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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Regulations S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
At March 15, 2000, there were 176,930,039 shares of Common Stock, $.50 par
value, outstanding; the aggregate market value of the voting stock held by
nonaffiliates at March 15, 2000 was approximately $14,351,645,000
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 16, 2000 are
incorporated by reference into Part III of this Report.
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<PAGE>
OMNICOM GROUP INC.
------------------
Index to Annual Report on Form 10-K
Year Ended December 31, 1999
Page
----
PART I
Item 1. Business ..................................................... 1
Item 2. Properties ................................................... 3
Item 3. Legal Proceedings ............................................ 3
Item 4. Submission of Matters to a Vote of Security Holders .......... 3
Supplemental Item. Executive Officers of the Registrant ................. 4
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters ................................ 5
Item 6. Selected Financial Data ...................................... 5
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............. 6
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ... 9
Item 8. Financial Statements and Supplementary Data .................. 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ........................ 9
PART III
Item 10. Directors and Executive Officers of the Registrant ........... 10
Item 11. Executive Compensation ....................................... 10
Item 12. Security Ownership of Certain Beneficial
Owners and Management ...................................... 10
Item 13. Certain Relationships and Related Transactions ............... 10
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 11, 2000.
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K .................................... 11
<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"),
provides corporate communications services to clients worldwide on a global,
pan-regional, national and local basis. Operations cover the major regions of
North America, the United Kingdom, Germany, France, the remainder of Continental
Europe, Latin America, the Far East, Australia, the Middle East and Africa. In
both 1999 and 1998, approximately 50% of the Omnicom Group's commissions and
fees came from its non-U.S. operations. The corporate communications services
offered by the Company include advertising in various media such as television,
radio, newspaper, magazines, outdoor and the internet, as well as public
relations, specialty advertising, direct response and promotional marketing,
strategic media planning and buying, and internet and digital media development.
According to the unaudited industry-wide figures published in 1999 by the
trade journal Advertising Age, the Omnicom Group was ranked as the largest
advertising agency group worldwide.
Corporate Communications Services
The Omnicom Group companies provide a variety of advertising and marketing
communication services to their clients, including: the creation and production
of advertising, marketing consultation, strategic media planning and buying,
financial and business-to-business advertising, directory advertising,
healthcare communications, managed care consultancy, recruitment communications,
branding consultancy, digital communications, contract publishing, design and
image consultancy, direct/database marketing, field marketing, integrated
promotional marketing, public affairs, corporate and financial public relations,
reputation management, sports and event marketing, telemarketing, and internet
and digital media development.
Brands
The above services are provided to clients through numerous worldwide,
national and regional independent agency brands. These brands include, among
others, BBDO Worldwide, DDB Worldwide, TBWA Worldwide, Abbott Mead Vickers,
Adelphi Group, Alcone Marketing Group, Bernard Hodes Advertising, Brodeur
Worldwide, Case Dunlap, Clark & Weinstock, Claydon Heeley, CPM International,
Diversified Healthcare Communications Group, Doremus & Company,
Fleishman-Hillard, Gavin Anderson & Company, GMR Marketing, Goodby, Silverstein
& Partners, GPC International, Griffin Bacal, GSD&M, Health & Medical
Communications Group, Integer Group, Interbrand, InterOne Marketing Group,
Ketchum, Ketchum Directory Advertising, M/A/R/C Inc., Martin-Williams, Merkley
Newman Harty, Moss Dragoti, Optimum Media Direction, PhD, Porter Novelli
International, Porter Novelli Convergence Group, Rapp Collins Worldwide, Steve
Cram & Associates, TARGIS Healthcare Communications Worldwide, The Designory,
TicToc, TLP, Inc., and Zimmerman & Partners Advertising. Additionally, through
its wholly-owned subsidiary Communicade, the Company has minority equity
investments in several interactive marketing agencies, including: AGENCY.COM,
Ltd., Organic, Inc., Razorfish, Inc., Red Sky Interactive, Inc., Critical Mass
and Answer Think Consulting Group, Inc.
Markets
The Omnicom Group agency brands provide services to their clients on a
global, pan-regional, national and local basis. These agencies operate
throughout the major cities of the United States and through subsidiaries and
affiliates in Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada,
Chile, China, Colombia, Costa Rica, Croatia, Cyprus, the Czech Republic,
Denmark, Dominican Republic, Egypt, El Salvador, Estonia, Finland, France,
Germany, Greece, Guatemala, Honduras, Hong Kong, Hungary, India, Ireland,
Israel, Italy, Japan, Kuwait, Latvia, Lebanon, Lithuania, Malaysia, Mexico, the
Netherlands, New Zealand, Nicaragua, Norway, Panama, Peru, the Philippines,
Poland, Portugal, Puerto Rico, Romania, Russia, Saudi Arabia, Singapore,the
Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden,
Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United
Kingdom, Uruguay, Venezuela and other countries around the world.
For financial information concerning domestic and foreign operations and
segment reporting see Note 5 to the Consolidated Financial Statements.
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Clients
The clients of the Omnicom Group include major consumer products,
industrial, financial and service industry companies, as well as smaller,
pan-regional, national and local companies.
The Omnicom Group's ten largest clients accounted for approximately 19% of
1999 commissions and fees. Twelve Omnicom Group agency brands provided services
to the Company's largest client, which accounted for approximately 5% of the
1999 commissions and fees.
Commissions and Fees
In most cases, fees are generated in lieu of commissions. Several
different fee arrangements are used depending on the client and individual
agency. In general, fee charges relate to the cost of providing services plus a
markup.
Commissions charged on media billings 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
companies bill their clients for this amount plus the commission.
Revenues are dependent upon the marketing requirements of clients and tend
to be highest in the second and fourth quarters of the calendar year.
Competitive Conditions
The Company's business is highly competitive and accounts may shift
agencies, usually on 90 days' notice. Clients may also reduce advertising and
marketing budgets at any time. An agency's ability to compete for new clients is
affected in some instances by the policy, which many advertisers and marketers
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
Omnicom Group's consistent maintenance of separate, independent agency brands
have enabled the Company to represent competing clients.
The Omnicom Group agency brands have sought, and will seek, new business
by showing potential clients examples of advertising and marketing campaigns 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
Company's 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 agencies 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. The Company believes that its compensation arrangements for its key
employees, which in addition to base salaries and performance bonuses may
include stock options, restricted stock and retirement plans, are highly
competitive with those of other advertising agencies. As of December 31, 1999,
the Omnicom Group, excluding unconsolidated affiliates, employed approximately
43,000 persons, of which approximately 17,700 were employed in the United States
and approximately 25,300 were employed in its international offices.
Government Regulation
The Company's 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
2
<PAGE>
estimate the effect of these developments on its domestic 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 scope, content and manner of presentation of advertising may be
modified. In addition, the Company will continue to ensure that its management
and operating personnel are aware of and are responsive to the possible
implications of such developments.
Item 2. Properties
Substantially all of the Company's offices are located in leased premises.
The Company actively manages its lease 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 50,000 sq. ft. of
space at 437 Madison Avenue, New York, New York under a lease expiring in the
year 2010.
Offices in Atlanta, Boston, Chicago, Coral Gables, Dallas, Detroit,
Houston, Irvine, Kansas City, Los Angeles, Minneapolis, New York, Palo Alto,
Philadelphia, Pittsburgh, San Francisco, San Jose, Seattle, Stamford, St. Louis
and Washington D.C. and at various other locations occupy approximately an
aggregate of 5,645,000 sq. ft. of space under leases with varying expiration
dates.
International
The Company's international subsidiaries and affiliates in Australia,
Austria, Belgium, Brazil, Bulgaria, Canada, Chile, China, Croatia, the Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong,
Hungary, India, Ireland, Italy, Japan, Latvia, Malaysia, Mexico, the
Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Puerto
Rico, Romania, Singapore, the Slovak Republic, South Africa, South Korea, Spain,
Sweden, Switzerland, 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 the last
quarter of 1999.
3
<PAGE>
Supplemental Item. Executive Officers of the Registrant
The individuals named below are Executive Officers of the Company and,
except as indicated below, have held their current position during the last five
years:
<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
Bruce Crawford ............ Chairman of Omnicom Group 71
John D. Wren .............. Chief Executive Officer & President of Omnicom Group 47
Randall J. Weisenburger ... Executive Vice President and Chief Financial Officer of
Omnicom Group 41
Dennis E. Hewitt .......... Treasurer of Omnicom Group 55
Barry J. Wagner ........... Secretary & General Counsel of Omnicom Group 59
Philip J. Angelastro ...... Controller of Omnicom Group 35
Allen Rosenshine .......... Chairman & Chief Executive Officer of BBDO Worldwide 61
James A. Cannon ........... Vice Chairman & Chief Financial Officer of BBDO Worldwide 61
Keith L. Reinhard ......... Chairman & Chief Executive Officer of DDB Worldwide 65
Thomas L. Harrison ........ Chairman & Chief Executive Officer of Diversified Agency Services,
a division of the Corporation 52
Michael Greenlees ......... President and Chief Executive Officer of TBWA Worldwide 53
Bernard Brochand .......... President, International Division of DDB Worldwide 61
</TABLE>
John D. Wren was appointed Chief Executive Officer of the Company
effective January 1, 1997, succeeding Bruce Crawford in the position. Mr. Wren
was appointed President of the Company 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.
Randall J. Weisenburger joined the Company in September 1998 and became
its Executive Vice President and Chief Financial Officer on January 1, 1999. Mr.
Weisenburger was previously with Wasserstein Perella & Co., where he was
President and Chief Executive Officer of Wasserstein Perella Management
Partners, its merchant banking subsidiary.
Barry J. Wagner was promoted to Secretary and General Counsel of the
Company in May 1995. Mr. Wagner was previously Assistant Secretary of the
Company.
Philip J. Angelastro was promoted to Controller of the Company effective
February 1, 1999. Mr. Angelastro joined the Company in June 1997 as Vice
President of Finance with Diversified Agency Services after being a Partner at
Coopers & Lybrand LLP.
Thomas L. Harrison has served as Chairman and Chief Executive Officer of
the Diversified Agency Services division of the Corporation since May 1998,
having previously served as its President since February 1997. He also has
served as Chairman of the Diversified Healthcare Communications Group since its
formation in 1994. From 1987 to 1994, Mr. Harrison served as Chairman and Chief
Executive Officer of the Harrison & Star Business Group.
Michael Greenlees has served as President and Chief Executive Officer of
TBWA Worldwide since March 1998. Prior thereto, he was Chairman and Chief
Executive Officer of GGT Group plc, which was acquired by the Company in
February 1998.
Bernard Brochand has served as President of the International Division of
DDB Worldwide since February 1989.
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 11, 2000.
4
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Price Range of Common Stock and Dividend History
The Company's common stock is listed on the New York Stock Exchange under
the symbol "OMC". The table below shows the range of quarterly high and low sale
prices reported 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 sales price on March 15, 2000
was $81 3/4.
Dividends Paid
Per Share of
High Low Common Stock
------ ----- ----------------
1998
First Quarter ............. 47 1/16 37 7/8 .125
Second Quarter ............ 49 7/8 45 1/2 .125
Third Quarter ............. 57 1/4 45 .125
Fourth Quarter ............ 58 38 9/16 .15
1999
First Quarter ............. 79 15/16 56 1/2 .15
Second Quarter ............ 85 1/8 67 .15
Third Quarter ............. 80 11/16 67 1/16 .15
Fourth Quarter ............ 107 1/8 71 5/8 .175
The Company is not aware of any restrictions on its present or future
ability to pay dividends. However, in connection with certain borrowing
facilities entered into by the Company and its subsidiaries (see Note 7 to the
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 31, 2000 the Board of Directors declared a regular quarterly
dividend of $0.175 per share of common stock, payable April 6, 2000 to holders
of record on March 10, 2000.
Approximate Number of Equity Security Holders
Approximate Number of
Record Holders
Title of Class on March 15, 2000
-------------- ---------------------
Common Stock, $.50 par value .................... 3,721
Preferred Stock, $1.00 par value ................ None
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. All prior years information has been restated to give effect
to the accounting for the acquisition of Abbott Mead Vickers Group Limited
(formerly known as Abbott Mead Vickers plc) under the pooling of interests
method of accounting (see Note 2 to the Consolidated Financial Statements). Per
share amounts for 1995 and 1996 have been restated to give effect to the
two-for-one stock split completed December 1997.
<TABLE>
<CAPTION>
(Dollars in Thousands Except Per Share Amounts)
---------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
For the year:
Commissions and fees .............. $5,130,545 $4,290,946 $3,296,224 $2,775,873 $2,360,688
Net income ........................ 362,882 278,845 217,300 162,076 135,196
Earnings per common share
Basic .......................... 2.07 1.61 1.30 1.02 0.92
Diluted ........................ 2.01 1.57 1.28 0.99 0.89
Dividends declared per common
share .......................... 0.625 0.525 0.45 0.375 0.33
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
(Dollars in Thousands Except Per Share Amounts)
---------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
At year end:
Total assets ...................... $9,017,637 $7,121,968 $5,114,364 $4,192,156 $3,653,265
Long-term obligations:
Long-term debt and
convertible subordinated
debentures ................... 711,632 717,410 341,665 208,329 293,418
Deferred compensation and
other liabilities .............. 300,746 269,966 166,492 130,606 126,725
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
As discussed in Note 2 to the Consolidated Financial Statements, on
February 10, 1999 the Company completed the acquisition of Abbott Mead Vickers
Group Limited (formerly known as Abbott Mead Vickers plc) ("AMV"). The AMV
acquisition was accounted for under the pooling-of-interests method of
accounting. Accordingly, the Company's financial statements have been restated
to include the financial results of AMV for all periods presented. The following
discussion is made with respect to the restated financial statements.
In 1999, domestic revenues from commissions and fees increased 20.7
percent. The effect of acquisitions, net of divestitures, accounted for a 6.1
percent increase. The remaining 14.6 percent increase was due to the growth of
existing businesses, including net new business wins and higher net spending by
existing clients.
In 1998, domestic revenues from commissions and fees increased 29.8
percent. The effect of acquisitions, net of divestitures, accounted for a 12.5
percent increase. The remaining 17.3 percent increase was due to the growth of
existing businesses, including net new business wins and higher net spending by
existing clients.
In 1999, international revenues increased 18.4 percent. The effect of
acquisitions, net of divestitures, accounted for a 10.9 percent increase in
international revenues. Changes in the translation of foreign currencies to the
U.S. dollar decreased international revenues by 6.0 percent. The remaining 13.5
percent increase was due to the growth of existing businesses, including net new
business wins and higher net spending by existing clients.
In 1998, international revenues increased 30.6 percent. The effect of
acquisitions, net of divestitures, accounted for an 18.7 percent increase in
international revenues. Changes in the translation of foreign currencies to the
U.S. dollar decreased international revenues by 2.5 percent. The remaining 14.4
percent increase was due to the growth of existing businesses, including net new
business wins and higher net spending by existing clients.
In 1999, worldwide operating expenses increased 18.2 percent.
Acquisitions, net of divestitures during the year, accounted for a 7.3 percent
increase in worldwide operating expenses. Changes in the translation of foreign
currencies to the U.S. dollar decreased worldwide operating expenses by 2.8
percent. The remaining 13.7 percent increase was caused by normal salary
increases and growth in out-of-pocket expenditures to service the increased
revenue base. Net foreign exchange transaction gains did not significantly
impact operating expenses for the year.
In 1998, worldwide operating expenses increased 29.3 percent.
Acquisitions, net of divestitures during the year, accounted for a 15.6 percent
increase in worldwide operating expenses. Changes in the translation of foreign
currencies to the U.S. dollar decreased worldwide operating expenses by 1.3
percent. The remaining 15.0 percent increase was caused by normal salary
increases and growth in out-of-pocket expenditures to service the increased
revenue base. Net foreign exchange transaction gains did not significantly
impact operating expenses for the year.
Net interest expense in 1999 increased $10 million. This increase
primarily reflects higher average borrowings during the year and higher interest
rates.
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<PAGE>
Net interest expense in 1998 increased $19.3 million. This increase
primarily reflects higher average borrowings during the year, resulting in part
from the issuance of the 2 1/4% Convertible Subordinated Debentures and the
5.20% French Franc Notes, partially offset by the effect of higher average
amounts of cash and marketable securities invested during the year.
The 1999 effective tax rate decreased to 40.6 percent. The decrease
reflects lower domestic and international effective tax rates.
The effective tax rate for 1998 decreased to 42.0 percent from 42.6
percent and primarily reflects lower effective tax rates at the Company's
international subsidiaries.
In 1999, consolidated net income increased 30.1 percent. This increase was
primarily the result of revenue growth and margin improvement, partially offset
by a decrease in equity in affiliates and an increase in minority interest
expense. In addition, in connection with the restatement of the prior year
amounts, certain costs were recorded by AMV, including transaction costs
associated with the merger. Operating margin, which excludes net interest
expense, increased to 14.1 percent in 1999 from 13.1 percent in 1998, primarily
as a result of greater growth in commission and fee revenue compared to the
growth in operating expenses. Changes in the translation of foreign currencies
to the U.S. dollar decreased consolidated net income by 4.2 percent. The
decrease in equity in affiliates in 1999 was primarily the result of the
acquisition of increased ownership interests in certain affiliates that resulted
in their consolidation in the December 31, 1999 financial statements, as well as
lower aggregate profits by companies accounted for under the equity method. The
increase in minority interest expense in 1999 was caused by higher earnings from
companies in which minority interests exists and an increase, as a result of
acquisitions, in the number of consolidated companies with a minority interest,
including the conversion of certain affiliates into subsidiaries.
In 1998, consolidated net income increased 28.3 percent. This increase was
the result of revenue growth and margin improvement, partially offset by a
decrease in equity in affiliates and an increase in minority interest expense.
Operating margin, which excludes net interest expense, increased to 13.1 percent
in 1998 from 12.5 percent in 1997 as a result of greater growth in commission
and fee revenue than the growth in operating expenses. Changes in the
translation of foreign currencies to the U.S. dollar decreased consolidated net
income by 1.9 percent. The decrease in equity in affiliates was primarily the
result of the acquisition of increased ownership interests in certain affiliates
that resulted in their consolidation in the December 31, 1998 financial
statements, as well as lower aggregate profits by companies accounted for under
the equity method. The increase in minority interest expense was caused by
higher earnings from companies in which minority interests exist and an increase
as a result of acquisitions during the year in the number of consolidated
companies with a minority interest, including the conversion of certain
affiliates into subsidiaries.
At December 31, 1999, accounts receivable, net of allowance for doubtful
accounts, increased by $667.0 million from December 31, 1998. At December 31,
1999, accounts payable increased by $746.9 million from December 31, 1998. These
increases were primarily due to an increased volume of activity resulting from
business growth and acquisitions during the year and, for accounts payable,
differences in the timing of payments to media and other suppliers in 1999 as
compared to 1998.
The Company is subject to the risk of currency exchange rate fluctuations
related to its international operations. 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. The Company or its international
operations may in some cases enter into hedging transactions to minimize the
risk of adverse currency exchange rate fluctuations. The Company's major
international markets are Brazil, Canada, the Euro currency countries, Japan and
the United Kingdom.
As part of managing the Company's exposures to currency exchange and
market interest rates, the Company periodically enters into derivative financial
instruments. Derivative financial instruments are subject to market and
counterparty risk. Market risk is the potential for loss resulting from changes
in market conditions. The Company periodically determines the potential loss
from market risk by performing a value-at-risk computation. Value-at-risk uses a
statistical model that utilizes historic currency exchange and interest rate
data to measure the potential impact on future earnings of the Company's
existing portfolio of derivative financial instruments. The value-at-risk
analysis performed on the Company's December 31, 1999 portfolio of derivative
financial instruments indicated that the risk of loss was immaterial.
Counterparty risk arises
7
<PAGE>
from the inability of a counterparty to meet its obligations. To minimize
counterparty risk, the Company only enters into derivative contracts with major
well-known financial institutions that have credit ratings equal to or better
than the Company's.
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, and results are
periodically reviewed with the Audit Committee.
At December 31, 1999 and 1998, the Company had forward foreign exchange
contracts outstanding with an aggregate notional principal amount of $893
million and $865 million, respectively, most of which were denominated in the
Company's major international market currencies. These contracts predominantly
hedge certain intercompany receivables and payables which are not recorded in
the respective company's functional currency. The terms of these contracts are
generally three months or less.
At December 31, 1999, the Company had Japanese yen 16.3 billion aggregate
notional principal amount of cross currency interest rate swaps. The swaps
convert a portion of the Company's U.S. dollar floating rate debt into fixed
rate Japanese yen debt and effectively hedge the Company's net investment in
Japanese yen denominated assets.
At December 31, 1999 and 1998, the Company had no other derivative
contracts outstanding.
Year 2000 Issue
The Company did not experience any significant disruption to its
operations related to computer system programming failures or errors associated
with the year 2000. The out-of-pocket costs incurred in 1999 for its Year 2000
remediation program were not material to the consolidated results of operations
for the year ended December 31, 1999. These costs, substantially all of which
were expensed, include third party consultants and the replacement and
remediation of existing computer software and hardware. Such costs do not
include internal management time, the effects of which were not material to the
Company's results of operations or financial condition.
Capital Resources and Liquidity
Cash and cash equivalents decreased $72.4 million during 1999 to $576.4
million at December 31, 1999. The Company's positive net cash flow provided by
operating activities was maintained. After annual cash outlays for dividends
paid to shareholders and minority interests and the repurchase of the Company's
common stock, primarily for employee programs, the balance of the cash flow,
together with the proceeds from the issuance of debt obligations, was used to
fund acquisitions, make capital expenditures and repay debt obligations.
The Company maintains two revolving credit facilities with a consortium of
banks. One facility, for $500 million, expires June 30, 2003 and the other, for
$750 million, expires April 28, 2000 (commitments have been delivered to extend
this facility until April 28, 2001). Under the terms of these facilities the
Company may either borrow directly or issue commercial paper. During the year
approximately $6,663 million of commercial paper was issued and $6,584 million
was redeemed. The average term of the commercial paper was 21 days. At December
31, 1999, approximately $79 million of commercial paper was outstanding at
interest rates ranging from 6.35% to 6.48%.
On June 24, 1998, the Company issued French Franc 1 billion (approximately
$164 million at the June 24, 1998 exchange rate) of 5.20% Notes with a scheduled
maturity in 2005.
On March 4, 1998, the Company issued 4,000,000 shares of common stock for
aggregate proceeds before expenses of $171 million.
On January 6, 1998, the Company issued $230 million of 2 1/4% Convertible
Subordinated Debentures with a scheduled maturity in 2013. The debentures are
convertible into common stock of the Company at a conversion price of $49.83 per
share subject to adjustment in certain events. Debenture holders have the right
to require the Company to redeem the debentures on January 6, 2004 at a price of
118.968%, or upon the occurrence of a Fundamental Change, as defined in the
indenture agreement, at the prevailing redemption
8
<PAGE>
price. The Company may redeem the debentures, as a whole or in part, on or after
December 31, 2001 initially at 112.841% and at increasing prices thereafter to
118.968% until January 6, 2004, and 100% thereafter. Unless the debentures are
redeemed, repaid, or converted prior thereto, the debentures will mature on
January 6, 2013 at their principal amount.
On January 3, 1997, the Company issued $218.5 million of 4 1/4%
Convertible Subordinated Debentures with a scheduled maturity in 2007. The
debentures are convertible into common stock of the Company at a conversion
price of $31.50 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.
On March 1, 1996, the Company issued Deutsche Mark 100 million Floating
Rate Bonds due March 1, 1999. The bonds matured on March 1, 1999 and were repaid
at par. The bonds were unsecured, unsubordinated obligations of the Company and
bore interest at a per annum rate equal to Deutsche Mark three month LIBOR plus
0.375%.
The Company maintains relationships with a number of banks worldwide,
which have committed to lines of credit in amounts sufficient to meet the
Company's cash needs. At December 31, 1999, the Company had $1,420.9 million in
such committed lines of credit, comprised of a $750 million unsecured revolving
credit agreement expiring on April 28, 2000 and a $500 million unsecured
revolving credit agreement expiring June 30, 2003, as discussed above, and
$170.9 million in lines of credit, principally outside of the United States. Of
the $1,420.9 million in committed lines, $127.1 million were drawn at December
31, 1999. Management believes that the Company's operating cash flow combined
with its available lines of credit (including the expected renewal of the $750
million revolving line of credit) are sufficient to support its foreseeable cash
requirements including dividends, capital expenditures, acquisitions and
maintenance of working capital.
Forward Looking Statements
This report contains disclosures which are forward-looking statements.
Forward-looking statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of words such as
"may," "will," "expect," "project," "estimate," "anticipate," "envisage," "plan"
or "continue." These forward-looking statements are based upon the Company's
current plans or expectations and are subject to a number of uncertainties and
risks that could significantly affect current plans and anticipated actions and
the Company's future financial condition and results. The uncertainties and
risks include, but are not limited to, general economic and business conditions;
loss of significant customers; changes in levels of client advertising; the
impact of competition; risks relating to acquisition activities; and the
complexity of integrated computer systems. As a consequence, current plans,
anticipated actions and future financial condition and results may differ from
those expressed in any forward-looking statements made by or on behalf of the
Company.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information with respect to quantitative and qualitative disclosure about
market risk is set forth under Item 7 in Part II of this Form 10-K.
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.
9
<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 11, 2000. Information regarding
the Company's executive officers is set forth under the Supplemental Item 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 11, 2000.
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 11, 2000.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to the Company's definitive proxy statement
expected to be filed by April 11, 2000.
