDO GmbH 58%
Media Direction GmbH............................. Germany BBDO GmbH 57%
HM1 Ges. f. Direktmarketing and Werbelogistik GmbH Germany BBDO GmbH 52%
BBDO Dusseldorf GmbH............................. Germany BBDO GmbH 80%
Art & Production pre-press center GmbH........... Germany Art & Production Advertising Services GmbH 52%
Hildmann & Schneider Werbeagentur GmbH.......... Germany BBDO GmbH 80%
BBDO Dusseldorf GmbH Werbeagentur................ Germany BBDO GmbH 80%
SELL BY TEL Telefon und Direktmarketing GmbH..... Germany BBDO GmbH 48%
Claus Koch Corporate Communications GmbH......... Germany BBDO GmbH 30%
BBDO Media Team GmbH............................. Germany BBDO GmbH 57%
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
M.I.D GmbH....................................... Germany BBDO GmbH 40%
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%
Kofner & Partner Werbeagentur GmbH............... Germany BBDO GmbH 32%
Leonhardt & Kern Werbung GmbH.................... Germany BBDO GmbH 32%
Luders/BBDO Werbeagentur GmbH.................... Germany BBDO GmbH 39%
BBDO Dusseldorf GmbH Advertising................. Germany BBDO GmbH 80%
Leonhardt & Kern Alpha GmbH Werbeagentur......... Germany Leonhardt & Kern Werbung GmbH 20%
Leonhardt & Kern Beta GmbH Werbeagentur.......... Germany Leonhardt & Kern Werbung GmbH 24%
Leonhardt & Kern Gamma GmbH Werbeagentur......... Germany Leonhardt & Kern Werbung GmbH 24%
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 Germany Economia 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%
Viamedia* Medienagentur fur Radio & TV GmbH...... Germany K & K Kohtes & Klewes Kommunikation GmbH 35%
PURE Information 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%
K&K Kohtes & Klewes Kommunikation Hamburg 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 90%
Infomercial Direct S.A........................... Greece BBDO Advertising S.A. 90%
Team/Athens S.A.................................. Greece BBDO Advertising S.A. 64%
Sponsoring Business Ltd.......................... Greece BBDO Advertising S.A. 90%
Arrow II Advertising S.A......................... Greece BBDO Advertising S.A. 27%
SPO S.A.......................................... Greece BBDO Advertising S.A. 45%
The Media Corp S.A.............................. Greece BBDO Advertising S.A. 90%
The Media Partnership S.A. ...................... Greece BBDO Advertising S.A. 23%
Cinemax S.A...................................... Greece BBDO Advertising S.A. 90%
Media Direction/Hellas S.A....................... Greece BBDO Advertising S.A. 90%
BBDO Business Communications S.A................. Greece BBDO Advertising S.A. 68%
IKON S.A......................................... Greece BBDO Advertising S.A. 44%
Point Zero S.A................................... Greece BBDO Advertising S.A. 28%
B/P/R Ltd........................................ Greece BBDO Advertising S.A. 90%
Grafis S.A....................................... Greece BBDO Advertising S.A. 90%
Lamda Alpha S.A.................................. Greece BBDO Advertising S.A. 23%
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 .................................. Hungary BBDO Worldwide Europe GmbH 96%
The Media Partnership............................ Hungary Topreklam/BBDO 24%
Hungarian Promotional............................ Hungary Topreklam/BBDO 53%
RK Swamy/BBDO Advertising Ltd.................... India BBDO Asia Pacific Ltd. 20%
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Gitam/BBDO Ltd................................... Israel BBDO Worldwide Inc. 20%
BBDO Italy SpA................................... Italy BBDO Worldwide Inc. 100%
The Media Partnership SpA........................ Italy BBDO Italy SpA 25%
Strategies SAL................................... Lebanon Impact/BBDO SAL 10%
Impact/BBDO SAL.................................. Lebanon Impact/BBDO International Ltd. 22%
BBDO (Malaysia) Sdn Bhd.......................... Malaysia BBDO Asia Pacific Ltd. 100%
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%
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%
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%
Diversified Marketing Services 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%
Media Direction A/S.............................. Norway BBDO Oslo AS 48%
Schroder Production AS........................... Norway BBDO Oslo AS 48%
Garnier/BBDO .................................... Panama BBDO Worldwide Inc. 50%
BBDO Panama...................................... Panama Garnier/BBDO 26%
BBDO Peru S.A.................................... Peru BBDO Worldwide Inc. 51%
PAC/BBDO Worldwide Inc........................... Philippines BBDO Asia Pacific Ltd. 30%
BBDO Warsaw...................................... Poland BBDO Worldwide Inc. 100%
The Media Partnership Lda........................ Portugal BBDO Portugal Agencia de Publicidade, Lda. 24%
Media Direction.................................. Portugal BBDO Portugal Agencia de Publicidade, Lda. 95%
Tempo Media S.A.................................. Portugal BBDO Portugal Agencia de Publicidade, Lda. 38%
