SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1994 1-6686
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-1024020
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1271 Avenue of the Americas 10020
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 399-8000
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No___.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. ____.
The aggregate market value of the registrant's voting stock
(exclusive of shares beneficially owned by persons referred to in
response to Item 12 hereof) was $2,418,268,527 as of March 21,
1995.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Common Stock outstanding at March 21, 1995: 77,925,241 shares.
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DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the year
ended December 31, 1994 are incorporated by reference in
Parts I and II.
2. Portions of the Proxy Statement for the 1995 Annual Meeting
of Stockholders are incorporated by reference in Parts I and
III.
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PART I
Item 1. Business
The Interpublic Group of Companies, Inc. was incorporated in
Delaware in September 1930 under the name of McCann-Erickson
Incorporated as the successor to the advertising agency
businesses founded in 1902 by A.W. Erickson and in 1911 by
Harrison K. McCann. It has operated under the Interpublic name
since January 1961. As used in this Annual Report, the
"Registrant" or "Interpublic" refers to The Interpublic Group of
Companies, Inc. while the "Company" refers to Interpublic and its
subsidiaries.
The advertising agency business is the primary business of
the Company. This business is carried on throughout the world
through three advertising agency systems, McCann-Erickson
Worldwide, Lintas Worldwide and The Lowe Group. The Company also
offers advertising agency services through association
arrangements with local agencies in various parts of the world.
Other activities conducted by the Company within the area of
"marketing communications" include market research, sales
promotion, product development, direct marketing, telemarketing
and other related services.
The principal functions of an advertising agency are to plan
and create advertising programs for its clients and to place
advertising in various media such as television, cable, radio,
magazines, newspapers, transit, direct response media and
outdoor. The planning function involves analysis of the market
for the particular product or service, evaluation of alternative
methods of distribution and choice of the appropriate media to
reach the desired market most efficiently. The advertising
agency then creates an advertising program, within the limits
imposed by the client's advertising budget, and places orders for
space or time with the media that have been selected.
The principal advertising agency subsidiaries of Interpublic
operating within the United States directly or through
subsidiaries and the locations of their respective corporate
headquarters are:
McCann-Erickson USA, Inc.......... New York, New York
Lintas Campbell-Ewald
Company.......................... Detroit (Warren),
Michigan
Lintas, Inc....................... New York, New York
Dailey & Associates............... Los Angeles, California
Lowe & Partners Inc............... New York, New York
Ammirati & Puris, Inc............. New York, New York
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In addition to domestic operations, the Company provides
advertising services for clients whose business is international
in scope as well as for clients whose business is restricted to a
single country or a small number of countries. It has offices in
Canada as well as in one or more cities in each of the following
countries:
EUROPE, AFRICA AND THE MIDDLE EAST
Austria Germany Namibia South Africa
Belgium Greece Netherlands Spain
Croatia Hungary Norway Sweden
Czech Republic Ireland Poland Switzerland
Denmark Italy Portugal Turkey
Finland Ivory Coast Romania United Arab Emirates
France Kenya Russia United Kingdom
Slovakia Zimbabwe
Slovenia
LATIN AMERICA AND THE CARIBBEAN
Argentina Costa Rica Honduras Peru
Barbados Dominican Republic Jamaica Puerto Rico
Bermuda Ecuador Mexico Trinidad
Brazil El Salvador Panama Uruguay
Chile Guatemala Paraguay Venezuela
Colombia
ASIA AND THE PACIFIC
Australia Japan People's Republic South Korea
Hong Kong Malaysia of China Taiwan
India Nepal Philippines Thailand
New Zealand Singapore
Operations in the foregoing countries are carried on by one
or more operating companies, at least one of which is either
wholly owned by Interpublic or a subsidiary or is a company in
which Interpublic or a subsidiary owns a 51% interest or more,
except in India and Nepal, where Interpublic or a subsidiary
holds a minority interest.
The Company also offers advertising agency services in
Aruba, the Bahamas, Bahrain, Belize, Bolivia, Cambodia, Cameroon,
Egypt, Gabon, Ghana, Grand Cayman, Guadeloupe, Guyana, Haiti,
Reunion, Indonesia, Iran, Israel, Ivory Coast, Kuwait, Lebanon,
Martinique, Mauritius, Morocco, Nicaragua, Nigeria, Oman,
Pakistan, Paraguay, Saudi Arabia, Senegal, Slovakia, Slovenia,
Sri Lanka, Surinam, Tunisia, Uganda, United Arab Emirates
(Dubai), Venezuela, VietNam and Zaire through association
arrangements with local agencies operating in those countries.
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For information concerning revenues, operating profits and
identifiable assets on a geographical basis for each of the last
three years, reference is made to Note 13: Geographic Areas of
the Notes to the Consolidated Financial Statements in the
Company's Annual Report to Stockholders for the year ended
December 31, 1994, which Note is hereby incorporated by
reference.
Developments in 1994
The Company completed several acquisitions and divestitures
within the United States and abroad in 1994.
Effective as of August 11, 1994, Ammirati & Puris Holdings,
Inc., a holding company, and its subsidiaries, Ammirati & Puris,
Inc. and Ammirati & Puris, Ltd. were acquired. Ammirati & Puris,
Inc. is an advertising agency with headquarters in New York City,
while Ammirati & Puris, Ltd. is based in Canada.
As of November 28, 1994, the Company acquired Western
International Media Corporation ("Western") and approximately
eighteen affiliated sub-chapter S corporations. Western is in
the business of media buying and placement, and is based in Los
Angeles.
Income from Commissions, Fees and Publications
The Company generates income from planning, creating and
placing advertising in various media. Historically, the
commission customary in the industry was 15% of the gross charge
("billings") for advertising space or time; more recently lower
commissions have frequently been negotiated, but often with
additional incentives for better performance. For example, an
incentive component is frequently included in arrangements with
clients based on increases in a client's sales of the products or
services being advertised. Under commission arrangements, media
bill the Company at their gross rates. The Company bills these
amounts to its clients, remits the net charges to the media and
retains the balance as its commission. Some clients, however,
prefer to compensate the Company on a fee basis, under which the
Company bills its client for the net charges billed by the media
plus an agreed-upon fee. These fees usually are calculated to
reflect the Company's salary costs and out-of-pocket expenses
incurred on the client's behalf, plus proportional overhead and a
profit mark-up.
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Normally, the Company, like other advertising agencies, is
primarily responsible for paying the media with respect to firm
contracts for advertising time or space. This is a problem only
if the client is unable to pay the Company because of insolvency
or bankruptcy. The Company makes serious efforts to reduce the
risk from a client's insolvency, including (1) carrying out
credit clearances, (2) requiring in some cases payment of media
in advance, or (3) agreeing with the media that the Company will
be solely liable to pay the media only after the client has paid
the Company for the media charges.
The Company also receives commissions from clients for
planning and supervising work done by outside contractors in the
physical preparation of finished print advertisements and the
production of television and radio commercials and infomercials.
This commission is customarily 17.65% of the outside contractor's
net charge, which is the same as 15% of the outside contractor's
total charges including commission. With the spread of
negotiated fees, the terms on which outstanding contractors'
charges are billed are subject to wide variations and even
include in some instances the elimination of commissions entirely
provided that there are adequate negotiated fees.
The Company derives income in many other ways, including the
planning and placement in media of advertising produced by
unrelated advertising agencies; the maintenance of specialized
media placement facilities; the creation and publication of
brochures, billboards, point of sale materials and direct
marketing pieces for clients; the planning and carrying out of
specialized marketing research; managing special events at which
clients' products are featured; and designing and carrying out
interactive programs for special uses.
The five clients of the Company that made the largest
contribution in 1994 to income from commissions and fees
accounted individually for 2% to 10% of such income and in the
aggregate accounted for over 31% of such income. Twenty clients
of the Company accounted for approximately 44% of such income.
Based on income from commissions and fees, the three largest
clients of the Company are General Motors Corporation, Unilever
and The Coca-Cola Company. General Motors Corporation first
became a client of one of the Company's agencies in 1916 in the
United States. Predecessors of several of the Lintas agencies
have supplied advertising services to Unilever since 1893. The
client relationship with The Coca-Cola Company began in 1942 in
Brazil and in 1955 in the United States. While the loss of the
entire business of one of the Company's three largest clients
might have a material adverse effect upon the business of the
Company, the Company believes that it is very unlikely that the
entire business of any of these clients would be lost at the same
time, because it represents several different brands or divisions
of each of these clients in a number of geographical markets - in
each case through more than one of the Company's agency systems.
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Representation of a client rarely means that the Company
handles advertising for all brands or product lines of the client
in all geographical locations. Any client may transfer its
business from an advertising agency within the Company to a
competing agency, and a client may reduce its advertising budget
at any time. The Company's advertising agencies in many
instances have written contracts with their clients.
As is customary in the industry, these contracts provide for
termination by either party on relatively short notice, usually
90 days but sometimes shorter or longer. In 1994, however, [43%]
of income from commissions and fees was derived from clients that
had been associated with one or more of the Company's agencies or
their predecessors for 20 or more years.
Personnel
As of January 1, 1995, the Company employed approximately
18,200 persons, of whom approximately 5,400 were employed in the
United States. Because of the personal service character of the
marketing communications business, the quality of personnel is of
crucial importance to continuing success. There is keen
competition for qualified employees. Interpublic considers its
employee relations to be satisfactory.
The Company has an active program for training personnel.
The program includes meetings and seminars throughout the world.
It also involves training personnel in its offices in New York
and in its larger offices worldwide.
Competition and Other Factors
The advertising agency and other marketing communications
businesses are highly competitive. The Company's agencies and
media services must compete with other agencies, both large and
small, and also with other providers of creative or media
services which are not themselves advertising agencies, in order
to maintain existing client relationships and to obtain new
clients. Competition in the advertising agency business depends
to a large extent on the client's perception of the quality of an
agency's "creative product". An agency's ability to serve
clients, particularly large international clients, on a broad
geographic basis is also an important competitive consideration.
On the other hand, because an advertising agency's principal
asset is its people, freedom of entry into the business is almost
unlimited and quite small agencies are, on occasion, able to take
all or some portion of a client's account from a much larger
competitor.
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Moreover, increasing size brings limitations to an agency's
potential for securing new business, because many clients prefer
not to be represented by an agency that represents a competitor.
Also, clients frequently wish to have different products
represented by different agencies. The fact that the Company
owns three separate worldwide agency systems and interests in
other advertising agencies gives it additional competitive
opportunities.
The advertising business is subject to government
regulation, both domestic and foreign. There has been an
increasing tendency in the United States on the part of
advertisers to resort to the courts to challenge comparative
advertising on the grounds that the advertising is false and
deceptive. Through the years, there has been a continuing
expansion of specific rules, prohibitions, media restrictions,
labeling disclosures and warning requirements with respect to the
advertising for certain products. Representatives within state
governments and the federal government as well as foreign
governments continue to initiate proposals to ban the advertising
of specific products and to impose taxes on or deny deductions
for advertising which, if successful, may have an adverse effect
on advertising expenditures.
Some countries are relaxing commercial restrictions as part
of their efforts to attract foreign investment. However, with
respect to other nations, the international operations of the
Company still remain exposed to certain risks which affect
foreign operations of all kinds, such as local legislation,
monetary devaluation, exchange control restrictions and unstable
political conditions. In addition, international advertising
agencies are from time to time exposed to the threat of forced
divestment in favor of local investors because they are
considered an integral factor in the communications process. A
provision of the present constitution in the Philippines is an
example.
Item 2. Properties
Most of the advertising operations of the Company are
carried on in leased premises, and its physical property consists
primarily of leasehold improvements, furniture, fixtures and
equipment. These facilities are located in various cities in
which the Company does business throughout the world. However,
subsidiaries of the Company own office buildings in Louisville,
Kentucky; Warren, Michigan; Frankfurt, Germany; Sao Paulo,
Brazil; Lima, Peru; and Brussels, Belgium and own office
condominiums in Buenos Aires, Argentina; Bogota, Colombia;
Manila, the Philippines; in England, subsidiaries of the Company
own office buildings in London, Manchester, Birmingham and Stoke-
on-Trent.
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The office building located in Warren, Michigan is held by
the Company subject to a mortgage which will terminate in April,
2000. The Company's ownership of the office building in
Frankfurt is subject to three mortgages which became effective on
or about February 1993. These mortgages terminate at different
dates, with the last to expire in February 2003. Reference is
made to Note 14 - Commitments and Contingent Liabilities - of the
Notes to the Consolidated Financial Statements in the Company's
Annual Report to Stockholders for the year ended December 31,
1994, which Note is hereby incorporated by reference.
Item 3. Legal Proceedings
Neither the Company nor any of its subsidiaries are subject
to any pending material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Executive Officers of the Registrant
There follows the information disclosed in accordance with
Item 401 of Regulation S-K of the Securities and Exchange
Commission (the "Commission") as required by Item 10 of Form 10-K
with respect to executive officers of the Registrant.
Name Age Office
Philip H. Geier, Jr. (1) 60 Chairman of the Board, President
and Chief Executive Officer
Eugene P. Beard (1) 59 Executive Vice President-Finance
and Operations and Chief Financial
Officer
Frank B. Lowe (1) 53 Chairman of The Lowe Group
Kenneth L. Robbins (1)(2) 59 Chairman of the Board and Chief
Executive Officer of Lintas
Worldwide
C. Kent Kroeber 56 Senior Vice President-Human
Resources
Christopher Rudge 57 Senior Vice President, General
Counsel and Secretary
Thomas J. Volpe 59 Senior Vice President-Financial
Operations
Joseph M. Studley 42 Vice President and Controller
(1) Also a Director
(2) Through July 1, 1995
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There is no family relationship among any of the executive
officers.
The employment histories for the past five years of Messrs.
Geier, Beard and Lowe are incorporated by reference to the Proxy
Statement for Interpublic's 1995 Annual Meeting of Stockholders.
Mr. Kroeber joined Interpublic in January 1966 as Manager of
Compensation and Training. He was elected a Vice President in
1970 and Senior Vice President in May 1980.
Mr. Robbins has been a director of Interpublic since 1991.