10
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)1. Financial Statements:
Page
----
Report of Management .............................................. F-1
Report of Independent Public Accountants .......................... F-2
Consolidated Statements of Income for the three years
ended December 31, 1999 ........................................ F-3
Consolidated Balance Sheets at December 31, 1999 and 1998 ......... F-4
Consolidated Statements of Shareholders' Equity
for the three years ended December 31, 1999 .................... F-5
Consolidated Statements of Cash Flows for the three years
ended December 31, 1999 ........................................ F-6
Notes to Consolidated Financial Statements ........................ F-7
Quarterly Results of Operations (Unaudited) ....................... F-22
2. Financial Statement Schedules:
Schedule II -- Valuation and Qualifying Accounts
(for the three years ended December 31, 1999) .................. S-1
All other schedules are omitted because they are not applicable.
3. Exhibits:
Exhibit
Number Description
------- -----------
(3)(i) Certificate of Incorporation (as amended on December 4, 1997
and as restated for filing purposes), filed as Exhibit 4.1
to Omnicom Group Inc.'s Registration Statement No.
333-46303, are incorporated herein by reference.
(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 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 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.
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.
11
<PAGE>
4.5 Indenture dated January 3, 1997 between the Registrant and
The Chase Manhattan Bank, as trustee, in connection with the
issuance of 4 1/4% 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 January 3, 1997 between
the Registrant and Morgan Stanley & Co. Incorporated related
to the Registrant's 4 1/4% Convertible Subordinated
Debentures due 2007 filed as Exhibit 4.4 to Omnicom Group
Inc.'s Form S-3 Registration No. 333-22589, is incorporated
herein by reference.
4.8 Indenture dated January 6, 1998, between Registrant and The
Chase Manhattan Bank, as trustee, in connection with the
issuance of 2 1/4% Convertible Subordinated Debentures due
2013 filed as Exhibit 4.1 to Omnicom Group Inc.'s Report on
Form 8-K dated January 20, 1998, is incorporated herein by
reference.
4.9 Form of Debentures (included in Exhibit 4.8 above) filed as
Exhibit 4.2 to Omnicom Group Inc.'s Report on Form 8-K dated
January 20, 1998, is incorporated herein by reference.
4.10 Registration Rights Agreement dated January 6, 1998, between
the Registrant and Morgan Stanley & Co. Incorporated related
to the Registrant's 2 1/4% Convertible Subordinated
Debentures due 2013 filed as Exhibit 4.3 to Omnicom Group
Inc.'s Report on Form 8-K dated January 20, 1998, is
incorporated herein by reference.
4.11 Fiscal Agency Agreement dated June 24, 1998, in connection
with the issuance of FRF 1,000,000,000 5.20% Notes due 2005
filed as Exhibit 4.1 to Omnicom Group Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, is
incorporated herein by reference.
4.12 Subscription Agreement dated June 22, 1998 by and among
Omnicom Group Inc., Morgan Stanley S.A. and Others, in
connection with the issuance of FRF 1,000,000,000 5.20%
Notes due 2005 filed as Exhibit 4.2 to Omnicom Group Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, is incorporated herein by reference.
4.13 Deed of the Covenant dated June 24, 1998, in connection with
the issuance of FRF 1,000,000,000 5.20% Notes due 2005 filed
as Exhibit 4.3 to Omnicom Group Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998, is
incorporated herein by reference.
(10) Material Contracts.
Management Contracts, Compensatory Plans, Contracts or
Arrangements.
10.1 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 Standard Form of the Registrant's 1998 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.
10.4 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.
10.5 Severance Agreement dated July 6, 1993, between Keith
Reinhard and DDB 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.
12
<PAGE>
10.6 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.
10.7 Deferred Compensation Agreement dated October 12, 1984,
between William G. Tragos and TBWA Chiat/Day Inc. (then
known as 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.
10.8 Standard Form of Severance Compensation Agreement
incorporated by reference to BBDO International Inc.'s Form
S-1 Registration Statement filed with the Securities and
Exchange Commission on September 28, 1973, is incorporated
herein by reference.
10.9 Omnicom Group Inc. 1998 Incentive Compensation Plan, filed
as Exhibit A to Omnicom Group Inc.'s Proxy Statement dated
April 6, 1998, is incorporated herein by reference.
10.10 Omnicom Group Inc. Restricted Stock Plan for Non-employee
Directors.
Other Material Contracts.
10.11 $500,000,000 Amended and Restated Credit Agreement, dated as
of May 10, 1996 amended and restated as of February 20,
1998, between Omnicom Finance Inc., Omnicom Finance Limited,
ABN AMRO Bank N.V., Chase Securities Inc. and the financial
institutions party thereto, filed as Exhibit 10.16 to
Omnicom Group Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1997, is incorporated herein by
reference.
10.12 364-Day Credit Agreement, dated as of April 30, 1999, among
Omnicom Finance Inc., Omnicom Finance Limited, the financial
institutions party thereto, Citibank, N.A., as
Administrative Agent, The Bank of Nova Scotia, as
Documentation Agent, and Instituto Bancario San Paolo Di
Torino Instituto Mobiliare Italiano S.p.A., as Syndication
Agent (the "Credit Agreement"), filed as Exhibit 10.1 to
Omnicom Group Inc.'s quarterly report on Form 10-Q for the
quarter ended March 31, 1999, is incorporated herein by
reference.
10.13 List of Contents of Exhibits to the Credit Agreement, filed
as Exhibit 10.2 to Omnicom Group Inc.'s quarterly report on
Form 10-Q for the quarter ended March 31, 1999, is
incorporated herein by reference.
10.14 Guaranty, dated as of April 30, 1999, made by Omnicom Group
Inc., filed as Exhibit 10.3 to Omnicom Group Inc.'s
quarterly report on Form 10-Q for the quarter ended March
31, 1999, is incorporated herein by reference.
(21) Subsidiaries of the Registrant
(23) Consents of Experts and Counsel.
23.1 Consent of Arthur Andersen LLP.
(24) Powers of Attorney from Bernard Brochand, Robert J.
Callander, James A. Cannon, Leonard S. Coleman, Jr., Bruce
Crawford, Susan S. Denison, Peter Foy, Thomas L. Harrison,
John R. Murphy, John R. Purcell, Keith L. Reinhard, Allen
Rosenshine, Gary L. Roubos, Quentin I. Smith, Jr. 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, 1999.
13
<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 29, 2000
By: /s/ RANDALL J. WEISENBURGER
----------------------------
Randall J. Weisenburger
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ BRUCE CRAWFORD* Chairman and Director March 29, 2000
- -----------------------------------
(Bruce Crawford)
/s/ JOHN D. WREN Chief Executive Officer March 29, 2000
- ----------------------------------- and President and Director
(John D. Wren)
/S/ RANDALL J. WEISENBURGER Executive Vice President and March 29, 2000
- ----------------------------------- Chief Financial Officer
(Randall J. Weisenburger)
/S/ PHILIP J. ANGELASTRO Controller (Principal March 29, 2000
- ----------------------------------- Accounting Officer)
(Philip J. Angelastro)
/s/ BERNARD BROCHAND* Director March 29, 2000
- -----------------------------------
(Bernard Brochand)
/s/ ROBERT J. CALLANDER* Director March 29, 2000
- -----------------------------------
(Robert J. Callander)
/s/ JAMES A. CANNON* Director March 29, 2000
- -----------------------------------
(James A. Cannon)
/s/ LEONARD S. COLEMAN, JR.* Director March 29, 2000
- -----------------------------------
(Leonard S. Coleman, Jr.)
/s/ SUSAN S. DENISON* Director March 29, 2000
- -----------------------------------
(Susan S. Denison)
/s/ PETER FOY* Director March 29, 2000
- -----------------------------------
(Peter Foy)
/s/ THOMAS L. HARRISON* Director March 29, 2000
- -----------------------------------
(Thomas L. Harrison)
/s/ JOHN R. MURPHY* Director March 29, 2000
- -----------------------------------
(John R. Murphy)
/s/ JOHN R. PURCELL * Director March 29, 2000
- -----------------------------------
(John R. Purcell)
/s/ KEITH L. REINHARD* Director March 29, 2000
- -----------------------------------
(Keith L. Reinhard)
/s/ ALLEN ROSENSHINE* Director March 29, 2000
- -----------------------------------
(Allen Rosenshine)
/s/ GARY L. ROUBOS* Director March 29, 2000
- -----------------------------------
(Gary L. Roubos)
/s/ QUENTIN I. SMITH, JR.* Director March 29, 2000
- -----------------------------------
(Quentin I. Smith, Jr.)
/s/ EGON P.S. ZEHNDER* Director March 29, 2000
- -----------------------------------
(Egon P.S. Zehnder)
*By /s/ BARRY J. WAGNER
- -----------------------------------
Barry J. Wagner
Attorney-in-fact
</TABLE>
14
<PAGE>
REPORT OF MANAGEMENT
The management of Omnicom Group Inc. is responsible for the integrity of
the financial data reported by the Company 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 Inc. and subsidiaries. These financial statements have been
prepared in accordance with generally accepted accounting principles.
The system of internal controls of the Company, 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, cash flows 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. Additionally, the Audit
Committee met periodically to review progress against the Company's Year 2000
readiness plan. 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.
JOHN D. WREN RANDALL J. WEISENBURGER
- ------------------------------------- ----------------------------------
John D. Wren Randall J. Weisenburger
Chief Executive Officer and President Executive Vice President and
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, 1999 and
1998, and related consolidated statements of income, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1999.
These consolidated 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 consolidated financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.
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 17, 2000
F-2
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in Thousands
Except Per Share Data)
-------------------------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
COMMISSIONS AND FEES .................................... $ 5,130,545 $ 4,290,946 $ 3,296,224
OPERATING EXPENSES:
Salaries and Related Costs ........................... 3,054,018 2,558,694 1,955,586
Office and General Expenses .......................... 1,352,397 1,170,045 928,954
----------- ----------- -----------
4,406,415 3,728,739 2,884,540
----------- ----------- -----------
OPERATING PROFIT ........................................ 724,130 562,207 411,684
NET INTEREST EXPENSE:
Interest and Dividend Income ......................... (34,486) (34,072) (23,677)
Interest Paid or Accrued ............................. 84,908 74,482 44,783
----------- ----------- -----------
50,422 40,410 21,106
----------- ----------- -----------
INCOME BEFORE INCOME TAXES .............................. 673,708 521,797 390,578
INCOME TAXES ............................................ 273,247 219,092 166,539
----------- ----------- -----------
INCOME AFTER INCOME TAXES ............................... 400,461 302,705 224,039
EQUITY IN AFFILIATES .................................... 15,368 20,506 25,742
MINORITY INTERESTS ...................................... (52,947) (44,366) (32,481
----------- ----------- -----------
NET INCOME .............................................. $ 362,882 $ 278,845 $ 217,300
=========== =========== ===========
NET INCOME PER COMMON SHARE:
Basic ................................................ $ 2.07 $ 1.61 $ 1.30
Diluted .............................................. $ 2.01 $ 1.57 $ 1.28
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-3
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
(Dollars in Thousands)
--------------------------
1999 1998
---------- ----------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents .................................................... $ 576,427 $ 648,781
Short-term investments at market, which approximates cost .................... 24,522 68,610
Accounts receivable, less allowance for doubtful accounts of $53,720
and $55,764 (Schedule II) ................................................. 3,358,304 2,691,340
Billable production orders in process, at cost ............................... 299,209 255,294
Prepaid expenses and other current assets .................................... 453,862 448,496
---------- ----------
Total Current Assets ......................................................... 4,712,324 4,112,521
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost, less
accumulated depreciation and amortization of $522,294 and $444,670 ........... 444,722 376,541
INVESTMENTS IN AFFILIATES ....................................................... 386,549 257,394
INTANGIBLES, less accumulated amortization of $352,081 and $284,663 ............. 2,428,385 2,073,037
DEFERRED TAX BENEFITS ........................................................... 120,346 98,154
LONG-TERM INVESTMENTS ........................................................... 785,406 4,998
DEFERRED CHARGES AND OTHER ASSETS ............................................... 139,905 199,323
---------- ----------
................................................................................ $9,017,637 $7,121,968
========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable ............................................................. $4,112,777 $3,365,844
Current portion of long-term debt ............................................ 82,621 83,454
Bank loans ................................................................... 47,748 56,440
Advance billings ............................................................. 417,044 270,312
Accrued taxes on income ...................................................... 77,584 50,454
Other accrued taxes .......................................................... 154,825 136,902
Other accrued liabilities .................................................... 1,085,323 1,006,826
Dividends payable ............................................................ 31,141 25,450
---------- ----------
Total Current Liabilities .................................................... 6,009,063 4,995,682
---------- ----------
LONG-TERM DEBT .................................................................. 263,149 268,913
CONVERTIBLE SUBORDINATED DEBENTURES ............................................. 448,483 448,497
DEFERRED COMPENSATION AND OTHER LIABILITIES ..................................... 300,746 269,966
DEFERRED INCOME TAXES ON UNREALIZED GAINS ....................................... 320,176 2,622
MINORITY INTERESTS .............................................................. 123,122 90,778
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, 300,000,000 shares authorized, 187,086,161
and 186,654,985 shares issued in 1999 and 1998, respectively .............. 93,543 93,328
Additional paid-in capital ................................................... 808,154 720,343
Retained earnings ............................................................ 882,051 628,742
Unamortized restricted stock ................................................. (85,919) (58,060)
Accumulated other comprehensive income ....................................... 285,234 (94,781)
Treasury stock, at cost, 9,598,602 and 8,698,365 shares in 1999 and 1998,
respectively .............................................................. (430,165) (244,062)
---------- ----------
Total Shareholders' Equity ................................................ 1,552,898 1,045,510
---------- ----------
$9,017,637 $7,121,968
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-4
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1999
(Dollars in Thousands)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Unamortized Other
Comprehensive --------------------- Paid-in Retained Restricted Comprehensive
Income Shares Par Value Capital Earnings Stock Income
------------- ----------- --------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31,
1996, as restated ............. 180,039,367 $90,021 $561,976 $315,756 $(39,445) $ 2,901
Pooling of interests
adjustment .................... 1,088,974 544 (492) (14,735)
----------- ------- -------- -------- -------- --------
Balance January 1,
1997, as restated ............. 181,128,341 90,565 561,484 301,021 (39,445) 2,901
Comprehensive income:
Net income .................... 217,300 217,300
Translation adjustments,
net of taxes of $37,300 ...... (50,259) (50,259)
-------
Comprehensive income ............ 167,041
=======
Dividends declared .............. (77,869)
Amortization of restricted
shares 17,311
Shares transactions under
employee stock plans .......... 21,480 11 16,540 (24,611)
Shares issued for
acquisitions .................. 107,358 53 3,690
Purchase of treasury shares
----------- ------- -------- -------- -------- --------
Balance December 31,
1997, as restated ............. 181,257,179 90,629 581,714 440,452 (46,745) 47,358)
Pooling of interests
adjustments ................... 3,550,366 1,776 (26,285) (2,455)
----------- ------- -------- -------- -------- --------
Balance January 1,
1998, as restated ............. 184,807,545 92,405 555,429 437,997 (46,745) (47,358)
Comprehensive income:
Net income .................... 278,845 278,845
Translation adjustments,
net of taxes of $34,340 ...... (47,423) (47,423)
--------
Comprehensive income .......... 231,422
========
Dividends declared .............. (88,100)
Amortization of
restricted shares ............. 21,489
Shares transactions under
employee stock plans .......... 2,750 1 40,788 (32,804)
Shares issued for acquisitions .. 2,002,187 1,001 34,403
Issuance of new shares .......... 96,962
Purchase of treasury shares
Cancellation of shares .......... (157,497) (79) (7,239)
----------- ------- -------- -------- -------- --------
Balance December 31,
1998 as restated .............. 186,654,985 93,328 720,343 628,742 (58,060) (94,781)
Comprehensive income:
Net income .................... 362,882 362,882
Unrealized gain on
investments, net of
income taxes of
$290,233 ..................... 417,653 417,653
Translation adjustments,
net of taxes of $25,726 ....... (37,638) (37,638)
--------
Comprehensive income ............ 742,897
========
Dividends declared .............. (109,573)
Amortization of
restricted shares ............. 27,812
Shares transactions under
employee stock plans .......... 306,381 152 58,197 (55,671)
Shares issued for
acquisitions .................. 127,069 64 7,136
Conversion of 4.25%
debentures .................... (5)
Purchase of treasury shares
Cancellation of shares .......... (2,274) (1) (177)
Gain on initial public
offering of common
stock of affiliates ........... 22,660
----------- ------- -------- -------- -------- --------
Balance December 31,
1999 .......................... 187,086,161 $93,543 $808,154 $882,051 $(85,919) $285,234
=========== ======= ======== ======== ======== ========
</TABLE>
Total
Treasury Shareholders'
Stock Equity
-------- ------------
Balance December 31,
1996, as restated ......................... $(180,094) $ 751,115
Pooling of interests
adjustment ................................ (14,683)
--------- ----------
Balance January 1,
1997, as restated ......................... (180,094) 736,432
Comprehensive income:
Net income ................................ 217,300
Translation adjustments,
net of taxes of $37,300 .................. (50,259)
Comprehensive income
Dividends declared .......................... (77,869)
Amortization of restricted
shares .................................... 17,311
Shares transactions under
employee stock plans ...................... 35,606 27,546
Shares issued for
acquisitions .............................. 313 4,056
Purchase of treasury shares ................. (69,762) (69,762)
--------- ----------
Balance December 31,
1997, as restated ......................... (213,937) 804,755
Pooling of interests
adjustments ............................... (26,964)
--------- ----------
Balance January 1,
1998, as restated ......................... (213,937) 777,791
Comprehensive income:
Net income ................................ 278,845
Translation adjustments,
net of taxes of $34,340 .................. (47,423)
Comprehensive income
Dividends declared .......................... (88,100)
Amortization of
restricted shares ......................... 21,489
Shares transactions under
employee stock plans ...................... 43,012 50,997
Shares issued for acquisitions .............. 2,088 37,492
Issuance of new shares ...................... 74,122 171,084
Purchase of treasury shares ................. (149,347) (149,347)
Cancellation of shares (7,318)
--------- ----------
Balance December 31,
1998 as restated .......................... (244,062) 1,045,510
Comprehensive income:
Net income ................................ 362,882
Unrealized gain on
investments, net of
income taxes of
$290,233 ................................. 417,653
Translation adjustments,
net of taxes of $25,726 ................... (37,638)
Comprehensive income
Dividends declared .......................... (109,573)
Amortization of
restricted shares ......................... 27,812
Shares transactions under
employee stock plans ...................... 100,037 102,715
Shares issued for
acquisitions .............................. 7,200
Conversion of 4.25%
debentures ................................ 19 14
Purchase of treasury shares ................. (286,159) (286,159)
Cancellation of shares ...................... (178)
Gain on initial public
offering of common
stock of affiliates ....................... 22,660
--------- ----------
Balance December 31,
1999 ...................................... $ (430,165) $1,552,898
========== ==========
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)
--------------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from Operating Activities:
Net income ...................................................................... $ 362,882 $ 278,845 $ 217,300
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of tangible assets ............................. 97,080 84,210 70,928
Amortization of intangible assets ............................................ 70,823 58,248 39,731
Minority interests ........................................................... 52,947 44,366 32,481
Earnings of affiliates in excess of dividends received ....................... (8,333) (6,869) (10,840)
(Increase) decrease in deferred tax benefits ................................. (33,064) 22,520 21,342
Provisions for losses on accounts receivable ................................. 14,399 15,586 10,491
Amortization of restricted shares ............................................ 27,812 21,489 17,311
Increase in accounts receivable .............................................. (645,093) (238,174) (379,958)
Increase in billable production orders in process ............................ (13,246) (35,113) (27,983)
Decrease (increase) in prepaid expenses and other current assets ............. 9,889 (64,044) (46,795)
Increase in accounts payable ................................................. 786,071 330,413 560,425
Increase in other accrued liabilities ........................................ 205,214 88,989 171,200
(Decrease) increase in accrued taxes on income ............................... (793) (49,887) 13,441
Increase in advances to affiliates ........................................... (36,283) (13,520) (26,748)
(Increase) decrease in deferred charges and other assets ..................... (2,753) 25,254 (49,605)
Other ........................................................................ 13,472 (87,329) (16,975)
--------- --------- ---------
Net Cash Provided by Operating Activities ....................................... 901,024 474,984 595,746
--------- --------- ---------
Cash Flows From Investing Activities:
Capital expenditures ......................................................... (129,871) (114,522) (114,814)
Purchases of equity interests in subsidiaries and affiliates,
net of cash acquired ...................................................... (691,392) (586,016) (371,823)
Sales of equity interests in subsidiaries and affiliates ..................... 14,380 80,325 6,705
Purchases of investments available-for-sale and other investments ............ (58,069) (65,007) (112,037)
Sales of investments available-for-sale and other investments ................ 96,891 101,735 41,798
--------- --------- ---------
Net Cash Used in Investing Activities ........................................... (768,061) (583,485) (550,171)
--------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from issuance of shares ............................................. -- 171,084 --
Net (repayments) borrowings under lines of credit ............................ (15,748) 12,786 2,130
Proceeds from issuances of debt obligations .................................. 83,924 411,605 254,652
Repayment of principal of debt obligations ................................... (75,642) (134,606) (81,389)
Shares transactions under employee stock plans ............................... 102,715 50,997 27,546
Dividends and loans from (to) affiliates and minority stockholders ........... 93,105 (46,431) (39,061)
Dividends paid ............................................................... (103,882) (88,623) (72,753)
Purchase of treasury shares .................................................. (286,159) (149,347) (69,762)
--------- --------- ---------
Net Cash (Used In) Provided by Financing Activities ............................. (201,687) 227,465 21,363
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents ................. (3,630) (35,321) (30,924)
--------- --------- ---------
Net Increase in Cash and Cash Equivalents ....................................... (72,354) 83,643 36,014
Cash and Cash Equivalents at Beginning of Period ................................ 648,781 565,138 529,124
--------- --------- ---------
Cash and Cash Equivalents at End of Period ...................................... $ 576,427 $ 648,781 $ 565,138
========= ========= =========
Supplemental Disclosures:
Income taxes paid ............................................................ $ 235,256 $ 223,921 $ 134,763
========= ========= =========
Interest paid ................................................................ $ 78,835 $ 60,784 $ 36,590
========= ========= =========
</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 (hereinafter collectively referred to as the "Company" or the "Omnicom
Group"), provides corporate communications services to clients worldwide on a
global, pan-regional, national and local basis. Operations cover the major
regions of North America, the United Kingdom, Germany, France, the remainder of
Continental Europe, Latin America, the Far East, Australia, the Middle East and
Africa. In both 1999 and 1998, approximately 50% of the Omnicom Group's
commissions and fees came from its non-U.S. operations. The communications
services offered by the Company include advertising in various media such as
television, radio, newspaper, magazines, outdoor and the internet, as well as
public relations, specialty advertising, direct response and promotional
marketing, strategic media planning and buying, and internet and digital media
development.
Recognition of Commission and Fee Revenue. Substantially all revenues
are derived from fees for manpower and for production of advertisements.
Additionally, revenues are derived from commissions for placement of
advertisements in various media. Revenue is realized when the service is
performed, in accordance with the terms of the contractual arrangement, and
collection is reasonably assured. Billings are generally rendered upon
completion of the earnings process, including: 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.
Restatement and Reclassifications. As discussed in Note 2, on February
10, 1999 the Company completed the acquisition of Abbott Mead Vickers Group
Limited (formerly known as Abbott Mead Vickers plc) ("AMV"). The AMV acquisition
was accounted for as a pooling-of-interests. All prior year amounts have been
restated to include the accounts of AMV. In addition, certain prior year amounts
have been reclassified to conform with the 1999 presentation.
Investments Available-For-Sale. Substantially all of the Company's
investments are classified as available-for-sale. Investments
available-for-sale, that consist principally of short-term investments and time
deposits with financial institutions with original maturity dates between 3
months and one year, are classified as current assets. Strategic investments
available-for-sale, which consist principally of publicly traded securities in
interactive marketing agencies, are classified as long-term investments.
Billable Production. Billable production orders in process consist
principally of costs incurred in providing corporate communications services to
clients. Such amounts are generally billed to clients when manpower is used,
when costs are incurred for radio and television production and when print
production is completed.
Common Stock. Wholly-owned subsidiaries of the Company have issued
securities which are exchangeable into common stock of the Company at the
holders' option. Shares of common stock issuable on the exchange of these
securities are included in common stock issued at December 31, 1999.
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 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 ("SFAS") No. 52, "Foreign Currency Translation." Under this
method, net transaction gains of $9.9 million, $15.2 million and $3.6 million
are included in 1999, 1998 and 1997 net income, respectively.
Earnings Per Common Share. Basic earnings per share is based upon the
weighted average number of common shares outstanding during each year. Diluted
earnings per share is based on the above, plus, if dilutive, common share
equivalents which include outstanding options and restricted shares, and if
dilutive, adjusted for the assumed conversion of the Company's 2 1/4% and 4 1/4%
Convertible Subordinated Debentures (assumed to be converted for the full year)
and the assumed increase in net income for the after tax interest cost of these
debentures. For purposes of computing diluted earnings per share for the years
ended December
F-7
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
31, 1999, 1998 and 1997, respectively, 3,046,904, 3,518,600 and 3,174,000 shares
were assumed to have been outstanding related to common share equivalents and
11,551,936, and 6,936,500 shares in 1999 and 1998, respectively were assumed to
have been converted related to the Company's convertible subordinated
debentures. Additionally, the assumed increase in net income used in the
computations was $17,968,000, $9,627,900 and $318,300 for the years ended
December 31, 1999, 1998 and 1997, respectively. The number of shares used in the
computations were as follows:
1999 1998 1997
---- ---- ----
Basic EPS computation .......... 175,285,932 173,104,700 166,857,300
Diluted EPS computation ........ 189,884,772 183,559,800 170,031,300
For purposes of computing diluted earnings per share for the year ended
December 31, 1998, the Company's 2 1/4% Convertible Subordinated Debentures and
for the year ended December 31, 1997 the 4 1/4% Convertible Subordinated
Debentures, were not reflected in the computation as inclusion would have been
anti-dilutive.