BBDO Portugal Agencia de Publicidade, Lda........ Portugal BBDO Worldwide Europe GmbH 95%
BBDO Puerto Rico Inc............................. Puerto Rico BBDO Worldwide Inc. 85%
Carlos Productions............................... Romania Graffiti/BBDO 13%
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%
Tiempo/BBDO Madrid S.A........................... Spain BBDO Espana S.A. 65%
The Media Partnership S.A........................ Spain BBDO Espana S.A. 23%
Contrapunto S.A.................................. Spain BBDO Espana S.A. 67%
Nucleo de Comunicacion........................... Spain Contrapunto 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........................... Spain Tiempo/BBDO Madrid S.A. 65%
DEC S.A. .................................. Spain Tiempo/BBDO S.A. 65%
Media Direction S.A.............................. Spain Tiempo/BBDO S.A. 77%
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
CyberLine AG (SELLBYTELL AG)..................... Switzerland SELL BY TEL Telefon und Direktmarketing GmbH 22%
Ehrenstrahle International A.B................... Sweden BBDO Worldwide Europe GmbH 76%
HLR/BBDO Reklambyra A.B.......................... Sweden BBDO Worldwide Europe GmbH 100%
Ehrenstrahle & Co. i Stockholm A.B............... Sweden Ehrenstrahle International A.B. 76%
HLR/Broadcast Filmproduction A.B................. Sweden HLR/BBDO Reklambyra A.B. 100%
Hird & Co. Annonsbyra A.B........................ Sweden HLR/BBDO Reklambyra A.B. 52%
Gester & Co. A.B................................. Sweden HLR/BBDO Reklambyra A.B. 25%
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. 27%
First City/BBDO Ltd.............................. United Kingdom Diversified Agency Services Ltd. 64%
BBDO Europe Ltd.................................. United Kingdom Prism International Ltd. 100%
BBDO/Venezuela C.A............................... Venezuela BBDO Worldwide Inc. 50%
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%
RPM Acquisition Inc.............................. Delaware The DDB Needham Worldwide Communications
Group Inc. 100%
Del Rivero Messianu Advertising.................. Florida RPM Acquisition Inc. 25%
DDB Needham Worldwide Partners Inc............... New York The DDB Needham Worldwide Communications
Group Inc. 100%
The DDB Needham Worldwide Communications Group Inc. New York Registrant 100%
Doyle Dane Bernbach de Mexico S.A. de C.V........ New York Registrant 100%
Griffin Bacal Inc................................ New York The DDB Needham Worldwide Communications
Group Inc. 100%
DDB Needham Dallas, Inc.......................... Texas The DDB Needham Worldwide Communications
Group Inc. 100%
Focus Agency Limited Partnership................. Texas The Focus Agency Inc. 66%
Rapp Collins Agency Group Inc. 33%
C-D Acquisitions Inc. 1%
PGC Advertising, Inc............................. Texas Registrant 100%
Elgin DDB 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%
Diversified Communications Group 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%
Carr Clark Rapp Collins Pty Ltd.................. Australia Diversified Communications Group Pty Ltd. 100%
Salesforce Victoria Pty Ltd...................... Australia Diversified Communications Group Pty Ltd. 100%
Doyle Dane Bernbach Pty.......................... Australia Registrant 100%
DDB Needham Heye & Partner GmbH.................. Austria DDB Needham Worldwide Partners Inc. 100%
DDB Needham Worldwide S.A. ...................... Belgium DDB Needham International Inc. 20%
The DDB Needham Worldwide Communications
Group Inc. 26%
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 Publicidade 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%
Zegers DDB S.A................................... Chile DDB Needham Worldwide Partners Inc. 40%
Beijing DDB Needham Advertising Co. Ltd.......... China DDB Needham Worldwide Ltd. 51%
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Guangzhou DDB Advertising Ltd.................... China DDB Needham (China) Investment Ltd. 80%
DDB Needham Worldwide Colombia Ltda.............. Colombia DDB Needham Worldwide Partners Inc. 80%
Adcom DDB Needham S.A............................ Costa Rica DDB Needham Worldwide Partners Inc. 60%
Futura DDB Croatia............................... Croatia DDB Needham S.C.E. 36%
DDB Needham Prague............................... Czech Republic DDB Needham Worldwide Partners Inc. 82%
The Media Partnership A/S........................ Denmark DDB Needham Denmark A/S 6%
Rapp & Collins DDBN A/S.......................... Denmark DDB Needham Denmark A/S 49%
E-Scape Interactive A/S.......................... Denmark DDB Needham Denmark A/S 60%
Rapp & Collins DDBN A/S 7%
Administration APS............................... Denmark DDB Needham Denmark A/S 8%
TBWA Reklamebureau A/S 7%
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 Worldwide Partners Inc. 70%
RCM/DDB.......................................... El Salvador Adcom/DDB Needham Centroamerica, S.A. 13%
Brand Sellers DDB Estonia A.S.................... Estonia DDB Worldwide Helsinki Oy 58%