He directed the international operations of Lintas:Worldwide as
Chairman of Lintas International from 1985 and became Chairman of
the Board and Chief Executive Officer of Lintas:Worldwide on
September 1, 1991.
Mr. Rudge has been associated with Interpublic since January
1, 1973, when he joined it as an Attorney in its Law Department.
He was elected Vice President and Assistant General Counsel on
May 15, 1984 and was elected to the additional office of
Assistant Secretary on May 20, 1986. Effective January 1, 1989,
he was elected General Counsel and Secretary. On May 15, 1990,
Mr. Rudge was elected a Senior Vice President of Interpublic.
Mr. Volpe joined Interpublic on March 3, 1986. He was
appointed Senior Vice President-Financial Operations on March 18,
1986. He served as Treasurer from January 1, 1987 through May
17, 1988 and the Treasurer's office continues to report to him.
He was Vice President and Treasurer of Colgate-Palmolive Company
from February 1981 to February 1986 and Assistant Corporate
Controller prior thereto.
Mr. Studley, who has been elected as Vice President and
Controller of Interpublic effective as of April 1, 1994, had been
Senior Vice President and Chief Financial Officer of E.C.
Television, a division of Interpublic, since January 1, 1990. He
was a Vice President of Lintas New York, a division of one of
Interpublic's subsidiaries, from August 1, 1987 until December
31, 1989.
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PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1994. See Note 12: Results by Quarter (Unaudited),
of the Notes to the Consolidated Financial Statements and
information under the heading Transfer Agent and Registrar for
Common Stock.
Item 6. Selected Financial Data
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1994 under the heading Selected Financial Data for
Five Years.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1994 under the heading Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Item 8. Financial Statements and Supplementary Data
The response to this Item is incorporated in part by
reference to the Registrant's Annual Report to Stockholders for
the year ended December 31, 1994 under the headings Financial
Statements and Notes to the Consolidated Financial Statements.
Reference is also made to the Financial Statement Schedules
listed under Item 14(a) of this Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item is incorporated by
reference to the Registrant's Proxy Statement for its 1995 Annual
Meeting of Stockholders (the "Proxy Statement"), to be filed not
later than 120 days after the end of the 1994 calendar year,
except for the description of Interpublic's Executive Officers
which appears in Part I of this Report on Form 10-K under the
heading Executive Officers of the Registrant.
Item 11. Executive Compensation
The information required by this Item is incorporated by
reference to the Proxy Statement. Such incorporation by
reference shall not be deemed to incorporate specifically by
reference the information referred to in Item 402(a)(8) of
Regulation S-K.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item is incorporated by
reference to the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by
reference to the Proxy Statement. Such incorporation by
reference shall not be deemed to incorporate specifically by
reference the information referred to in Item 402(a)(8) of
Regulation S-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) Listed below are all financial statements, financial
statement schedules and exhibits filed as part of this Report on
Form 10-K.
1. Financial Statements:
See the Index to Financial Statements on page F-1.
2. Financial Statement Schedules:
See the Index to Financial Statement Schedules on
page F-1.
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3. Exhibits:
(Numbers used are the numbers assigned in Item 601 of
Regulation S-K and the EDGAR Filer Manual. An additional copy of
this exhibit index immediately precedes the exhibits filed with
this Report on Form 10-K and the exhibits transmitted to the
Commission as part of the electronic filing of the Report.)
Exhibit No. Description
3 (i) The Restated Certificate of Incorporation of the
Registrant, as amended is incorporated by reference to
its Report on Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
(ii) The By-Laws of the Registrant, amended as of February
19, 1991, are incorporated by reference to its Report
on Form 10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
Indenture, dated as of April 1, 1992, between
Interpublic and Morgan Guaranty Trust Company of New
York is not included as an Exhibit to this Report but
will be furnished to the Commission upon its request.
10 Material Contracts.
(a) Underwriting Agreement, dated March 30, 1992, by and
between Interpublic and Goldman Sachs International
Limited is incorporated by reference to Registrant's
Report on Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
(b) Employment, Consultancy and other Compensatory
Arrangements with Management.
Employment and Consultancy Agreements and any
amendments or supplements thereto and other
compensatory arrangements filed with the Registrant's
Reports on Form 10-K for the years ended December 31,
1980 through December 31, 1993, inclusive, are
incorporated by reference in this Report on Form 10-K.
See Commission file number 1-6686. Listed below are
agreements or amendments to agreements between the
Registrant and its executive officers which remain in
effect on and after the date hereof or were executed
during the year ended December 31, 1994 and thereafter,
which are filed as exhibits to this Report on Form 10-
K.
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(i) Eugene P. Beard
Supplemental Agreement made as of January 1, 1995
to an Employment Agreement made as of January 1,
1983.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between
The Interpublic Group of Companies, Inc., Lintas
Campbell-Ewald Company, McCann-Erickson USA, Inc.,
McCann-Erickson Marketing, Inc., Lintas, Inc. and
Manufacturers Hanover Trust Company, as Trustee,
is incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1990. See Commission file number 1-
6686.
(ii) The Stock Option Plan (1988) and the Achievement
Stock Award Plan of the Registrant are
incorporated by reference to Appendices C and D of
the Prospectus dated May 4, 1989 forming part of
its Registration Statement on Form S-8 (No. 33-
28143).
(iii) The Management Incentive Compensation Plan of the
Registrant is incorporated by reference to the
Appendix of the Prospectus dated March 21, 1988
forming part of its Registration Statement on Form
S-8 (No. 33-20291).
(iv) The 1986 Stock Incentive Plan of the Registrant is
incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1993. See Commission file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of the
Registrant is incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992. See Commission file
number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the
Registrant, as amended, is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1993. See
Commission file number 1-6686.
(vii) The Long-Term Performance Incentive Plan of the
Registrant is incorporated by reference to
Appendix A of the Prospectus dated December 12,
1988 forming part of its Registration Statement on
Form S-8 (No. 33-25555).
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(viii) Resolution of the Board of Directors adopted on
February 16, 1993, amending the Long-Term
Performance Incentive Plan is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(ix) Resolution of the Board of Directors adopted on
May 16, 1989 amending the Long-Term Performance
Incentive Plan is incorporated by reference to
Registrant's Report on Form 10-K for the year
ended December 31, 1989. See Commission file
number 1-6686.
(d) Loan Agreements.
(i) Amendment, No. 4, dated as of December 1, 1994 to
the Credit Agreement, dated as of September 30,
1992, and effective as of December 30, 1992,
between Interpublic and Citibank.
(ii) Amendment, No. 4, dated as of December 1, 1994 to
the Credit Agreement, dated as of September 30,
1992, and effective as of December 23, 1992,
between Interpublic and NBD.
(iii) Amendment, No. 4, dated as of December 1, 1994 to
the Credit Agreement, dated as of September 30,
1992, and effective as of December 30, 1992,
between Interpublic and Trust Company Bank.
(iv) Amendment, No. 4, dated as of December 1, 1994 to
the Credit Agreement, dated as of September 30,
1992, and effective as of December 30, 1992,
between Interpublic and Swiss Bank.
(v) Amendment, No. 4, dated as of December 2, 1994 to
a Guarantee, dated as of December 17, 1991,
between Interpublic and Lloyds Bank.
(vi) Amendment, No. 4, dated as of December 1, 1994 to
the Credit Agreement, dated as of September 30,
1992, and effective as of December 30, 1992,
between Interpublic and Fuji Bank.
(vii) Amendment, No. 4, dated as of December 1, 1994 to
the Credit Agreement, dated as of September 30,
1992 and effective as of December 30, 1992,
between Interpublic and Chemical.
(viii) Amendment, No. 4, dated as of December 1, 1994 to
the Credit Agreement, dated as of September 30,
1992 and effective as of December 30, 1992,
between Interpublic and UBS.
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(ix) Credit Agreement, dated as of December 1, 1994
between Interpublic and Bank of America National
Trust and Savings Association.
(x) Other Loan and Guaranty Agreements filed with the
Registrant's Annual Report on Form 10-K for the
years ended December 31, 1988 and December 31,
1986 are incorporated by reference in this Report
on Form 10-K. Other Credit Agreements, amendments
to various Credit Agreements, Termination
Agreements, Loan Agreements, a Note Purchase
Agreement, dated August 20, 1991, Guarantee, dated
December 17, 1991, Notification dated March 14,
1991 by Registrant and Intercreditor Agreements
filed with the Registrant's Report on Form 10-K
for the years ended December 31, 1989 through
December 31, 1993, inclusive and filed with
Registrant's Reports on Form 10-Q for the periods
ended March 31, 1994 and June 30, 1994 are
incorporated by reference into this Report on Form
10-K. See Commission file number 1-6686.
(e) Leases.
Material leases of premises are incorporated by
reference to the Registrant's Annual Report on
Form 10-K for the years ended December 31, 1980
and December 31, 1988. See Commission file number
1-6686.
(f) Acquisition Agreement for Purchase of Real Estate.
(i) Acquisition Agreement (in German) between
Treuhandelsgesellschaft Aktiengesellschaft & Co.
Grundbesitz OHG and McCann-Erickson Deutschland
GmbH & Co. Management Property KG ("McCann-
Erickson Deutschland") and the English translation
of the Acquisition Agreement are incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
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(g) Mortgage Agreements and Encumbrances.
(i) Summaries In German and English of Mortgage
Agreements between McCann-Erickson Deutschland and
Frankfurter Hypothekenbank Aktiengesellschaft
("Frankfurter Hypothekenbank"), Mortgage
Agreement, dated January 22, 1993, between McCann-
Erickson Deutschland and Frankfurter
Hypothekenbank, Mortgage Agreement, dated January
22, 1993, between McCann-Erickson Deutschland and
Hypothekenbank are incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993. See Commission file
number 1-6686. Summaries In German and English of
Mortgage Agreement, between McCann-Erickson
Deutschland and Frankfurter Sparkasse and Mortgage
Agreement, dated January 7, 1993, between McCann-
Erickson Deutschland and Frankfurter Sparkasse are
incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1992. See Commission file number 1-6686.
(ii) Summaries In German and English of Documents
Creating Encumbrances In Favor of Frankfurter
Hypothekenbank and Frankfurter Sparkasse In
Connection With the Aforementioned Mortgage
Agreements, Encumbrance, dated January 15, 1993,
In Favor Of Frankfurter Hypothekenbank, and
Encumbrance, dated January 15, 1993, In Favor of
Frankfurter Sparkasse are incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(iii) Loan Agreement (in English and German), dated
January 29, 1993 between Lintas Deutschland GmbH
and McCann-Erickson Deutschland is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
11 Computation of Earnings Per Share.
PAGE
<PAGE>
13 This Exhibit includes: (a) those portions of the Annual
Report to Stockholders for the year ended December 31, 1994
which are included therein under the following headings:
Financial Highlights; Management's Discussion and Analysis
of Financial Condition and Results Of Operations;
Consolidated Balance Sheet; Consolidated Statement of
Income; Consolidated Statement of Cash Flows; Consolidated
Statement of Stockholders' Equity; Notes to Consolidated
Financial Statements (the aforementioned consolidated
financial statements together with the Notes to Consolidated
Financial Statements hereinafter shall be referred to as the
"Consolidated Financial Statements"); Report of Independent
Accountants; Selected Financial Data For Five Years; Report
of Management; and Stockholders' Information; and (b)
Appendix to Exhibit 13.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney to sign Form 10-K and resolution of Board
of Directors re Power of Attorney.
29 (a) Supplemental Agreements filed with Registrant's Annual
Report on Form 10-K for the year ended December 31,
1990 are incorporated by reference into this Report on
Form 10-K. See Commission file number 1-6686.
(b) The Preferred Share Purchase Rights Plan as adopted on
July 18, 1989 is incorporated by reference to
Registrant's Registration Statement on Form 8-A dated
August 1, 1989 (No. 00017904) and, as amended, by
reference to Registrant's Registration Statement on
Form 8 dated October 3, 1989 (No. 00106686).<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Registrant)
March 28, 1995 BY: Philip H. Geier, Jr.
Philip H. Geier, Jr.,
Chairman of the Board,
President and Chief
Executive 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.
Name Title Date
Chairman of the Board, March 28, 1995
President and Chief Executive
Philip H. Geier, Jr. Officer (Principal Executive
Philip H. Geier, Jr. Officer) and Director
Executive Vice President March 28, 1995
-Finance and Operations
Eugene P. Beard (Principal Financial
Eugene P. Beard Officer) and Director
*Lynne V. Cheney Director March 28, 1995
Lynne V. Cheney
*Frank B. Lowe Director March 28, 1995
Frank B. Lowe
PAGE
<PAGE>
*Kenneth L. Robbins Director March 28, 1995
Kenneth L. Robbins
*Leif H. Olsen Director March 28, 1995
Leif H. Olsen
*J. Phillip Samper Director March 28, 1995
J. Phillip Samper
*Joseph J. Sisco Director March 28, 1995
Joseph J. Sisco
*Frank Stanton Director March 28, 1995
Frank Stanton
Joseph M. Studley
Joseph M. Studley Vice President and March 28, 1995
Controller (Principal
Accounting Officer)
*Jacqueline G. Wexler Director March 28, 1995
Jacqueline G. Wexler
*By Philip H. Geier, Jr.
Philip H. Geier, Jr.
Attorney-in-fact
PAGE
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The Financial statements appearing under the headings: Financial
Highlights, Management Discussion and Analysis of Financial Condition
and Results of Operations, Consolidated Financial Statements, Notes to
Consolidated Financial Statements, Report of Independent Accountants,
Selected Financial Data for Five Years and Report of Management
accompanying Annual Report to Stockholders for the year ended December
31, 1994, together with the report thereon of Price Waterhouse dated
February 13, 1995 appearing on page 35 thereof, are incorporated by
reference in this report on Form 10-K. With the exception of the
aforementioned information and the information incorporated in Items 5,
6 and 7, no other data appearing in the Annual Report to Stockholders
for the year ended December 31, 1994 is deemed to be filed as part of
this report on Form 10-K.
The following financial statements schedules should be read in
conjunction with the financial statements in such Annual Report to
Stockholders for the year ended December 31, 1994. Financial statement
schedules not included in this report on Form 10-K have been omitted
because they are not applicable or the required information is shown in
the financial statements or the notes thereto.