Gains and Losses on Issuance of Stock in Affiliates and Subsidiaries.
Gains and losses on the issuance of stock in equity method affiliates and
consolidated subsidiaries are recognized directly in the Company's shareholder's
equity through an increase or decrease to additional paid-in capital, in the
period in which the sale occurs.
Severance Agreements. Arrangements with certain present and former
employees provide for continuing payments for periods up to 10 years after
cessation of their full-time employment in consideration for agreements by the
employees not to compete and to render consulting services in the post
employment period. Such payments, which are determined, subject to certain
conditions and limitations, by earnings in subsequent periods, are expensed in
such periods.
Depreciation of Furniture and Equipment and Amortization of Leasehold
Improvements. Depreciation charges are computed on a straight-line basis or
declining balance method over the estimated useful lives of furniture and
equipment, up to 10 years. Leasehold improvements are amortized on a
straight-line basis over the lesser of the terms of the related lease or the
useful life of these assets.
Intangibles. Intangibles represent acquisition costs in excess of the fair
value of tangible net assets of purchased subsidiaries. The intangible values
associated with the Company's business consist predominantly of two types: the
value of the worldwide agency networks and agency brands and the value of
ongoing client relationships. The Company's worldwide agency networks have been
operating for an average of over 60 years and intangibles associated with
enhancing network value are intended to enhance the long-term value of the
networks. Client relationships in the corporate communications services industry
are typically long-term in nature and the Company's largest clients have on
average been clients for more than 25 years. As such, intangibles are amortized
on a straight-line basis principally over a period of 40 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, unrealized
gains and losses on investments available for sale and the issuance of stock in
affiliates.
F-8
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 (valued at the then market
value of the shares and excluding shares related to the AMV acquisition) and the
liabilities assumed in connection with the acquisition of equity interests in
subsidiaries and affiliates, for each of the three years ended December 31:
<TABLE>
<CAPTION>
(Dollars in thousands)
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fair value of non-cash assets acquired $ 1,059,443 $ 1,586,331 $ 473,800
Cash paid, net of cash acquired ...... (691,392) (586,016) (371,823)
Common shares issued ................. (7,200) (175,180) (7,214)
----------- ----------- -----------
Liabilities assumed .................. $ 360,851 $ 825,135 $ 94,763
=========== =========== ===========
</TABLE>
Concentration of Credit Risk. The Company provides corporate
communications 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. 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 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
On February 10, 1999, the Company completed the acquisition of AMV. AMV
provides corporate communications services to clients principally in the United
Kingdom. The Company issued approximately 9.6 million shares of new common stock
in exchange for the 92.3% of AMV ordinary shares not already owned by the
Company, at a fixed exchange ratio of .1347 common shares of the Company per AMV
ordinary share. The transaction was accounted for under the pooling-of-interests
method of accounting. Accordingly, the Company's financial statements have been
restated to include the operating results of AMV for all periods presented.
F-9
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Selected financial information for the combining entities included in the
consolidated statements of income for the years ended December 31, 1998 and 1997
are as follows (in thousands):
1998 1997
---- ----
Commissions and fees
Previously reported ................ $ 4,092,042 $ 3,124,813
AMV ................................ 198,904 171,411
----------- -----------
Restated ......................... $ 4,290,946 $ 3,296,224
Net income
Previously reported ................ $ 285,068 $ 222,415
AMV ................................ (6,223) (5,115)
----------- -----------
Restated ......................... $ 278,845 $ 217,300
=========== ===========
The restated results reflect the impact of including the operating results
of AMV, net of adjustments to eliminate inter-company transactions between AMV
and the Company, and to conform AMV accounting methods to those used by the
Company.
During 1999, the Company made several other acquisitions whose aggregate
cost, in cash or by issuance of the Company's common stock, totaled $748.6
million for net assets, which included intangible assets of $489.3 million. Due
to the nature of corporate communications services companies, the companies
acquired by the Company generally have tangible net liabilities or minimal
tangible net assets. Valuations of these companies are based on a number of
factors, including the competitive position of each company's agency networks
and agency brands. Included in both figures are payments of $137.0 million made
in 1999 related to acquisitions completed in prior years.
Certain acquisitions completed in 1999 and prior years require payments in
future years if certain results are achieved by the companies that were
acquired. Formulas for these contingent future payments vary from acquisition to
acquisition. Contingent future payments are not expected to be material to the
Company's results of operations or financial position.
In January 1998, the Company completed the acquisitions of
Fleishman-Hillard, Inc., GPC International Holdings Inc. and Palmer Jarvis Inc.
These acquisitions were accounted for under the pooling-of-interests method of
accounting and, accordingly, the results of operations of Fleishman-Hillard
Inc., GPC International Holdings Inc. and Palmer Jarvis Inc. have been included
in the consolidated financial statements since January 1, 1998. Prior year
consolidated financial statements were not restated as the impact on such years
was not material. The number of shares of common stock issued by the Company in
connection with these acquisitions was 3,550,366.
In February 1997, the Company completed the acquisitions of Cline Davis &
Mann, Inc. and Gavin Anderson & Company (Japan), Inc. Both of these acquisitions
were accounted for under the pooling-of-interests method of accounting and,
accordingly, the results of operations of Cline Davis & Mann, Inc. and Gavin
Anderson & Company (Japan), Inc. have been included in the consolidated
financial statements since January 1, 1997. Prior year consolidated financial
statements were not restated as the impact on such years was not material. A
total of 1,088,974 shares of common stock were issued in connection with these
acquisitions.
In May 1996, the Company completed the acquisition of Ketchum
Communications Holdings, Inc. ("Ketchum"). The acquisition was accounted for
under the pooling-of-interests method of accounting 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 2,413,706 shares of common stock were issued in connection with this
acquisition.
3. Bank Loans and Lines of Credit
Bank loans of $47.7 million and $56.4 million at December 31, 1999 and
1998, respectively, are primarily comprised of bank overdrafts of international
subsidiaries, which are treated as unsecured loans pursuant to bank agreements.
The weighted average interest rate on the borrowings outstanding as of
F-10
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1999 and 1998 was 6.37% and 6.62%, respectively. At December 31,
1999 and 1998, the Company had unsecured committed lines of credit aggregating
$1,420.9 million and $742.7 million, respectively. The unused portion of credit
lines was $1,293.8 million and $686.4 million at December 31, 1999 and 1998,
respectively. The lines of credit, including the credit facilities discussed
below, are generally extended at lending rates that the banks grant to their
most creditworthy borrowers.
On April 30, 1999, the Company entered into a $750 million revolving
credit agreement (the "$750 million credit facility"), with a consortium of
banks expiring on April 28, 2000.
The $750 million credit facility is used primarily to support the issuance
of commercial paper. The Company had $79.4 million of commercial paper
borrowings outstanding with interest rates ranging from 6.35% to 6.48% as of
December 31, 1999, which matured on January 27, 2000. The gross amount of
commercial paper issued and redeemed, under this facility, during the year ended
December 31, 1999 was $4,617 million and $4,538 million, respectively.
Commercial paper is included in long-term debt in the consolidated balance
sheet, as it is the Company's intention to refinance these borrowings on a
long-term basis through continued commercial paper borrowings supported by
available bank facilities (see Note 7).
On February 20, 1998, the Company established a $500 million revolving
credit agreement (the "$500 million credit facility"), expiring on June 30,
2003. There were no borrowings under this credit facility at December 31, 1999
and 1998.
The $500 million credit facility also allows for the issuance of
commercial paper backed by a bank letter of credit issued under the terms of the
credit facility. The Company had no commercial paper outstanding under this
agreement as of December 31, 1999 and 1998. The gross amount of commercial paper
issued and redeemed, during the year under this facility was $2,046 million,
$4,231 million and $2,017 million in 1999, 1998 and 1997, respectively.
4. Employee Stock Plans
Stock Options and Restricted Stock. Under the terms of the Company's 1998
Incentive Compensation Plan (the "1998 Plan"), 4,958,074 shares of common stock
of the Company have been reserved as of December 31, 1999 for restricted stock
awards and non-qualified stock options to key employees of the Company. The
maximum number of shares of common stock of the Company that may be granted in
any calendar year, under the 1998 Plan, is 1.5% of the total number of shares of
common stock issued and outstanding on the first day of that calendar year. Any
remaining reserved shares of common stock may be carried over to subsequent
years. The remaining number of such reserved shares was 747,653 at December 31,
1999. Awards under the Company's 1987 Stock Plan, as amended (the "1987 Plan"),
ceased to be made when the Company adopted the 1998 Plan.
As permitted by SFAS No. 123, "Accounting for Stock Based Compensation,"
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.
Pursuant to the 1987 Plan and 1998 Plan (the "Plans"), the price of
options awarded 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.
ESPP. Effective September 1, 1999 the Company adopted the Omnicom Group
Inc. Employee Stock Purchase Plan (the "ESPP"). The ESPP enables substantially
all domestic employees to purchase full or fractional shares of the Company's
common stock through payroll deductions of up to 10% of eligible compensation.
The price an employee pays is 85% of the fair market value on the purchase date
of that plan quarter. During 1999 employees purchased 63,408 shares, all of
which were treasury shares, for which $4.8 million was paid to the Company.
Under the ESPP 2,936,592 shares remain reserved at December 31, 1999.
F-11
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the status of the Company's stock option plan for the three
years ended December 31, 1999 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------- -------------------------- ---------------------------
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 ............... 7,190,800 $23.16 6,867,800 $16.21 6,757,800 $13.16
Options granted .................... 3,467,234 74.65 1,700,000 42.62 1,440,000 24.28
Options exercised .................. (2,304,647) 16.44 (1,377,000) 12.52 (1,330,000) 9.45
Options forfeited .................. (54,000) 46.91 -- --
--------- ------ -------- ------ --------- -----
Shares under option, end of year ... 8,299,387 46.37 7,190,800 23.16 6,867,800 16.21
Options exercisable at ========= ===== ========= ===== ========= =====
year-end ........................ 3,270,887 3,730,800 3,447,800
--------- --------- ---------
</TABLE>
The following table summarizes information about options outstanding and
options exercisable at December 31, 1999:
<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> <C>
5.81 40,000 1 year $ 5.81 40,000 $ 5.81
8.77 120,000 3 years 8.77 120,000 8.77
10.02 213,800 4 years 10.02 213,800 10.02
12.11 to 26.27 288,194 5 years 12.51 288,194 12.51
12.94 to 16.20 620,000 6 years 13.15 620,000 13.15
19.72 820,000 7 years 19.72 820,000 19.72
24.28 1,170,000 8 years 24.28 594,000 24.28
39.75 to 66.40 1,717,128 9 years 44.05 562,128 46.98
44.62 to 91.22 3,310,265 10 years 75.35 12,765 46.44
--------- ---------
8,299,387 3,270,887
========= =========
</TABLE>
Pro forma. The weighted average fair value of options granted during 1999,
1998 and 1997 was $20.91, $11.45 and $6.27 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:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Expected option lives .............. 5 years 5 years 5 years
Risk free interest rate ............ 4.77% - 6.31% 4.66% - 5.75% 6.15%
Expected volatility ................ 18.25% - 21.2% 18.36% - 20.15% 19.7%
Dividend yield ..................... 0.7% - 0.8% 0.9% - 1.0% 1.5%
</TABLE>
Using compensation cost for grants of the Company's stock options and
shares issued under the ESPP, determined based on the estimated fair value at
the grant or issuance date in 1999, 1998 and 1997, 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:
<TABLE>
<CAPTION>
Dollars in Thousands Except Per Share Data
-------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net income, as reported .................... $362,882 $278,845 $217,300
Net income, pro forma ...................... 347,643 271,031 212,145
Basic income per share, as reported ........ 2.07 1.61 1.30
Basic income per share, pro forma .......... 1.98 1.57 1.27
Diluted income per share, as reported ...... 2.01 1.57 1.28
Diluted income per share, pro forma ........ 1.93 1.53 1.26
</TABLE>
F-12
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Restricted Shares. A summary of changes in outstanding shares of
restricted stock for the three years ended December 31, 1999 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Beginning balance 2,703,612 3,137,350 3,315,516
Amount granted 935,263 783,419 1,105,838
Amount vested (983,251) (1,111,808) (1,123,882)
Amount forfeited (53,343) (105,349) (160,122)
--------- --------- ---------
Ending balance 2,602,281 2,703,612 3,137,350
========= ========= =========
</TABLE>
All restricted shares granted under the Plans 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 Plans, 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, 1999, 1998 and 1997 amounted to $27.8 million,
$21.5 million and $17.3 million, respectively.
5. Segment Reporting
The Company's wholly-owned and partially-owned businesses operate within
the corporate communications services operating segment. These businesses
provide a variety of communications services to clients through several
worldwide, national and regional independent agency brands. The businesses
exhibit similar economic characteristics driven from their consistent efforts to
create customer driven marketing communications services that build their
clients businesses. A summary of the Company's operations by geographic area as
of December 31, 1999, 1998 and 1997, and for the years then ended is presented
below:
<TABLE>
<CAPTION>
(Dollars in Thousands)
---------------------------------------------------------------------------------
United United Other Other
States Kingdom Germany France Europe International Consolidated
------ ------- ------- ------ ------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999
Commissions and Fees $2,532,917 $720,047 $431,739 $359,042 $554,767 $532,033 $5,130,545
Long-Lived Assets 219,590 101,989 10,883 16,951 38,661 56,648 444,722
1998
Commissions and Fees $2,098,220 $659,658 $358,441 $306,734 $468,878 $399,015 $4,290,946
Long-Lived Assets 156,092 100,242 11,916 17,245 38,446 52,600 376,541
1997
Commissions and Fees $1,616,768 $501,738 $284,544 $172,395 $374,303 $346,476 $3,296,224
Long-Lived Assets 128,563 72,430 9,125 8,712 26,336 26,903 272,069
</TABLE>
F-13
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 the United States, Europe and Australia,
as of December 31, 1999, 1998 and 1997, and for the years then ended:
(Dollars in Thousands)
----------------------------------
1999 1998 1997
---- ---- ----
Current assets ................. $912,791 $773,661 $442,023
Non-current assets ............. 241,385 156,459 75,072
Current liabilities ............ 692,927 657,247 348,753
Non-current liabilities ........ 65,978 87,258 26,741
Minority interests ............. 1,002 2,327 3,219
Gross revenue .................. 522,103 510,730 374,196
Costs and expenses ............. 467,745 444,453 305,144
Net income ..................... 23,662 33,183 46,834
The Company's equity in the net income of these affiliates amounted to
$15.4 million, $20.6 million and $25.7 million for 1999, 1998 and 1997,
respectively. The Company's equity in the net tangible assets of these
affiliated companies was approximately $174.0 million, $110.5 million and $83.1
million at December 31, 1999, 1998 and 1997, respectively. Included in the
Company's investments in affiliates is the excess of acquisition costs over the
fair value of tangible net assets acquired. These excess acquisition costs are
being amortized on a straight-line basis principally over a period of forty
years. In 1999 and 1998, the Company disposed of shares held in certain
affiliates. The resulting impact of these sales was not material to the 1999 and
1998 consolidated results of operations or financial position.
In April 1999, Razorfish, Inc. (Razorfish), an affiliate of the Company,
issued shares of its common stock in an initial public offering. The Company,
through a wholly-owned subsidiary, owned 32.4% of Razorfish's equity immediately
following the initial public offering. Consistent with the Company's accounting
policy and based on an offering price of $16 per share, an after tax gain of
$5.1 million was recognized by the Company in shareholders' equity as a direct
increase to additional paid-in capital. During the fourth quarter of 1999, the
Company's ownership interest in Razorfish was diluted below 20% and as a result
the Company discontinued accounting for its investment under the equity method.
The Company's investment in Razorfish is carried at market value. Substantially
all of the Company's long-term investments on the consolidated Balance Sheet at
December 31, 1999 are comprised of shares in Razorfish. Unrealized gains
resulting from an increase in the market value of the Company's common stock
shareholdings of Razorfish were recorded in comprehensive income since the date
the equity method of accounting was discontinued.
In December 1999, AGENCY.com Ltd (AGENCY), an affiliate of the Company,
issued shares of its common stock in an initial public offering. The Company,
through a wholly-owned subsidiary, owns 36% of AGENCY's equity. Based on an
offering price of $26 per share, an after tax gain of $17.6 million was
recognized by the Company in shareholders' equity as a direct increase to
additional paid-in capital. The Company accounts for its investment in AGENCY
under the equity method. At December 31, 1999, the fair market value of the
Company's investment in AGENCY was $944 million, which amount substantially
exceeded its carrying value.
F-14
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Long-Term Debt and Convertible Subordinated Debentures
Long-term debt and convertible subordinated debentures outstanding as of
December 31, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
(Dollars in Thousands)
--------------------
1999 1998
---- ----
U.S. Dollar Commercial Paper with an average
<S> <C> <C>
interest rate of 6.41% ...................................... $ 79,402 --
Deutsche Mark Floating Rate Bonds, with a scheduled maturity
in 2000, interest at DM three month LIBOR, plus 0.65% ....... 57,185 $ 66,522
Deutsche Mark Floating Rate Bonds, with a scheduled maturity
in 1999, interest at DM three month LIBOR plus 0.375% ....... -- 59,930
French Franc 5.20% Notes, with a scheduled maturity in 2005 .... 153,394 178,600
Floating Rate Loan Notes, with a scheduled maturity in 2001 .... 1,982 2,033
Sundry notes and loans payable to banks and others at rates from
4.1% to 26%, maturing at various dates through 2018 ............ 53,807 45,282
-------- --------
345,770 352,367
Less current portion ........................................... 82,621 83,454
-------- --------
Total long-term debt ......................................... $263,149 $268,913
4 1/4% Convertible Subordinated Debentures with a scheduled
maturity in 2007 ............................................ $218,483 $218,497
2 1/4% Convertible Subordinated Debentures with a scheduled
maturity in 2013 ............................................ 230,000 230,000
-------- --------
Total convertible subordinated debentures ................... $448,483 $448,497
======== ========
</TABLE>
On April 30, 1999, the Company entered into a $750 million revolving
credit agreement with a consortium of banks expiring on April 28, 2000. This
credit agreement supports the facility for issuing commercial paper. The
remaining borrowing capacity under this agreement at December 31, 1999 was
$670.6 million.
On June 24, 1998, the Company issued French Franc 1 billion of 5.20%
Notes. The Notes are unsecured, unsubordinated obligations of the Company. The
Notes are subject to redemption in whole at their principal amount at the option
of the Company at any time in the event of certain changes affecting taxation in
the United States. Unless previously redeemed, or purchased and cancelled, the
Notes will be redeemed at their principal amount on June 24, 2005.
In March 1998, the Company issued floating rate Loan Notes in connection
with the acquisition of the GGT Group plc. The Loan Notes are unsecured
obligations and bear interest at a yearly rate offered in the London Inter-Bank
Market for six month deposits of sterling. The Loan Notes are redeemable, at the
option of the holder, in whole or in part at their nominal amount, together with
accrued interest on any interest payment date after December 31, 1998. Under
certain conditions, the Company may redeem the Loan Notes, at their nominal
amount plus accrued interest on any interest payment date. Unless previously
repaid, redeemed or purchased and cancelled, the Loan Notes will be repaid on
June 30, 2001 at par.
On February 20, 1998, the Company established a $500 million revolving
credit agreement (the "$500 million credit facility"). This $500 million credit
facility is with a consortium of banks expiring on June 30, 2003. This credit
facility includes a facility for issuing commercial paper backed by a bank
letter of credit. Because the Company has the ability and intent to refinance
commercial paper on a long-term basis under the $500 million credit facility,
commercial paper borrowings at December 31, 1999 has been classified as
long-term. The credit facility 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, 1999
the Company was in compliance with these convenants.
On January 6, 1998, the Company issued $230 million of 2 1/4% Convertible
Subordinated Debentures with a scheduled maturity in 2013. The debentures are
convertible into common stock of the Company at a conversion price of $49.83 per
share subject to adjustment in certain events. Debenture holders have the right
F-15
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
to require the Company to redeem the debentures on January 6, 2004 at a price of
118.968%, 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 31, 2001 initially
at 112.841% and at increasing prices thereafter to 118.968% until January 6,
2004, and 100% thereafter. Unless the debentures are redeemed, repaid or
converted prior thereto, the debentures will mature on January 6, 2013 at their
principal amount.
On January 3, 1997, the Company issued $218.5 million of 4 1/4%
Convertible Subordinated Debentures with a scheduled maturity in 2007. The
debentures are convertible into common stock of the Company at a conversion
price of $31.50 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.
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 matured on March 1, 1999 and were 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,
subordinated 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, subsequent to January 5, 1997 may be
redeemed at the option of the issuer on any interest payment date at their
principal amount plus any accrued but unpaid interest. On August 18, 1997 and
October 1, 1997, Deutsche Mark 69 million and Deutsche Mark 20 million,
respectively, of the Deutsche Mark 200 million Floating Rate Bonds were
repurchased. The remaining bonds matured on January 5, 2000 and were repaid at
par.
Aggregate maturities on long-term debt and convertible subordinated
debentures in the next five years are as follows:
(Dollars in Thousands)
2000 ......................... $ 82,621
2001 ......................... 6,086
2002 ......................... 2,254
2003 ......................... 83,254
2004 ......................... 1,925
Thereafter ................... 618,113
F-16
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Income Taxes
Income before income taxes and the provision for taxes on income consisted
of the amounts shown below:
Years Ended December 31,
(Dollars in Thousands)
----------------------------
1999 1998 1997
---- ---- ----
Income before incomes taxes:
Domestic ....................... $314,338 $263,058 $182,608
International .................. 359,370 258,739 207,970
-------- -------- --------
Total .................... $673,708 $521,797 $390,578
======== ======== ========
Provision for taxes on income:
Current:
Federal .................. $ 80,401 $ 65,180 $ 47,145
State and local .......... 30,577 21,292 17,221
International ............ 144,228 121,367 88,725
-------- -------- --------
255,206 207,839 153,091
======== ======== ========
Deferred:
Federal .................. 9,499 7,943 7,712
State and local .......... 381 1,853 541
International ............ 8,161 1,457 5,195
-------- -------- --------
18,041 11,253 13,448
-------- -------- --------
Total .................... $273,247 $219,092 $166,539
======== ======== ========
The Company's effective income tax rate varied from the statutory federal
income tax rate as a result of the following factors:
1999 1998 1997
---- ---- ----
Statutory federal income tax rate .................... 35.0% 35.0% 35.0%
State and local taxes on income, net of federal
income tax benefit ................................ 3.0 2.9 3.0
International subsidiaries' tax rate differentials ... 1.3 2.2 2.8
Non-deductible amortization of goodwill .............. 3.2 3.4 3.0
Other ................................................ (1.9) (1.5) (1.2)
--- --- ---
Effective rate ....................................... 40.6% 42.0% 42.6%
==== ==== ====
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
liabilities recorded in connection with acquisitions. Deferred tax liabilities
result principally from non-cash, unrealized financial statement gains
associated with investments and capital transactions related to initial public
offerings of common stock by affiliates, and expenses which are currently
deductible for tax purposes, but have not yet been expensed in the financial
statements.
F-17
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Deferred tax (liabilities) benefits as of December 31, 1999 and 1998
consisted of the amounts shown below (dollars in millions):
1999 1998
---- ----
Unrealized gains on investments in and capital
transactions of, affiliates ......................... $(320.2) $(2.6)
Compensation and severance reserves ................... 52.7 42.9
Acquisition liabilities ............................... 43.1 20.6
Deductible intangibles ................................ 37.1 39.1
Lease reserves ........................................ 4.9 11.3
Financial instruments ................................. 7.3 14.2
Other, net ............................................ 5.2 6.4
------- ------
$(169.9) $131.9
======= ======
Current deferred tax benefits as of December 31, 1999 and 1998 were $30.0
million and $36.3 million, respectively, and were included in prepaid expenses
and other current assets. Non-current deferred tax benefits as of December 31,
1999 and 1998 were $120.3 million and $98.2 million, respectively. The Company
has concluded that it is probable that it will be able to realize these 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 board 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 related to the Company's
contributions to these plans amounted to $77.2 million, $72.7 million and $59.2
million in 1999, 1998 and 1997, 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 $8.5 million, $5.2 million and $5.3 million
in 1999, 1998 and 1997, respectively.
Certain subsidiaries of the Company have executive retirement programs
under which benefits will be paid to participants or to 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 costs related to these benefits were not material
to the 1999, 1998 and 1997 consolidated results of operations or financial
position.
10. Commitments and Contingent Liabilities
At December 31, 1999, 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 $341.6
million in 1999, $311.5 million in 1998 and $242.7 million in 1997 after
reduction for rents received from subleases of $17.4 million, $14.7 million and
$12.8 million, respectively.
F-18
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Future minimum base rents under terms of noncancellable operating leases,
reduced by rents to be received from existing noncancellable subleases, are as
follows:
(Dollars in Thousands)
Gross Rent Sublease Rent Net Rent
---------- -------------------- --------
2000 ...................... $267,719 $14,534 $253,185
2001 ...................... 251,577 11,713 239,864
2002 ...................... 229,331 9,358 219,973
2003 ...................... 205,559 8,107 197,452
2004 ...................... 192,817 7,448 185,369
Thereafter ................ 1,096,480 20,539 1,075,941
The present value of the gross future minimum base rents under
noncancellable operating leases is $1,338.2 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, 1999 and 1998.