Brand Sellers DDB OY............................. Finland DDB Worldwide Helsinki Oy 67%
DDB Worldwide Helsinki Oy........................ Finland DDB Needham Worldwide Partners Inc. 67%
Datum Optimum Media Oy........................... Finland DDB Worldwide Helsinki Oy 36%
Diritto Rapp & Collins Oy........................ Finland DDB Worldwide Helsinki Oy 54%
Motamo S.A....................................... France DDB & Co. S.A. 41%
DDB Cybertime SARL............................... France DDB Communication France S.A. 79%
DDB Lille S.A.................................... France DDB Communication France S.A. 48%
DDB The Way S.A.................................. France DDB Communication France S.A. 63%
DDB Atlantique S.A............................... France DDB Communication France S.A. 74%
TMPF S.A......................................... France Optimum Media Direction S.A. 15%
La Marque Media SNC.............................. France Optimum Media Direction S.A. 89%
TMPR S.A......................................... France TMPF S.A. 12%
Optimum Media SNC................................ France Optimum Media Direction S.A. 89%
Optimum Media Direction S.A...................... France DDB Communication France S.A. 39%
La Compagnie/BBDO S.A. 50%
Media Direction SNC.............................. France Optimum Media Direction S.A. 89%
Productions 32 SNC............................... France DDB Communication France S.A. 52%
SDMS S.A. 17%
DDB & Co S.A..................................... France DDB Communication France S.A. 51%
MODA S.A......................................... France DDB Communication France S.A. 79%
Directing/Rapp & Collins S.A..................... France DDB Communication France S.A. 55%
DDB Trade SNC.................................... France DDB Communication France S.A. 79%
Marketic Conseil S.A............................. France DDB Communication France S.A. 44%
Piment S.A....................................... France DDB Communication France S.A. 49%
Providence SNC................................... France MODA S.A. 79%
SFV-Perre Contact S.A............................ France SDMS S.A. 17%
DDB Communication France S.A. 52%
DDB Communication France S.A..................... France Registrant 79%
Publiteam S.A.................................... France SDMS S.A. 40%
Louis XIV S.A.................................... France DDB Communication France S.A. 40%
OP & A S.A....................................... France DDB Communication France S.A. 40%
SDMS S.A......................................... France DDB Communication France S.A. 49%
Printer SNC...................................... France DDB Communication France S.A. 40%
SDMS S.A. 24%
Boxa Nova SNC.................................... France SDMS S.A. 24%
DDB Communication France S.A. 40%
Groupe 32 SNC.................................... France Productions 32 SNC 35%
SFV-Perre Contact S.A. 13%
Printer SNC 19%
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Rapp & Collins SNC............................... France Directing/Rapp & Collins S.A. 27%
Piment S.A. 24%
DDB CIE SNC...................................... France DDB Communication France S.A. 78%
DDB SNC.......................................... France DDB Communication France S.A. 79%
Hoffmann, Reiser, Schalt Frankfurt............... Germany Communication Management GmbH Dusseldorf 48%
Optimum Sponsoring Dusseldorf.................... Germany Jaschke Optimum Media Dusseldorf 26%
Optimum Media.................................... Germany Communication Management GmbH Dusseldorf 99%
Production 32 Dusseldorf......................... Germany Communication Management GmbH Dusseldorf 99%
Jahns, Rapp & Collins Dusseldorf................. Germany Communication Management GmbH Dusseldorf 50%
Heye & Partner GmbH 18%
Hering, Selby & Co. Hamburg...................... Germany Communication Management GmbH Dusseldorf 30%
Wensauer & Partner Ludwigsburg................... Germany Communication Management GmbH Dusseldorf 10%
Screen GmbH...................................... Germany Communication Management GmbH Dusseldorf 99%
InterScreen GmbH................................. Germany Screen GmbH 49%
The Media Partnership GmbH....................... Germany Communication Management GmbH Dusseldorf 25%
DDB Needham Beteiligungsgesellschaft GmbH........ Germany Communication Management GmbH Dusseldorf 82%
DDB Needham GmbH Dusseldorf...................... Germany Communication Management GmbH Dusseldorf 99%
Fritsch Heine Rapp & Collins GmbH................ Germany Communication Management GmbH Dusseldorf 85%
Heye & Partner GmbH.............................. Germany DDB Needham Worldwide Partners Inc. 45%
Heye Management Service GmbH..................... Germany Heye & Partner GmbH 23%
Print, Munchen GmbH.............................. Germany Heye & Partner GmbH 45%
Communication Management GmbH Dusseldorf......... Germany Registrant 99%
Optimum Media Direction Germany GmbH............. Germany Heye & Partner GmbH 23%
BBDO GmbH 40%
DDBN GmbH (Frankfurt)............................ Germany DDB Needham Beteiligungsgesellschaft GmbH 82%