Separate financial statements for the companies which are 50% or less
owned and accounted for by the equity method have been omitted because,
considered in the aggregate as a single subsidiary, they do not
constitute a significant subsidiary.
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
Report of Independent Accountants on
Financial Statement Schedules F-2
Consent of Independent Accountants F-2
Financial Statement Schedules Required to be Filed by Item 8 of this
form:
II Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other
than Related Parties F-3
VIII Valuation and Qualifying Accounts F-4
IX Short-Term Borrowings F-5
X Supplementary Income Statement Information F-6
F-1
PAGE
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
The Interpublic Group of Companies, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 13, 1995 appearing in the 1994 Annual Report to
Stockholders of The Interpublic Group of Companies, Inc. (which report
and consolidated financial statements are incorporated by reference in
this Annual Report on Form 10-K) also included an audit of the Financial
Statement Schedules listed in Item 14 (a) of this Form 10-K. In our
opinion, these Financial Statement Schedules present fairly, in all
material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE, LLP
New York, New York
February 13, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 of The Interpublic Group of Companies, Inc. (the
"Company"), of our report dated February 13, 1995, appearing in the 1994
Annual Report to Stockholders which is incorporated in this Annual Report
on Form 10-K: Registration Statements No. 2-79071; No. 2-43811; No. 2-
56269; No. 2-61346; No. 2-64338; No. 2-67560; No. 2-72093; No. 2-88165;
No. 2-90878, No. 2-97440 and No. 33-28143, relating variously to the
Stock Option Plan (1971), the Stock Option Plan (1981), the Stock Option
Plan (1988) and the Achievement Stock Award Plan of the Company;
Registration Statements No. 2-53544; No. 2-91564, No. 2-98324, No. 33-
22008 and No. 33-64062, relating variously to the Employee Stock Purchase
Plan (1975) and the Employee Stock Purchase Plan (1985) of the Company;
Registration Statements No. 33-20291 and No. 33-2830 relating to the
Management Incentive Compensation Plan of the Company; Registration
Statement No. 33-5352 and No. 33-21605 relating to the 1986 Stock
Incentive Plan and 1986 United Kingdom Stock Option Plan of the Company;
and Registration Statement No. 33-10087 and No. 33-25555 relating to the
Long-Term Performance Incentive Plan of the Company. We also consent to
the incorporation by reference of our report on the Financial Statement
Schedules, which appears on this Form of the 10-K. We hereby consent to
the incorporation by reference in the Prospectus constituting part of the
Registration Statement on Form S-3 (No. 33-37346) of the Interpublic
Group of Companies, Inc. of our report dated February 13, 1995, appearing
in the 1994 Annual Report to Stockholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which
appears above.
PRICE WATERHOUSE, LLP
New York, New York
March 24, 1995
F-2
PAGE
<PAGE>
SCHEDULE II
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES.
For the Years Ended December 31, 1994, 1993 and 1992
(Dollars in Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance at Deductions - Balance
Beginning Amounts at End
Name of Debtor of Period Additions Collected Other<F1> of Period
1994:
A. Gomes $ 68 $ 0 $ 68 $ 0 $ 0
D. Holt <F2> 12,000 700 100 0 12,600
1993:
A. Gomes $ 137 $ 0 $ (45) $ (24) $ 68
G. Bowen 300 0 (300) 0 0
1992:
A. Gomes $ 0 $ 137 $ 0 $ 0 $ 137
G. Bowen 0 300 0 0 300
[FN]
<F1> Effect of currency translation.
<F2> Resulting from 1994 acquisitions.
F-3
PAGE
<PAGE>
SCHEDULE VIII
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1994, 1993 and 1992
(Dollars in Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
(1) (2)
Balance Charged Charged
at to to Other Balance
Beginning Costs & Accounts- Deductions- at End
Description of Period Expenses Describe Describe Period
Allowance for
Doubtful Accounts -
deducted from
Receivables in the
Consolidated
Balance Sheet:
1994 $16,834 $6,522 $4,097 <F3> $6,109 <F5> $22,656
699 <F4>
613 <F7>
1993 $15,559 $5,600 $ 764 <F3> $3,823 <F5> $16,834
898 <F6> 2,360 <F4>
196 <F7>
1992 $18,553 $4,320 $ 449 <F7> $5,497 <F5> $15,559
2,266 <F4>
[FN]
<F3> Allowance for doubtful accounts of acquired and newly consolidated
companies.
<F4> Foreign currency translation adjustment.
<F5> Principally amounts written off.
<F6> Reversal of previously written off accounts.
<F7> Miscellaneous.
F-4
PAGE
<PAGE>
<TABLE> SCHEDULE IX
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
SHORT-TERM BORROWINGS
For the Years Ended December 31, 1994, 1993 and 1992
(Dollars in Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
At End of Period
Weighted
Maximum Average Average
Category of Balance Weighted Amount Amount Interest
Aggregate at Average Outstanding Outstanding Rate
Short-Term End of Interest During the During the During the
Borrowings <F8> Period Rate Period Period <F8> Period <F9>
<S> <C> <C> <C> <C> <C>
Payable to Banks:
1994: $113,630 9.7% $170,032 $139,589 6.4%
1993: $130,457 6.6% $130,457 $110,972 7.2%
1992 $ 80,617 9.7% $159,648 $120,482 7.4%
<FN>
<F8> Generally are lines of credit and overdraft facilities bearing interest at prevailing rates.
Does not include interest on short or long-term borrowings, or current portion of long-term
borrowings.
<F9> Computed principally on the basis of average monthly/quarterly amounts.
F-5
</TABLE>
<PAGE>
<PAGE>
SCHEDULE X
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the Years Ended December 31, 1994, 1993 and 1992
(Dollars in Thousands)
COLUMN A COLUMN B
Item Charged to Costs and Expenses
1994 1993 1992
Maintenance and repairs $20,822 $20,127 $22,196
Amortization of $18,335 $18,730 $19,573
Intangible Assets
Taxes Other Than Payroll $19,128 $16,561 $18,519
and Income Taxes
F-6
PAGE
<PAGE>
INDEX TO DOCUMENTS
Exhibit No. Description
3 (i) The Restated Certificate of Incorporation of the
Registrant, as amended is incorporated by reference to its
Report on Form 10-K for the year ended December 31, 1992.
See Commission file number 1-6686.
(ii) The By-Laws of the Registrant, amended as of February 19,
1991, are incorporated by reference to its Report on Form
10-K for the year ended December 31, 1990. See Commission
file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
Indenture, dated as of April 1, 1992, between Interpublic
and Morgan Guaranty Trust Company of New York is not
included as an Exhibit to this Report but will be furnished
to the Commission upon its request.
10 Material Contracts.
(a) Underwriting Agreement, dated March 30, 1992, by and
between Interpublic and Goldman Sachs International Limited
is incorporated by reference to Registrant's Report on Form
10-K for the year ended December 31, 1992. See Commission
file number 1-6686.
(b) Employment, Consultancy and other Compensatory Arrangements
with Management.
Employment and Consultancy Agreements and any
amendments or supplements thereto and other
compensatory arrangements filed with the
Registrant's Reports on Form 10-K for the
years ended December 31, 1980 through December
31, 1993, inclusive, are incorporated by
reference in this Report on Form 10-K. See
Commission file number 1-6686. Listed below
are agreements or amendments to agreements
between the Registrant and its executive
officers which remain in effect on and after
the date hereof or were executed during the
year ended December 31, 1994 and thereafter,
which are filed as exhibits to this Report on
Form 10-K.
(i) Eugene P. Beard
Supplemental Agreement made as of January 1,
1995 to an Employment Agreement made as of
January 1, 1983.
INDEX - 1
PAGE
<PAGE>
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990
between The Interpublic Group of Companies,
Inc., Lintas Campbell-Ewald Company, McCann-
Erickson USA, Inc., McCann-Erickson Marketing,
Inc., Lintas, Inc. and Manufacturers Hanover
Trust Company, as Trustee, is incorporated by
reference to Registrant's Annual Report on
Form 10-K for the year ended December 31,
1990. See Commission file number 1-6686.
(ii) The Stock Option Plan (1988) and the
Achievement Stock Award Plan of the Registrant
are incorporated by reference to Appendices C
and D of the Prospectus dated May 4, 1989
forming part of its Registration Statement on
Form S-8 (No. 33-28143).
(iii) The Management Incentive Compensation Plan of
the Registrant is incorporated by reference to
the Appendix of the Prospectus dated March 21,
1988 forming part of its Registration
Statement on Form S-8 (No. 33-20291).
(iv) The 1986 Stock Incentive Plan of the
Registrant is incorporated by reference to
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993. See
Commission file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of
the Registrant is incorporated by reference to
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1992. See
Commission file number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the
Registrant, as amended, is incorporated by
reference to Registrant's Annual Report on
Form 10-K for the year ended December 31,
1993. See Commission file number 1-6686.
INDEX - 2
PAGE
<PAGE>
(vii) The Long-Term Performance Incentive Plan of
the Registrant is incorporated by reference to
Appendix A of the Prospectus dated December
12, 1988 forming part of its Registration
Statement on Form S-8 (No. 33-25555).
(viii) Resolution of the Board of Directors adopted
on February 16, 1993, amending the Long-Term
Performance Incentive Plan is incorporated by
reference to Registrant's Annual Report on
Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
(ix) Resolution of the Board of Directors adopted
on May 16, 1989 amending the Long-Term
Performance Incentive Plan is incorporated by
reference to Registrant's Report on Form 10-K
for the year ended December 31, 1989. See
Commission file number 1-6686.
(d) Loan Agreements.
(i) Amendment, No. 4, dated as of December 1, 1994
to the Credit Agreement, dated as of September
30, 1992, and effective as of December 30,
1992, between Interpublic and Citibank.
(ii) Amendment, No. 4, dated as of December 1, 1994
to the Credit Agreement, dated as of September
30, 1992, and effective as of December 23,
1992, between Interpublic and NBD.
(iii) Amendment, No. 4, dated as of December 1, 1994
to the Credit Agreement, dated as of September
30, 1992, and effective as of December 30,
1992, between Interpublic and Trust Company
Bank.
(iv) Amendment, No. 4, dated as of December 1, 1994
to the Credit Agreement, dated as of September
30, 1992, and effective as of December 30,
1992, between Interpublic and Swiss Bank.
(v) Amendment, No. 4, dated as of December 2, 1994
to a Guarantee, dated as of December 17, 1991,
between Interpublic and Lloyds Bank.
(vi) Amendment, No. 4, dated as of December 1, 1994
to the Credit Agreement, dated as of September
30, 1992, and effective as of December 30,
1992, between Interpublic and Fuji Bank.
(vii) Amendment, No. 4, dated as of December 1, 1994
to the Credit Agreement, dated as of September
30, 1992 and effective as of December 30,
1992, between Interpublic and Chemical.
PAGE
<PAGE>
INDEX - 3
(viii) Amendment, No. 4, dated as of December 1, 1994
to the Credit Agreement, dated as of September
30, 1992 and effective as of December 30,
1992, between Interpublic and UBS.
(ix) Credit Agreement, dated as of December 1, 1994
between Interpublic and Bank of America
National Trust and Savings Association.
(x) Other Loan and Guaranty Agreements filed with
the Registrant's Annual Report on Form 10-K
for the years ended December 31, 1988 and
December 31, 1986 are incorporated by
reference in this Report on Form 10-K. Other
Credit Agreements, amendments to various
Credit Agreements, Termination Agreements,
Loan Agreements, a Note Purchase Agreement,
dated August 20, 1991, Guarantee, dated
December 17, 1991, Notification dated March
14, 1991 by Registrant and Intercreditor
Agreements filed with the Registrant's Report
on Form 10-K for the years ended December 31,
1989 through December 31, 1993, inclusive and
filed with Registrant's Reports on Form 10-Q
for the periods ended March 31, 1994 and June
30, 1994 are incorporated by reference into
this Report on Form 10-K. See Commission file
number 1-6686.
(e) Leases.
Material leases of premises are incorporated
by reference to the Registrant's Annual Report
on Form 10-K for the years ended December 31,
1980 and December 31, 1988. See Commission
file number 1-6686.
(f) Acquisition Agreement for Purchase of Real Estate.
(i) Acquisition Agreement (in German) between
Treuhandelsgesellschaft Aktiengesellschaft &
Co. Grundbesitz OHG and McCann-Erickson
Deutschland GmbH & Co. Management Property KG
("McCann-Erickson Deutschland") and the
English translation of the Acquisition
Agreement are incorporated by reference to
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1992. See
Commission file number 1-6686.
PAGE
<PAGE>
INDEX - 4
(g) Mortgage Agreements and Encumbrances.
(i) Summaries In German and English of Mortgage
Agreements between McCann-Erickson Deutschland
and Frankfurter Hypothekenbank
Aktiengesellschaft ("Frankfurter
Hypothekenbank"), Mortgage Agreement, dated
January 22, 1993, between McCann-Erickson
Deutschland and Frankfurter Hypothekenbank,
Mortgage Agreement, dated January 22, 1993,
between McCann-Erickson Deutschland and
Hypothekenbank are incorporated by reference
to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993. See
Commission file number 1-6686. Summaries In
German and English of Mortgage Agreement,
between McCann-Erickson Deutschland and
Frankfurter Sparkasse and Mortgage Agreement,
dated January 7, 1993, between McCann-Erickson
Deutschland and Frankfurter Sparkasse are
incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1992. See Commission file number
1-6686.
(ii) Summaries In German and English of Documents
Creating Encumbrances In Favor of Frankfurter
Hypothekenbank and Frankfurter Sparkasse In
Connection With the Aforementioned Mortgage
Agreements, Encumbrance, dated January 15,
1993, In Favor Of Frankfurter Hypothekenbank,
and Encumbrance, dated January 15, 1993, In
Favor of Frankfurter Sparkasse are
incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1992. See Commission file number
1-6686.
(iii) Loan Agreement (in English and German), dated
January 29, 1993 between Lintas Deutschland
GmbH and McCann-Erickson Deutschland is
incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1992. See Commission file number
1-6686.