Amounts in parentheses represent liabilities.
<TABLE>
<CAPTION>
1999 1998
---------------------- -----------------------
(Dollars in Thousands) (Dollars in Thousands)
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Cash, cash equivalents and
short-term investments ................. $600,949 $600,949 $717,391 $717,391
Long-term investments ..................... 785,406 785,406 4,998 11,316
Other investments ......................... 6,419 6,419 10,562 10,562
Long-term debt and convertible
subordinated debentures ................ (794,253) (1,509,076) (800,864) (1,088,322)
Financial Commitments
Cross currency interest rate swaps ..... -- (47,038) -- (27,669)
Forward foreign exchange contracts ..... -- (1,596) -- 2,514
Guarantees ............................. -- (47,861) -- (6,417)
Letters of credit ...................... -- (14,002) -- (922)
</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:
Short-term investments:
Short-term investments which consist primarily of short-term investments
and investments in short-term interest bearing instruments with original
maturity dates between three months and one year are carried at cost which
approximates fair value.
Long-term investments:
Long-term investments consist of available-for-sale securities, primarily
in the Company's holdings in interactive marketing agencies that are publicly
traded. The investments are carried at market value and the unrealized gains and
losses on these securities are included in Shareholders' Equity.
Other investments:
Included in deferred charges and other assets are other long-term
investments carried at cost, which approximates estimated fair value.
F-19
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Long-term debt:
A portion of the Company's long-term debt included floating rate debt, the
carrying value of which approximates fair value. The Company's long-term debt
also included convertible subordinated debentures and fixed rate senior debt.
The fair value of these instruments was determined by reference to quotations
available in markets where these issues were traded. The quotations for the
subordinated debentures primarily reflected the conversion value of the
debentures into the Company's common stock.
Financial Commitments:
The estimated fair values 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 values of guarantees principally
related to affiliated companies, and letters of credit were based upon the face
value of the underlying instruments.
12. Financial Instruments and Market Risk
The Company 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 participates 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.
Additionally, senior management reports periodically to the Audit Committee of
the Board of Directors concerning derivative activities. In 1993, the Audit
Committee established limitations on derivative activities which are reviewed
annually.
At December 31, 1999 and 1998, the Company had Japanese yen 16.3 billion
aggregate notional principal amount of cross currency interest rate swaps. The
swaps convert a portion of the Company's U.S. dollar floating rate debt into
fixed rate Japanese yen debt and effectively hedge the Company's net investment
in Japanese yen denominated assets.
The Company enters into forward foreign exchange contracts predominately
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, 1999 and 1998, the aggregate amount of intercompany receivables and
payables subject to this hedge program was $773 million and $628 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, 1999 and 1998. 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-20
<PAGE>
OMNICOM GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
(Dollars in thousands)
Notional Principal Amount
---------------------------------
1999 1998
------------------------------- ------------------------------
Currency Company Buys Company Sells Company Buys Company Sells
-------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
U.S. Dollar $140,704 $ 90,416 $215,157 $ 45,010
Euro 261,228 246,599 204,249 302,667
Canadian Dollar 52,296 60,485 13,077 3,574
Swedish Krona 4,027 1,463 1,621 2,432
Hong Kong Dollar 3,870 2,669 1,485 5,978
Australian Dollar 1,485 124 310 --
Swiss Franc 618 3,902 1,810 1,489
Singapore Dollar 1,088 4,930 1,031 4,669
Greek Drachma 22 3,088 -- 6,183
Norwegian Krone -- 9,453 -- 8,120
Danish Krone -- 4,177 1,851 3,958
Czech Republic Koruna -- 68 -- --
Japanese Yen -- -- 20,365 20,272
-------- -------- -------- --------
Total $465,338 $427,374 $460,956 $404,352
======== ======== ======== ========
</TABLE>
Comparatives have been restated to reflect the rationalization of the 11
eurozone currencies as a result of the introduction of the euro.
The derivative financial instrument existing during the years ended
December 31, 1999 and 1998 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. 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.
13. Adoption of New Accounting Pronouncements
In June 1998, the Financial Accounting Standard Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" which the Company
is required to adopt effective January 1, 2001. SFAS No. 133 cannot be applied
retroactively. SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. SFAS No. 133 requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. Once implemented, SFAS No. 133 must be applied to
(a) derivative instruments and (b) certain derivative instruments embedded in
hybrid contracts that were issued, acquired, or substantively modified after
December 31, 1997.
The Company intends to adopt SFAS No. 133 for its fiscal year ending
December 31, 2001. The impact of SFAS No. 133 on the Company's financial
statements will depend on a variety of factors, including future interpretative
guidance from the FASB, the future level forecasted and actual foreign currency
transactions, the extent of the Company's hedging activities, the types of
hedging instruments used and the effectiveness of such instruments. However, the
Company does not believe the effect of adopting SFAS No. 133 will be material to
its financial position.
F-21
<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, 1999 and 1998, in
thousands of dollars except for per share amounts. All prior years information
has been restated to give effect to the accounting for the acquisition of Abbott
Mead Vickers Group Limited under the pooling of interest method (see Note 2 to
the Consolidated Financial Statements).
<TABLE>
<CAPTION>
First Second Third Fourth
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Commissions & Fees
1999 ................. $ 1,146,877 $ 1,270,369 $ 1,210,880 $ 1,502,419
1998 ................. 905,799 1,094,160 1,032,985 1,258,002
Income Before Income Taxes
1999 ................. 123,323 198,699 131,254 220,432
1998 ................. 94,360 167,268 106,589 153,580
Income Taxes
1999 ................. 50,515 80,573 53,851 88,308
1998 ................. 39,381 71,570 46,104 62,037
Income After Income Taxes
1999 ................. 72,808 118,126 77,403 132,124
1998 ................. 54,979 95,698 60,485 91,543
Equity in Affiliates
1999 ................. 929 2,849 (202) 11,792
1998 ................. 4,086 4,313 4,960 7,147
Minority Interests
1999 ................. (8,175) (13,833) (6,916) (24,023)
1998 ................. (7,741) (13,755) (9,465) (13,405)
Net Income
1999 ................. 65,562 107,142 70,285 119,893
1998 ................. 51,324 86,256 55,980 85,285
Basic Earnings Per Share
1999 ................. 0.37 0.61 0.40 0.69
1998 ................. 0.30 0.50 0.32 0.49
Diluted Earnings per Share
1999 ................. 0.37 0.59 0.39 0.66
1998 ................. 0.29 0.48 0.32 0.48
</TABLE>
F-22
<PAGE>
Schedule II
OMNICOM GROUP INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 31, 1999
<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, 1999 ..................... $55,764 $14,399 $16,007 $ 436 $53,720
December 31, 1998 ..................... 30,475 15,586 (8,573) (1,130) 55,764
December 31, 1997 ..................... 23,166 10,491 1,609 1,573 30,475
</TABLE>
- ----------
(1) Net of acquisition date balances in allowance for doubtful accounts of
companies acquired of $6.1 million, $13.1 million and $2.0 million in
1999, 1998 and 1997, respectively.
S-1
<PAGE>
INDEX TO EXHIBITS
(3)(i) Certificate of Incorporation (as amended on December 4, 1997 and as
restated for filing purposes), filed as Exhibit 4.1 to Omnicom Group
Inc.'s Registration Statement No. 333-46303, are incorporated herein
by reference.
(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 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 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.
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 4 1/4%
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 January 3, 1997 between the
Registrant and Morgan Stanley & Co. Incorporated related to the
Registrant's 4 1/4% Convertible Subordinated Debentures due 2007
filed as Exhibit 4.4 to Omnicom Group Inc.'s Form S-3 Registration
No. 333-22589, is incorporated herein by reference.
<PAGE>
4.8 Indenture dated January 6, 1998, between Registrant and The Chase
Manhattan Bank, as trustee, in connection with the issuance of 2 1/4%
Convertible Subordinated Debentures due 2013 filed as Exhibit 4.1 to
Omnicom Group Inc.'s Report on Form 8-K dated January 20, 1998, is
incorporated herein by reference.
4.9 Form of Debentures (included in Exhibit 4.8 above) filed as Exhibit
4.2 to Omnicom Group Inc.'s Report on Form 8-K dated January 20,
1998, is incorporated herein by reference.
4.10 Registration Rights Agreement dated January 6, 1998, between the
Registrant and Morgan Stanley & Co. Incorporated related to the
Registrant's 2 1/4% Convertible Subordinated Debentures due 2013
filed as Exhibit 4.3 to Omnicom Group Inc.'s Report on Form 8-K dated
January 20, 1998, is incorporated herein by reference.
4.11 Fiscal Agency Agreement dated June 24, 1998, in connection with the
issuance of FRF 1,000,000,000 5.20% Notes due 2005 filed as Exhibit
4.1 to Omnicom Group Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, is incorporated herein by reference.
4.12 Subscription Agreement dated June 22, 1998 by and among Omnicom Group
Inc., Morgan Stanley S.A. and Others, in connection with the issuance
of FRF 1,000,000,000 5.20% Notes due 2005 filed as Exhibit 4.2 to
Omnicom Group Inc.'s Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998, is incorporated herein by reference.
4.13 Deed of the Covenant dated June 24, 1998, in connection with the
issuance of FRF 1,000,000,000 5.20% Notes due 2005 filed as Exhibit
4.3 to Omnicom Group Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, is incorporated herein by reference.
(10) Material Contracts.
Management Contracts, Compensatory Plans, Contracts or Arrangements.
10.1 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 Standard Form of the Registrant's 1998 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.
10.4 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.
<PAGE>
10.5 Severance Agreement dated July 6, 1993, between Keith Reinhard and
DDB 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.
10.6 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.
10.7 Deferred Compensation Agreement dated October 12, 1984, between
William G. Tragos and TBWA Chiat/Day Inc. (then known as 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.
10.8 Standard Form of Severance Compensation Agreement incorporated by
reference to BBDO International Inc.'s Form S-1 Registration
Statement filed with the Securities and Exchange Commission on
September 28, 1973, is incorporated herein by reference.
10.9 Omnicom Group Inc. 1998 Incentive Compensation Plan, filed as Exhibit
A to Omnicom Group Inc.'s Proxy Statement dated April 6, 1998, is
incorporated herein by reference.
10.10 Omnicom Group Inc. Restricted Stock Plan for Non-employee Directors.
Other Material Contracts.
10.11 $500,000,000 Amended and Restated Credit Agreement, dated as of May
10, 1996 amended and restated as of February 20, 1998, between
Omnicom Finance Inc., Omnicom Finance Limited, ABN AMRO Bank N.V.,
Chase Securities Inc. and the financial institutions party thereto,
filed as Exhibit 10.16 to Omnicom Group Inc.'s Annual Report on Form
10-K for the year ended December 31, 1997, is incorporated herein by
reference.
10.12 364-Day Credit Agreement, dated as of April 30, 1999, among Omnicom
Finance Inc., Omnicom Finance Limited, the financial institutions
party thereto, Citibank, N.A., as Administrative Agent, The Bank of
Nova Scotia, as Documentation Agent, and Instituto Bancario San Paolo
Di Torino Instituto Mobiliare Italiano S.p.A., as Syndication Agent
(the "Credit Agreement"), filed as Exhibit 10.1 to Omnicom Group
Inc.'s quarterly report on Form 10-Q for the quarter ended March 31,
1999, is incorporated herein by reference.
10.13 List of Contents of Exhibits to the Credit Agreement, filed as
Exhibit 10.2 to Omnicom Group Inc.'s quarterly report on Form 10-Q
for the quarter ended March 31, 1999, is incorporated herein by
reference.
10.14 Guaranty, dated as of April 30, 1999, made by Omnicom Group Inc.,
filed as Exhibit 10.3 to Omnicom Group Inc.'s quarterly report on
Form 10-Q for the quarter ended March 31, 1999, is incorporated
herein by reference.
(21) Subsidiaries of the Registrant
<PAGE>
(23) Consents of Experts and Counsel.
23.1 Consent of Arthur Andersen LLP.
(24) Powers of Attorney from Bernard Brochand, Robert J. Callander, James
A. Cannon, Leonard S. Coleman, Jr., Bruce Crawford, Susan S. Denison,
Peter Foy, Thomas L. Harrison, John R. Murphy, John R. Purcell, Keith
L. Reinhard, Allen Rosenshine, Gary L. Roubos, Quentin I. Smith, Jr.
and Egon P.S. Zehnder.
(27) Financial Data Schedule (filed in electronic format only).
Exhibit 10.10
OMNICOM GROUP INC.
RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purposes of the Plan.
The purposes of the Omnicom Group Inc. Restricted Stock Plan for
Non-employee Directors (the "Plan") are to encourage equity ownership in
Omnicom Group Inc. (the "Company") by Non-employee Directors through the
granting of restricted stock, to provide an incentive to such directors to
continue to serve the Company and to aid the Company in attracting
qualified director candidates in the future.
2. Definitions.
For purposes of the Plan, the following terms shall have the
meanings set forth below:
(a) "Award Agreement" shall mean a written agreement entered into
between the Company and a Non-employee Director in connection with a
Restricted Stock Award under the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Board Term" shall mean each Board year beginning on the date of an
annual meeting of the Company's shareholders and ending on the date
immediately preceding the next annual meeting of the Company's
shareholders.
(d) "Change of Control" shall mean and include each of the following:
(i) the acquisition, in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act)
by any person or entity or any group of persons or entities who
constitute a group (within the meaning of Section 13(d)(3) of the
Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
Subsidiary, of any securities of the Company such that, as a result
of such acquisition, such person, entity or group either (A)
beneficially owns (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, more than 20% of the
Company's outstanding voting securities entitled to vote on a
regular basis in the election of the members of the Board or (B)
otherwise has the ability to elect, directly or indirectly, a
majority of the members of the Board; (ii) a change in the
composition of the Board such that a majority of the members of the
Board are not Continuing Directors; or (iii) the consummation of a
merger or consolidation of the Company with any other corporation or
entity which has been approved by the shareholders of the Company,
other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or
by being
<PAGE>
converted into voting securities of the surviving entity) at least
80% of the total voting power represented by the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the consummation of a plan of
complete dissolution or liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one or more
transactions) all or substantially all of the Company's assets which
has been approved by the shareholders of the Company.
Notwithstanding the foregoing, the preceding events shall not be
deemed to be a Change of Control if, prior to any transaction or
transactions causing such change, a majority of the Continuing
Directors shall have voted not to treat such transaction or
transactions as resulting in a Change of Control.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Common Stock" shall mean the common stock, par value $0.50 per
share, of the Company.
(g) "Company" shall mean Omnicom Group Inc., a New York corporation, or
any successor corporation.
(h) "Continuing Director" shall mean, as of any date of determination,
any member of the Board who (i) was a member of the Board on the
effective date of the Plan or (ii) was nominated for election or
elected to the Board with the affirmative vote of a majority of the
Continuing Directors who were members of the Board at the time of
such nomination or election.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time and as now or hereafter construed,
interpreted and applied by regulations, rulings and cases.
(j) "Non-employee Director" shall mean any member of the Board who is
not also an employee of the Company or any Subsidiary.
(k) "Restricted Stock Award" shall mean an award under Section 5 hereof
entitling a Non-employee Director to Shares that are nontransferable
and subject to forfeiture until specific conditions established by
the Board are satisfied.
(l) "Shares" shall mean shares of Common Stock of the Company.
(m) "Subsidiary" shall mean any corporation or other entity of which a
majority of its voting power or its equity securities or equity
interest is owned directly or indirectly by the Company.
3. Administration of the Plan.
The Plan shall be administered by the Board. The Board shall have
and exercise all power and authority under the Plan, including, without
limitation, the power and
-2-
<PAGE>
authority to administer the Plan, to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, and to make
all other determinations deemed necessary or advisable for the
administration of the Plan. Any action of the Board in administering the
Plan shall be final, conclusive and binding on all persons. No member of
the Board shall be liable for any action taken or determination made in
good faith with respect to the Plan or any Restricted Stock Award
hereunder.
4. Shares Subject to Plan.
4.1 Number of Shares.
The maximum number of Shares which may be issued pursuant to
Restricted Stock Awards under the Plan shall be 25,000 Shares, which
number shall be subject to adjustment as provided in Section 6 hereof.
Such Shares shall be Shares that shall have been or may be reacquired by
the Company and held in treasury.
4.2 Reuse of Shares.
If any Shares granted under a Restricted Stock Award do not vest and
are forfeited, such Shares shall thereafter be available for Restricted
Stock Awards during the term of the Plan.
5. Restricted Stock Awards.
5.1 Restricted Stock Awards.
As of the first business day following the commencement of each
Board Term, each Non-employee Director shall receive a Restricted Stock
Award of 250 Shares (subject to adjustment as provided in Section 6
hereof).
5.2 Vesting Requirements.
The restrictions imposed on Shares granted under a Restricted Stock
Award shall lapse in accordance with the vesting requirements specified by
the Board in the Award Agreement. Such vesting requirements may be based
on the continued service of the Non-employee Director with the Company for
a specified time period or periods, provided that any such restriction
shall not be scheduled to lapse in its entirety earlier than the first
anniversary of the date of grant of the Restricted Stock Award.
5.3 Restrictions.
Shares granted under any Restricted Stock Award may not be subject
to any encumbrance, lien, pledge, obligation, liability or charge, and may
not be transferred or assigned (otherwise than by will or the laws of
descent and distribution), until such Shares have vested and all
applicable restrictions are removed or have expired, unless otherwise
allowed by the Board; provided, however, that Shares granted under any
Restricted Stock Award may be transferred without consideration to family
members,
-3-
<PAGE>
provided that any such family member shall be subject to all terms,
conditions and restrictions of the Plan and the applicable Award
Agreement. For purposes hereof, a family member shall mean any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law, including adoptive relationships, any
person sharing the Non-employee Director's household (other than a tenant
or employee), a trust in which these persons have more than fifty percent
of the beneficial interest, a foundation in which these persons (or the
Non-employee Director) control the management of assets, and any other
entity in which these persons (or the Non-employee Director) own more than
fifty percent of the voting interests. The Board may require that the
certificates representing the Shares of a Restricted Stock Award remain in
the custody of the Company, or bear a legend making appropriate reference
to the restrictions imposed, until such Shares have vested and all
restrictions are removed or have expired. Failure to satisfy any
applicable restrictions shall result in the Shares granted under the
Restricted Stock Award being forfeited, unless otherwise provided by the
Board.
5.4 Rights as Shareholder.
Subject to the foregoing provisions of this Section 5 and the
applicable Award Agreement, the Non-employee Director will have all rights
of a shareholder with respect to the Shares granted to him or her under a
Restricted Stock Award, including the right to vote the Shares and receive
all dividends and other distributions paid or made with respect thereto
(provided that any dividends or distributions in Shares shall be subject
to the same restrictions as apply to the Shares with respect to which such
dividends or distributions were paid), unless the Board determines
otherwise at the time of the Restricted Stock Award.
5.5 Section 83(b) Election.
If a Non-employee Director makes an election under section 83(b) of
the Code with respect to a Restricted Stock Award, the Non-employee
Director shall promptly file a copy of such election with the Company.
5.6 Change of Control.
In the event of a Change of Control of the Company, all Shares
granted under a Restricted Stock Award that are not yet vested or that are
subject to restrictions shall become immediately 100% vested in each
Non-employee Director and shall be free of any restrictions, immediately
prior to the first date that the definition of Change of Control has been
satisfied.
6. Antidilution Adjustments.
In the event that the Board shall determine that any stock dividend,
recapitalization, forward split or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or share exchange, or
other similar corporate transaction or event, affects the Common Stock
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Non-employee Directors under the Plan,
-4-
<PAGE>
then the Board shall, in such manner as it may deem equitable, adjust any
or all of (i) the number and kind of Shares which may thereafter be issued
in connection with Restricted Stock Awards, and (ii) the aggregate number
and kind of Shares subject to the Plan, or, if deemed appropriate, make
provision for a cash payment with respect to any outstanding Restricted
Stock Award.
7. Conditions of Issuance of Stock Certificates.
7.1 Applicable Conditions.
The Company shall not be required to issue any certificate for
Shares granted under any Restricted Stock Award prior to fulfillment of
all of the following conditions:
(a) the completion of any registration or other qualification of
such Shares under any federal or state law, or under the
rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, that the
Board shall, in its sole discretion, deem necessary or
advisable;
(b) the obtaining of any approval or other clearance from any
federal or state governmental agency that the Board shall, in
its sole discretion, determine to be necessary or advisable;
(c) the lapse of such reasonable period of time following the date
of the Restricted Stock Award as the Board from time to time
may establish for reasons of administrative convenience; and
(d) if required by the Board, in its sole discretion, the receipt
by the Company from a Non-employee Director of (i) a
representation in writing that the Shares granted under any
Restricted Stock Award are being acquired for investment and
not with a view to distribution and (ii) such other
representations and warranties as are deemed necessary by
counsel to the Company.
7.2 Legends.
In addition to any legend that may be required pursuant to Section 5
hereof, the Board may require that the certificates representing the
Shares granted under a Restricted Stock Award bear a legend making
appropriate reference to the restrictions upon resale imposed by
applicable federal and state securities laws and regulations.
8. No Rights to Continued Service.
Nothing in the Plan, in any Restricted Stock Award or in any Award
Agreement shall confer upon any Non-employee Director the right to
continue service as a member of the Board or to be entitled to any
remuneration or benefits not set forth in the Plan or Award Agreement.
-5-
<PAGE>
9. No Rights to Assets of the Company.
Nothing in the Plan, in any Restricted Stock Award or in any Award
Agreement shall confer upon any Non-employee Director any right to any
particular assets of the Company. A Non-employee Director's rights under
the Plan are limited to those rights of an unsecured creditor except to
the extent Shares are actually issued to such Non-employee Director.
10. Amendment and Termination of the Plan.
The Board, at any time and from time to time, may suspend,
terminate, modify or amend the Plan; provided, however, that an amendment
which requires shareholder approval for the Plan to continue to comply
with any law, regulation or stock exchange requirement shall not be
effective unless approved by the requisite vote of shareholders. No
suspension, termination, modification or amendment of the Plan shall
adversely affect any Restricted Stock Award previously made, unless the
written consent of the affected Non-employee Director is obtained.
11. Effective Date and Term of the Plan.
The Plan shall be effective as of January 31, 2000 and shall
terminate on January 31, 2010, unless sooner terminated by action of the
Board. No Restricted Stock Awards may be granted after such termination,
but termination of the Plan shall not, without the consent of any
Non-employee Director who then holds Shares granted under a Restricted
Stock Award, alter or impair any rights or obligations in respect of such
Shares.
12. Governing Law.
The Plan, any Award Agreement and the rights of all persons claiming
hereunder or thereunder shall be governed by the laws of the State of New
York without giving effect to the choice of law principles thereof, except
to the extent that such laws are preempted by federal law.