Olympic DDB Needham S.A.......................... Greece DDB Needham Worldwide Partners Inc. 63%
Tempo Hellas S.A................................. Greece Olympic DDB Needham S.A. 45%
TBWA/Producta S.A. 15%
Rapp Collins Hellas 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%
Leon & Partners.................................. Greece Olympic DDB Needham S.A. 25%
Publinac/DDB Needham Guatemala [C.A.]............ Guatemala Adcom/DDB Needham Centroamerica, S.A. 11%
Adcom/DDB Needham ............................... Honduras Adcom/DDB Needham Centroamerica, S.A. 25%
Bentley Communications Ltd....................... Hong Kong DDB Needham Asia Pacific Ltd. 33%
Diversified Agency Services Ltd. 35%
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 DDB Needham Asia Pacific Ltd. 28%
Diversified Agency Services Ltd. 30%
DDB Needham Asia Pacific Ltd..................... Hong Kong DDB Needham Worldwide Partners Inc. 100%
DDB Needham (China) Investment Ltd............... Hong Kong DDB Needham Asia Pacific Ltd. 100%
DDB Needham Advertising Co. (Budapest)........... Hungary DDB Needham Heye & Partner GmbH 40%
DDB Needham Worldwide Partners Inc. 40%
Lexington Bt.................................... Hungary DDB Needham Advertising Co. (Budapest) 40%
Madison Bt. 33%
Madison Bt....................................... Hungary DDB Needham Advertising Co. (Budapest) 66%
MUDRA Communications Ltd....................... India The DDB Needham Worldwide Communications
Group Inc 10%
Verba DDB Needham S.R.L.......................... Italy DDB Needham Worldwide Partners Inc. 85%
Optimum Media Direction.......................... 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%
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Rapp Collins S.R.L............................... Italy Verba DDB Needham S.R.L. 68%
DDB Needham Japan Inc............................ Japan The DDB Needham Worldwide Communications
Group Inc. 100%
DDB Needham DIK Korea............................ Korea DDB Needham Worldwide Partners Inc. 25%
Brand Sellers DDB Baltic......................... Latvia DDB Worldwide Helsinki Oy 44%
Naga DDB SDN BHD................................. Malaysia DDB Needham Asia Pacific Ltd. 30%
DDB Needham Worldwide S.A. de C.V................ Mexico Registrant 100%
Result DDB....................................... Netherlands DDB Needham Worldwide Partners Inc. 90%
Capital Advice B.V............................... Netherlands Result DDB 90%
Rapp and Collins B.V............................. Netherlands Result DDB 90%
DDB Needham Holding B.V.......................... Netherlands DDB Needham Worldwide Partners Inc. 100%
The Media Partnership............................ Netherlands Result DDB 17%
Tom Tom B.V...................................... Netherlands Result DDB 68%
DDB Needham New Zealand Ltd...................... New Zealand DDB Needham Worldwide Ltd. 60%
DDB Needham Worldwide Ltd........................ New Zealand DDB Needham Worldwide Pty. Ltd.
(Australia) 100%
New Deal DDB Needham A/S......................... Norway DDB Needham Holding B.V. 2%
DDB Needham Worldwide Partners Inc. 49%
Optimum Media A/S................................ Norway New Deal DDB Needham A/S 46%
Big Deal Film A/S................................ Norway New Deal DDB Needham A/S 51%
Real Deal DDB A/S................................ Norway New Deal DDB Needham A/S 26%
HMP DDB Needham A/S.............................. Norway New Deal DDB Needham A/S 26%
Macaroni A/S..................................... Norway New Deal DDB Needham A/S 20%
HMP DDB Needham A/S 3%
Pro Deal A/S..................................... Norway New Deal DDB Needham A/S 51%
KS Reklameformidling............................. Norway New Deal DDB Needham A/S 3%
Adcom/DDB Needham Centroamerica, S.A............. Panama DDB Needham Worldwide Partners Inc. 50%
Adcom/DDB Needham Panama S.A..................... Panama Adcom/DDB Needham Centroamerica, S.A. 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 Meios, Publicidade S.A.... Portugal DDB Needham Worldwide & Guerreiro
Publicidade S.A. 28%
The Media Partnership............................ Portugal DDB Needham Worldwide & Guerreiro
Publicidade S.A. 18%
DDB Needham Worldwide & Guerreiro Publicidade S.A. Portugal Registrant 70%
Olympic DDB Romania SRL.......................... Romania DDB Needham S.C.E. 63%
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, S.A.................................. Spain The DDB Needham Worldwide Communications
Group Inc. 7%
Registrant 79%
Tandem Campmany Guasch DDB, S.A.................. Spain Registrant 2%
Tandem DDB, S.A. 84%
Optimum Media S.A................................ Spain Tandem Campmany Guasch DDB, S.A. 86%
Instrumens/Rapp & Collins S.A.................... Spain Tandem DDB, S.A. 86%
Screen SA (Barcelona)............................ Spain Screen GmbH 99%
A Toda Copia S.A................................. Spain Tandem DDB, S.A. 86%
The Media Partnership S.A........................ Spain Tandem DDB, S.A. 19%