11 Computation of Earnings Per Share.
13 This Exhibit includes: (a) those portions of the Annual Report
to Stockholders for the year ended December 31, 1994 which are
included therein under the following headings: Financial
Highlights; Management's Discussion and Analysis of Financial
Condition and Results Of Operations; Consolidated Balance Sheet;
Consolidated Statement of Income; Consolidated Statement of Cash
Flows; Consolidated Statement of Stockholders' Equity; Notes to
Consolidated Financial Statements (the aforementioned
consolidated financial statements together
INDEX - 5PAGE
<PAGE>
with the Notes to Consolidated Financial Statements hereinafter
shall be referred to as the "Consolidated Financial
Statements"); Report of Independent Accountants; Selected
Financial Data For Five Years; Report of Management; and
Stockholders' Information; and (b) Appendix to Exhibit 13.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney to sign Form 10-K and resolution of Board of
Directors re Power of Attorney.
29 (a) Supplemental Agreements filed with Registrant's Annual
Report on Form 10-K for the year ended December 31, 1990
are incorporated by reference into this Report on Form 10-
K. See Commission file number 1-6686.
(b) The Preferred Share Purchase Rights Plan as adopted on July
18, 1989 is incorporated by reference to Registrant's
Registration Statement on Form 8-A dated August 1, 1989
(No. 00017904) and, as amended, by reference to
Registrant's Registration Statement on Form 8 dated October
3, 1989 (No. 00106686).
INDEX - 6
<PAGE>
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of January 1, 1995, by
and between THE INTERPUBLIC GROUP OF COMPANIES, INC., a
corporation of the State of Delaware (hereinafter referred to as
the "Corporation"), and EUGENE P. BEARD (hereinafter referred to
as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to
an Employment Agreement made as of January 1, 1983, as amended
by Supplemental Agreements dated as of February 19, 1985,
September 24, 1985, March 1, 1986, January 4, 1988, January
1, 1990, May 15,1990, March 1, 1991, October 1, 1991, January 1,
1994, January 5, 1994 and June 1, 1994 (hereinafter referred to
collectively as the "Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend
the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual
promises herein and in the Employment Agreement set forth, the
parties hereto, intending to be legally bound, agree as follows:
1. Paragraph 3.01 of the Employment Agreement is
hereby amended, effective January 1, 1995, by
deleting "$175,000" threfrom and substituting
"$100,000" therefor.
PAGE
<PAGE>
2. Section 3.02 of the Employment Agreement is
hereby amended effective January 1, 1995 by
deleting "$400,000" therefrom and substituting
"$475,000" therefor
3. Except as hereinabove amended, the Employment
Agreement shall continue in full force and
effect.
4. This Supplemental Agreement shall be governed by
the laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. KENT KROEBER
SS: EUGENE P. BEARD
- 2 -
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT, dated as of December 1, 1994 to the Credit
Agreement dated as of September 30, 1992 and effective as of
December 30, 1992, as amended on April 30, 1993, October 5, 1993,
and August 15, 1994 (the "Agreement") between THE INTERPUBLIC
GROUP OF COMPANIES, INC. (the "Borrower") and CITIBANK, N.A. (the
"Bank").
The parties hereto desire to amend the Agreement subject to
the terms and conditions of this Amendment, as hereinafter
provided. Accordingly, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined
herein, each term used herein which is defined in the Agreement
shall have the meaning assigned to such term in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the
Agreement and in each of the documents relating to the Agreement
shall from and after the date hereof refer to the Agreement as
amended hereby.
2. AMENDMENTS.
A. The definition of "Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended to read in
its entirety as follows:
"Termination Date" means December 1, 1997 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
B. Section 2.1 of the Agreement is hereby amended by
replacing the number "$15,000,000" with the number
"$20,000,000".
C. The definition of "CD Margin" set forth in Section 2.5(B)
of the Agreement is hereby amended to read in its entirety
as follows:
The "CD Margin" means on any date from and after
December 1, 1994 (i) .425%, if at the end of each of the two
most recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was equal
to or less than .40 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than
.50 to 1; or (ii) .525%, if (a) the conditions of clause (i)
have not been satisfied and (b) at the end of each of the
two most recently completed fiscal quarters the Borrower's
PAGE
<PAGE>
ratio of Total Borrowed Funds to Consolidated Net Worth was
equal to or less than .70 to 1 and the Borrower's ratio of
Cash Flow to Total Borrowed Funds was equal to or greater
than .35 to 1; or (iii) 5/8 of 1%, if the conditions set
forth in both clauses (i) and (ii) are not satisfied.
D. The definition of "Euro-Dollar Margin" set forth in
Section 2.5(C) of the Agreement is hereby amended to read in
its entirety as follows:
The "Euro-Dollar Margin" means on any date from and
after December 1, 1994 (i) 3/10 of 1%, if at the end of each
of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .40 to 1 and the Borrower's
ratio of Cash Flow to Total Borrowed Funds was equal to or
greater than .50 to 1; or (ii) 4/10 of 1%, if (a) the
conditions of clause (i) have not been satisfied and (b) at
the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1; or (iii) 1/2 of
1%, if the conditions set forth in both clauses (i) and (ii)
are not satisfied.
E. Section 2.6 of the Agreement is hereby amended to read
in its entirety as follows:
2.6 Fees. The Borrower shall pay to the Bank a
commitment fee on the unused portion of the Commitment. The
per annum commitment fee shall be on any date from and after
December 1, 1994 (i) 1/8 of 1% of the unused portion of the
Commitment, if at the end of each of the two most recently
completed fiscal quarters the Borrower's ratio of Total
Borrowed Funds to Consolidated Net Worth was equal to or
less than .40 to 1 and the Borrower's ratio of Cash Flow to
Total Borrowed Funds was equal to or greater than .50 to 1;
or (ii) .15% of the unused portion of the Commitment, if (a)
the conditions of clause (i) have not been satisfied and (b)
at the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1 or (iii) .18% of
the unused portion of the Commitment, if the conditions set
forth in both clauses (i) and (ii) are not satisfied. Such
fees shall accrue from December 1, 1994 to and including the
Termination Date and shall be payable quarterly in arrears
on the last day of each December, March, June, and September
and on any date on which the Commitment is terminated or
otherwise reduced.
PAGE
<PAGE>
3. AGREEMENT AS AMENDED. Except as expressly amended
hereby, the Agreement shall continue in full force and
effect in accordance with the terms thereof.
4. GOVERNING LAW. This Amendment, and the Agreement as
amended hereby, shall be construed in accordance with and
governed by the laws of the State of New York.
5. SEVERABILITY. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
6. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall constitute an
original but all of which when taken together shall
constitute one and the same instrument.
7. EFFECTIVENESS. This Amendment shall become effective as
of the date first above written upon receipt by the Bank of
counterparts hereof executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers
as of the day and year first above written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
CITIBANK, N.A.
By: ERIC HUTTNER
ERIC HUTTNER
VICE PRESIDENT
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT, dated as of December 1, 1994 to the Credit
Agreement dated as of September 30, 1992 and effective as of
December 30, 1992, as amended on April 30, 1993, October 5, 1993,
and August 15, 1994 (the "Agreement") between THE INTERPUBLIC
GROUP OF COMPANIES, INC. (the "Borrower") and NBD BANK, N.A. (the
"Bank").
The parties hereto desire to amend the Agreement subject to
the terms and conditions of this Amendment, as hereinafter
provided. Accordingly, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined
herein, each term used herein which is defined in the Agreement
shall have the meaning assigned to such term in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the
Agreement and in each of the documents relating to the Agreement
shall from and after the date hereof refer to the Agreement as
amended hereby.
2. AMENDMENTS.
A. The definition of "Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended to read in
its entirety as follows:
"Termination Date" means December 1, 1997 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
B. The definition of "CD Margin" set forth in Section
2.5(B) of the Agreement is hereby amended to read in its
entirety as follows:
The "CD Margin" means on any date from and after
December 1, 1994 (i) .425%, if at the end of each of the two
most recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was equal
to or less than .40 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than
.50 to 1; or (ii) .525%, if (a) the conditions of clause (i)
have not been satisfied and (b) at the end of each of the
two most recently completed fiscal quarters the Borrower's
ratio of Total Borrowed Funds to Consolidated Net Worth was
equal to or less than .70 to 1 and the Borrower's ratio of
Cash Flow to Total Borrowed Funds was equal to or greater
than .35 to 1; or (iii) 5/8 of 1%, if the conditions set
forth in both clauses (i) and (ii) are not satisfied.
PAGE
<PAGE>
C. The definition of "Euro-Dollar Margin" set forth in
Section 2.5(C) of the Agreement is hereby amended to read in
its entirety as follows:
The "Euro-Dollar Margin" means on any date from and
after December 1, 1994 (i) 3/10 of 1%, if at the end of each
of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .40 to 1 and the Borrower's
ratio of Cash Flow to Total Borrowed Funds was equal to or
greater than .50 to 1; or (ii) 4/10 of 1%, if (a) the
conditions of clause (i) have not been satisfied and (b) at
the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1; or (iii) 1/2 of
1%, if the conditions set forth in both clauses (i) and (ii)
are not satisfied.
D. Section 2.6 of the Agreement is hereby amended to read
in its entirety as follows:
2.6 FEES. The Borrower shall pay to the Bank a
commitment fee on the unused portion of the Commitment. The
per annum commitment fee shall be on any date from and after
December 1, 1994 (i) 1/8 of 1% of the unused portion of the
Commitment, if at the end of each of the two most recently
completed fiscal quarters the Borrower's ratio of Total
Borrowed Funds to Consolidated Net Worth was equal to or
less than .40 to 1 and the Borrower's ratio of Cash Flow to
Total Borrowed Funds was equal to or greater than .50 to 1;
or (ii) .15% of the unused portion of the Commitment, if (a)
the conditions of clause (i) have not been satisfied and (b)
at the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1 or (iii) .18% of
the unused portion of the Commitment, if the conditions set
forth in both clauses (i) and (ii) are not satisfied. Such
fees shall accrue from December 1, 1994 to and including the
Termination Date and shall be payable quarterly in arrears
on the last day of each December, March, June, and September
and on any date on which the Commitment is terminated or
otherwise reduced.
3. AGREEMENT AS AMENDED. Except as expressly amended
hereby, the Agreement shall continue in full force and
effect in accordance with the terms thereof.
PAGE
<PAGE>
4. GOVERNING LAW. This Amendment, and the Agreement as
amended hereby, shall be construed in accordance with and
governed by the laws of the State of New York.
5. SEVERABILITY. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
6. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall constitute an
original but all of which when taken together shall
constitute one and the same instrument.
7. EFFECTIVENESS. This Amendment shall become effective as
of the date first above written upon receipt by the Bank of
counterparts hereof executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers
as of the day and year first above written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
NBD BANK, N.A.
By: CAROLYN PARKS
CAROLYN PARKS
VICE PRESIDENT
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT, dated as of December 1, 1994 to the Credit
Agreement dated as of September 30, 1992 and effective as of
December 30, 1992, as amended on April 30, 1993, October 5, 1993,
and August 15, 1994 (the "Agreement") between THE INTERPUBLIC
GROUP OF COMPANIES, INC. (the "Borrower") and TRUST COMPANY BANK
(the "Bank").
The parties hereto desire to amend the Agreement subject to
the terms and conditions of this Amendment, as hereinafter
provided. Accordingly, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined
herein, each term used herein which is defined in the Agreement
shall have the meaning assigned to such term in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the
Agreement and in each of the documents relating to the Agreement
shall from and after the date hereof refer to the Agreement as
amended hereby.
2. AMENDMENTS.
A. The definition of "Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended to read in
its entirety as follows:
"Termination Date" means December 1, 1997 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
B. The definition of "CD Margin" set forth in Section
2.5(B) of the Agreement is hereby amended to read in its
entirety as follows:
The "CD Margin" means on any date from and after
December 1, 1994 (i) .425%, if at the end of each of the two
most recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was equal
to or less than .40 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than
.50 to 1; or (ii) .525%, if (a) the conditions of clause (i)
have not been satisfied and (b) at the end of each of the
two most recently completed fiscal quarters the Borrower's
ratio of Total Borrowed Funds to Consolidated Net Worth was
equal to or less than .70 to 1 and the Borrower's ratio of
Cash Flow to Total Borrowed Funds was equal to or greater
than .35 to 1; or (iii) 5/8 of 1%, if the conditions set
forth in both clauses (i) and (ii) are not satisfied.
PAGE
<PAGE>
C. The definition of "Euro-Dollar Margin" set forth in
Section 2.5(C) of the Agreement is hereby amended to read in
its entirety as follows:
The "Euro-Dollar Margin" means on any date from and
after December 1, 1994 (i) 3/10 of 1%, if at the end of each
of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .40 to 1 and the Borrower's
ratio of Cash Flow to Total Borrowed Funds was equal to or
greater than .50 to 1; or (ii) 4/10 of 1%, if (a) the
conditions of clause (i) have not been satisfied and (b) at
the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1; or (iii) 1/2 of
1%, if the conditions set forth in both clauses (i) and (ii)
are not satisfied.
D. Section 2.6 of the Agreement is hereby amended to read
in its entirety as follows:
2.6 FEES. The Borrower shall pay to the Bank a
commitment fee on the unused portion of the Commitment. The
per annum commitment fee shall be on any date from and after
December 1, 1994 (i) 1/8 of 1% of the unused portion of the
Commitment, if at the end of each of the two most recently
completed fiscal quarters the Borrower's ratio of Total
Borrowed Funds to Consolidated Net Worth was equal to or
less than .40 to 1 and the Borrower's ratio of Cash Flow to
Total Borrowed Funds was equal to or greater than .50 to 1;
or (ii) .15% of the unused portion of the Commitment, if (a)
the conditions of clause (i) have not been satisfied and (b)
at the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1 or (iii) .18% of
the unused portion of the Commitment, if the conditions set
forth in both clauses (i) and (ii) are not satisfied. Such
fees shall accrue from December 1, 1994 to and including the
Termination Date and shall be payable quarterly in arrears
on the last day of each December, March, June, and September
and on any date on which the Commitment is terminated or
otherwise reduced.