-6-
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 -- --
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%
Eagle River Interactive Inc. .................. Delaware Registrant 100%
Strategic Alliance Services Inc. .............. Delaware Registrant 100%
Goodby, Silverstein & Partners Holdings Inc. .. California Registrant 100%
Goodby, Silverstein & Partners Inc. ........... California Goodby, Silverstein & Partners Holdings Inc. 100%
I&S Corporation ............................... Japan Registrant 40%
Manning Gottlieb Media Limited ................ United Kingdom Omnicom UK Ltd. 50%
Simons Palmer Clemmow Johnson (Holdings) Limited 32%
The Allmond Partnership Limited ............... United Kingdom Manning Gottlieb Media Limited 62%
Omnicom Finance Plc ........................... United Kingdom Omnicom Europe Limited 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 Atmosphere ............................... Delaware BBDO Worldwide Inc. 90%
BBDO International Inc. ....................... Delaware Omnicom International Inc. 100%
Baker Lovick, L.L.C. .......................... Delaware BBDO Canada Inc. 99%
Omnicom Finance Plc 1%
InterOne Marketing Group Inc. ................. Michigan Registrant 100%
RR Realty, Inc. ............................... Michigan InterOne Marketing Group Inc. 100%
RATTO/BBDO S.A. ............................... Argentina BBDO Worldwide Inc. 40%
Clemenger BBDO Ltd. ........................... Australia BBDO Worldwide Inc. 47%
Diversified Marketing Services Pty. Ltd. ...... Australia Clemenger BBDO Ltd. 47%
Clemenger Direct Pty. Ltd. (Sydney) ........... Australia Diversified Marketing Services Pty. Ltd. 47%
Quantum Market Research Pty. Ltd. ............. Australia Diversified Marketing Services Pty. Ltd. 28%
Sales Success (Aust) Pty. Ltd. ................ Australia Diversified Marketing Services Pty. Ltd. 24%
Multinet Systems .............................. Australia Diversified Marketing Services Pty. Ltd. 33%
Porter Novelli Australia (Melbourne) Pty. Ltd. Australia Diversified Marketing Services Pty. Ltd. 26%
Porter Novelli Australia Pty. Ltd. ............ Australia Diversified Marketing Services Pty. Ltd. 26%
Curtis Jones & Brown (Sydney) ................. Australia Diversified Marketing Services Pty. Ltd. 26%
Port Productions Pty. Ltd. (Melbourne) ........ Australia Diversified Marketing Services Pty. Ltd. 35%
Total Advt & Communications ................... Australia Diversified Marketing Services Pty. Ltd. 37%
Emory Vincent design .......................... Australia Diversified Marketing Services Pty. Ltd. 40%
Turnbull Porter Novelli (Melbourne) ........... Australia Porter Novelli Australia Pty. Ltd. 26%
Turnbull Porter Novelli (Sydney) .............. Australia Porter Novelli Australia Pty. Ltd. 26%
Vectus Pty. Ltd. .............................. Australia Diversified Marketing Services Pty. Ltd. 35%
Hardie Grant Magazines Pty. Ltd. .............. Australia Diversified Marketing Services Pty. Ltd. 12%
CorPol Alliances Pty. Ltd. .................... Australia Diversified Marketing Services Pty. Ltd. 28%
MM Communications Pty. Ltd. ................... Australia Diversified Marketing Services Pty. Ltd. 33%
Clemenger BBDO (Melbourne) Pty. Ltd. ......... Australia Clemenger BBDO Ltd. 47%
Clemenger BBDO (Sydney) Pty. Ltd. ............ Australia Clemenger BBDO Ltd. 47%
Clemenger BBDO (Tasmania) Pty. Ltd. .......... Australia Clemenger BBDO Ltd. 47%
Clemenger BBDO Concept Pty. Ltd. .............. Australia Clemenger BBDO Ltd. 47%
Clemenger BBDO (Adelaide) Pty Ltd. ........... Australia Clemenger BBDO Ltd. 47%
BBDO Holding .................................. Austria BBDO Worldwide Inc. 71%
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Palla, Koblinger & Partner Relationship
Marketing ................................... Austria BBDO Holding 56%
MSB & K ....................................... Austria BBDO Holding 35%
Palla, Koblinger & Spreitzer Interactive Media Austria BBDO Holding 55%
On Duty Event Marketing ....................... Austria BBDO Holding 21%
Master Management ............................. Austria BBDO Holding 71%
BBDO Austria GmbH ............................. Austria BBDO Holding 71%
BBDO Austria GmbH & Co KG Strategic Brand Comm. Austria BBDO Austria GmbH 65%
Optimum Media Direction ....................... Austria BBDO Austria GmbH & Co KG Strategic Brand Comm. 32%
DDB Heye & Partner GmbH 50%
BBDO Belgium S.A. ............................. Belgium BBDO Worldwide Inc. 92%
Sponsoring & Event Marketing S.A. ............. Belgium BBDO Belgium S.A. 92%
Omnimedia S.A. ................................ Belgium BBDO Belgium S.A. 46%
DDB Worldwide S.A. 46%
Morael & Partners S.A. ........................ Belgium BBDO Belgium S.A. 74%
VVL/BBDO S.A. ................................. Belgium BBDO Belgium S.A. 74%
Moors Bloomsbury .............................. Belgium BBDO Belgium S.A. 74%
N'Lil S.A. .................................... Belgium BBDO Belgium S.A. 47%
Optimum Media Direction ....................... Belgium BBDO Belgium S.A. 46%
DDB Worldwide S.A. 46%
Optimum Media Team ............................ Belgium BBDO Belgium S.A. 46%
DDB Worldwide S.A. 46%
Topolino S.A. ................................. Belgium BBDO Belgium S.A. 47%
BBDO/Business Communications S.A. ............. Belgium BBDO Belgium S.A. 74%
DMC ........................................... Belgium BBDO Belgium S.A. 46%
No Media Comunicacao Ltda. .................... Brazil ALMAP/BBDO Comunicacoes Ltda. 80%
ALMAP/BBDO Comunicacoes Ltda. ................. Brazil BBDO Publicidade, Ltda. 80%
BBDO Publicidade, Ltda. ....................... Brazil BBDO Worldwide Inc. 100%
BBDO Canada Inc. .............................. Canada BBDO Worldwide Inc. 100%
McKim Communications Ltd. ..................... Canada BBDO Canada Inc. 49%
Generator Corp. ............................... Canada BBDO Canada Inc. 70%
Lanyon Phillips Communications Inc. ........... Canada BBDO Canada Inc. 17%
Canada Omnicom Canada Inc. 60%
Bazooka Information Design Inc. ............... Canada Lanyon Phillips Communications Inc. 17%
Blue Suede Studio Inc. ........................ Canada Lanyon Phillips Communications Inc. 17%
PNMD, Inc. .................................... Canada Omnicom Canada Inc. 49%
InterOne Marketing Group Ltd. ................. Canada InterOne Marketing Group Inc. 100%
BBDO Chile, S.A. .............................. Chile BBDO Worldwide Inc. 63%
IMAX Design ................................... Chile BBDO Chile, S.A. 32%
Publicistas & Clientes ........................ Chile BBDO Chile, S.A. 32%
180 degrees ................................... Chile BBDO Chile, S.A. 16%
Media Direction ............................... Chile BBDO Chile, S.A. 63%
BBDO Investigacion ............................ Chile BBDO Chile, S.A. 63%
Axis Direct ................................... Chile BBDO Chile, S.A. 32%
BBDO Publicidad ............................... Chile BBDO Chile, S.A. 63%
Multinet ...................................... Chile BBDO Chile, S.A. 19%
Market In ..................................... Chile BBDO Chile, S.A. 38%
Test .......................................... Chile BBDO Chile, S.A. 28%
Finish ........................................ Chile BBDO Chile, S.A. 44%
BBDO/CNUAC Advertising Co. Ltd. ............... China BBDO Asia Pacific Ltd. 51%
Garnier/BBDO S.A. ............................. Costa Rica BBDO Worldwide Inc. 20%
BBDO Zagreb ................................... Croatia BBDO Worldwide Inc. 60%
Media Direction ............................... Croatia BBDO Zagreb 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%
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Impact/ BBDO Advertising & Marketing Ltd. ..... Cyprus Impact/BBDO International Ltd. 44%
Mark/BBDO a.s. ................................ Czech Republic BBDO Worldwide Europe GmbH 80%
Media Direction a.s. .......................... Czech Republic BBDO Worldwide Europe GmbH 80%
Media Service AS .............................. Czech Republic BBDO Worldwide Inc. 75%
BBDO Group sro ................................ Czech Republic BBDO Worldwide Inc. 80%
Advis sro ..................................... Czech Republic BBDO Worldwide Inc. 25%
BBDO Danmark A/S .............................. Denmark BBDO Worldwide Inc. 75%
BBDO A/S ...................................... Denmark BBDO Danmark A/S 75%
BBDO Business Communications A/S .............. Denmark BBDO Danmark A/S 30%
Sepia A/S ..................................... Denmark BBDO Danmark A/S 19%
Sleeping Beauty A/S ........................... Denmark BBDO Business Communications A/S 7%
BBDO Danmark A/S 19%
Sepia A/S 5%
Interactive Partnership ....................... Denmark Sleeping Beauty A/S 21%
Impact Advertising Ltd. ....................... Egypt Impact/BBDO Group Partnership 44%
Strategies Advertising Limited ................ Egypt Impact/BBDO Group Partnership 44%
The Firm Factory .............................. Egypt Impact/BBDO Group Partnership 44%
OMD Ltd. ...................................... Egypt OMD ME Ltd. 44%
Apex Publicidad, S.A. ......................... El Salvador Garnier/BBDO S.A. 15%
BBDO Helsinki OY .............................. Finland BBDO Worldwide Europe GmbH 86%
BBDO Paris S.A. ............................... France BBDO Worldwide Europe GmbH 90%
BBDO Marketing Services S.A. .................. France BBDO Paris S.A. 46%
Robinson S.A. ................................. France BBDO Paris S.A. 46%
West End SARL ................................. France BBDO Paris S.A. 48%
Capital BBDO S.A. ............................. France BBDO Paris S.A. 90%
Cyber Networks S.A. ........................... France BBDO Paris S.A. 63%
Deslegan S.A. ................................. France BBDO Paris S.A. 89%
Marketing Valley S.A. ......................... France BBDO Paris S.A. 63%
B2L Looping ................................... France BBDO Paris S.A. 79%
CLM/BBDO S.A. ................................. France BBDO Paris S.A. 89%
Around Midnight SARL .......................... France BBDO Paris S.A. 90%
BBDO Corporate SARL ........................... France BBDO Paris S.A. 63%
Creapress S.A. ................................ France BBDO Paris S.A. 72%
Client First SARL ............................. France Deslegan S.A. 35%
Expertises SARL ............................... France Deslegan S.A. 85%
Realites & Communications S.A. ................ France BBDO Corporate SARL 62%
Epsilon SNC ................................... France West End SARL 48%
Blue Moon ..................................... France BBDO Marketing Services S.A. 23%
Proximity BBDO S.A. ........................... France BBDO Marketing Services S.A. 30%
Anaconda S.A. ................................. France Proximity BBDO S.A. 30%
ATM SARL ...................................... France Proximity BBDO S.A. 30%
BBDO Worldwide Europe GmbH .................... Germany BBDO Worldwide Inc. 100%
BBDO GmbH ..................................... Germany BBDO Worldwide Europe GmbH 91%
BBDO Interactive GmbH ......................... Germany BBDO GmbH 68%
KNSK/BBDO Slagman Holding GmbH ................ Germany BBDO GmbH 63%
The Media Partnership GmbH .................... Germany BBDO GmbH 23%
Communication Management GmbH Dusseldorf 25%
Stein Holding GmbH ............................ Germany BBDO GmbH 63%
Art & Production Advertising Services GmbH .... Germany BBDO GmbH 91%
Sponsor Partners GmbH ......................... Germany BBDO GmbH 77%
Media Direction GmbH .......................... Germany BBDO GmbH 68%
BBDO Consulting GmbH .......................... Germany BBDO GmbH 73%
Optimum Media Direction Germany GmbH .......... Germany BBDO GmbH 45%
HM1 Ges. f. Direkt marketing und Werbelogistik mbH Germany BBDO GmbH 59%
BBDO Dusseldorf GmbH .......................... Germany BBDO GmbH 91%
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
MSBK, TEAM Dialog-Marketing GmbH .............. Germany BBDO GmbH 41%
MSBK International AG 31%
BBDO Dusseldorf GmbH Werbeagentur ............. Germany BBDO GmbH 91%
SELLBYTEL Call- & Communication Center GmbH ... Germany BBDO GmbH 71%
BBDO Media Team GmbH .......................... Germany BBDO GmbH 68%
M-I-D Marketinformationsdienst GmbH ........... Germany BBDO GmbH 45%
European Communications Consultants (ECCO) GmbH Germany BBDO GmbH 45%
Economia Holding GmbH ......................... Germany BBDO GmbH 60%
Kofner & Partner Werbeagentur GmbH ............ Germany BBDO GmbH 36%
Leonhardt & Kern Werbung GmbH ................. Germany BBDO GmbH 70%
Luders/BBDO Werbeagentur GmbH ................. Germany BBDO GmbH 44%
BBDO Dusseldorf GmbH Advertising .............. Germany BBDO GmbH 91%
GFMO, OMD Gesellschaft fur Media-Optim. mbH ... Germany BBDO GmbH 84%
MM & B Media Agentur GmbH ..................... Germany BBDO Media Team GmbH 20%
Redwood Brand Publishing GmbH ................. Germany BBDO GmbH 46%
Peter Schmidt, Claus Koch Holding GmbH ........ Germany BBDO GmbH 29%
Art & Production pre-press center GmbH ........ Germany Art & Production Advertising Services GmbH 91%
G.P.O. Gesellschaft fur Plakat-Optimierung mbH Germany GFMO, OMD Gesellschaft fur Media-Optim. mbH 84%
GFMS, OMD Gesellschaft fur Media
Sonderwerbeformen mbH ....................... Germany GFMO, OMD Gesellschaft fur Media-Optim. mbH 84%
Compas Media-Agentur GmbH ..................... Germany GFMO, OMD Gesellschaft fur Media-Optim. mbH 84%
promediapart/G.F.M.O. Gesellschaft fur
Media-Opt. mbH Germany GFMO, OMD Gesellschaft fur Media-Optim. mbH 75%
Leonhardt & Kern Alpha GmbH Werbeagentur ...... Germany Leonhardt & Kern Werbung GmbH 70%
Leonhardt & Kern Beta GmbH Werbeagentur ....... Germany Leonhardt & Kern Werbung GmbH 53%
Leonhardt & Kern Gamma GmbH Werbeagentur ...... Germany Leonhardt & Kern Werbung GmbH 63%
Design und Grafikstudio "An der Alster" GmbH .. Germany Economia Holding GmbH 60%
Manfred Baumann GmbH .......................... Germany Economia Holding GmbH 60%
Economia Ges. f. Marketing and Werb. mbH & Co KG Germany Economia Holding GmbH 60%
Brodersen, Stampe und Partner Werbeagentur GmbH Germany Economia Holding GmbH 60%
DIALOGISTIK Service-Center Direktmarketing GmbH Germany HM1 Ges. f. Direkt marketing und Werbelogistik mbH 59%
MD Factory Marketing Datanmanagement GmbH ..... Germany HM1 Ges. f. Direkt marketing und Werbelogistik mbH 38%
DCS Atelier fur Direct Communication GmbH
Werbe-Service Germany HM1 Ges. f. Direkt marketing und Werbelogistik mbH 59%
HM1 Heuser, Mayer & Partner Direktmark GmbH ... Germany HM1 Ges. f. Direkt marketing und Werbelogistik mbH 59%
Kohtes & Klewes Dusseldolf GmbH ............... Germany European Communications Consultants (ECCO) GmbH 45%
Kohtes & Klewes Dresden GmbH .................. Germany European Communications Consultants (ECCO) GmbH 32%
Kohtes & Klewes Frankfurt GmbH ................ Germany European Communications Consultants (ECCO) GmbH 42%
Viamedia Medienagentur fur Radio & TV GmbH .... Germany European Communications Consultants (ECCO) GmbH 34%
Kohtes, Klewes Bonn GmbH ...................... Germany European Communications Consultants (ECCO) GmbH 41%
Kohtes & Klewes Hamburg GmbH .................. Germany European Communications Consultants (ECCO) GmbH 38%
Kohtes & Klewes communication medical GmbH .... Germany European Communications Consultants (ECCO) GmbH 39%
Brodeur Kohtes & Klewes Kommunikation GmbH .... Germany European Communications Consultants (ECCO) GmbH 41%
Michael Vagedes Gesellschaft fur Eventkomm. mbH Germany European Communications Consultants (ECCO) GmbH 18%
Kohtes & Klewes Berlin GmbH ................... Germany European Communications Consultants (ECCO) GmbH 43%
Deekeling Kommunikation GmbH ................. Germany European Communications Consultants (ECCO) GmbH 32%
Kohtes & Klewes Munchen GmbH .................. Germany European Communications Consultants (ECCO) GmbH 39%
Corps, Corporate Publishing Center GmbH ....... Germany European Communications Consultants (ECCO) GmbH 23%
Porter Novelli Germany GmbH ................... Germany European Communications Consultants (ECCO) GmbH 45%
Online Relations Consulting GmbH .............. Germany European Communications Consultants (ECCO) GmbH 45%
Promotion Dynamics GmbH ....................... Germany Stein Holding GmbH 44%
Stein Promotions GmbH ......................... Germany Stein Holding GmbH 63%
Stein Promotions Hamburg GmbH ................. Germany Stein Holding GmbH 63%
MSBK Team Consulting GmbH ..................... Germany MSBK, Team Dialog-Marketing GmbH 22%
a.s.a.p. Final Art Service GmbH ............... Germany MSBK, Team Dialog-Marketing GmbH 37%
P.S. Produktions-Service GmbH ................. Germany MSBK International AG 46%
SMP Werbeservice GmbH ......................... Germany MSBK International AG 36%
Knauer/Rump/Partner Werbeagentur GmbH ......... Germany MSBK International AG 49%
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
SELL/DIALOG Werbeagentur GmbH ................. Germany Knauer/Rump/Partner Werbeagentur GmbH 49%
Claus Koch Corp. Communications GmbH .......... Germany Peter Schmidt, Claus Koch Holding GmbH 28%
Peter Schmidt Studios GmbH .................... Germany Peter Schmidt, Claus Koch Holding GmbH 28%
Final Artwork Grafik und Werbegestaltung GmbH . Germany Peter Schmidt, Claus Koch Holding GmbH 28%
KNSK Slagman Werbeagentur GmbH ................ Germany KNSK/BBDO Slagman Holding Gmbh 70%
Slagman's Werbergentur GmbH & Co. KG .......... Germany KNSK/BBDO Slagman Holding Gmbh 70%
Slagman's Direkt GmbH & Co. KG ................ Germany KNSK/BBDO Slagman Holding Gmbh 70%
BBDO Advertising S.A. ......................... Greece BBDO Worldwide Europe GmbH 80%
BBDO Worldwide Inc. 20%
Infomercial Direct S.A. ....................... Greece BBDO Advertising S.A. 100%
Team/Athens S.A. .............................. Greece BBDO Advertising S.A. 67%
Arrow II Advertising S.A. ..................... Greece BBDO Advertising S.A. 35%
SPO S.A. ...................................... Greece BBDO Advertising S.A. 50%
The Media Corp S.A. .......................... Greece BBDO Advertising S.A. 100%
Cinemax S.A. .................................. Greece BBDO Advertising S.A. 100%
Media Direction Hellas S.A. ................... Greece BBDO Advertising S.A. 100%
BBDO Business Communications S.A. ............. Greece BBDO Advertising S.A. 100%
IKON S.A./Porter Novelli ...................... Greece BBDO Advertising S.A. 100%
Point Zero S.A. ............................... Greece BBDO Advertising S.A. 27%
Grafis S.A. ................................... Greece BBDO Advertising S.A. 80%
Lamda Alpha S.A. .............................. Greece BBDO Advertising S.A. 26%
BBDO/Guatemala S.A. ........................... Guatemala Garnier/BBDO S.A. 30%
Zeus/BBDO ..................................... Honduras Garnier/BBDO S.A. 23%
BBDO Asia Pacific Ltd. ........................ Hong Kong BBDO Worldwide Inc. 100%
BBDO Hong Kong Ltd. ........................... Hong Kong BBDO Asia Pacific Ltd. 100%
ADCOM BBDO Direct Ltd. ........................ Hong Kong BBDO Hong Kong Ltd. 100%
The Orchard Group Ltd. ........................ Hong Kong BBDO Asia Pacific Ltd. 100%
Orchard Intergrated Ltd. ...................... Hong Kong The Orchard Group Limited 100%
BBDO Budapest ................................. Hungary BBDO Worldwide Europe GmbH 95%
The Media Partnership ......................... Hungary BBDO Budapest 24%
Hungarian Promotional Services ................ Hungary BBDO Budapest 52%
Media Direction ............................... Hungary BBDO Budapest 95%
Optima Media Direction ........................ Hungary BBDO Budapest 42%
RK Swamy/BBDO Advertising Ltd. ................ India BBDO Asia Pacific Ltd. 50%
The Candover Company .......................... Ireland BBDO Investment 50%
AMV (Investments) Ltd. 50%
Tramway Investments Ltd. ...................... Ireland The Candover Company 100%
Irish International ........................... Ireland Tramway Investments Ltd. 100%
Gitam/BBDO Ltd. ............................... Israel BBDO Worldwide Inc. 49%
Data Pro Ltd. ................................. Israel Gitam/BBDO Ltd. 15%
Y.SAAR Ltd. ................................... Israel Gitam/BBDO Ltd. 15%
Video Dada Ltd. ............................... Israel Gitam/BBDO Ltd. 49%
Multi Sedar Ltd. .............................. Israel Gitam/BBDO Ltd. 49%
Motiv Plus S.A. ............................... Israel Gitam/BBDO Ltd. 49%
Gitam International S.A. ...................... Israel Motiv Plus S.A. 22%
BBDO Italy SpA ................................ Italy BBDO Worldwide Inc. 100%
D'Adda Lorenzini Vigorelli SpA ................ Italy BBDO Worldwide Inc. 5%
BBDO Italy Ltd. 35%
OMD ME Ltd. ................................... Jersey Impact/BBDO Group Partnership 44%
Freelance Ltd. ................................ Jersey Impact/BBDO Group Partnership 35%
Impact/BBDO SAL ............................... Lebanon Impact/BBDO Group Partnership 35%
Strategies ME ................................. Lebanon Impact/BBDO Group Partnership 33%
OMD SA ........................................ Lebanon OMD ME Ltd 44%
Link Creations Limited ........................ Malaysia BBDO Asia Pacific Ltd. 49%
L & M Promotions .............................. Malaysia BBDO Asia Pacific Ltd. 49%
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
BBDO Mexico, S.A. de C.V. ..................... Mexico BBDO Worldwide Inc. 90%
OFI Finance B.V. .............................. Netherlands Registrant 66%
BBDO Canada Inc. 34%
BBDO Nederland B.V. ........................... Netherlands BBDO Worldwide Inc. 50%
FHV/BBDO Creative Marketing Agency N.V. ....... Netherlands BBDO Nederland B.V. 50%
Bennis Porter Novelli ......................... Netherlands BBDO Nederland B.V. 50%
Signum Informationieprojecten B.V. ............ Netherlands BBDO Nederland B.V. 50%
Signum Niehe .................................. Netherlands Signum Informationieprojecten B.V. 25%
Signum Beishuizen ............................. Netherlands Signum Informationieprojecten B.V. 25%
BVI/One2One ................................... Netherlands BBDO Nederland B.V. 50%
BBDO Business Communications B.V. ............. Netherlands BBDO Nederland B.V. 50%
D.M. Het ReklameTeam B.V. ..................... Netherlands FHV/BBDO Creative Marketing Agency N.V. 35%
Liberty Films B.V. ............................ Netherlands FHV/BBDO Creative Marketing Agency N.V. 50%
Mediacenter B.V. .............................. Netherlands FHV/BBDO Creative Marketing Agency N.V. 13%
Media Direction Netherland B.V. ............... Netherlands FHV/BBDO Creative Marketing Agency N.V. 38%
Diversified Marketing Services Ltd. (N.Z.) .... New Zealand Clemenger BBDO Ltd. 47%
Clemenger BBDO Ltd. (N.Z.) .................... New Zealand Clemenger BBDO Ltd. 47%
Aim Direct .................................... New Zealand Diversified Marketing Services Ltd. (N.Z.) 47%
Porter Novelli New Zealand Ltd. ............... New Zealand Diversified Marketing Services Ltd. (N.Z.) 46%
Total Media ................................... New Zealand Diversified Marketing Services Ltd. (N.Z.) 19%
Mailshop Ltd. ................................. New Zealand Diversified Marketing Services Ltd. (N.Z.) 28%
Crossman Porter Novelli ....................... New Zealand Porter Novelli New Zealand Ltd. 43%
Logos Porter Novelli (Wellington) ............. New Zealand Porter Novelli New Zealand Ltd. 38%
Colenso BBDO Ltd. ............................. New Zealand Clemenger BBDO Ltd. (N.Z.) 47%
HKM Advertising Ltd. .......................... New Zealand Colenso BBDO Ltd. 47%
Agency Management Systems ..................... New Zealand Clemenger BBDO Ltd. 47%
Optimum Media Direction ....................... New Zealand Clemenger BBDO Ltd. (N.Z.) 23%
DDB New Zealand Ltd. 30%
BBDO/Nicaragua S.A. ........................... Nicaragua Garnier/BBDO S.A. 25%
BBDO Oslo A/S ................................. Norway BBDO Worldwide Europe GmbH 80%
BBDO Myres AS ................................. Norway BBDO Worldwide Europe GmbH 60%
Media Direction A/S ........................... Norway BBDO Myres AS 60%
Schroder Production A/S ....................... Norway BBDO Myres AS 60%
Sepia A/S ..................................... Norway BBDO Myres AS 60%
Atmosphere .................................... Norway BBDO Myres AS 60%
Garnier/BBDO Inc. S.A. ........................ Panama BBDO Worldwide Inc. 50%
BBDO Panama ................................... Panama Garnier/BBDO Inc. S.A. 26%
BBDO Peru S.A. ................................ Peru BBDO Worldwide Inc. 51%
Gold Pencil Co. Inc. .......................... Philippines BBDO Asia Pacific Ltd. 34%
BBDO Guerrero Oriega Inc. ..................... Philippines BBDO Asia Pacific Ltd. 30%
Gold Pencil Co. Inc. 20%
NoS/BBDO Sp. Zo.o. ............................ Poland BBDO Worldwide Inc. 80%
Spin Communications ........................... Poland NoS/BBDO Sp. Zo.o. 80%
Media Direction ............................... Poland NoS/BBDO Sp. Zo.o. 80%
BBDO Portugal Agencia de Publicidade, Lda. .... Portugal BBDO Worldwide Europe GmbH 95%
Media Direction ............................... Portugal BBDO Portugal Agencia de Publicidade, Lda. 95%
Media Partnership ............................. Portugal BBDO Portugal Agencia de Publicidade, Lda. 24%
Guerriero DDB Publicidade, Ltda. 17%
BBDO Puerto Rico Inc. ......................... Puerto Rico BBDO Worldwide Inc. 100%