Paradiset DDB Needham A.B........................ Sweden DDB Needham Worldwide Sweden A.B. 51%
DDB Needham Worldwide Sweden A.B................. Sweden DDB Needham Worldwide Partners Inc. 100%
Seiler DDB AG.................................... Switzerland DDB Needham Holding AG 30%
DDB Needham Holding AG........................... Switzerland Registrant 100%
DDB Needham Worldwide Inc........................ Taiwan DDB Needham Asia Pacific Ltd. 90%
Spaulding & Hawi DDB Advertising Co., Ltd........ Thailand The DDB Needham Worldwide Communications
Group Inc. 100%
Medina/Turgul DDB................................ Turkey DDB Needham Worldwide Partners Inc. 30%
BMP DDB Ltd...................................... United Kingdom Omnicom UK Ltd. 100%
Billco Ltd....................................... United Kingdom BMP DDB Ltd. 100%
Online Magic Ltd................................. United Kingdom BMP DDB Ltd. 50%
</TABLE>
S-9
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Optimum Media Direction Ltd...................... United Kingdom BMP DDB Ltd. 100%
Outdoor Connection Ltd........................... United Kingdom BMP DDB Ltd. 33%
Griffin Bacal Limited............................ United Kingdom Prism International Ltd. 100%
Target DDB Publicidad C.A........................ 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%
Team South....................................... Delaware Rapp Collins Worldwide Holdings Inc. 100%
Quantum Plus Corp................................ Delaware Rapp Collins Worldwide Holdings Inc. 100%
Clark & Weinstock Inc............................ Delaware Registrant 100%
Ketchum International, Inc....................... Delaware Ketchum Communications Holdings, InC. 100%
Creative Media L.L.C............................. Delaware Premier Magazines Inc. 99%
Goodby, Silverstein & Partners Holding Inc. 1%
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%
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%
Zintzmeyer & Lux (NA) Inc........................ Delaware Interbrand Zintzmeyer & Lux A.G. 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%
The Rodd Group Inc............................... New York Registrant 25%
Gerstman + Meyers Inc............................ New York Interbrand Schechter Inc. 100%
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 Public Relations, Inc.............. New York Registrant 100%
Rapp & Collins USA Inc........................... New York Registrant 100%
Gavin Anderson & Company (Japan), Inc............ New York Registrant 100%
Ketchum Communications, Inc...................... Pennsylvania Ketchum Communications Holdings, Inc. 100%
Ketchum Communications Holdings, Inc............. Pennsylvania Registrant 100%
GMR Group Inc.................................... Pennsylvania Registrant 47%
TLP, Inc......................................... Texas Registrant 100%
MDI S.A.......................................... Argentina Registrant 25%
</TABLE>
S-10
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Gavin Anderson & Company Pty Ltd................. Australia Gavin Anderson & Company Worldwide Inc. 100%
Canberra Liaison................................. Australia Gavin Anderson & Company Pty Ltd. 40%
PPD Sales Services GmbH.......................... Austria PPD Sales Services GmbH 84%
GPC Market Access Europe S.A..................... Belgium GPC Market Access Group Ltd. 36%
GPC Connect Ltd. 49%
KPR S.A.......................................... Belgium Kallir, Philips, Ross, Inc. 26%
CPM Belgium S.A.................................. Belgium Promotess Holdings S.A. 100%
Promotess Holdings S.A........................... Belgium Diversified Agency Services Ltd. 100%
Rapp Collins Brazil.............................. Brazil Registrant 70%
Langdon Starr Inc................................ Canada Omnicom Canada Inc. 20%
GPC International Holdings Inc................... Canada Registrant 20%
Pathways Marketing Consultants (Shanghai) Co. Ltd. China Registrant 50%
Rapp Collins Centro America SA................... Costa Rica Rapp Collins Worldwide Limited Partnership 50%
PPD Marketing Services Spol.sr.o................. Czech Republic PPD Sales Services GmbH 43%
PPD Marketing Services GmbH 41%
S.C.H. Consultants S.A........................... France GPC Market Access Group Ltd. 38%
Gavin Anderson & Company (France) S.A............ France Gavin Anderson & Company Worldwide Inc. 90%
The Media Partnership Europe S.A................. France Omnicom UK Ltd. 48%
Product Plus (France) S.A........................ France Product Plus International Ltd. 83%
Ketchum Advertising France....................... France Ketchum International, Inc. 49%
KPRW Paris....................................... France Ketchum International, Inc. 60%
AZ Promotion - Moridis S.A....................... France Omnicom UK Ltd. 40%
Gavin Anderson & Company Worldwide GmbH.......... Germany BBDO Worldwide Europe GmbH 92%
TARGIS Agentur fur Kommunikation GmbH............ Germany Diversified Agency Services Ltd. 51%
KPRW Munich GmbH................................. Germany Ketchum International, Inc. 100%