3. AGREEMENT AS AMENDED. Except as expressly amended
hereby, the Agreement shall continue in full force and
effect in accordance with the terms thereof.
PAGE
<PAGE>
4. GOVERNING LAW. This Amendment, and the Agreement as
amended hereby, shall be construed in accordance with and
governed by the laws of the State of New York.
5. SEVERABILITY. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
6. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall constitute an
original but all of which when taken together shall
constitute one and the same instrument.
7. EFFECTIVENESS. This Amendment shall become effective as
of the date first above written upon receipt by the Bank of
counterparts hereof executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers
as of the day and year first above written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
TRUST COMPANY BANK
By: ALLISON LEWIS VELLA
ALLISON LEWIS VELLA
ASSISTANT VICE PRESIDENT
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT, dated as of December 1, 1994 to the Credit
Agreement dated as of September 30, 1992 and effective as of
December 30, 1992, as amended on April 30, 1993, October 5, 1993,
and August 15, 1994 (the "Agreement") between THE INTERPUBLIC
GROUP OF COMPANIES, INC. (the "Borrower") and SWISS BANK
CORPORATION (the "Bank").
The parties hereto desire to amend the Agreement subject to
the terms and conditions of this Amendment, as hereinafter
provided. Accordingly, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined
herein, each term used herein which is defined in the Agreement
shall have the meaning assigned to such term in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the
Agreement and in each of the documents relating to the Agreement
shall from and after the date hereof refer to the Agreement as
amended hereby.
2. AMENDMENTS.
A. The definition of "Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended to read in
its entirety as follows:
"Termination Date" means December 1, 1997 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
B. The definition of "CD Margin" set forth in Section
2.5(B) of the Agreement is hereby amended to read in its
entirety as follows:
The "CD Margin" means on any date from and after
December 1, 1994 (i) .425%, if at the end of each of the two
most recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was equal
to or less than .40 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than
.50 to 1; or (ii) .525%, if (a) the conditions of clause (i)
have not been satisfied and (b) at the end of each of the
two most recently completed fiscal quarters the Borrower's
ratio of Total Borrowed Funds to Consolidated Net Worth was
equal to or less than .70 to 1 and the Borrower's ratio of
Cash Flow to Total Borrowed Funds was equal to or greater
than .35 to 1; or (iii) 5/8 of 1%, if the conditions set
forth in both clauses (i) and (ii) are not satisfied.
PAGE
<PAGE>
C. The definition of "Euro-Dollar Margin" set forth in
Section 2.5(C) of the Agreement is hereby amended to read in
its entirety as follows:
The "Euro-Dollar Margin" means on any date from and
after December 1, 1994 (i) 3/10 of 1%, if at the end of each
of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .40 to 1 and the Borrower's
ratio of Cash Flow to Total Borrowed Funds was equal to or
greater than .50 to 1; or (ii) 4/10 of 1%, if (a) the
conditions of clause (i) have not been satisfied and (b) at
the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1; or (iii) 1/2 of
1%, if the conditions set forth in both clauses (i) and (ii)
are not satisfied.
D. Section 2.6 of the Agreement is hereby amended to read
in its entirety as follows:
2.6 FEES. The Borrower shall pay to the Bank a
commitment fee on the unused portion of the Commitment. The
per annum commitment fee shall be on any date from and after
December 1, 1994 (i) 1/8 of 1% of the unused portion of the
Commitment, if at the end of each of the two most recently
completed fiscal quarters the Borrower's ratio of Total
Borrowed Funds to Consolidated Net Worth was equal to or
less than .40 to 1 and the Borrower's ratio of Cash Flow to
Total Borrowed Funds was equal to or greater than .50 to 1;
or (ii) .15% of the unused portion of the Commitment, if (a)
the conditions of clause (i) have not been satisfied and (b)
at the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1 or (iii) .18% of
the unused portion of the Commitment, if the conditions set
forth in both clauses (i) and (ii) are not satisfied. Such
fees shall accrue from December 1, 1994 to and including the
Termination Date and shall be payable quarterly in arrears
on the last day of each December, March, June, and September
and on any date on which the Commitment is terminated or
otherwise reduced.
3. AGREEMENT AS AMENDED. Except as expressly amended
hereby, the Agreement shall continue in full force and
effect in accordance with the terms thereof.
PAGE
<PAGE>
4. GOVERNING LAW. This Amendment, and the Agreement as
amended hereby, shall be construed in accordance with and
governed by the laws of the State of New York.
5. SEVERABILITY. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
6. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall constitute an
original but all of which when taken together shall
constitute one and the same instrument.
7. EFFECTIVENESS. This Amendment shall become effective as
of the date first above written upon receipt by the Bank of
counterparts hereof executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers
as of the day and year first above written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: ALAN M. FORSTER
VICE PRESIDENT & TREASURER
SWISS BANK CORPORATION
By: JANE A. MAJESKI
JANE A. MAJESKI
DIRECTOR
<PAGE>
AMENDMENT NO. 4 TO
GUARANTEE BETWEEN THE INTERPUBLIC
GROUP OF COMPANIES, INC. AND
LLOYDS BANK PLC
AMENDMENT No. 4, dated as of December 2, 1994 to a Guarantee
dated December 17, 1991 between The Interpublic Group of
Companies, Inc. (the "Guarantor") and Lloyds Bank Plc (the
"Agent"), as previously amended by Amendments No. 1 through 3
dated, respectively, December 18, 1992, June 30, 1993 and October
27, 1993 (The "Guarantee").
Section 1. AMENDMENTS
(a) From the date hereof, Section 4.1 (ii) of the Guarantee
is hereby amended by deleting it in its entirety and replacing it
with the following provision:
"(ii) save as provided in Clause 4.2, as soon as
practicable and in any event within 50 days after the
end of each of the first three quarters of each fiscal
year of the Guarantor, a consolidated balance sheet of
the Guarantor and its Consolidated Subsidiaries as at
the end of such quarter and the related consolidated
statements of income and retained earnings and
statement of cash flows of the Guarantor and its
Consolidated Subsidiaries for such quarter and for the
portion of the Guarantor's fiscal year ended at the end
of such quarter setting forth in each case in
comparative form the figures for the corresponding
quarter and the corresponding portion of the
Guarantor's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness
of presentation, generallyaccepted accounting
principles (other than as to footnotes)and consistency
(except to the extent of any change described therein
and permitted by generally accepted accounting
principles) by the chief financial officer or the chief
accounting officer of the Guarantor;"
(b) From the date hereof, Sections 5.1 (ii) and 5.1 (iii)
of the Guarantee are hereby amended by deleting them in their
entirety and replacing them with the following provisions:
"(ii) Total Borrowed Funds do not exceed 85% of Consolidated
Net Worth at the end of any quarter; and
PAGE
<PAGE>
(iii) The ratio of Cash Flow to Total Borrowed Funds is not
less than 0.30:1.00 for any consecutive four quarters, such
ratio to be calculated at the end of each fiscal quarter on
a trailing four quarter basis."
(c) Section 5.2(i) of the Guarantee is hereby amended by
deleting it in its entirety and replacing it with the following
provision:
"(i) "Cash flow" means the sum of net income (plus any
amount by which net income has been reduced by reason of the
recognition of post-retirement and post-employment benefit
costs prior to the period in which such benefits are paid),
depreciation charges, amortization costs and changes in
deferred taxes;"
(d) Section 5.2(ii) of the Guarantee is hereby amended by
deleting it in its entirety and replacing it with the following
provision:
"(ii) "Consolidated Net Worth" means at any date the
consolidated stockholders' equity of the Guarantor and its
Consolidated Subsidiaries as such appear on the financial
statements of the Guarantor determined in accordance with
generally accepted accounting principles in the United
States of America, plus any amount by which retained
earnings have been reduced by reason of the recognition of
post-retirement and post-employment benefit costs prior to
the period in which such benefits are paid, but in each case
without taking into account the effect of cumulative
translation adjustments."
Section 2. Miscellaneous. Except as specifically amended
as set forth above, the Guarantee shall remain in full force and
effect.
Section 3. Governing Law. This agreement shall be governed
by, and construed in accordance with, the law of the State of New
York.
Section 4. Counterparts. This Amendment may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were
upon the same instrument.
PAGE
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this
Amendment to be duly executed and is intended to be effective as
of the date first above written.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
THE ARRANGER/AGENT:
LLOYDS BANK PLC
By: M.J.E. DUTFIELD
M.J.E. DUTFIELD
CAPITAL MARKETS GROUP
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT, dated as of December 1, 1994 to the Credit
Agreement dated as of September 30, 1992 and effective as of
December 30, 1992, as amended on April 30, 1993, October 5, 1993,
and August 15, 1994 (the "Agreement") between THE INTERPUBLIC
GROUP OF COMPANIES, INC. (the "Borrower") and THE FUJI BANK,
LIMITED (the "Bank").
The parties hereto desire to amend the Agreement subject to
the terms and conditions of this Amendment, as hereinafter
provided. Accordingly, the parties hereto agree as follows:
1. Definitions. Unless otherwise specifically defined
herein, each term used herein which is defined in the Agreement
shall have the meaning assigned to such term in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the
Agreement and in each of the documents relating to the Agreement
shall from and after the date hereof refer to the Agreement as
amended hereby.
2. Amendments.
A. The definition of "Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended to read in
its entirety as follows:
"Termination Date" means December 1, 1997 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
B. The definition of "CD Margin" set forth in Section
2.5(B) of the Agreement is hereby amended to read in its
entirety as follows:
The "CD Margin" means on any date from and after
December 1, 1994 (i) .425%, if at the end of each of the two
most recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was equal
to or less than .40 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than
.50 to 1; or (ii) .525%, if (a) the conditions of clause (i)
have not been satisfied and (b) at the end of each of the
two most recently completed fiscal quarters the Borrower's
ratio of Total Borrowed Funds to Consolidated Net Worth was
equal to or less than .70 to 1 and the Borrower's ratio of
Cash Flow to Total Borrowed Funds was equal to or greater
than .35 to 1; or (iii) 5/8 of 1%, if the conditions set
forth in both clauses (i) and (ii) are not satisfied.
C. The definition of "Euro-Dollar Margin" set forth in
Section 2.5(C) of the Agreement is hereby amended to read in
its entirety as follows:
PAGE
<PAGE>
The "Euro-Dollar Margin" means on any date from and
after December 1, 1994 (i) 3/10 of 1%, if at the end of each
of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .40 to 1 and the Borrower's
ratio of Cash Flow to Total Borrowed Funds was equal to or
greater than .50 to 1; or (ii) 4/10 of 1%, if (a) the
conditions of clause (i) have not been satisfied and (b) at
the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1; or (iii) 1/2 of
1%, if the conditions set forth in both clauses (i) and (ii)
are not satisfied.
D. Section 2.6 of the Agreement is hereby amended to read
in its entirety as follows:
2.6 Fees. The Borrower shall pay to the Bank a
commitment fee on the unused portion of the Commitment. The
per annum commitment fee shall be on any date from and after
December 1, 1994 (i) 1/8 of 1% of the unused portion of the
Commitment, if at the end of each of the two most recently
completed fiscal quarters the Borrower's ratio of Total
Borrowed Funds to Consolidated Net Worth was equal to or
less than .40 to 1 and the Borrower's ratio of Cash Flow to
Total Borrowed Funds was equal to or greater than .50 to 1;
or (ii) .15% of the unused portion of the Commitment, if (a)
the conditions of clause (i) have not been satisfied and (b)
at the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1 or (iii) .18% of
the unused portion of the Commitment, if the conditions set
forth in both clauses (i) and (ii) are not satisfied. Such
fees shall accrue from December 1, 1994 to and including the
Termination Date and shall be payable quarterly in arrears
on the last day of each December, March, June, and September
and on any date on which the Commitment is terminated or
otherwise reduced.
3. Agreement as Amended. Except as expressly amended
hereby, the Agreement shall continue in full force and
effect in accordance with the terms thereof.
4. Governing Law. This Amendment, and the Agreement as
amended hereby, shall be construed in accordance with and
governed by the laws of the State of New York.
PAGE
<PAGE>
5. Severability. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
6. Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall constitute an
original but all of which when taken together shall
constitute one and the same instrument.
7. Effectiveness. This Amendment shall become effective as
of the date first above written upon receipt by the Bank of
counterparts hereof executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers
as of the day and year first above written.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: Alan M. Forster
Title: Vice President & Treasurer
THE FUJI BANK, LIMITED
By: Michael Imperiale
Title: Vice President
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT, dated as of December 1, 1994 to the Credit
Agreement dated as of September 30, 1992 and effective as of
December 30, 1992, as amended on April 30, 1993, October 5, 1993,
and August 15, 1994 (the "Agreement") between THE INTERPUBLIC
GROUP OF COMPANIES, INC. (the "Borrower") and CHEMICAL BANK (the
"Bank").
The parties hereto desire to amend the Agreement subject to
the terms and conditions of this Amendment, as hereinafter
provided. Accordingly, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined
herein, each term used herein which is defined in the Agreement
shall have the meaning assigned to such term in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the
Agreement and in each of the documents relating to the Agreement
shall from and after the date hereof refer to the Agreement as
amended hereby.
2. AMENDMENTS.
A. The definition of "Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended to read in
its entirety as follows:
"Termination Date" means December 1, 1997 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
B. Section 2.1 of the Agreement is hereby amended by
replacing the number "$15,000,000" with the number
"$20,000,000".
C. The definition of "CD Margin" set forth in Section 2.5(B)
of the Agreement is hereby amended to read in its entirety
as follows:
The "CD Margin" means on any date from and after
December 1, 1994 (i) .425%, if at the end of each of the two
most recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was equal
to or less than .40 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than
.50 to 1; or (ii) .525%, if (a) the conditions of clause (i)
have not been satisfied and (b) at the end of each of the
two most recently completed fiscal quarters the Borrower's
ratio of Total Borrowed Funds to Consolidated Net Worth was
PAGE
<PAGE>
equal to or less than .70 to 1 and the Borrower's ratio of
Cash Flow to Total Borrowed Funds was equal to or greater
than .35 to 1; or (iii) 5/8 of 1%, if the conditions set
forth in both clauses (i) and (ii) are not satisfied.