Headline Public Relations & Promotions, Inc. .. Puerto Rico BBDO Puerto Rico Inc. 85%
Graffiti/BBDO ................................. Romania BBDO Worldwide Inc. 20%
Prospero ...................................... Romania BBDO Worldwide Inc. 20%
Carlos Productions ............................ Romania Graffiti/BBDO 13%
BBDO Marketing ................................ Russia BBDO Worldwide Europe GmbH 100%
Arabian Central Establishment ................. Saudi Arabia Impact/BBDO Group Partnership 44%
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
BBDO Singapore Pte Ltd. ....................... Singapore BBDO Asia Pacific Ltd. 100%
Mark BBDO s.a ................................. Slovak Republic BBDO Worldwide Europe GmbH 80%
Mark/BBDO Ltd. ................................ Slovak Republic Mark/BBDO s.a. 38%
Berry Bush/BBDO (Proprietary) Limited ......... South Africa BBDO Worldwide Inc. 20%
BBDO Espana S.A. .............................. Spain BBDO Worldwide Inc. 90%
Tiempo/BBDO Madrid S.A. ....................... Spain BBDO Espana S.A. 55%
Tiempo/BBDO S.A. .............................. Spain BBDO Espana S.A. 72%
Contrapunto S.A. .............................. Spain BBDO Espana S.A. 69%
CD Data S.A. .................................. Spain Contrapunto S.A. 53%
C.P. Communicacion Argentina .................. Spain Contrapunto S.A. 69%
C.P. Communicacion Barcelona S.A. ............. Spain Contrapunto S.A. 34%
Tiempo/BBDO S.A. 26%
C.P. Communicacion S.A. ....................... Spain Contrapunto S.A. 61%
Media Direction Madrid S.A. ................... Spain Tiempo/BBDO Madrid S.A. 55%
DEC S.A. ...................................... Spain Tiempo/BBDO S.A. 61%
Media Direction S.A. .......................... Spain Tiempo/BBDO S.A. 72%
Orbital Communicacion S.A. .................... Spain Tiempo/BBDO S.A. 43%
Orbital Communicacion S.A. .................... Spain Tiempo/BBDO Madrid S.A. 16%
MSBK International AG ......................... Switerland BBDO Worldwide Inc. 61%
Ehrenstrahle International A.B. ............... Sweden BBDO Worldwide Europe GmbH 76%
HLR/BBDO Reklambyra A.B. ...................... Sweden BBDO Worldwide Europe GmbH 100%
Ehrenstrahle & Co. in Stockholm A.B. .......... Sweden Ehrenstrahle International A.B. 76%
Media Communications Services Sverige AB. .... Sweden HLR/BBDO Reklambyra A.B. 20%
BBDO Taiwan Advertising Company Ltd. .......... Taiwan BBDO Asia Pacific Ltd. 55%
Damask/BBDO Limited ........................... Thailand BBDO Asia Pacific Ltd. 100%
Alice BBDO .................................... Turkey BBDO Worldwide Europe GmbH 30%
MEDIA + ....................................... Turkey Alice BBDO 27%
FOCUS 4 ....................................... Turkey Alice BBDO 27%
BBDO Direct Marketing and PR Services ......... Turkey Alice BBDO 30%
Impact/BBDO ................................... United Arab Emirates Impact/BBDO International Ltd. 44%
OMD LLC ....................................... United Arab Emirates OMD ME Ltd. 26%
Abbott Mead Vickers Group Limited ............. United Kingdom BBDO Worldwide Inc. 100%
BBDO Investment ............................... United Kingdom BBDO Worldwide Inc. 100%
BBDO Italy Ltd. ............................... United Kingdom Abbott Mead Vickers Group Limited 100%
Abbott Mead Vickers BBDO Ltd. ................. United Kingdom Abbott Mead Vickers Group Limited 100%
Freud Communications .......................... United Kingdom Abbott Mead Vickers Group Limited 100%
Redwood Publishing Ltd. ....................... United Kingdom Abbott Mead Vickers Group Limited 100%
AMV Advance Ltd. .............................. United Kingdom Abbott Mead Vickers BBDO Ltd 100%
Redwood International ......................... United Kingdom Abbott Mead Vickers Group Limited 100%
Barraclough Hall Woolston Gray Ltd. ........... United Kingdom Abbott Mead Vickers Group Limited 100%
Momentum Integrated Communications Ltd. ....... United Kingdom Abbott Mead Vickers Group Limited 100%
Clarke Hooper Consulting Ltd. ................. United Kingdom Abbott Mead Vickers Group Limited 100%
Clarke Hooper Momentum Limited ................ United Kingdom Clarke Hooper Consulting Ltd. 100%
Frew, MacMaster Ltd. .......................... United Kingdom Abbott Mead Vickers Group Limited 100%
Craik Jones Watson Mitchell Voelkel Ltd. ...... United Kingdom Abbott Mead Vickers Group Limited 100%
BBDO Ltd. ..................................... United Kingdom Abbott Mead Vickers BBDO Ltd. 100%
New PHD Ltd. .................................. United Kingdom Abbott Mead Vickers Group Limited 80%
Abbott Mead Vickers BBDO Ltd. 20%
AMV (Investments) Ltd. ........................ United Kingdom Abbott Mead Vickers Group Limited 100%
Telecom Express Ltd. .......................... United Kingdom Abbott Mead Vickers Group Limited 100%
Fishburn Hedges Boys Williams Holdings Ltd. ... United Kingdom Abbott Mead Vickers Group Limited 100%
McBain, Noel-Johnson & Co Ltd. ................ United Kingdom Abbott Mead Vickers Group Limited 100%
Leagas Delaney Group Ltd. ..................... United Kingdom Abbott Mead Vickers Group Limited 100%
Aurelia Public Relations Ltd. ................. United Kingdom Freud Communications 100%
Traffic Interactive Ltd. ...................... United Kingdom Freud Communications 33%
Clarke Hooper Consulting Ltd. 67%
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Brand Asset Management Licnesing Ltd. ......... United Kingdom Freud Communications 20%
Prager & Partners Ltd. ........................ United Kingdom Barraclough Hall Woolston Gray Ltd. 75%
Prager List Broking Ltd. ...................... United Kingdom Prager & Partners Ltd. 38%
Counting House Ltd. ........................... United Kingdom Barraclough Hall Woolston Gray Ltd. 100%
Pulse Interactive Ltd. ........................ United Kingdom Barraclough Hall Woolston Gray Ltd. 100%
The O'Connell Partnership Ltd. ................ United Kingdom Momentum Integrated Communications Ltd. 100%
Touchdown Events Promotion Ltd. ............... United Kingdom Clarke Hooper Consulting Ltd. 100%
Ross Roy Ltd. ................................. United Kingdom Clarke Hooper Consulting Ltd. 100%
PHD Compass Ltd. .............................. United Kingdom New PHD Ltd. 50%
MSc Communications Ltd. ....................... United Kingdom New PHD Ltd. 50%
Outdoor Connection Ltd. ....................... United Kingdom New PHD Ltd. 33%
Drum PHD Ltd. ................................. United Kingdom New PHD Ltd. 47%
Abbott Mead Vickers BBDO Ltd. 53%
Brand Science Ltd. ............................ United Kingdom New PHD Ltd. 50%
Media Vantage Ltd. ............................ United Kingdom New PHD Ltd. 50%
Grandmall Ltd. ................................ United Kingdom Telecom Express Ltd. 50%
Fishburn Hedges Boys Williams Ltd. ............ United Kingdom Fishburn Hedges Boys Williams Holdings Ltd. 100%
FH Trustees Ltd. .............................. United Kingdom Fishburn Hedges Boys Williams Holdings Ltd. 100%
Electronic Studio TM Ltd. ..................... United Kingdom McBain, Noel-Johnson & Co Ltd. 100%
Electronic Solutions Ltd. ..................... United Kingdom McBain, Noel-Johnson & Co Ltd. 100%
Open Agency ................................... United Kingdom McBain, Noel-Johnson & Co Ltd. 100%
The Leagas Delaney Partnership Ltd. ........... United Kingdom Leagas Delaney Group Ltd. 100%
Leagas Delaney International Ltd. ............. United Kingdom Leagas Delaney Group Ltd. 100%
Media Direction Ltd. .......................... United Kingdom Leagas Delaney Group Ltd. 100%
BBDO Europe Ltd. .............................. United Kingdom Prism International Ltd. 100%
Ratto/BBDO Y Asociados S.A. ................... Uruguay RATTO/BBDO S.A. 40%
BBDO/Venezuela C.A. ........................... Venezuela BBDO Worldwide Inc. 50%
DDB Chicago Inc. .............................. Delaware DDB Worldwide Communications Group, Inc. 100%
DDB International Inc. ........................ Delaware Omnicom International Inc. 100%
DDB Worldwide Partners Inc. ................... New York DDB Worldwide Communications Group, Inc. 100%
DDB Worldwide Communications Group, Inc. ...... New York Registrant 100%
Griffin Bacal Inc. ............................ New York DDB Chicago Inc. 100%
DDB Dallas Inc. ............................... Texas DDB Worldwide Communications Group, Inc. 100%
Tracy-Locke, Inc. ............................. Texas DDB Dallas Inc. 100%
PGC Advertising, Inc. ......................... Texas Registrant 100%
DDB Seattle Inc. .............................. Washington DDB Worldwide Communications Group, Inc. 100%
The Focus Agency Inc. ......................... Washington Registrant 100%
DDB Argentina S.A. ............................ Argentina DM9 Holding Inc. 100%
DDB Worldwide Pty. Ltd. (Australia) ........... Australia DDB Worldwide Partners Inc. 100%
DDB Brisbane Pty. Ltd. ........................ Australia DDB Worldwide Pty. Ltd. (Australia) 100%
Diversified Communications Group Pty. Ltd. .... Australia DDB Worldwide Pty. Ltd. (Australia) 100%
Optimum Media Pty. Ltd. ....................... Australia DDB Worldwide Pty. Ltd. (Australia) 100%
DDB Sydney Pty. Ltd. .......................... Australia DDB Worldwide Pty. Ltd. (Australia) 100%
Production 32 Pty. Ltd. ....................... Australia DDB Worldwide Pty. Ltd. (Australia) 100%
DDB Melbourne Pty. Ltd. ....................... Australia DDB Worldwide Pty. Ltd. (Australia) 100%
Pulse Productions Pty. Ltd. ................... Australia DDB Worldwide Pty. Ltd. (Australia) 100%
DDB Finance Pty. Ltd. ......................... Australia DDB Worldwide Pty. Ltd. (Australia) 100%
Rapp Collins Australia Pty. Ltd. .............. Australia DDB Worldwide Pty. Ltd. (Australia) 100%
Salesforce Australia Pty. Ltd. ................ Australia Diversified Communications Group Pty. Ltd. 100%
Doyle Dane Bernbach Pty. Ltd. ................. Australia Registrant 100%
CCP. Heye Werbeagentur GmbH Vienna ........... Austria Heye & Partner GmbH 20%
DDB Heye & Partner GmbH ...................... Austria DDB Holding Europe S.C.A. 86%
DDB Worldwide S.A. ............................ Belgium DDB Holding Europe S.C.A. 79%
Marketing Power Rapp & Collins S.A. ........... Belgium DDB Worldwide S.A. 52%
DM9 DDB Publicidad ............................ Brazil DM9 Holding Inc. 76%
</TABLE>
S-9
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Ghirrotti & Co. ............................... Brazil DDB Worldwide Communications Group Inc. 20%
Olympic DDB Bulgaria .......................... Bulgaria Olympic DDB S.A. 61%
Omnicom Canada Inc. ........................... Canada Registrant 100%
Griffin Bacal Canada .......................... Canada Griffin Bacal Inc. 100%
Griffin Bacal Volny ........................... Canada Griffin Bacal Canada 100%
Palmer Jarvis Inc. ............................ Canada Registrant 100%
Area 51 Interactive Inc. ...................... Canada Palmer Jarvis Inc. 100%
Seabreeze Investment (1983) Ltd. .............. Canada Palmer Jarvis Inc. 100%
Palmer Jarvis & Associates (Canada)
Advertising Corp. ........................... Canada Seabreeze Investments (1983) Ltd. 100%
Palmer Jarvis Retail Advertising Ltd. ......... Canada Palmer Jarvis & Associates (Canada) Advertising Corp.100%
Kaizen Media Services Inc. .................... Canada Palmer Jarvis Retail Advertising Ltd. 100%
The Malahat Group Inc. ........................ Canada Palmer Jarvis Retail Advertising Ltd. 50%
Palmer Jarvis & Associates Advertising
(Manitoba) Ltd. ............................. Canada Palmer Jarvis Retail Advertising Ltd. 50%
Palmer Jarvis & Associates (Canada) Advertising Corp. 50%
Palmer Jarvis Advertising Saskatchewan Ltd. ... Canada Palmer Jarvis Retail Advertising Ltd. 50%
DM9 Holding Inc. .............................. Cayman Islands DDB Worldwide Partners Inc. 100%
Zegers DDB S.A. ............................... Chile DM9 Holding 40%
Beijing DDB Advertising Co. Ltd. .............. China DDB Worldwide Ltd. 51%
Guangzhou DDB Advertising Ltd. ................ China DDB (China) Investment Ltd. 100%
DDB Worldwide Colombia Ltda. .................. Colombia DDB Worldwide Partners Inc. 24%
Adcom DDB S.A. ................................ Costa Rica Adcom/DDB Centroamerica, S.A. 36%
Futura DDB Croatia ............................ Croatia Olympic DDB S.A. 31%
OMD Croatia ................................... Croatia Futura DDB Croatia 16%
BBDO Zagreb 30%
Pyramis DDB ................................... Cyprus Olympic DDB S.A. 43%
DDB A.S. ...................................... Czech Republic DDB Holding Europe S.C.A. 97%
DDB Denmark A/S ............................... Denmark DDB Worldwide Partners, Inc. 70%
Rapp & Collins DDB A/S ........................ Denmark DDB Denmark A/S 49%
E-SCAPE Interactive A/S ....................... Denmark DDB Denmark A/S 53%
Rapp & Collins DDB A/S 5%
ADministration ApS ............................ Denmark DDB Denmark A/S 9%
TBWA Reklamebureau A/S 11%
Rapp & Collins DDBN A/S 6%
BBDO A/S 9%
BBDO Business Communications A/S 4%
Sepia A/S 2%
Agitator Reklamebureau ........................ Denmark DDB Holding Europe S.C.A. 39%
Bernbach Consult A/S .......................... Denmark DDB Denmark A/S 70%
Andco A/S ..................................... Denmark DDB Denmark A/S 70%
Pierre P Production A/S ....................... Denmark DDB Denmark A/S 70%
Optimum Media Direction ....................... Denmark DDB Denmark A/S 35%
BBDO Danmark A/S 37%
RCM/DDB ....................................... El Salvador Adcom/DDB Centroamerica, S.A. 13%
Brand Sellers DDB EESTI A.S. .................. Estonia DDB Worldwide Helsinki Oy 57%
Halo Interactive DDB .......................... Estonia Brand Sellers DDB EESTI A.S. 31%
DDB & Co. ..................................... Estonia Brand Sellers DDB EESTI A.S. 57%
Rapp Collins .................................. Estonia Brand Sellers DDB EESTI A.S. 57%
Datum Optimum Media Tallinn ................... Estonia Datum Optimum Media Direction Oy 36%
DDB Worldwide Helsinki Oy ..................... Finland DDB Holding Europe S.C.A. 67%
Brand Sellers DDB Oy .......................... Finland DDB Worldwide Helsinki Oy 67%
Datum Optimum Media Direction Oy .............. Finland DDB Worldwide Helsinki Oy 36%
DDB Worldwide Partners, Inc. 29%
Sarajarvi & Hellen Oy ......................... Finland DDB Worldwide Helsinki Oy 36%
Diritto Rapp & Collins Oy ..................... Finland DDB Worldwide Helsinki Oy 54%
Micro Media Oy ................................ Finland DDB Worldwide Helsinki Oy 54%
</TABLE>
S-10
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
DDB Holding Europe S.C.A. ..................... France Registrant 86%
DDB Communication France S.A. ................. France DDB Holding Europe S.C.A. 86%
DDB Interactive SARL .......................... France DDB Communication France S.A. 63%
DDB Lille SNC ................................. France DDB Communication France S.A. 86%
DDB The Way S.A. .............................. France DDB Communication France S.A. 69%
DDB Atlantique S.A. ........................... France DDB Communication France S.A. 63%
Optimum Media Direction SCS ................... France DDB Communication France S.A. 26%
Groupe BDDP France S.A. 33%
BBDO Paris S.A. 27%
La Marque Media SNC ........................... France Optimum Media Direction SCS 87%
Optimum Media SNC ............................. France Optimum Media Direction SCS 87%
Media Direction SNC ........................... France Optimum Media Direction SCS 87%
SEO Achat D'espace SNC ........................ France Optimum Media Direction SCS 87%
SDMS S.A. ..................................... France DDB Communication France S.A. 85%
Productions 32 SNC ............................ France DDB Communication France S.A. 57%
SDMS S.A. 29%
DDB Worldwide Europe S.A. ..................... France DDB Communication France S.A. 86%
Directing/Rapp & Collins SNC .................. France DDB Communication France S.A. 60%
Marketic Conseil S.A. ......................... France DDB Communication France S.A. 46%
Piment SNC .................................... France DDB Communication France S.A. 53%
SFV-Perre Contact S.A. ........................ France SDMS S.A. 51%
DDB Communication France S.A. 34%
Louis XIV S.A. ................................ France DDB Communication France S.A. 44%
OP & A S.A. ................................... France DDB Communication France S.A. 44%
Printer SNC ................................... France DDB Communication France S.A. 44%
SDMS S.A. 42%
Gutenberg On Line Regions S.A. ................ France SDMS S.A. 42%
DDB Communication France S.A. 44%
Interimage Rhone Alpes SNC .................... France SDMS S.A. 42%
DDB Communication France S.A. 44%
Interimage .................................... France SDMS S.A. 29%
DDB Communication France S.A. 57%
Groupe 32 SNC ................................. France DDB Communication France S.A. 48%
SDMS S.A. 38%
Rapp & Collins SNC ............................ France Directing/Rapp & Collins SNC 60%
Customing S.A. ................................ France Directing/Rapp & Collins SNC 60%
DDB CIE SNC ................................... France DDB Communication France S.A. 85%
DDB SCA ....................................... France DDB Communication France S.A. 86%
BCRC SA ....................................... France DDB Communication France S.A. 86%
DDB Nouveau Monde S.A. ........................ France DDB Communication France S.A. 61%
40emes Rugissants S.A. ........................ France DDB Communication France S.A. 38%
SDMS S.A. 19%
DDB Marketmind S.A. ........................... France DDB Communication France S.A. 38%
SDMS S.A. 19%
Adam Graphic .................................. France DDB Marketmind S.A. 57%
Studio 603 SNC ................................ France Piment SNC 52%
Mise A Jour Production SNC .................... France Directing/Rapp & Collins SNC 59%
La Place S.A. ................................. France DDB Communication France S.A. 52%
RC2 S.A. ...................................... France DDB Communication France S.A. 86%
DDB & Co. Hintzy Heymann S.A. ................. France DDB Communication France S.A. 62%
Tagaro! DDB and Co. S.A. ...................... France DDB & Co. Hintzy Heymann S.A. 47%
Communication Management GmbH Dusseldorf ...... Germany Registrant 99%
Hoffmann, Reiser, Schalt Frankfurt ............ Germany Communication Management GmbH Dusseldorf 48%
Optimum Sponsoring Dusseldorf ................. Germany Optimum Media Dusseldorf 89%
Optimum Media Dusseldorf ...................... Germany Communication Management GmbH Dusseldorf 89%
</TABLE>
S-11
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Production 32 Dusseldorf ...................... Germany Communication Management GmbH Dusseldorf 99%
Jahns Rapp Collins ............................ Germany Communication Management GmbH Dusseldorf 50%
Heye & Partner GmbH 16%
Selby & Co. Hamburg ........................... Germany Communication Management GmbH Dusseldorf 30%
Production Service Ludwigsburg ................ Germany DDB GmbH Dusseldorf 99%
Screen GmbH ................................... Germany Communication Management GmbH Dusseldorf 97%
InterScreen Dusseldorf ........................ Germany Screen GmbH 50%
Interscreen Prag (TCH) ........................ Germany InterScreen Dusseldorf 50%
DDB Beteiligungsgesellschaft GmbH ............. Germany Communication Management GmbH Dusseldorf 99%
DDB GmbH Dusseldorf ........................... Germany Communication Management GmbH Dusseldorf 99%
Fritsch Heine Rapp Collins Hamburg ............ Germany Communication Management GmbH Dusseldorf 85%
Heye Media GmbH ............................... Germany Heye & Partner GmbH 44%
Heye & Partner GmbH ........................... Germany DDB Holding Europe S.C.A. 45%
Heye Management Service GmbH .................. Germany Heye & Partner GmbH 23%
Print Munchen GmbH ............................ Germany Heye & Partner GmbH 45%
Optimum Media Direction Germany GmbH .......... Germany Heye & Partner GmbH 11%
BBDO GmbH 20%
Optimum Media Dusseldorf 49%
Buhler, Flettner & Partner .................... Germany DDB Beteiligungsgesellschaft GmbH 99%
DDB & Co. GmbH ................................ Germany Buhler, Flettner & Partner 99%
Rapp Collins Consulting ....................... Germany Fritsch Heine Rapp Collins Hamburg 85%
Olympic DDB S.A. .............................. Greece DDB Worldwide Partners Inc. 61%
Tempo Optimum Media Hellas S.A. ............... Greece Olympic DDB S.A. 37%
TBWA Athens S.A. 15%
Rapp Collins Hellas S.A. ...................... Greece Olympic DDB S.A. 41%
DDB S.C.E. .................................... Greece Olympic DDB S.A. 61%
Publinac/DDB Guatemala [C.A.] ................. Guatemala Adcom/DDB Centroamerica, S.A. 11%
Adcom/DDB ..................................... Honduras Adcom/DDB Centroamerica, S.A. 20%
DDB Asia Pacific Ltd. ......................... Hong Kong DDB Worldwide Partners, Inc. 100%
DDB (China) Investment Ltd. ................... Hong Kong DDB Asia Pacific Ltd. 100%
DDB Worldwide Ltd. ............................ Hong Kong DDB (China) Investment Ltd. 100%
DDB Nexus Ltd. ................................ Hong Kong DDB Worldwide Ltd. 51%
DDB China Ltd. ................................ Hong Kong DDB Asia Pacific Ltd. 100%
DDB Advertising Co. (Budapest) ................ Hungary DDB Heye & Partner GmbH 40%
DDB Holding Europe S.C.A. 52%
Lexington Kft. ............................... Hungary DDB Advertising Co. (Budapest) 28%
Madison Publishing Kft. ....................... Hungary DDB Advertising Co. (Budapest) 92%
DDB Agency Kft. ............................... Hungary DDB Advertising Co. (Budapest) 92%
DDB Communication S.R.L. ...................... Italy DDB Holding Europe S.C.A. 90%
Optimum Media Direction S.R.L. ................ Italy DDB Communication S.R.L. 36%
BBDO Italy SpA 40%
Verba DDB S.R.L. .............................. Italy DDB Communication S.R.L. 90%
Verba S.R.L. .................................. Italy DDB Communication S.R.L. 90%
Grafika S.R.L. ................................ Italy DDB Communication S.R.L. 90%
Nadler S.R.L. ................................. Italy DDB Communication S.R.L. 90%
TMP Italy S.R.L. .............................. Italy DDB Communication S.R.L. 23%
BBDO Italy SpA 25%
Rapp Collins S.R.L. ........................... Italy DDB Communication S.R.L. 72%
DDB Japan Inc. ................................ Japan DDB Worldwide Communications Group Inc. 100%
Lee & DDB Inc. ................................ Korea DDB Worldwide Partners Inc. 54%
SIA DDB Worldwide Latvia ...................... Latvia DDB Worldwide Helsinki Oy 44%
SIA Brand Sellers DDB Baltic .................. Latvia SIA DDB Worldwide Latvia 44%
Rapp Collins .................................. Latvia SIA DDB Worldwide Latvia 37%
</TABLE>
S-12
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
DDB & Co. SIA ................................. Latvia SIA DDB Worldwide Latvia 30%
Datum Optimum Media Latvia .................... Latvia Datum Optimum Media Direction Oy 22%
Brand Sellers DDB Vilinius .................... Lithuania DDB Worldwide Helsinki Oy 48%
Datum Optimum Media Lithuania ................. Lithuania Datum Optimum Media Direction Oy 36%
Naga DDB SDN BHD .............................. Malaysia DDB Asia Pacific Ltd. 30%
Gibert DDB .................................... Mexico Latin Advertising Venture LLC 60%
DDB Worldwide S.A. de C.V. .................... Mexico Registrant 100%
B.V. Result DDB ............................... Netherlands DDB Holding Europe S.C.A. 85%
Interactive Works B.V. ........................ Netherlands B.V. Result DDB 65%
Medion B.V. ................................... Netherlands Rapp and Collins B.V. 79%
Mediacenter Holding B.V. ...................... Netherlands B.V. Result DDB 11%
Rapp and Collins B.V. ......................... Netherlands B.V. Result DDB 79%
Eigen Fabrikaat B.V. .......................... Netherlands B.V. Result DDB 49%
DDB Holding B.V. .............................. Netherlands DDB Holding Europe S.C.A. 100%
OMD ........................................... Netherlands B.V. Result DDB 43%
TBWA-OMD C.V. 35%
DDB New Zealand Ltd. .......................... New Zealand DDB Worldwide Ltd. 64%
DDB Worldwide Ltd. ............................ New Zealand DDB Worldwide Pty. Ltd. (Australia) 100%
Beyond DDB Ltd. ............................... New Zealand DDB New Zealand Ltd. 64%
The WOW Factor Ltd. ........................... New Zealand Beyond DDB Ltd. 54%
Rapp Collins Worldwide Ltd. ................... New Zealand Beyond DDB Ltd. 64%
Salesforce New Zealand Ltd. ................... New Zealand Beyond DDB Ltd. 25%
Salesforce Australia Pty. Ltd. 60%
Imagination Identity Consultants Ltd. ......... New Zealand Beyond DDB Ltd. 44%
DDB Norway A/S ................................ Norway DDB Holding Europe S.C.A. 100%
New Deal DDB A/S .............................. Norway DDB Norway A/S 98%
DDB Holding B.V. 2%
Optimum Media A/S ............................. Norway New Deal DDB A/S 100%
Big Deal Film A/S ............................. Norway New Deal DDB A/S 100%
Real Deal DDB A/S ............................. Norway New Deal DDB A/S 50%
Business Deal DDB A/S ......................... Norway New Deal DDB A/S 100%