Ketchum Advertising GmbH......................... Germany Ketchum International, Inc. 65%
Advantage GmbH................................... Germany Doremus & Company 35%
Zintzmeyer & Lux GmbH............................ Germany Interbrand Zintermeyer & Lux A.G. 100%
Diversified Agency Services GmbH................. Germany Registrant 98%
Diversified Agency Services Ltd. 2%
CPM International GmbH........................... Germany Diversified Agency Services GmbH 98%
CPM International Ltd. 2%
PPD Verwaltungs-GmbH............................. Germany Diversified Agency Services GmbH 100%
PPD Sales Services GmbH.......................... Germany CPM International GmbH 4%
PPD Verwaltungs-GmbH 80%
PPD Marketing Services GmbH...................... Germany CPM International GmbH 4%
PPD Verwaltungs-GmbH 80%
CCS Handelsservice GmbH.......................... Germany PPD Sales Services GmbH 33%
Gavin Anderson & Company (H.K.) Ltd.............. 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%
Diversified Agency Services Ltd.................. Hong Kong DDB Needham Asia Pacific Ltd. 100%
Rapp Collins Worldwide (Hong Kong) Ltd........... Hong Kong Diversified Agency Services Ltd. 80%
PPD Marketing Services Szolgaltata kft........... Hungary PPD Sales Services GmbH 42%
PPD Marketing Services GmbH 42%
CCS Magyat Kft................................... Hungary PPD Sales Services GmbH 84%
Counter Products Marketing (Ireland) Ltd......... Ireland CPM International Ltd. 100%
Interbrand Italia Srl............................ Italy Omnicom UK Ltd. 25%
Inventa Srl...................................... Italy Interbrand Italia Srl 15%
Omnicom UK Ltd. 10%
CPM Italia Srl................................... Italy Interbrand Italia Srl 25%
KPRW Milan....................................... Italy Ketchum International, Inc. 41%
PRAP Japan....................................... Japan Ketchum International, Inc. 15%
Kabushiki Kaisha Interbrand Japan................ Japan Interbrand Group plc 74%
Interbrand International Holdings (I.I.H.) BV 26%
</TABLE>
S-11
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Interbrand Korea Inc............................. Korea Interbrand Group plc 100%
Ketchum Mexico S.A. de C.B....................... Mexico Ketchum International, Inc. 100%
Rapp Collins Marcoa Mexico S.A. de C.V........... Mexico Rapp Collins Worldwide Limited Partnership 100%
CPM Nederland Field Marketing B.V................ Netherlands CPM Belgium S.A. 100%
Interbrand International Holdings (I.I.H.) BV.... Netherlands Interbrand Group plc. 100%
PPD Marketing Services Sp.z.o.o.................. Poland PPD Sales Services GmbH 43%
PPD Marketing Services GmbH 41%
GPC Market Access Scotland Ltd................... Scotland GPC Market Access Group Ltd. 85%
Gavin Anderson & Company (Singapore) Pte. Ltd.... Singapore Gavin Anderson & Company Inc. 60%
Interbrand Design Counsel Pte. Ltd............... Singapore Registrant 40%
PPD Marketing Services Spol.sr.o................. Slovak Republic PPD Sales Services GmbH 43%
PPD Marketing Services GmbH 41%
Adding Cognis SL................................. Spain Diversified Agency Services Ltd. 40%
Product Plus Iberica SA.......................... Spain Product Plus International Ltd. 83%
Marketing Aplicado SA............................ Spain Omnicom UK Ltd. 40%
Ecosens AG....................................... Switzerland Interbrand Zintzmeyer & Lux A.G. 40%
Ketchum Public Relations plc..................... United Kingdom Diversified Agency Services Ltd. 100%
GPC Connect Ltd.................................. United Kingdom GPC Market Access Group Ltd. 85%
Affinity Consulting Ltd.......................... United Kingdom Countrywide Porter Novelli Ltd. 41%
Vandisplay Ltd................................... United Kingdom CPM International Ltd. 100%
CPM Field Marketing Ltd.......................... United Kingdom Davidson Pearce Group Ltd. 100%
Alcone/ Europe Ltd............................... United Kingdom Davidson Pearce Group Ltd. 100%
Product Plus International Ltd................... United Kingdom Davidson Pearce Group Ltd. 83%
Countrywide Porter Novelli Ltd................... United Kingdom Diversified Agency Services Ltd. 100%
DAS Financial Services Ltd....................... United Kingdom Diversified Agency Services Ltd. 75%
BBDO Canada Inc. 25%
Medi Cine International plc...................... United Kingdom Diversified Agency Services Ltd. 100%
WWAV Rapp Collins Group Ltd...................... United Kingdom Diversified Agency Services Ltd. 100%
Gavin Anderson (UK) Ltd.......................... United Kingdom Diversified Agency Services Ltd. 100%
GPC Market Access Group Ltd...................... United Kingdom Diversified Agency Services Ltd. 85%
Doremus & Company Ltd............................ United Kingdom Diversified Agency Services Ltd. 100%
Prism International Ltd.......................... United Kingdom Diversified Agency Services Ltd. 100%
Omnicom UK Ltd................................... United Kingdom Diversified Agency Services Ltd. 100%