D. The definition of "Euro-Dollar Margin" set forth in
Section 2.5(C) of the Agreement is hereby amended to read in
its entirety as follows:
The "Euro-Dollar Margin" means on any date from and
after December 1, 1994 (i) 3/10 of 1%, if at the end of each
of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .40 to 1 and the Borrower's
ratio of Cash Flow to Total Borrowed Funds was equal to or
greater than .50 to 1; or (ii) 4/10 of 1%, if (a) the
conditions of clause (i) have not been satisfied and (b) at
the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1; or (iii) 1/2 of
1%, if the conditions set forth in both clauses (i) and (ii)
are not satisfied.
E. Section 2.6 of the Agreement is hereby amended to read
in its entirety as follows:
2.6 FEES. The Borrower shall pay to the Bank a
commitment fee on the unused portion of the Commitment. The
per annum commitment fee shall be on any date from and after
December 1, 1994 (i) 1/8 of 1% of the unused portion of the
Commitment, if at the end of each of the two most recently
completed fiscal quarters the Borrower's ratio of Total
Borrowed Funds to Consolidated Net Worth was equal to or
less than .40 to 1 and the Borrower's ratio of Cash Flow to
Total Borrowed Funds was equal to or greater than .50 to 1;
or (ii) .15% of the unused portion of the Commitment, if (a)
the conditions of clause (i) have not been satisfied and (b)
at the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1 or (iii) .18% of
the unused portion of the Commitment, if the conditions set
forth in both clauses (i) and (ii) are not satisfied. Such
fees shall accrue from December 1, 1994 to and including the
Termination Date and shall be payable quarterly in arrears
on the last day of each December, March, June, and September
and on any date on which the Commitment is terminated or
otherwise reduced.
PAGE
<PAGE>
3. AGREEMENT AS AMENDED. Except as expressly amended
hereby, the Agreement shall continue in full force and
effect in accordance with the terms thereof.
4. GOVERNING LAW. This Amendment, and the Agreement as
amended hereby, shall be construed in accordance with and
governed by the laws of the State of New York.
5. SEVERABILITY. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
6. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall constitute an
original but all of which when taken together shall
constitute one and the same instrument.
7. EFFECTIVENESS. This Amendment shall become effective as
of the date first above written upon receipt by the Bank of
counterparts hereof executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers
as of the day and year first above written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: ALAN M. FORSTER
ALAN M. FORSTER
Vice President & Treasurer
CHEMICAL BANK
By: ROBERT K. GAYNOR
ROBERT K. GAYNOR
Vice President
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT, dated as of December 1, 1994 to the Credit
Agreement dated as of September 30, 1992 and effective as of
December 30, 1992, as amended on April 30, 1993, October 5, 1993,
and August 15, 1994 (the "Agreement") between THE INTERPUBLIC
GROUP OF COMPANIES, INC. (the "Borrower") and UNION BANK OF
SWITZERLAND (the "Bank").
The parties hereto desire to amend the Agreement subject to
the terms and conditions of this Amendment, as hereinafter
provided. Accordingly, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined
herein, each term used herein which is defined in the Agreement
shall have the meaning assigned to such term in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the
Agreement and in each of the documents relating to the Agreement
shall from and after the date hereof refer to the Agreement as
amended hereby.
2. AMENDMENTS.
A. The definition of "Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended to read in
its entirety as follows:
"Termination Date" means December 1, 1997 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
B. The definition of "CD Margin" set forth in Section
2.5(B) of the Agreement is hereby amended to read in its
entirety as follows:
The "CD Margin" means on any date from and after
December 1, 1994 (i) .425%, if at the end of each of the two
most recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was equal
to or less than .40 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than
.50 to 1; or (ii) .525%, if (a) the conditions of clause (i)
have not been satisfied and (b) at the end of each of the
two most recently completed fiscal quarters the Borrower's
ratio of Total Borrowed Funds to Consolidated Net Worth was
equal to or less than .70 to 1 and the Borrower's ratio of
Cash Flow to Total Borrowed Funds was equal to or greater
than .35 to 1; or (iii) 5/8 of 1%, if the conditions set
forth in both clauses (i) and (ii) are not satisfied.
PAGE
<PAGE>
C. The definition of "Euro-Dollar Margin" set forth in
Section 2.5(C) of the Agreement is hereby amended to read in
its entirety as follows:
The "Euro-Dollar Margin" means on any date from and
after December 1, 1994 (i) 3/10 of 1%, if at the end of each
of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .40 to 1 and the Borrower's
ratio of Cash Flow to Total Borrowed Funds was equal to or
greater than .50 to 1; or (ii) 4/10 of 1%, if (a) the
conditions of clause (i) have not been satisfied and (b) at
the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1; or (iii) 1/2 of
1%, if the conditions set forth in both clauses (i) and (ii)
are not satisfied.
D. Section 2.6 of the Agreement is hereby amended to read
in its entirety as follows:
2.6 Fees. The Borrower shall pay to the Bank a
commitment fee on the unused portion of the Commitment. The
per annum commitment fee shall be on any date from and after
December 1, 1994 (i) 1/8 of 1% of the unused portion of the
Commitment, if at the end of each of the two most recently
completed fiscal quarters the Borrower's ratio of Total
Borrowed Funds to Consolidated Net Worth was equal to or
less than .40 to 1 and the Borrower's ratio of Cash Flow to
Total Borrowed Funds was equal to or greater than .50 to 1;
or (ii) .15% of the unused portion of the Commitment, if (a)
the conditions of clause (i) have not been satisfied and (b)
at the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1 or (iii) .18% of
the unused portion of the Commitment, if the conditions set
forth in both clauses (i) and (ii) are not satisfied. Such
fees shall accrue from December 1, 1994 to and including the
Termination Date and shall be payable quarterly in arrears
on the last day of each December, March, June, and September
and on any date on which the Commitment is terminated or
otherwise reduced.
3. AGREEMENT AS AMENDED. Except as expressly amended
hereby, the Agreement shall continue in full force and
effect in accordance with the terms thereof.
PAGE
<PAGE>
4. GOVERNING LAW. This Amendment, and the Agreement as
amended hereby, shall be construed in accordance with and
governed by the laws of the State of New York.
5. SEVERABILITY. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
6. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall constitute an
original but all of which when taken together shall
constitute one and the same instrument.
7. EFFECTIVENESS. This Amendment shall become effective as
of the date first above written upon receipt by the Bank of
counterparts hereof executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers
as of the day and year first above written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: ALAN M. FORSTER
ALAN M. FORSTER
Vice President & Treasurer
UNION BANK OF SWITZERLAND
By: ROBERT W. CASEY, JR.
ROBERT W. CASEY, JR.
Vice President
By: LAURENT CHAIX
LAURENT CHAIX
Assistant Vice President
<PAGE>
CREDIT AGREEMENT
BETWEEN
INTERPUBLIC GROUP OF COMPANIES, INC.
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
__________________________
US$15,000,000
__________________________
Dated as of December 1, 1994
PAGE
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
SECTION 1
INTERPRETATIONS AND DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms and Determinations . . . . . . . . . . . 7
SECTION 2
THE LOANS
2.1 Commitment. . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Method of Borrowing . . . . . . . . . . . . . . . . . . . 8
2.3 The Note. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Maturity of Loans . . . . . . . . . . . . . . . . . . . . 9
2.5 Interest Rates. . . . . . . . . . . . . . . . . . . . . . 9
2.6 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.7 Optional Termination or Reduction of Commitment . . . . . 13
2.8 Mandatory Termination or Reduction of
Commitment. . . . . . . . . . . . . . . . . . . . . . . . 13
2.9 Optional Prepayments. . . . . . . . . . . . . . . . . . . 13
2.10 General Provisions as to Payments . . . . . . . . . . . . 14
2.11 Computation of Interest and Fees. . . . . . . . . . . . . 14
2.12 Funding Losses. . . . . . . . . . . . . . . . . . . . . . 14
2.13 Extension of Commitment . . . . . . . . . . . . . . . . . 14
SECTION 3
CONDITIONS OF LENDING
3.1 All Loans . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Initial Loan. . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Basis for Determining Interest Rate Inadequate. . . . . . 18
4.2 Illegality. . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Increased Costs and Reduced Returns . . . . . . . . . . . 18
PAGE
<PAGE>
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 Corporate Existence and Power . . . . . . . . . . . . . . 21
5.2 Corporate and Governmental Authorization:
Contravention . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Binding Effect. . . . . . . . . . . . . . . . . . . . . . 21
5.4 Financial Information . . . . . . . . . . . . . . . . . . 21
5.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 22
5.6 Compliance with ERISA . . . . . . . . . . . . . . . . . . 22
5.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.8 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6
COVENANTS
6.1 Information . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 Maintenance of Property; Insurance. . . . . . . . . . . . 25
6.3 Conduct of Business and Maintenance of Existence. . . . . 25
6.4 Compliance with Laws. . . . . . . . . . . . . . . . . . . 25
6.5 Inspection of Property, Books and Records . . . . . . . . 26
6.6 Cash Flow to Total Borrowed Funds . . . . . . . . . . . . 26
6.7 Total Borrowed Funds to Consolidated Net Worth. . . . . . 26
6.8 Minimum Consolidated Net Worth. . . . . . . . . . . . . . 26
6.9 Negative Pledge . . . . . . . . . . . . . . . . . . . . . 27
6.10 Consolidations, Mergers and Sales of Assets . . . . . . . 28
6.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7
EVENTS OF DEFAULT
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . 29
SECTION 8
MISCELLANEOUS
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2 Amendments and Waivers; Cumulative Remedies . . . . . . . 32
8.3 Successors and Assigns. . . . . . . . . . . . . . . . . . 32
8.4 Expenses; Documentary Taxes; Indemnification. . . . . . . 33
8.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 34
8.6 Headings; Table of Contents . . . . . . . . . . . . . . . 34
8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . 34
<PAGE>
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of December 1, 1994 between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a Delaware corporation (the "BORROWER"),
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking institution (the "BANK").
SECTION 1
INTERPRETATIONS AND DEFINITIONS
1.1 DEFINITIONS. The following terms, as used herein, shall
have the following respective meanings:
"ADJUSTED CD RATE" has the meaning set forth in Section
2.5(b) hereof.
"ADJUSTED LONDON INTERBANK OFFERED RATE" has the meaning
set forth in Section 2.5(C) hereof.
"APPLICABLE LENDING OFFICE" means, with respect to the
Bank, (i) in the case of Domestic Loans, its Domestic Lending
Office and (ii) in the case of Eurodollar Loans, its Euro-
Dollar Lending Office.
"ASSESSMENT RATE" has the meaning set forth in Section
2.5(b) hereof.
"BASE RATE" means, for any day, a rate per annum equal to
the higher of (i) the rate of interest announced publicly by
the Bank in San Francisco, California, from time to time, as
the Bank's reference rate and (ii) the Federal Funds Rate for
such day plus 1%.
"BASE RATE LOAN" means a Loan which the Borrower
specifies pursuant to Section 2.2 hereof shall be a Base Rate
Loan.
"BENEFIT ARRANGEMENT" means, at any time, an employee
benefit plan within the meaning of Section 3(3) of ERISA which
is not a Plan or a Multiemployer Plan and which is maintained
or otherwise contributed to by any member of the ERISA Group.
"CASH FLOW" means the sum of net income of the Borrower
and its Consolidated Subsidiaries (plus any amount by which
net income has been reduced by reason of the recognition of
post-retirement and post-employment benefit costs prior to the
period in which such benefits are paid), depreciation
expenses, amortization costs and changes in deferred taxes.
PAGE
<PAGE>
"CD BASE RATE" has the meaning set forth in Section
2.5(b) hereof.
"CD LOAN" means a Loan which the Borrower specifies
pursuant to Section 2.2 hereof shall be a CD Loan.
"CD MARGIN" has the meaning set forth in Section 2.5(b)
hereof.
"CODE" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto.
"COMMITMENT" means the obligation of the Bank to lend the
amount set forth in Section 2.1 hereof, as such amount may be
reduced from time to time pursuant to Section 2.7 hereof.
"CONSOLIDTAED SUBSIDIARY" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements as of such date.
"CONSOLIDATED NET WORTH" means at any date the
consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries as such appear on the financial
statements of the Borrower determined in accordance with
generally accepted accounting principles (plus any amount by
which retained earnings has been reduced by reason of the
recognition of post-retirement and post-employment benefit
costs prior to the period in which such benefits are paid and
without taking into account the effect of cumulative currency
translation adjustments).
"DEBT" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, including reimbursement obligations for letters of
credit, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under capital leases, (v)
all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person,
and (vi) all Debt of others Guaranteed by such Person, but in
each case specified in (i) through (vi) excludes obligations
arising in connection with securities repurchase transactions.
PAGE
<PAGE>
"DEFAULT" means any condition or event which constitutes
an Event of Default or which with the giving of notice or
lapse of time, or both, would become an Event of Default.
"DOLLARS" and the sign "$" mean lawful money of the
United States of America.
"DOMESTIC BUSINESS DAY" means any day except a Saturday,
Sunday or other day on which commercial banks in San
Francisco, California are authorized by law to close.
"DOMESTIC LENDING OFFICE" means the principal office of
the Bank located at 1850 Gateway Boulevard, Concord, CA 94520,
or such other branch or affiliate) located within the United
States as the Bank may hereafter designate as its Domestic
Lending Office.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or
both.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth
in Section 2.5(b) hereof.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA GROUP" means the Borrower and all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which,
together with the Borrower, are treated as a single employer
under Section 414(b) or (c) of the Code.
"EURODOLLAR BUSINESS DAY" means any Domestic Business Day
on which commercial Banks in London are open for international
business (including dealings in Dollar deposits).
"EURODOLLAR LENDING OFFICE" means the office of the Bank
located at 1850 Gateway Boulevard, Concord, California 94520,
or such other branch (or affiliate) of the Bank as it may
hereafter designate as its Eurodollar Lending Office.
"EURODOLLAR LOAN" means a Loan which the Borrower
specifies pursuant to Section 2.2 hereof shall be a Eurodollar
Loan.