Macaroni A/S .................................. Norway New Deal DDB A/S 50%
Pro Deal A/S .................................. Norway New Deal DDB A/S 100%
Inferno A/S ................................... Norway DDB Norway A/S 35%
Retail Deal DDB A/S ........................... Norway New Deal DDB A/S 69%
New Deal DDB Interactive A/S .................. Norway New Deal DDB A/S 50%
Adcom/DDB Centroamerica, S.A. ................. Panama DDB Worldwide Partners Inc. 50%
AMA-DDB Worldwide Inc. ........................ Philippines DDB Asia Pacific Ltd. 51%
Corporate Profiles DDB Sp. ZO.O. .............. Poland DDB Worldwide Partners Inc. 49%
Optimum Media Sp. ZO.O. ....................... Poland Corporate Profiles DDB Sp. ZO.O. 34%
Twin Advertising Sp. ZO.O. .................... Poland Corporate Profiles DDB Sp. ZO.O. 49%
Tempo Media Agencia de Melos, Publicidade S.A. Portugal Guerriero DDB Publicidade, Ltda. 28%
BBDO Portugal Agencia de Publicidad, Lda 38%
DDB Publicidade International (Portugal) Sociedade
Unipessoal Lda. ............................ Portugal Guerriero DDB Publicidade, Ltda. 70%
BBDO Portugal Agencia de Publicidad, Lda 24%
Guerriero DDB Publicidade, Ltda. .............. Portugal DDB Holding Europe S.C.A. 70%
Olympic DDB Romania SRL ....................... Romania Olympic DDB S.A. 61%
DDB Worldwide GAF Pte. Ltd. ................... Singapore DDB Asia Pacific Ltd. 90%
DDB A.S. Bratislava ........................... Slovak Republic DDB Worldwide Partners Inc. 80%
Tandem DDB, S.A. .............................. Spain DDB Holding Europe S.C.A. 7%
Registrant 81%
Tandem Campmany Guasch DDB, S.A. .............. Spain Registrant 2%
Tandem DDB, S.A. 86%
</TABLE>
S-13
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Optimum Media S.A. ............................ Spain Tandem Campmany Guasch DDB, S.A. 81%
Instrumens/Rapp & Collins S.A. ................ Spain Tandem DDB, S.A. 88%
Screen SA (Barcelona) ......................... Spain Screen GmbH 99%
A Toda Copia S.A. ............................. Spain Tandem DDB, S.A. 88%
The Media Partnership S.A. .................... Spain Tandem DDB, S.A. 19%
BBDO Espana S.A. 27%
DDB Interactive S.A. .......................... Spain Tandem DDB, S.A. 70%
Bomberos A.B. ................................. Sweden Paradiset DDB A.B. 51%
Mercator Trade Marketing A.B. ................. Sweden Paradiset DDB A.B. 51%
Paradiset DDB A.B. ............................ Sweden DDB Worldwide Sweden A.B. 100%
DDB Worldwide Sweden A.B. ..................... Sweden DDB Holding Europe S.C.A. 100%
DDB Werbeagentur AG. .......................... Switzerland DDB Holding AG 100%
Seiler Com Holding ............................ Switzerland DDB Holding AG 30%
DDB Holding AG ................................ Switzerland DDB Holding Europe S.C.A. 100%
DDB Worldwide Ltd. ............................ Taiwan DDB Asia Pacific Ltd. 90%
DDB (Thailand) Limited ........................ Thailand DDB Worldwide Partners Inc. 100%
DDB Bangkok ................................... Thailand DDB Worldwide Communications Group Inc. 100%
Medina/Turgul DDB ............................. Turkey DDB Holding Europe S.C.A. 30%
Slogan DDB .................................... Uruguay DDB Worldwide Partners Inc. 40%
BMP DDB Limited ............................... United Kingdom Omnicom UK Limited 100%
Billco Limited ................................ United Kingdom BMP DDB Limited 100%
Optimum Media Direction Limited ............... United Kingdom BMP DDB Limited 100%
Optimum Media Limited ......................... United Kingdom BMP DDB Limited 100%
Outdoor Connection Limited .................... United Kingdom BMP DDB Limited 33%
Solutions in Media Limited .................... United Kingdom Omnicom UK Limited 100%
Griffin Bacal Limited ......................... United Kingdom Prism International Limited 100%
Target DDB Publicidad C.A. .................... Venezuela DDB Worldwide Partners Inc. 49%
Acuity Healthgroup, Inc. ...................... California Registrant 100%
Alcone Marketing Group, Inc. .................. California Registrant 100%
Baxter, Gurian & Mazzei, Inc. ................. California Health & Medical Communications, Inc. 100%
Goddard*Claussen Porter Novelli Inc. .......... California Porter Novelli Inc. 100%
Harrison Wilson & Associates Inc. ............. California Harrison Wilson & Associates Inc. 100%
The Designory, Inc. ........................... California Registrant 100%
Upstart Communications, Inc. .................. California Fleishman-Hillard Inc. 100%
Integer Group, L.L.C. ......................... Colorado C-D Acquisitions Inc. 100%
Karsh & Hagan, Inc. ........................... Colorado Integer Group, L.L.C. 100%
ACCEL Healthcare L.L.C. ....................... Delaware DAS Holdings Inc. 60%
Bayless & Partners, Inc. ...................... Delaware Registrant 100%
Beaupre & Co. Public Relations Inc. ........... Delaware Brodeur & Partners, Inc. 100%
Bernard Hodes Group Inc. ...................... Delaware Registrant 100%
Brodeur/Park Place, Inc. ...................... Delaware Brodeur & Partners, Inc. 100%
C&B/Interactive Public Relations Inc. ......... Delaware Copithorne & Bellows Public Relations Inc. 100%
CareerMosaic Inc. ............................. Delaware Bernard Hodes Group Inc. 100%
Clark & Weinstock Inc. ........................ Delaware Registrant 100%
Copithorne & Bellows Public Relations Inc. .... Delaware Registrant 100%
DAS GP L.L.C. ................................. Delaware CD Acquisitions Inc. 100%
DAS Holdings Inc. ............................. Delaware Registrant 100%
Direct Partners Inc. .......................... Delaware Registrant 100%
Doremus & Company ............................. Delaware BBDO Worldwide Inc. 100%
Doremus Printing Corp. ........................ Delaware Doremus & Company 100%
EBS PN, a Porter Novelli Company .............. Delaware Porter Novelli Inc. 100%
Featherlite/GMR Sports Group, L.L.C. .......... Delaware Gary M. Reynolds and Associates, Inc. 50%
Fleishman-Hillard Inc. ........................ Delaware Registrant 100%
Focus Agency L.P. ............................. Delaware DAS GP L.L.C. 1%
CD Acquisitions Inc. 99%
</TABLE>
S-14
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Gavin Anderson & Company Worldwide Inc. ....... Delaware Registrant 100%
GPC America Inc. .............................. Delaware Registrant 100%
Harrison Wilson & Associates Inc. ............. Delaware Registrant 100%
Ketchum Directory Advertising Inc. ............ Delaware Registrant 100%
Ketchum Inc. .................................. Delaware Registrant 100%
Ketchum International, Inc. ................... Delaware Registrant 100%
Ketchum New York Advertising Holdings, Inc. ... Delaware Ketchum Communications Holdings, Inc. 100%
Kragie Newell Advertising L.L.C. .............. Delaware Integer Group, L.L.C. 100%
Lois Paul & Partners Inc. A Fleishman
Hillard Company ............................. Delaware Fleishman-Hillard Inc. 100%
Meridian Technology Marketing Inc. ............ Delaware Registrant 100%
Merkley Newman Harty, Inc. .................... Delaware Registrant 100%
Millsport L.L.C. .............................. Delaware DAS Holdings Inc. 60%
NCG/Porter Novelli Inc. ....................... Delaware Registrant 100%
Optima Direct, Inc. ........................... Delaware Registrant 100%
Porter Novelli Inc. ........................... Delaware Doremus & Company 100%
Pro ED COMMUNICATIONS Inc. .................... Delaware Registrant 100%
QED Technologies Inc. ......................... Delaware Registrant 100%
Quantum Plus Corp. ............................ Delaware Registrant 100%
Rapp Collins Worldwide GP L.L.C. .............. Delaware Rapp Partnership Holdings Inc. 100%
Rapp Collins Worldwide Holdings L.L.C. ........ Delaware Rapp Partnership Holdings Inc. 100%
Rapp Collins Worldwide Inc. (DE) .............. Delaware Rapp Collins Worldwide Holdings L.L.C. 100%
Rapp Collins Worldwide Limited Partnership .... Delaware Rapp Collins Worldwide Holdings L.L.C. 99%
Rapp Collins Worldwide GP L.L.C. 1%
Rapp Digital Direct Inc. ...................... Delaware Registrant 100%
Rapp Partnership Holdings Inc. ................ Delaware Registrant 100%
Scirex Corporation ............................ Delaware Registrant 20%
Sheppard Associates Inc. ...................... Delaware Registrant 100%
Team South .................................... Delaware Registrant 100%
The Marketing Arm Inc. ........................ Delaware Registrant 100%
Tic Toc, The Imagination Company L.L.C. ....... Delaware DAS Holdings Inc. 75%
TLP East L.L.C. ............................... Delaware TLP, Inc. 100%
Watt/Fleishman-Hilliard Inc. .................. Delaware Fleishman-Hillard Inc. 100%
Worldwide Marketing Resources ................. Delaware Registrant 100%
R Duffy Wall & Associates, Inc. ............... District of Columbia Fleishman-Hillard Inc. 100%
Martec CI Group, Inc. ......................... Florida Diversified Agency Services Holding 51%
Frank J. Corbett, Inc. ........................ Illinois Health & Medical Communications, Inc. 100%
HRC Illinois Inc. ............................. Illinois Rapp Collins Worldwide Holdings L.L.C. 100%
JAC Investments, Inc. ......................... Illinois Case Dunlap Enterprises Inc. 80%
The Russ Reid Company Incorporated ............ Illinois DAS Holdings Inc. 50%
Brodeur & Partners Inc. ....................... Massachusetts Registrant 100%
Cone Inc. ..................................... Massachusetts Registrant 100%
Fleishman-Hillard Missouri Poll, Inc. ......... Missouri Fleishman-Hillard Inc. 100%
Adelphi USA Inc. .............................. New Jersey Adelphi Group Limited 100%
AMM-Adelphi LLC ............................... New Jersey Adelphi Group Limited 50%
CPR Worldwide USA L.L.C. ...................... New York CPR Worldwide, Ltd. 67%
Della Femina/Jeary and Partners ............... New York Ketchum New York Advertising Holdings, Inc. 49%
Gavin Anderson & Company (Japan), Inc. ........ New York Registrant 100%
Gavin Anderson & Company Inc. ................. New York Gavin Anderson & Company Worldwide Inc. 100%
Gerstman + Meyers Inc. ........................ New York Interbrand Corporation 100%
Harrison & Star, Inc. ......................... New York Registrant 100%
Harrison Star Public Relations, Inc. .......... New York Registrant 100%
Health & Medical Communications, Inc. ......... New York BBDO Worldwide Inc. 100%
Health Science Communications Inc. ............ New York Registrant 100%
Interbrand Corporation ........................ New York Registrant 100%
Kaleidoscope Creative, Inc. ................... New York Registrant 100%
</TABLE>
S-15
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Kallir, Philips, Ross, Inc. ................... New York Registrant 100%
Lyons/Lavey/Nickel/Swift, Inc. ................ New York Health & Medical Communications, Inc. 100%
Rapp & Collins USA Inc. ....................... New York Registrant 100%
RC Communications, Inc. ....................... New York Registrant 99%
Shain Colavito Pensabene Direct, Inc. ......... New York Registrant 100%
Stern Advertising Inc. ........................ Ohio Registrant 100%
GMR Group Inc. ................................ Pennsylvania Registrant 73%
Ketchum Communications Holdings, Inc. ......... Pennsylvania Registrant 100%
Case Dunlap Enterprises, Inc. ................. Texas Registrant 100%
M/A/R/C Inc. .................................. Texas Registrant 100%
TLP, Inc. ..................................... Texas Registrant 100%
Marketstar Corporation ........................ Utah Registrant 40%
Steve Cram & Associates, Inc. ................. Virginia Registrant 100%
Gary M. Reynolds and Associates, Inc. ......... Wisconsin Registrant 100%
Interbrand Avalos & Bourse ................... Argentina Diversified Agency Services Holding 30%
Porter Novelli Argentina S.R.L. ............... Argentina Diversified Agency Services Holding 25%
Rapp Collins Argentina ........................ Argentina Diversified Agency Services Holding 100%
Canberra Liaison .............................. Australia Gavin Anderson & Company Pty Ltd. 70%
Gavin Anderson & Company Pty Ltd. ............. Australia Gavin Anderson & Company Worldwide Inc. 100%
Interbrand Australia Pty Ltd. ................. Australia Interbrand Corporation 100%
Alcone Marketing Group Asia Pacific ........... Australia Alcone Marketing Group, Inc. 100%
Fleishman-Hillard Brussels .................... Belgium Fleishman-Hillard Inc. 100%
Communications International Group SA ......... Belgium Diversified Agency Services Limited 100%
GPC Government Policy Consultants SA .......... Belgium GPC Group Limited 42%
GPC Tennoc Limited 58%
Promotess Holdings SA ......................... Belgium Diversified Agency Services Limited 100%
CPM Belgium SA ................................ Belgium Promotess Holdings SA 100%
Ellips Communications Management & Services SA Belgium Promotess Holdings SA 100%
DM Company S.A. de C.V. ....................... Brazil Diversified Agency Services Holding 80%
Doremus & Company LTDA. ....................... Brazil Doremus & Company 90%
Rapp Collins Brazil ........................... Brazil Registrant 70%
Concordia Communication ET Affaires
Publiques Inc. .............................. Canada GPC Canada Inc. 85%
Critical Mass Inc. ............................ Canada Rapp Digital Canada Inc. 50%
D.R. Harley Consultants Limited ............... Canada GPC Canada Inc. 85%
Fleishman-Hillard Canada, Inc. ................ Canada Fleishman-Hillard Inc. 100%
GPC Canada Inc. ............................... Canada GPC International Holdings Inc. 87%
GPC International Holdings Inc. ............... Canada Registrant 100%
Langdon Starr Ketchum ......................... Canada Omnicom Canada Inc. 20%
Rapp Digital Canada Inc. ...................... Canada Registrant 100%
Specialized Communications Inc. ............... Canada GPC International Holdings Inc. 85%
Diversified Agency Services Holding ........... Cayman Islands Registrant 100%
Sales Rapp Collins ............................ Chile Diversified Agency Services Holding 30%
Fleishman-Hillard Link, Ltd. .................. China Fleishman-Hillard Missouri Poll, Inc. 65%
Pathways Marketing Consultants
(Shanghai) Co. Ltd. ......................... China Sinowin Industrial Ltd. 100%
Sinowin Industrial Ltd. ....................... China Registrant 75%
Analyse Informatique des Donnees SA ........... France DAS France Limited 60%
Andree Richard Porter Novelli SARL ............ France Le Desk International SARL 100%
Arsenal S.A. .................................. France DAS France Limited 75%
Bernard Hodes Advertising S.A. ................ France DAS France Limited 80%
CPM - Event S.A. .............................. France CPM Field Marketing SARL 100%
CPM Field Marketing SARL ...................... France CPM France S.A. 100%
CPM France S.A. ............................... France GIE Groupe CPM France 100%
CPM salesforce SARL ........................... France CPM France S.A. 100%
CPM Satisfaction & Surveys SARL ............... France CPM Field Marketing SARL 100%
CPM Services SNC .............................. France Groupe CPM France S.A. 100%
</TABLE>
S-16
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
CPM Show SARL ................................. France CPM - Event S.A. 98%
CPM Telemarketing SARL ........................ France CPM Field Marketing SARL 100%
Data Business et Marketing SARL ............... France Analyse Informatique des Donnees SA 49%
Fleishman-Hillard France ...................... France Fleishman-Hillard Inc. 99%
Gavin Anderson & Company (France) S.A. ........ France Gavin Anderson & Company Worldwide Inc. 100%
Groupe CPM France S.A. ........................ France DAS France Limited 100%
GIE Groupe CPM France ......................... France CPM France S.A. 75%
Healthcare Connection SARL .................... France DAS France Limited 50%
Institute Opinion Patient SA .................. France Adelphi Group Limited 50%
Ketchum Advertising France .................... France Ketchum International, Inc. 62%
KPRW Paris .................................... France Ketchum Inc. 79%
Le Desk International SARL .................... France Parmenide Porter Novelli SA 70%
Parmenide Porter Novelli SA ................... France DAS France Limited 70%
Pro Valorem ................................... France Gavin Anderson & Company (France) S.A. 100%
Promotrade 3 SARL ............................. France DAS France Limited 100%
Sophie Renard Relations Publiques SA .......... France Groupe CPM France S.A. 35%
SRRP One SARL ................................. France Groupe CPM France S.A. 23%
The Media Partnership Europe SA ............... France Omnicom UK Limited 48%
Advantage GmbH ................................ Germany Doremus & Co. 35%
CCS Handelsservice GmbH ....................... Germany Omnicom Germany GmbH 40%
CPM International GmbH ........................ Germany Omnicom Germany GmbH 98%
Omnicom Germany GmbH ......................... Germany Registrant 100%
Fleishman-Hillard Germany GmbH ................ Germany Fleishman-Hillard Inc. 70%
Food Consult GmbH ............................. Germany Ketchum Public Relations GmbH 100%
Interbrand Zintzmeyer & Lux GmbH .............. Germany Interbrand Zintermeyer & Lux A.G. 100%
Ketchum Public Relations GmbH ................. Germany Ketchum Inc. 100%
Planet Communications ......................... Germany Ketchum International, Inc. 65%
Plus Promotion Verkaufsforderungs mbH ......... Germany PPD Marketing Services GmbH & Co. KG 21%
PPD Management GmbH ........................... Germany Omnicom Germany GmbH 100%
PPD Sales Services GmbH & Co. KG .............. Germany CPM International GmbH 96%
PPD Management GmbH 4%
PPD Personal Service GmbH .................... Germany PPD Sales Services GmbH & Co. KG 100%
PPD Marketing Services GmbH & Co. KG .......... Germany CPM International GmbH 96%
PPD Management GmbH 4%
TARGIS Healthcare Communication Germany GmbH .. Germany Omnicom Germany GmbH 85%
BC Staff Options Co. Ltd. ..................... Hong Kong DDB Asia Pacific Ltd. 33%
Diversified Agency Services Ltd. 35%
Bentley Communications Ltd. ................... Hong Kong DDB Asia Pacific Ltd. 28%
Diversified Agency Services Ltd. 30%
BPR Advertising Co., Ltd. ..................... Hong Kong DDB Asia Pacific Ltd. 28%
Diversified Agency Services Ltd. 30%
BPR Staff Options Co. Ltd. .................... Hong Kong DDB Asia Pacific Ltd. 33%
Diversified Agency Services Ltd. 35%
Brilliant Shine Development Ltd. .............. Hong Kong Bentley Communications Ltd. 100%
Diversified Agency Services Ltd. .............. Hong Kong Registrant 100%
Doremus Hong Kong Ltd. ........................ Hong Kong Diversified Agency Services Ltd. 100%
Fleishman-Hillard Hong Kong ................... Hong Kong Fleishman-Hillard Inc. 100%
Gavin Anderson & Company (H.K.) Ltd. .......... Hong Kong Diversified Agency Services Ltd. 100%
Ketchum NEWSCAN Public Relations Ltd. ......... Hong Kong Ketchum Inc. 30%
Rapp Collins Worldwide (Hong Kong) Ltd. ....... Hong Kong Diversified Agency Services Ltd. 100%
Fleishman-Hillard Saunders Limited ............ Ireland Fleishman-Hillard Inc. 41%
Westland Entertainment ........................ Ireland Fleishman-Hillard Saunders Limited 41%
Counter Products Marketing (Ireland) Limited .. Ireland CPM United Kingdom Limited 90%
Fleishman-Hillard Italia SpA .................. Italy Fleishman-Hillard Inc. 90%
Brodeur Image Time SrL ........................ Italy Omnicom UK Ltd. 30%
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Ketchum Public Relations SRL .................. Italy Ketchum Inc. 41%
Interbrand Italia Srl ......................... Italy Omnicom UK Limited 67%
CPM Italia Srl ................................ Italy Interbrand Italia Srl 99%
Inventa Srl ................................... Italy Interbrand Italia Srl 60%
Omnicom UK Limited 27%
Fleishman-Hillard Japan K.K. .................. Japan Fleishman-Hillard Inc. 90%
PRAP Japan Inc. ............................... Japan Ketchum Inc. 15%
Rapp Collins K.K. ............................. Japan DAS Holdings Inc. 80%
Targis K.K. ................................... Japan Registrant 67%
Kabushiki Kaisha Interbrand Japan ............. Japan Diversified Agency Services B.V. 26%
Interbrand Group Limited 74%
Interbrand Korea, Inc. ........................ Korea Interbrand Group Limited 100%
Fleishman-Hillard Communications SDN,BHD ...... Malaysia Fleishman-Hillard Pte Ltd. 80%
DAS Mexico S.A. DE C.V. ....................... Mexico Registrant 100%
Fleishman-Hillard Mexico, S.A. de C.V. ........ Mexico Fleishman-Hillard Inc. 100%
Interbrand Mexico S.A. DE ..................... Mexico DAS Mexico S.A. DE C.V. 100%
Martec S.A. DE C.V. ........................... Mexico Diversified Agency Services Holding 51%
Rapp Collins Mexico, S.A. de C.V. ............. Mexico Rapp Collins Worldwide Limited Partnership 100%
CPM Nederland Field Marketing BV .............. Netherlands Omnicom UK Limited 100%
Diversified Agency Services B.V. .............. Netherlands Interbrand Group Ltd. 100%
Interbrand Newell and Sorrell BV. ............. Netherlands Interbrand Newell and Sorrell Limited 100%
Jeronimus/Wolf BV ............................. Netherlands Schoep & van der Toorn BV 40%
Meridian Technology Marketing Europe BV ....... Netherlands Schoep & van der Toorn BV 100%
MSP BV ........................................ Netherlands M/A/R/C Inc. 25%
Schoep & van der Toorn BV ..................... Netherlands Diversified Agency Services B.V. 65%
Targetbase Europe BV .......................... Netherlands M/A/R/C Inc. 100%
Swinth BV ..................................... Netherlands Schoep & van der Toorn BV 35%
Fleishman-Hillard - Puerto Rico ............... Puerto Rico Fleishman-Hillard Inc. 100%
Bentley Porter Novelli Technology Pte Ltd. .... Singapore Diversified Agency Services Ltd. 57%
Bernard Hodes Advertising (pte) Ltd. .......... Singapore DDB Worldwide GAF Pte.Ltd. 100%
Fleishman-Hillard Pte Ltd. .................... Singapore Fleishman-Hillard Inc. 80%
Gavin Anderson & Company (Singapore) Pte. Ltd. Singapore Gavin Anderson & Company Worldwide Inc. 60%
Interbrand Pte. Ltd. .......................... Singapore Registrant 100%
FH Vallen Wilkins ............................. South Africa Fleishman-Hillard Inc. 51%
SEIS Madrid ................................... Spain Ketchum Inc. 30%
Spain Diversified Agency Services B.V. 40%
Adding Omnicom SL ............................. Spain Diversified Agency Services Limited 51%
CPM Targis SA ................................. Spain Adding Omnicom SL 40%
Marketing Aplicado SA 60%
Comunicacion Empresarial SL ................... Spain Diversified Agency Services Limited 25%
Eikona Comunicacion SA ........................ Spain Comunicacion Empresarial SL 100%
Global Enterprise SL .......................... Spain Comunicacion Empresarial SL 50%
Image on Line SL .............................. Spain Comunicacion Empresarial SL 100%
XYZ Comunicacion SL ........................... Spain Comunicacion Empresarial SL 100%
Marketing Aplicado SA ......................... Spain Omnicom UK Limited 49%
Promotion Center CPM AG ....................... Switzerland CPM Nederland Field Marketing BV 48%
Interbrand Zintzmeyer & Lux AG ................ Switzerland Omnicom UK Limited 100%
FH Saunders (NI) Ltd. (Belfast) ............... United Kingdom Fleishman-Hillard Saunders Limited 41%
Adelphi Communications Limited ................ United Kingdom Adelphi Group Limited 100%
Adelphi Group Limited ......................... United Kingdom Diversified Agency Services Limited 100%
Adelphi International Research Limited ........ United Kingdom Adelphi Group Limited 100%
Affinity Consulting Limited ................... United Kingdom Countrywide Porter Novelli Limited 100%
Alcone Marketing Group Limited ................ United Kingdom Omnicom UK Limited 100%
Bernard Hodes Advertising Limited ............. United Kingdom Bernard Hodes Limited 100%
Bernard Hodes Limited ......................... United Kingdom Prism International Limited 100%
</TABLE>
S-18
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
BMP Interaction Limited ....................... United Kingdom BMP DDB Limited 100%
Brodeur Worldwide Limited ..................... United Kingdom Diversified Agency Services Limited 82%
Omnicom UK LImited 18%
Claydon Heeley International Limited .......... United Kingdom Diversified Agency Services Limited 100%
CMB Limited ................................... United Kingdom WWAV Rapp Collins Group Limited 25%
Copithorne & Bellows Public Relations Limited . United Kingdom Diversified Agency Services Limited 100%
Countrywide Communications (London) Limited ... United Kingdom Countrywide Porter Novelli Limited 100%
Countrywide Communications (Scotland) Limited United Kingdom Countrywide Porter Novelli Limited 100%
Countrywide Porter Novelli Limited ............ United Kingdom Diversified Agency Services Limited 100%
Coupon Information Limited .................... United Kingdom Alcone Marketing Group Limited 50%
CPM Field Marketing Limited ................... United Kingdom Omnicom UK Limited 100%
CPM International Group Limited ............... United Kingdom Prism International Limited 100%