Market Access Ltd................................ United Kingdom GPC Market Access Group Ltd. 85%
Interbrand UK Ltd................................ United Kingdom Interbrand Group plc. 100%
Smythe Dorward Lambert Ltd....................... United Kingdom Omnicom UK Ltd. 100%
Scope Ketchum Communications Group Ltd........... United Kingdom Omnicom UK Ltd. 100%
Perception Design Ltd............................ United Kingdom Scope Ketchum Communications Group Ltd. 51%
Omnicom UK Ltd. 49%
Scope Ketchum Communications Ltd................. United Kingdom Scope Ketchum Communications Group Ltd. 85%
Omnicom UK Ltd. 15%
Scope Ketchum Sponsorship Ltd.................... United Kingdom Scope Ketchum Communications Group Ltd. 85%
Omnicom UK Ltd. 15%
Scope Public Affairs Ltd......................... United Kingdom Scope Ketchum Communications Group Ltd. 50%
Omnicom UK Ltd. 50%
Markforce Associates Ltd......................... United Kingdom Interbrand Group plc. 100%
Interbrand Group plc............................. United Kingdom Omnicom UK Ltd. 100%
Granby Marketing Services Ltd.................... United Kingdom Omnicom UK Ltd. 100%
CPM International Ltd............................ United Kingdom Omnicom UK Ltd. 100%
Davidson Pearce Group Ltd........................ United Kingdom Omnicom UK Ltd. 100%
Specialist Publications (UK) Ltd................. United Kingdom Omnicom UK Ltd. 100%
Interbrand Zintermeyer & Lux A.G................. United Kingdom Omnicom UK Ltd. 100%
The Anvil Consultancy Ltd........................ United Kingdom Omnicom UK Ltd. 100%
Premier Magazines Ltd............................ United Kingdom Omnicom UK Ltd. 75%
</TABLE>
S-12
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Colour Solutions Ltd............................. United Kingdom Omnicom UK Ltd. 100%
Solutions in Media Ltd........................... United Kingdom Omnicom UK Ltd. 100%
Paling Walters Targis Ltd........................ United Kingdom Omnicom UK Ltd. 100%
A Plus Group Ltd................................. United Kingdom Omnicom UK Ltd. 20%
Porter Novelli Ltd............................... United Kingdom Omnicom UK Ltd. 100%
Macmillan Davies Hodes Advertising Ltd........... United Kingdom Prism International Ltd. 100%
Macmillan Davies Hodes Consultants Ltd........... United Kingdom Prism International Ltd. 100%
Diversified Agency Services Ltd.................. United Kingdom Registrant 100%
The Computing Group Ltd.......................... United Kingdom WWAV Rapp Collins Group Ltd. 100%
Data Warehouse Ltd............................... United Kingdom WWAV Rapp Collins Group Ltd. 50%
WWAV Rapp Collins Ltd............................ United Kingdom WWAV Rapp Collins Group Ltd. 100%
WWAV Rapp Collins North Ltd...................... United Kingdom WWAV Rapp Collins Group Ltd. 100%
HLB Ltd.......................................... United Kingdom WWAV Rapp Collins Group Ltd. 100%
WWAV Rapp Collins Scotland Ltd................... United Kingdom WWAV Rapp Collins Group Ltd. 100%
Clark McKay Buckingham Ltd....................... United Kingdom WWAV Rapp Collins Group Ltd. 25%
BMP DDB Limited 25%
Financial Database Marketing Ltd................. United Kingdom WWAV Rapp Collins North Ltd. 14%
TBWA Chiat/Day Inc............................... Delaware TBWA International B.V. 10%
Registrant 90%
The Chop Shop Editorial, Inc..................... Delaware TBWA Chiat/Day Inc. 100%
Grand Central Partners L.P....................... Missouri TBWA Chiat/Day Inc. 23%
TBWA Chiat/Day Inc. St. Louis.................... Missouri TBWA Chiat/Day Inc. 100%
TBWA Chiat/Day GBD Holdings, Inc................. New York TBWA Chiat/Day Inc. 100%
GBB Advertising Co............................... New York TBWA Chiat/Day GBD Holdings, Inc. 51%
Savaglio TBWA y Associados S.A................... Argentina Registrant 20%
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%
Illuco S.A. (Brussels)........................... Belgium TBWA S.A. (Brussels) 100%
Concept+......................................... Belgium TBWA International B.V. 61%
Eurospace S.A.................................... Belgium TBWA S.A. (Brussels) 100%
TBWA Brazil...................................... Brazil Omnicom International Holdings Inc. 100%
TBWA Graciotti Schonburg Navarro LTDA............ Brazil Registrant 51%
Stringer Veroni Ketchum.......................... Canada Omnicom Canada Inc. 67%
Ketchum International, Inc. 33%
Frederick y Valenzuela TBWA Disenadores Asociados S.A. Chile Registrant 30%
TBWA Reklamebureau A/S........................... Denmark Registrant 62%
Eliasson & Jesting/TBWA Dialog................... Denmark TBWA Reklamebureau A/S 51%
TBWA S.A.(Paris)................................. France TBWA International B.V. 75%
TBWA (Deutschland) Holding GmbH (Frankfurt)...... Germany TBWA International B.V. 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%
TBWA/Producta S.A................................ Greece Registrant 51%
TBWA Lee Davis Advertising Ltd................... Hong Kong Registrant 51%
Fokusz TBWA Marketingkommunikacio KFT............ Hungary TBWA International B.V. 30%