"EURODOLLAR MARGIN" has the meaning set forth in Section
2.5(C) hereof.
PAGE
<PAGE>
"EURODOLLAR RESERVE PERCENTAGE" has the meaning set forth
in Section 2.5(C) hereof.
"EVENT OF DEFAULT" has the meaning set forth in Section
7 hereof.
"FEDERAL FUNDS RATE" means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest l/100th
of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the
Domestic Business Day next succeeding such day, provided that
(i) if such day is not a Domestic Business Day, the Federal
Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and
(ii) if no such rate is so published on such next succeeding
Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to the Bank on such day on
such transactions as determined by the Bank in a reasonable
manner.
"FIXED CD RATE" has the meaning set forth in Section
2.5(b) hereof.
"FIXED RATE LOANS" means CD Loans, Eurodollar Loans or
Money Market Rate Loans.
"GUARANTEE" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose
of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part),
PROVIDED that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a
corresponding meaning.
PAGE
<PAGE>
"INTEREST PERIOD" means: (1) with respect to each CD
Loan, at the Borrower's option, the period commencing on the
date of such Loan and ending 30, 60, 90 or 180 days
thereafter, (2) with respect to each Eurodollar Loan, at the
Borrower's option, the period commencing on the date of such
Loan and ending one, two, three or six months thereafter and
(3) with respect to each Base Rate Loan the period commencing
on the date of such Loan and ending 30 days thereafter
PROVIDED, that:
(a) any Interest Period which would otherwise end on a
day which is not a Eurodollar Business Day shall be extended
to the next succeeding Eurodollar Business Day unless with
respect to a Eurodollar Loan such Eurodollar Business Day
falls in another calendar month, in which case such Interest
Period shall end on the next preceding EuroDollar Business
Day;
(b) with respect to a Eurodollar Loan, any Interest
Period which begins on the last Eurodollar Business Day of the
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on
the last Eurodollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date;
PROVIDED FURTHER, however, that if any such Interest Period
shall be less than 30 days, the Loan for such Interest Period
shall be a Base Rate Loan.
"LIEN" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or other encumbrance
of any kind in respect of such asset. For purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"LOAN" and "LOANS" means a Domestic Loan, a Eurodollar
Loan, or a Money Market Rate Loan, as the context may require.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth
in Section 2.5(C) hereof.
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"MATERIAL PLAN" means at any time a Plan or Plans having
aggregate unfunded benefit liabilities (within the meaning of
Section 4001(a)(18) of ERISA) in excess of $25,000,000.
"MONEY MARKET RATE LOAN" means a Loan made by the Bank to
the Borrower pursuant to Section 2.5(D) hereof.
"MULTIEMPLOYER PLAN" means at any time an employee
pension benefit plan that is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years
made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such
five year period.
"NOTE OR NOTES" means the promissory note of the
Borrower, substantially in the form of Exhibits A and B hereto
evidencing the obligation of the Borrower to repay the Loans.
"PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under
ERISA.
"PARTICIPANT" has the meaning set forth in Section 8.3.
"PERSON" means an individual, a corporation, a
partnership, an association, a business trust or any other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PLAN" means at any time a defined benefit pension plan
(other than a Multiemployer Plan) which is covered by Title IV
of ERISA or subject to the minimum funding standards-under
Section 412 of the Code and either (i) is maintained, or
contributed to, by any member of the ERISA Group for employees
of any member of the ERISA Group or (ii) has at any time
within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member
of the ERISA Group for employees of any Person which was at
such time a member of the ERISA Group.
"REGULATION U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
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"SIGNIFICANT SUBSIDIARY" or "Significant Group of
Subsidiaries" at any time of determination means any
Consolidated Subsidiary or group of Consolidated Subsidiaries,
respectively, which, individually or in the aggregate,
together with its or their Subsidiaries, accounts or account
for more than 10% of the consolidated gross revenues of the
Borrower and its Consolidated Subsidiaries for the most
recently ended fiscal year or for more than 10% of the total
assets of the Borrower and its Consolidated Subsidiaries as of
the end of such fiscal year; PROVIDED that in connection with
any determination with respect to a Significant Group of
Subsidiaries under (x) Section 7(e), there shall be a payment
default, failure or other event (of the type described therein
but without regard to the principal amount of such obligation)
of each Consolidated Subsidiary included in such group, (y)
Sections 7(f) and (g) and the last sentence of Section 6.10,
the condition or event described therein shall exist with
respect to each Consolidated Subsidiary included in such group
or (z) Section 7(i), there shall be a final judgment (of the
type specified therein but without regard to the amount of
such judgment) rendered against each Consolidated Subsidiary
included in such group.
"SUBSIDIARY" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions is at the time
directly or indirectly owned by the Borrower.
"TERMINATION DATE" means December 1, 1997 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
"TOTAL BORROWED FUNDS" means at any date, without
duplication, (i) all outstanding obligations of the Borrower
and its Consolidated Subsidiaries for borrowed money, (ii) all
outstanding obligations of the Borrower and its Consolidated
Subsidiaries evidenced by bonds, debentures, notes or similar
instruments and (iii) any outstanding obligations of the type
set forth in (i) or (ii) of any other Person Guaranteed by the
Borrower and its Consolidated Subsidiaries, it being
understood that the obligation to repurchase securities
transferred pursuant to a securities repurchase agreement
shall not be deemed to give rise to any amount of Total
Borrowed Funds pursuant to this definition.
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1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder,
shall be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Bank.
SECTION 2
THE LOANS
2.1 COMMITMENT. At any time prior to the Termination Date
the Bank agrees, on the terms and conditions set forth in this
Agreement, to lend to the Borrower from time to time amounts not
exceeding in the aggregate at any one time outstanding the
principal amount of $15,000,000 (the "Commitment"). Each Loan
under this Section 2.1 shall be in the principal amount of
$1,000,000 (except that any such Loan may be in the amount of the
unused Commitment) or any larger multiple thereof. During such
period and within the foregoing limits, the Borrower may borrow
under this Section 2.1, repay or to the extent permitted by Section
2.9 hereof prepay Loans and reborrow under this Section 2.1.
2.2 METHOD OF BORROWING.
(a) With respect to each Loan made pursuant to Section
2.1 hereof, the Borrower shall give the Bank notice prior to
11:00 a.m. on the drawdown date in the case of a Base Rate
Loan, at least one Domestic Business Day's notice in the case
of a CD Loan, or at least three Eurodollar Business Days'
notice in the case of a Eurodollar Loan, specifying:
(i) the date of such Loan, which shall be a
Domestic Business Day in the case of a Domestic Loan and
a EuroDollar Business Day in the case of a Eurodollar
Loan;
(ii) the principal amount of such Loan;
(iii) whether the Loan is to be a Base Rate Loan, a
CD Loan or a Eurodollar Loan; and
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(iv) in the case of a Fixed Rate Loan, the duration
of the Interest Period applicable thereto, subject to the
definition of Interest Period.
(b) On the date of each Loan the Bank will make the
proceeds thereof available to the Borrower at the Domestic
Lending Office.
(c) If the Bank makes a new Loan hereunder on a day
which the Borrower is to repay all or any part of an
outstanding Loan, the Bank shall apply the proceeds of its new
Loan to make such repayment and only an amount equal to the
difference (if any) between the amount being borrowed and the
amount being repaid shall be made available by the Bank to the
Borrower as provided in subsection (b) of this Section or
remitted by the Borrower to the Bank as provided in Section
2.10 hereof, as the case may be.
2.3 THE NOTE.
(a) The Loans shall be evidenced by a single Note
payable to the order of the Bank for the account of its
Applicable Lending Office in an amount equal to the aggregate
unpaid principal amount of the Loans. The Money Market Rate
Loans shall be evidenced by the Money Market Rate Note, a form
of which is attached hereto as Exhibit B.
(b) The Bank shall record and prior to any transfer, if
permitted, of its Note, shall endorse on the schedule forming
a part thereof appropriate notations evidencing the date, the
type, the amount and the maturity of each Loan to be evidenced
by the Note and the date and amount of each payment of
principal made by the Borrower with respect thereto; provided
that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Note and, further provided, the Bank
shall make such additions and deletions as the Borrower may
request in order to correct any mistakes. The Bank is hereby
irrevocably authorized by the Borrower so to endorse the Note
and to attach to and make a part of the Note a continuation of
any such schedule as and when required.
2.4 MATURITY OF LOANS. Each Loan shall mature, and the
principal amount thereof shall be due and payable, on the last day
of the Interest Period applicable to such Loan. Each Money Market
Rate Loan shall mature at such time as may be agreed to by the Bank
and the Borrower.
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2.5 INTEREST RATES.
(a) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per
annum equal to the Base Rate. Such interest shall be payable
for each Interest Period on the last day thereof. Any overdue
principal of and, to the extent permitted by law, overdue
interest on the Base Rate Loans shall bear interest during
such overdue period for each day until paid at a rate per
annum equal to the sum of 1% plus the otherwise applicable
rate for such day, payable on demand of the Bank.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for each Interest Period applicable
thereto, at a rate per annum equal to the applicable Fixed CD
Rate; provided that if any CD Loan or any portion thereof
shall, as a result of clause (c) of the definition of Interest
Period, have an Interest Period of less than 30 days, such
portion shall bear interest during such Interest Period at the
rate applicable to Base Rate Loans during such Period. Such
interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than 90
days, at intervals of 90 days after the first day thereof.
Any overdue principal of and, to the extent permitted by law,
overdue interest on the CD Loans shall bear interest during
such overdue period for each day until paid at a rate per
annum equal to the sum of 1% plus the higher of (i) the Fixed
CD Rate applicable to such Loan and (ii) the rate applicable
to Base Rate Loans for such day, payable on demand of the
Bank.
The "FIXED CD RATE" applicable to any CD Loan for
any Interest Period means a rate per annum equal to the
sum of the CD Margin plus the applicable Adjusted CD
Rate.
The "CD MARGIN" means (i) .4250%, if at the end of
each of the two most recently completed fiscal quarters
the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .40 to
1 and the Borrower's ratio to Cash Flow to Total Borrowed
Funds was equal to or greater than .50 to 1; or (ii)
.5250%, if (a) the conditions of clause (i) have not been
satisfied and (b) at the end of each of the two most
recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was
equal to or less than .70 to 1 and the Borrower's ratio
equal
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of Cash Flow to Total Borrowed Funds was equal to or
greater than .35 to 1; or (iii) .6250%, if the conditions
set forth in both clauses (i) and (ii) are not satisfied.
The "ADJUSTED CD RATE" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [---------] + AR
[ 1 - DRP ]
ACDR = Adjusted CD Rate for such Interest Period
CDBR = CD Base Rate for such Interest Period
AR = Assessment Rate
DRP = Domestic Reserve Percentage
The "CD BASE RATE" means for any Interest Period the
prevailing per annum rate of interest as reasonably
determined by the Bank (rounded upward, if necessary, to
the next higher 1/100 of 1%) bid at 11:00 a.m. (New York
time) (or as soon thereafter as practicable) on the first
day of such Interest Period by two or more certificate of
deposit dealers of recognized standing selected by the
Bank for the purchase at face value of US dollar
certificates of deposit issued by major New York banks in
an amount comparable to the principal amount of the CD
Loan to which such Interest Period applies and with a
maturity comparable to such Interest Period.
The "DOMESTIC RESERVE PERCENTAGE" means for any day,
that percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve
requirement (including, without limitation, any basic,
supplemental or emergency reserves) for a member bank of
the Federal Reserve System with deposits exceeding five
billion Dollars in respect of new non-personal time
deposits in Dollars having a maturity comparable to the
related Interest Period and in an amount of $100,000 or
more. The Fixed CD Rate shall be adjusted automatically
on and as of the effective date of any change in the
Domestic Reserve Percentage.
______________________
*The amount in brackets being rounded upwards, if necessary,
to the next higher 1/100 of 1%.
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"ASSESSMENT" means for any Interest Period the net
annual assessment rate (rounded upwards, if necessary, to
the next higher 1/100 of 1%) actually incurred by the
Bank to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's)
insuring time deposits at offices of the Bank in the
United States during the most recent period for which
such rate has been determined prior to the commencement
of such Interest Period.
(c) Each Eurodollar Loan shall bear interest on the
unpaid principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of
the Eurodollar Margin plus the applicable Adjusted London
Interbank Offered Rate. Such interest shall be payable for
each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of
three months after the first day thereof. Any overdue
principal of and, to the extent permitted by law, overdue
interest on the Eurodollar Loans shall bear interest for each
day until paid at a rate per annum equal to the sum of 1% plus
the higher of (i) the rate of interest applicable to such Loan
and (ii) the rate applicable to Base Rate Loans for such day,
payable on demand of the Bank.
The "ADJUSTED LONDON INTERBANK OFFERED RATE"
applicable to any Interest Period means a rate per annum
equal to the quotient obtained (rounded upwards, if
necessary, to the next higher 1/100 of 1%) by dividing
(i) the applicable London Interbank Offered Rate by (ii)
1.00 MINUS the Eurodollar Reserve Percentage.
The "LONDON INTERBANK OFFERED RATE" applicable to
any Interest Period means the rate per annum at which
deposits in Dollars are offered to the Bank in the London
interbank market at approximately 11:00 a.m. (London
time) two Eurodollar Business Days prior to the first day
of such Interest Period in an amount approximately equal
to the principal amount of the Eurodollar Loan to which
such Interest Period is to apply and for a period of time
comparable to such Interest Period.
The "EURODOLLAR RESERVE PERCENTAGE" means for any
day that percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve
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System with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of
any other category of liabilities which includes deposits
by reference to which the interest rate on Eurodollar
Loans is determined or any category of extensions of
credit or other assets which includes loans by a
non-United States office of the Bank to United States
residents). The Adjusted London Interbank Offered Rate
shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve
Percentage.
The "EURODOLLAR MARGIN" means (i) .30%, if at the
end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .40 to
1 and the Borrower's ratio of Cash flow to Total Borrowed
Funds was equal to or greater than .50 to 1; or (ii)
.40%, if (a) the conditions of clause (i) have not been
satisfied and (b) at the end of each of the two most
recently completed fiscal quarters the Borrower's ratio
of Total Borrowed Funds to Consolidated Net Worth was
equal to or less than .70 to 1 and the Borrower's ratio
of Cash Flow to Total Borrowed Funds was equal to or
greater than .35 to 1; or (iii) .50%, if the conditions
set forth in both clauses (i) and (ii) are not satisfied.