CPM United Kingdom Limited .................... United Kingdom Omnicom UK Limited 100%
CPR Worldwide Limited ......................... United Kingdom Fleishman-Hillard Holdings Limited 100%
DAS Financial Services Limited ................ United Kingdom Diversified Agency Services Limited 75%
DAS France Limited ............................ United Kingdom Omnicom UK Limited 100%
DAS Property Development Limited .............. United Kingdom Omnicom UK Limited 100%
Data Warehouse Limited ........................ United Kingdom WWAV Rapp Collins Group Limited 100%
Designtech Consultants Limited ................ United Kingdom IDH Group Limited 100%
Diversified Agency Services Limited ........... United Kingdom Omnicom Europe Limited 100%
Doremus & Company Limited ..................... United Kingdom Diversified Agency Services Limited 100%
Field Marketing Solutions Limited ............. United Kingdom Diversified Agency Services Limited 100%
Financial Database Marketing Limited .......... United Kingdom WWAV Rapp Collins North Limited 14%
Fleishman-Hillard Holdings Limited ............ United Kingdom Omnicom Europe Limited 100%
Fleishman-Hillard UK Limited .................. United Kingdom Fleishman-Hillard Holdings Limited 100%
GA Design UK Limited .......................... United Kingdom Gavin Anderson (UK) Limited 20%
Gavin Anderson (UK) Limited ................... United Kingdom Diversified Agency Services Limited 100%
Generator Limited ............................. United Kingdom IDH Group Limited 100%
Government Policy Consultants Limited ......... United Kingdom GPC Group Limited 100%
GPC Group Limited ............................. United Kingdom Diversified Agency Services Limited 85%
GPC Scotland Limited .......................... United Kingdom Government Policy Consultants Limited 100%
GPC Tennoc Limited ............................ United Kingdom GPC Group Limited 100%
Health Science TARGIS Limited ................. United Kingdom Diversified Agency Services Limited 100%
HLB Limited ................................... United Kingdom WWAV Rapp Collins Group Limited 100%
IDH Group Limited ............................. United Kingdom Diversified Agency Services Limited 100%
IDH Trustees Limited .......................... United Kingdom IDH Group Limited 100%
Interbrand Group Limited ...................... United Kingdom Omnicom UK Limited 100%
Interbrand Newell and Sorrell Limited ......... United Kingdom Interbrand Group Limited 100%
Interbrand U.K. Limited ....................... United Kingdom Interbrand Group Limited 100%
Jones Mason Barton Antenen Limited ............ United Kingdom Diversified Agency Services Limited 50%
BMP DDB LImited 50%
Ketchum Group Limited ......................... United Kingdom Omnicom UK Limited 100%
Ketchum Limited ............................... United Kingdom Ketchum Group Limited 85%
Omnicom UK Limited 15%
Ketchum Sponsorship Limited ................... United Kingdom Ketchum Group Limited 85%
Omnicom UK Limited 15%
Lynne Franks Limited .......................... United Kingdom Ketchum Group Limited 100%
Macmillian Davies Hodes Consultants Limited ... United Kingdom Bernard Hodes Limited 100%
Mapi Values Limited ........................... United Kingdom Adelphi Group Limited 48%
Markforce Associates Limited .................. United Kingdom Interbrand Group Limited 100%
Marketstar CPM Limited ........................ United Kingdom CPM International Group Limited 100%
Medi Cine International Limited ............... United Kingdom Diversified Agency Services Limited 100%
Media Direction Europe Limited ................ United Kingdom Diversified Agency Services Limited 100%
Medi-Cine Productions Limited ................. United Kingdom Medi Cine International Limited 100%
</TABLE>
S-19
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Newell & Sorell Inc. .......................... United Kingdom Interbrand Newell and Sorrell Limited 100%
Omnicom Europe Limited ........................ United Kingdom Registrant 100%
Omnicom Finance Plc ........................... United Kingdom Omnicom Europe Limited 100%
Omnicom UK Limited ............................ United Kingdom Diversified Agency Services Limited 100%
Optimum Media Direction Limited ............... United Kingdom Omnicom UK Limited 100%
Outdoor Connection Limited .................... United Kingdom BMP DDB Limited 33%
Paling Walters Targis Limited ................. United Kingdom Omnicom UK Limited 100%
Pauffley Limited .............................. United Kingdom IDH Group Limited 100%
Perception Design Limited ..................... United Kingdom Ketchum Group Limited 51%
Omnicom UK Limited 49%
Porter Novelli Limited ........................ United Kingdom Omnicom UK Limited 100%
Premier Media Partners Limited ................ United Kingdom Omnicom UK Limited 100%
Prima Europe Limited .......................... United Kingdom Government Policy Consultants Limited 100%
Publishing Resources Limited .................. United Kingdom IDH Group Limited 100%
Rapp Collins Europe Limited ................... United Kingdom Diversified Agency Services Limited 100%
Ruoloc Limited ................................ United Kingdom Omnicom UK Limited 100%
Smythe Dorward Lambert Limited ................ United Kingdom Omnicom UK Limited 100%
Solutions in Media Limited .................... United Kingdom Omnicom UK Limited 100%
Specialist Publications (UK) Limited .......... United Kingdom Omnicom UK Limited 100%
Synapse Public Relations Limited .............. United Kingdom CPR Worldwide Limited 76%
Targetbase Business Solutions Ltd. ............ United Kingdom M/A/R/C Inc. 100%
The Computing Group Limited ................... United Kingdom WWAV Rapp Collins Group Limited 100%
WWAV Rapp Collins Group Limited ............... United Kingdom Diversified Agency Services Limited 100%
WWAV Rapp Collins Limited ..................... United Kingdom WWAV Rapp Collins Group Limited 100%
WWAV Rapp Collins Media Limited ............... United Kingdom WWAV Rapp Collins Group Limited 100%
WWAV Rapp Collins North Limited ............... United Kingdom WWAV Rapp Collins Group Limited 100%
WWAV Rapp Collins Scotland Limited ............ United Kingdom WWAV Rapp Collins Group Limited 100%
WWAV Rapp Collins West Limited ................ United Kingdom WWAV Rapp Collins Group Limited 100%
TBWA Worldwide Inc. ........................... New York Registrant 100%
TBWA Chiat/Day Inc. ........................... Delaware TBWA Worldwide Inc. 100%
Ketchum Advertising Inc. ...................... Delaware Registrant 100%
Advertising US Holdings Inc. .................. Delaware TBWA Worldwide Inc. 100%
Zimmerman Holdings Group Inc. ................. Delaware Registrant 100%
Informed Communications Systems Inc. .......... Delaware Zimmerman Holdings Group Inc. 100%
National Theft Deterrent Systems Inc. ......... Delaware Zimmerman Holdings Group Inc. 100%
Gold Greenlees Trott US Holdings Inc. ......... Delaware TBWA UK Group Limited 100%
GGT USA / South Inc. .......................... Delaware Gold Greenlees Trott US Holdings Inc. 100%
Zimmerman & Partners Advertising Inc. ......... Florida Zimmerman Holdings Group Inc. 100%
Martin-Williams Inc. .......................... Minnesota Gold Greenlees Trott US Holdings Inc. 100%
G&S Associates Inc. ........................... Texas Gold Greenlees Trott US Holdings Inc. 100%
Savaglio TBWA y Associados S.A. ............... Argentina Registrant 30%
TBWA Holdings Australasia Pty Ltd. ............ Australia Registrant 100%
Whybin TBWA & Partners Pty. Ltd. .............. Australia TBWA Holdings Australasia Pty Ltd 60%
Whybin Lawrence TBWA .......................... Australia TBWA Holdings Australasia Pty Ltd 51%
TBWA/TELL Werbeagentur G.m.b.H. ............... Austria Registrant 70%
Austria 3 / TBWA .............................. Austria TBWA Worldwide Inc. 98%
Media Plan .................................... Austria TBWA Worldwide Inc. 100%
TBWA/GV Group S.A. ............................ Belgium TBWA International B.V. 70%
TBWA S.A. (Brussels) .......................... Belgium TBWA/GV Group S.A. 70%
GV Company S.A. ............................... Belgium TBWA/GV Group S.A. 70%
Motu Nui S.A. ................................. Belgium TBWA/GV Group S.A. 70%
Media KnowHow S.A. ............................ Belgium TBWA/GV Group S.A. 70%
4ReAL S.A. .................................... Belgium TBWA/GV Group S.A. 56%
Marketing & Entertainment S.A. ................ Belgium TBWA/GV Group S.A. 70%
</TABLE>
S-20
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Concept@TBWA .................................. Belgium TBWA S.A. (Brussels) 70%
TBWA Propaganda Limitada ...................... Brazil Registrant 70%
TBWA Sofia o.o.d. ............................. Bulgaria Registrant 55%
Stringer Veroni Ketchum ....................... Canada Omnicom Canada Inc. 67%
Ketchum International, Inc. 33%
Frederick & Valenzuela TBWA Disenadores
Asociados S.A. .............................. Chile Registrant 30%
Shanghai TBWA Lee Davis Advertising Ltd. ...... China TBWA Hong Kong Ltd. 40%
TBWA Publicidad ............................... Costa Rica Registrant 25%
TBWA Zagreb d.o.o. ............................ Croatia Registrant 90%
TBWA Praha s.r.o. ............................. Czech Republic Registrant 30%
Hager Praha s.r.o. ............................ Czech Republic Registrant 60%
MAX TBWA s.r.o. ............................... Czech Republic Registrant 62%
TBWA Reklamebureau A/S ........................ Denmark Registrant 85%
Eliasson & Jesting/TBWA Dialog ................ Denmark TBWA Reklamebureau A/S 43%
Paltemaa Huttunen Santala TBWA Oy ............. Finland Registrant 34%
Groupe BDDP France SA ......................... France TBWA Worldwide Inc. 96%
Registrant 4%
Holding Manager BDDP Corporate S.A. ........... France Groupe BDDP France SA 31%
TBWA Worldwide S.A. ........................... France Groupe BDDP France SA 100%
BDDP @ TBWA S.A. .............................. France Groupe BDDP France SA 100%
TBWA N S.A. .................................. France BDDP @ TBWA S.A. 100%
BDDP & Fils S.A. .............................. France Groupe BDDP France SA 70%
Question d'Edition S.A. ....................... France Groupe BDDP France SA 82%
Holding Manager BDDP Corporate S.A. 1%
Jump S.A. ..................................... France Groupe BDDP France SA 79%
Ananas S.A.R.L. ............................... France Jump S.A. 79%
Jump Operations S.A. .......................... France Jump S.A. 78%
Groupe Jump S.A. .............................. France Jump S.A. 71%
Bossa Nova S.A. ............................... France Jump S.A. 77%
Nouvelle Vague S.A. ........................... France Groupe BDDP France SA 77%
Nickel S.A. ................................... France Groupe BDDP France SA 87%
ALS BDDP S.A. ................................. France Groupe BDDP France SA 70%
BDDP Corporate S.A. ........................... France Groupe BDDP France SA 95%
Holding Manager BDDP Corporate S.A. 2%
Agence BDDP Corporate S.A. .................... France BDDP Corporate S.A. 97%
Allo Carrieres SARL ........................... France Agence BDDP Corporate S.A. 97%
Compagnie Corporate Gestion Deleguee S.A. ..... France Agence BDDP Corporate S.A. 97%
Auditoire S.A. ................................ France BDDP Corporate S.A. 97%
Auditoire Voyages SNC ......................... France Auditoire S.A. 97%
Textuel S.A. .................................. France BDDP Corporate S.A. 97%
Les Editions Textuel S.A. ..................... France BDDP Corporate S.A. 28%
Textuel S.A. 5%
BDDP & Tequila Interactive S.A. ............... France BDDP Corporate S.A. 48%
Tequila France S.A. 48%
CPM Rhone - Alpes SARL ........................ France BDDP Corporate S.A. 48%
TBWA Corporate SARL ........................... France BDDP Corporate S.A. 97%
La Mode En Images S.A. ........................ France BDDP Corporate S.A. 77%
Medias & Supports S.A. ........................ France BDDP Corporate S.A. 97%
Tequila France S.A. ........................... France Groupe BDDP France SA 95%
The Brand Company S.A. ........................ France Groupe BDDP France SA 88%
The Media Partnership France S.A. ............. France Groupe BDDP France SA 17%
The Media Partnership Research S.A. ........... France The Media Partnership France S.A. 17%
TBWA (Deutschland) Holding GmbH ............... Germany TBWA International B.V. 100%
TBWA Werbeagentur GmbH ........................ Germany TBWA (Deutschland) Holding GmbH 100%
TBWA Dusseldorf GmbH .......................... Germany TBWA Werbeagentur GmbH 100%
</TABLE>
S-21
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
BDDP Communications GmbH ...................... Germany Groupe BDDP France SA 95%
BDDP & Partners B.V. 5%
Godenrath Preiswerk/BDDP Werbeagentur GmbH .... Germany BDDP Communications GmbH 85%
Wundrich Meissen Creativ Consulting GmbH ...... Germany Godenrath Preiswerk/BDDP Werbeagentur GmbH 85%
Production Company Stuttgart GmbH ............. Germany Godenrath Preiswerk/BDDP Werbeagentur GmbH 85%
Planet Communications Germany ................. Germany Ketchum International Inc. 70%
TBWA Athens S.A. .............................. Greece Registrant 51%
TBWA Thompson Ltd. ............................ Hong Kong Registrant 100%
TBWA Hong Kong Ltd. .......................... Hong Kong TBWA Thompson Ltd. 55%
Registrant 34%
TBWA Budapest Reklam Mugynokseg Kft ........... Hungary Registrant 80%
TBWA - Planet Kft ............................. Hungary Registrant 100%
TBWA Anthem Private Limited ................... India Registrant 51%
Radeus Advertising Private Limited ............ India TBWA Anthem Private Limited 51%
Yehoshua TBWA Advertising & Marketing Ltd. .... Israel TBWA International B.V. 25%
TBWA/BDDP S.P.A. .............................. Italy TBWA International B.V. 100%
June Advertising S.P.A. ....................... Italy Groupe BDDP France SA 100%
Tequila Pro Ad S.r.l .......................... Italy Tequila International Holdings Limited 51%
Activa S.r.l .................................. Italy Tequila Pro Ad S.r.l 51%
TBWA Nippo .................................... Japan TBWA Worldwide Inc. 82%
e Graphics .................................... Japan TBWA Worldwide Inc. 67%
TBWA Korea .................................... Korea TBWA Worldwide Inc. 70%
Teran TBWA Publicidad ......................... Mexico Registrant 30%
TBWA International B.V. ....................... Netherlands Registrant 100%
Data Company & Services Company B.V. .......... Netherlands TBWA International B.V. 100%
Wavv Van Rooij B.V. ........................... Netherlands Data Company & Services Company B.V. 65%
TBWA Campaign Company B.V. .................... Netherlands TBWA International B.V. 70%
Dresme Van Dijk Partners B.V. ................. Netherlands TBWA International B.V. 88%
Direct Company B.V. ........................... Netherlands Dresme Van Dijk Partners B.V. 70%
Designers Orange Company B.V. ................. Netherlands Dresme Van Dijk Partners B.V. 70%
PR Company B.V. ............................... Netherlands Dresme Van Dijk Partners B.V. 70%
Sponsor Company B.V. .......................... Netherlands Dresme Van Dijk Partners B.V. 70%
E-Company B.V. ................................ Netherlands Dresme Van Dijk Partners B.V. 70%
Job Advertising Company B.V. .................. Netherlands Dresme Van Dijk Partners B.V. 70%
TBWA/H Europe B.V. ............................ Netherlands TBWA International B.V. 50%
TBWA Reklame & Marketing B.V. ................. Netherlands TBWA International B.V. 100%
Grant Tandy B.V. .............................. Netherlands TBWA International B.V. 100%
BDDP & Partners B.V. .......................... Netherlands TBWA International B.V. 100%
Navar Direct B.V. ............................. Netherlands TBWA International B.V. 88%
BDDP Nederland B.V. ........................... Netherlands Navar Direct B.V. 88%
ARA/BDDP Groep B.V. ........................... Netherlands BDDP Nederland B.V. 70%
Navar BDDP B.V. ............................... Netherlands ARA/BDDP Groep B.V. 70%
ARA/BDDP B.V. ................................. Netherlands Navar Direct B.V. 70%
Bovil B.V. .................................... Netherlands Navar Direct B.V. 61%
HVR/Bruns van der Wijk B.V. ................... Netherlands Navar Direct B.V. 61%
Mako/Bovaco B.V. .............................. Netherlands Navar Direct B.V. 61%
Multicom Direct Marketing & Advertising B.V. .. Netherlands Navar Direct B.V. 70%
TBWA-OMD C.V. ................................. Netherlands TBWA Campaign Company B.V. 22%
Direct Company B.V. 20%
Job Advertising Company B.V. 6%
HVR/Bruns van der Wijk B.V. 6%
ARA/BDDP B.V. 12%
Navar BDDP B.V. 4%
Whybin TBWA Limited ........................... New Zealand TBWA Worldwide Inc. 51%
TBWA Reklamebyra A.S. ......................... Norway TBWA International B.V. 100%
</TABLE>
S-22
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
Bold TBWA Reklamebyra A.S. .................... Norway TBWA International B.V. 32%
Immo Polska Sp. zo.o. ......................... Poland Registrant 76%
Hager Polska Sp. zo.o. ........................ Poland Registrant 76%
TBWA Warszawa Sp. zo.o. ....................... Poland Registrant 73%
Tequila Poland Sp. zo.o. ...................... Poland Registrant 100%
TBWA-EPG Publicidade, Ltd. .................... Portugal Registrant 74%
TBWA Bucharest s.r.l. ......................... Romania Registrant 90%
TBWA Singapore Pte Ltd. ....................... Singapore Registrant 82%
TBWA Worldwide Inc. 18%
Tequila Asia Pacific (Singapore) Pte Ltd. ..... Singapore Tequila UK Limited 90%
TBWA Bratislava spol s.r.o. ................... Slovakia Registrant 90%
TBWA Ljubljana ................................ Slovenia Registrant 100%
Hunt Lascaris TBWA Holdings (Pty) Limited ..... South Africa TBWA International B.V. 20%
Registrant 80%
TBWA Hunt Lascaris Johannesberg (Pty) Limited . South Africa Hunt Lascaris TBWA Holdings (Pty) Limited 80%
Hunt Lascaris TBWA Cape (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 80%
Paroden Inv Holdings (Pty) Limited ............ South Africa TBWA International B.V. 100%
Schalit Shipley Nethwork ...................... South Africa Registrant 20%
Paroden Inv Holdings (Pty) Limited 40%
Nethwork Cape ................................. South Africa Schalit Shipley Nethwork 45%
Diversified Advertising Services (SA) (Pty) Ltd. South Africa Registrant 51%
Ad Active S.A. (Pty) Limited .................. South Africa Diversified Advertising Services (SA) (Pty) Ltd 51%
Rapp Collins S.A. (Pty) Limited ............... South Africa Diversified Advertising Services (SA) (Pty) Ltd 41%
Tool S.A. (Pty) Limited ....................... South Africa Diversified Advertising Services (SA) (Pty) Ltd 31%
South Africa Advertising Investments (Pty)
Limited ..................................... South Africa Registrant 100%
Gavin Reddy Hawn (Pty) Limited ................ South Africa South Africa Advertising Investments (Pty) Limited 65%
Media Direciton S.A. (Proprietary) Limited .... South Africa Registrant 51%
TBWA Espana S.A. .............................. Spain TBWA International B.V. 95%
TBWA Sweden A.B. .............................. Sweden Registrant 100%
TBWA Reklambyra K.B. .......................... Sweden TBWA Sweden A.B. 51%
Impuls TBWA A.G. .............................. Switzerland BDDP & Partners B.V. 70%
TBWA Services A.G. ............................ Switzerland Impuls TBWA A.G. 70%
Print-Pool A.G. ............................... Switzerland Impuls TBWA A.G. 70%
Editor Multimedia A.G. ........................ Switzerland Impuls TBWA A.G. 70%
Publik A.G. fuer Unternehmenskommunikation .... Switzerland Impuls TBWA A.G. 70%
Impuls Direct A.G. ............................ Switzerland Impuls TBWA A.G. 53%
TBWA Next & Triplet Advertising Co. Limited ... Thailand Registrant 61%
TBWA Istanbul ................................. Turkey TBWA Worldwide Inc. 67%
TBWA UK Group Limited ......................... United Kingdom Omnicom Europe Limited 100%
Tequila International Holdings Limited ........ United Kingdom TBWA UK Group Limited 100%
Blau Tequila Limited .......................... United Kingdom Tequila International Holdings Limited 50%
Summertime Communications Limtied ............. United Kingdom TBWA UK Group Limited 100%
BDDP.GGT Limited .............................. United Kingdom Summertime Communications Limtied 100%
Floral Street Holdings Limited ................ United Kingdom BDDP.GGT Limited 100%
TBWA GGT Simons Palmer Limited ................ United Kingdom Floral Street Holdings Limited 100%
FSC Group Limited ............................. United Kingdom TBWA GGT Simons Palmer Limited 100%
Simons Palmer Clemmow Johnson (Holdings) Limited United Kingdom TBWA GGT Simons Palmer Limited 100%
Maher Bird Associates Limited ................. United Kingdom Simons Palmer Clemmow Johnson
(Holdings) Limited 84%
B.D.H. Communications Group Limited ........... United Kingdom TBWA UK Group Limited 100%
BDH TBWA Limited .............................. United Kingdom B.D.H. Communications Group Limited 100%
Corporate Business Advisers Limited ........... United Kingdom TBWA UK Group Limited 100%
Mortimer Whittaker O'Sullivan Limited ......... United Kingdom Corporate Business Advisers Limited 100%
R. M. Communications Limited .................. United Kingdom GGT Advertising Limited 100%
</TABLE>
S-23
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Voting
Jurisdiction Securities
of Owning Owned by
Company Incorporation Entity Registrant
------- ------------- ------ ----------
<S> <C> <C> <C>
GGT Direct Advertising Limited ................ United Kingdom TBWA UK Group Limited 100%
Happy Dog Limited ............................. United Kingdom TBWA UK Group Limited 100%
Option One Group Limited ...................... United Kingdom TBWA UK Group Limited 100%
Option One Limited ............................ United Kingdom Option One Group Limited 100%
Prism International Limited ................... United Kingdom Option One Limited 100%
Tequila Payne Stracey Limited ................. United Kingdom Prism International Limited 96%
Tequila UK Limited ............................ United Kingdom Tequila Payne Stracey Limited 100%
</TABLE>
S-24
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 17, 2000 included in Form 10-K into the previously
filed Registration Statement File Nos. 333-41717, 333-70091, 333-74591,
333-74727, 333-74879, 333-84349 and 333-90931 on Form S-8 of Omnicom Group Inc.
and into the previously filed Registration Statement File Nos. 333-22589,
333-43883, 333-44481, 333-44483, 333-46303 and 333-47047 on Form S-3 of Omnicom
Group Inc.
ARTHUR ANDERSEN LLP
New York, New York
March 29, 2000
Exhibit 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors of
Omnicom Group Inc., a New York corporation ("Omnicom"), constitute and appoint
John D. Wren and Barry J. Wagner, and each of them, their true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for them and in their name, place and stead, to sign the Annual
Report on Form 10-K of Omnicom for the fiscal year ended December 31, 1999,
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 and the New York
Stock Exchange, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or their substitute or substitutes, shall do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have subscribed these presents
on the 29th day of March, 2000.
/s/ Bernard Brochand /s/ John R. Murphy
- ----------------------------------- ----------------------------------
Bernard Brochand John R. Murphy
/s/ Robert J. Callander /s/ John R. Purcell
- -------------------------------------- ----------------------------------
Robert J. Callander John R. Purcell
/s/ James A. Cannon /s/ Keith L. Reinhard
- -------------------------------------- ----------------------------------
James A. Cannon Keith L. Reinhard
/s/ Leonard S. Coleman, Jr. /s/ Allen Rosenshine
- -------------------------------------- ----------------------------------
Leonard S. Coleman, Jr. Allen Rosenshine
/s/ Bruce Crawford /s/ Gary L. Roubos
- -------------------------------------- ----------------------------------
Bruce Crawford Gary L. Roubos
/s/ Susan S. Denison /s/ Quentin I. Smith, Jr.
- -------------------------------------- ----------------------------------
Susan S. Denison Quentin I. Smith, Jr.
/s/ Peter Foy /s/ Egon P.S. Zehnder
- -------------------------------------- ----------------------------------
Peter Foy Egon P.S. Zehnder
/s/ Thomas L. Harrison
- --------------------------------------
Thomas L. Harrison
<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, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 576,427
<SECURITIES> 24,522
<RECEIVABLES> 3,412,024
<ALLOWANCES> 53,720
<INVENTORY> 0
<CURRENT-ASSETS> 4,712,324
<PP&E> 967,016
<DEPRECIATION> 522,294
<TOTAL-ASSETS> 9,017,637
<CURRENT-LIABILITIES> 6,009,063
<BONDS> 711,632
0
0
<COMMON> 93,543
<OTHER-SE> 1,459,355
<TOTAL-LIABILITY-AND-EQUITY> 9,017,637
<SALES> 0
<TOTAL-REVENUES> 5,130,545
<CGS> 0
<TOTAL-COSTS> 3,054,018
<OTHER-EXPENSES> 1,352,397
<LOSS-PROVISION> 14,399
<INTEREST-EXPENSE> 84,908
<INCOME-PRETAX> 673,708
<INCOME-TAX> 273,247
<INCOME-CONTINUING> 362,882
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 362,882
<EPS-BASIC> 2.07
<EPS-DILUTED> 2.01
</TABLE>