TBWA Italia SpA (Milan).......................... Italy TBWA International B.V. 100%
Teran TBWA Publicidad............................ Mexico Registrant 30%
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%
Direct Company B.V............................... Netherlands Dresme Van Dijk Partners 100%
TBWA/ H Nethwork B.V. ........................... Netherlands TBWA International B.V. 50%
TISSA Holding B.V................................ Netherlands TBWA International B.V. 100%
</TABLE>
S-13
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
TBWA Reclame & Marketing......................... Netherlands TBWA International B.V. 100%
TBWA Reklamebyra AS.............................. Norway TBWA International B.V. 34%
TBWA Warsawa SP.Z.O.O............................ Poland Registrant 41%
EPG-TBWA Publicidade Ltd......................... Portugal Registrant 65%
TBWA Fong Haque and Soh Pte Ltd.................. Singapore Registrant 70%
Hunt Lascaris TBWA Holdings (Pty) Limited........ South Africa TBWA International B.V. 20%
Registrant 55%
Hunt Lascaris TBWA Johannesberg (Pty) Limited.... South Africa Hunt Lascaris TBWA Holdings (Pty) Limited 75%
Hunt Lascaris TBWA FMC (Pty) Limited............. South Africa Hunt Lascaris TBWA Holdings (Pty) Limited 75%
Hunt Lascaris TBWA (Durban) (Pty) Limited........ South Africa Hunt Lascaris TBWA Holdings (Pty) Limited 60%
Paroden Inv Holdings (Pty) Limited............... South Africa TBWA International B.V. 100%
Hunt Lascaris TBWA Cape (Pty) Limited............ South Africa Hunt Lascaris TBWA Holdings (Pty) Limited 64%
Schalit Shipley Nethwork......................... South Africa Registrant 20%
TBWA/ H Nethwork B.V. 10%
Paroden Inv Holdings (Pty) Limited 40%
Rapp Collins S.A................................. South Africa Registrant 80%
South Africa Advertising Investments (Pty) Limited South Africa Registrant 60%
DDB Needham South Africa (Pty) Limited........... South Africa South Africa Advertising Investments
(Pty) Limited 41%
Eurospace Africa (Proprietary) Limited........... South Africa Registrant 51%
The White House.................................. South Africa DDB Needham South Africa (Pty) Limited 41%
TBWA Espana S.A.................................. Spain TBWA International B.V. 95%
TBWA Sweden A.B.................................. Sweden Registrant 100%
TBWA Reklambyra KB............................... Sweden TBWA Sweden A.B. 50%
TBWA International A.G........................... Switzerland TBWA International B.V. 100%
TBWA A.G. (Zurich)............................... Switzerland TBWA International A.G. 100%
TBWA GGK Zurich AG............................... Switzerland TBWA International B.V. 35%
TBWA Next & Triplet Advertising Co. Limited...... Thailand Registrant 51%
TBWA Ltd......................................... United Kingdom Floral Street Holdings Ltd. 100%
TISSA Ltd........................................ United Kingdom Floral Street Holdings Ltd. 100%
Genesis Digital Creation Limited................. United Kingdom TBWA Ltd. 100%
TBWA Direct Limited.............................. United Kingdom TBWA Ltd. 100%
Rose Video Ltd................................... United Kingdom TBWA Ltd. 100%
Floral Street Holdings Ltd....................... United Kingdom Diversified Agency Services Limited 100%
</TABLE>
S-14
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 18, 1997 included in this Form 10-K into the
previously filed Registration Statement File Nos. 33-51493, 33-29375 and
33-37380 on Form S-8 of Omnicom Group Inc. and into the previously filed
Registration Statement File Nos. 333-22589, 333-22587, 333-22561, 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 333-01619 on Form S-4 of Omnicom Group Inc.
ARTHUR ANDERSEN LLP
New York, New York
March 24, 1997
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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. Murphy
Dated: March 24, 1997 -----------------------------
John R. Murphy
<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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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 John
Wren 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, 1996 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 24, 1997 -----------------------------
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, 1996 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-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 510,267
<SECURITIES> 12,841
<RECEIVABLES> 1,581,053
<ALLOWANCES> 25,642
<INVENTORY> 0
<CURRENT-ASSETS> 2,424,985
<PP&E> 522,757
<DEPRECIATION> 301,102
<TOTAL-ASSETS> 4,055,943
<CURRENT-LIABILITIES> 2,863,076
<BONDS> 204,744
0
0
<COMMON> 43,144
<OTHER-SE> 757,534
<TOTAL-LIABILITY-AND-EQUITY> 4,055,943
<SALES> 0
<TOTAL-REVENUES> 2,641,667
<CGS> 0
<TOTAL-COSTS> 1,555,553
<OTHER-EXPENSES> 759,541
<LOSS-PROVISION> 7,911
<INTEREST-EXPENSE> 34,067
<INCOME-PRETAX> 305,231
<INCOME-TAX> 123,639
<INCOME-CONTINUING> 176,329
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 176,329
<EPS-PRIMARY> 2.29
<EPS-DILUTED> 2.25
</TABLE>