(d) Each Money Market Rate Loan shall be made by the
Bank to the Borrower upon such terms and conditions and in
such amounts as may be agreed upon from time to time by the
Bank and the Borrower. Each Money Market Rate Loan shall be
evidenced by a Note in the form of Exhibit B hereto.
2.6 FEES. The Borrower shall pay to the Bank a commitment
fee computed on the unused portion of the Commitment. The per annum
commitment fee shall be on any date from and after December 1,
1994; (i) .125% of the unused portion of the Commitment, if at the
end of each of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net Worth
was equal to or less than .40 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than .50 to 1;
or (ii) .15% of the unused portion of the Commitment, if (a) the
conditions of clause (i) have not been satisfied and (b) at the end
of each of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net Worth
was equal to or less than .70 to 1 and the Borrower's ratio of Cash
Flow to Total Borrowed Funds was equal to or greater than .35 to 1;
or (iii) .180% of the unused portion of the Commitment, if the
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conditions set forth in clauses (i) and (ii) are not satisfied.
Such fees shall accrue from December 1, 1994 to and including the
Termination Date and shall be payable quarterly in arrears on the
last day of each June, September, December and March and on any
date on which the Commitment is terminated or otherwise reduced.
2.7 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT. The
Borrower may, upon at least three Domestic Business Days' notice to
the Bank, terminate at any time, or reduce from time to time the
unused portion of the Commitment. Any such reduction of the
Commitment shall be in the amount of $1,000,000 or any larger
multiple thereof. If the Commitment is terminated in its entirety,
the accrued commitment fee shall be payable on the effective date
of such termination.
2.8 MANDATORY TERMINATION OR REDUCTION OF COMMITMENT. If not
previously terminated by the Borrower pursuant to Section 2.7, the
Commitment shall terminate on the Termination Date, and any Loans
then outstanding (together with accrued interest thereon) shall be
due and payable on such date.
2.9 OPTIONAL PREPAYMENTS.
(a) The Borrower may, upon at least one Domestic
Business Day's notice to the Bank, prepay the Base Rate Loans
without premium or penalty in whole at any time or from time
to time in part in an amount equal to $1,000,000 or any
multiple of $1,000,000 in excess thereof (or such lesser
amount as applicable if less than $1,000,000 is outstanding)
by paying the principal amount being prepaid together with
accrued interest thereon to the date of prepayment.
(b) Except as provided in Section 4.2 hereof, the
Borrower may not prepay all or any portion of the principal
amount of any Fixed Rate Loan prior to the maturity thereof.
2.10 GENERAL PROVISIONS AS TO PAYMENTS. The Borrower shall
make each payment of principal of, and interest on, the Loans and
of commitment fees hereunder not later than 11:00 a.m. (New York
City time) on the date when due in funds immediately available at
the office of the Bank in San Francisco, California for the account
of (i) the Domestic Lending Office in the case of Domestic Loans
and Money Market Rate Loans or (ii) the Eurodollar Lending Office
in the case of Eurodollar Loans. Whenever any payment of principal
of, or interest on, the Domestic Loans, the Money Market Rate
Loans, the commitment fee or facility fee shall be due on a day
which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day.
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Whenever any payment of principal of, or interest on, the
Eurodollar Loans shall be due on a day which is not a Eurodollar
Business Day, the date for payment thereof shall be extended to the
next succeeding Eurodollar Business Day unless as a result thereof
it would fall in the next calendar month, in which case it shall be
advanced to the next preceding EuroDollar Business Day. If the
date for any payment of principal is extended by operation of law
or otherwise, interest shall be payable for such extended time.
2.11 COMPUTATION OF INTEREST AND FEES. Interest on the Loans
bearing interest based on clause (i) of the definition of Base Rate
shall be computed on the basis of a year of 365 or 366 days, as the
case may be, and paid for actual days elapsed. Interest on Loans
bearing interest based on clause (ii) of the definition of Base
Rate, the CD Loans, the Eurodollar Loans and the calculation of the
commitment fee and facility fee shall be computed on the basis of
a year of 360 days and paid for actual days elapsed.
2.12 FUNDING LOSSES. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan (pursuant to Section
4 or Section 7 or otherwise) on any day other than the last day of
an Interest Period applicable to such Loan, or if the Borrower
fails to borrow any Fixed Rate Loan after notice has been given to
the Bank in accordance with Section 2.2 hereof, the Borrower shall
reimburse the Bank on demand for any resulting loss or expense
incurred by it (or by any existing or prospective Participant in
the related Loan) including (without limitation) any loss incurred
in obtaining, liquidating or employing deposits from third parties;
PROVIDED that the Bank shall have delivered to the Borrower a
certificate by a Bank officer as to the amount of such loss.
2.13 EXTENSION OF COMMITMENT. Not more than 60 nor less than
45 days prior to each date which is either the second or third
anniversary of this Agreement, the Borrower may request in writing
that the Bank extend the Commitment for an additional period of one
year from the then current Termination Date. If the Bank, in its
sole discretion, decides to grant such request, it shall so notify
the Borrower not less than 30 days before the then current
Termination Date in writing, whereupon the Commitment shall be
extended for an additional period of one year from the then current
Termination Date, and the term "Termination Date" shall thereafter
refer to the date that the Commitment, as so extended, will
terminate. If not extended as provided in this Section 2.13, the
Commitment will automatically terminate on the then current
Termination Date without further action by the Borrower or the
Bank.
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SECTION 3
CONDITIONS OF LENDING
The obligation of the Bank to make each Loan hereunder is
subject to the performance by the Borrower of all its obligations
under this Agreement and to the satisfaction of the following
further conditions:
3.1 ALL LOANS. In the case of each Loan hereunder, including
the initial Loan:
(a) receipt by the Bank of the notice from the Borrower
required by Section 2.2 hereof;
(b) the fact that immediately after the making of the
Loan no Default with respect to Sections 6.1(d), 6.6, 6.7,
6.8, 6.9 or 6.10 or Event of Default shall have occurred and
be continuing, except that in the case of any Loan which,
after the application of proceeds thereof, results in no net
increase in the outstanding principal amount of Loans made by
the Bank, the fact that immediately after the making of the
Loan, no Event of Default shall have occurred and be
continuing;
(c) the fact that the representations and warranties
contained in this Agreement shall be true on and as of the
date of the Loan (except, in the case of any Loan which, after
the application of the proceeds thereof, results in no net
increase in the outstanding principal amount of Loans made by
the Bank, the representations and warranties set forth in
Sections 5.4(B) and 5.5 so long as the Borrower has disclosed
to the Bank any matter which would cause any such
representation to be untrue on the date of such Loan); and
(d) receipt by the Bank of such other documents,
evidence, materials and information with respect to the
matters contemplated hereby as the Bank may reasonably
request.
Each borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Loan as to the facts
specified in (b) and (c) of this Section.
3.2 INITIAL LOAN. In the case of the initial Loan:
(a) receipt by the Bank of a duly executed Note;
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(b) receipt by the Bank of an opinion of counsel to the
Borrower as to the matters referred to in Sections 5.1, 5.2,
5.3, 5.5 and 5.8 hereof, and covering such other matters as
the Bank may reasonably request, dated the date of such Loan,
satisfactory in form and substance to the Bank;
(c) receipt by the Bank of certified copies of all
corporate action taken by the Borrower to authorize the
execution, delivery and performance of this Agreement and the
Note, and the Loans hereunder and such other corporate
documents and other papers as the Bank may reasonably request;
(d) receipt by the Bank of a certificate of a duly
authorized officer of the Borrower as to the incumbency, and
setting forth a specimen signature, of each of the persons (i)
who has signed this Agreement on behalf of the Borrower; (ii)
who will sign the Note on behalf of the Borrower; and (iii)
who will, until replaced by other persons duly authorized for
that purpose, act as the representatives of the Borrower for
the purpose of signing documents in connection with this
Agreement and the transactions contemplated hereby; and
(e) receipt by the Bank of a certificate of a duly
authorized officer of the Borrower to the effect set forth in
Sections 3.1(b) and 3.1(c) hereof.
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Basis for Determining Interest Rate Inadequate. If on or
prior to the first day of any Interest Period deposits in Dollars
(in the applicable amounts) are not being offered to the Bank in
the relevant market for such Interest Period, the Bank shall
forthwith give notice thereof to the Borrower, whereupon the
obligations of the Bank to make CD Loans or Eurodollar Loans, as
the case may be, shall be suspended until the Bank notifies the
Borrower that the circumstances giving rise to such suspension no
longer exist. Unless the Borrower notifies the Bank at least two
Domestic Business Days before the date of any Fixed Rate Loan for
which a notice of borrowing has previously been given that it
elects not to borrow on such date, such Loan shall instead be made
as a Base Rate Loan or the notice of borrowing may be withdrawn.
4.2 ILLEGALITY. If, after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration
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thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by the Bank (or its EuroDollar Lending Office) with
any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make
it unlawful or impossible for the Bank (or its Eurodollar Lending
Office) to make, maintain or fund its Eurodollar Loans, the Bank
shall forthwith so notify the Borrower, whereupon the Bank's
obligation to make Eurodollar Loans shall be suspended. Before
giving any notice to the Borrower pursuant to this Section 4.2, the
Bank will designate a different Eurodollar Lending Office if such
designation will avoid the need for giving such notice and will
not, in the judgment of the Bank, be otherwise disadvantageous to
the Bank. If the Bank shall determine that it may not lawfully
continue to maintain and fund any of its outstanding Eurodollar
Loans to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding principal
amount of each such Eurodollar Loan, together with accrued interest
thereon.
4.3 INCREASED COSTS AND REDUCED RETURNS.
(a) If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof or
compliance by the Bank (or its Applicable Lending Office) with
any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency:
(i) shall subject the Bank (or its Applicable
Lending Office) to any tax, duty or other charge with
respect to its obligation to make Fixed Rate Loans, its
Fixed Rate Loans, or its Note, or shall change the basis
of taxation of payments to the Bank (or its Applicable
Lending Office) of the principal of or interest on its
Fixed Rate Loans or in respect of any other amounts due
under this Agreement, in respect of its Fixed Rate Loans
or its obligation to make Fixed Rate Loans, (except for
changes in the rate of tax on the overall net income of
the Bank or its Applicable Lending Office imposed by the
jurisdiction in which the Bank's principal executive
office or Applicable Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement
(including, without limitation, any imposed by the Board
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of Governors of the Federal Reserve System, but excluding
(A) with respect to any CD Loan any such requirement
included in an applicable Domestic Reserve Percentage and
(B) with respect to any Eurodollar Loan any such
requirement included in an applicable Eurodollar Reserve
Percentage) against assets of, deposits with or for the
account of, or credit extended by, the Bank (or its
Applicable Lending Office) or shall impose on the Bank
(or its Applicable Lending Office) or on the United
States market for certificates of deposit or the London
interbank market any other condition affecting its
obligation to make Fixed Rate Loans, its Fixed Rate Loans
or its Note;
and the result of any of the foregoing is to increase the cost
to the Bank (or its Applicable Lending Office) of making or
maintaining any Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by the Bank (or its Applicable
Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by the Bank to be
material, then, within 15 days after demand by the Bank, the
Borrower agrees to pay to the Bank such additional amount or
amounts as will compensate the Bank for such increased cost or
reduction.
(b) If the Bank shall have determined that the adoption,
after the date hereof, of any applicable law, rule or
regulation regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by the Bank (or its Applicable Lending
Office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Bank's
capital as a consequence of its obligations hereunder to a
level below that which the Bank could have achieved but for
such adoption, change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an
amount deemed by the Bank to be material, then from time to
time, within 15 days after demand by the Bank, the Borrower
shall pay to such Bank such additional amount or amounts as
will compensate the Bank for such reduction.
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(c) The Bank will promptly notify the Borrower of any
event of which it has knowledge, occurring after the date
hereof, which will entitle the Bank to compensation pursuant
to this Section and will designate a different Applicable
Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the
judgment of the Bank, be otherwise disadvantageous to the
Bank. A certificate by an officer of the Bank claiming
compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall,
in the absence of manifest error, constitute PRIMA FACIE
evidence of such amount. In determining such amount, the Bank
may use any reasonable averaging and attribution methods.
SECTION 5
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank that:
5.1 CORPORATE EXISTENCE AND POWER. The Borrower is a
corporation duly organized, incorporated, validly existing and in
good standing under the laws of the State of its incorporation, and
has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
5.2 CORPORATE AND GOVERNMENTAL AUTHORIZATION: CONTRAVENTION.
The execution, delivery and performance by the Borrower of this
Agreement and the Note are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the
Borrower or of any judgment, injunction, order, decree, material
agreement or other instrument binding upon the Borrower or result
in the creation or imposition of any Lien on any asset of the
Borrower or any of its Consolidated Subsidiaries.
5.3 BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Borrower and the Notes, when executed and
delivered in accordance with this Agreement, will constitute a
valid and binding obligation of the Borrower.
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5.4 FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as at December 31, 1993 and the
related consolidated statements of income and retained
earnings and cash flows of the Borrower and its Consolidated
Subsidiaries for the fiscal year then ended, certified by
Price Waterhouse, certified public accountants, and set forth
in the Borrower's most recent Annual Report on Form 10-K, a
copy of which has been delivered to the Bank, fairly present
in conformity with generally accepted accounting principles,
the consolidated financial position of the Borrower and its
Consolidated Subsidiaries at such date and the consolidated
results of operations for such fiscal year;
(b) Since December 31, 1993 there has been no material
adverse change in the business, financial position or results
of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole, other than as a result of
the recognition of post-employment costs prior to the period
in which such benefits are paid.
5.5 LITIGATION. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened
against, the Borrower or any of its Consolidated Subsidiaries
before any court or arbitrator or any governmental body, agency or
official in which there is a significant probability of an adverse
decision which would materially adversely affect the business,
consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries taken
as a whole or which in any manner draws into question the validity
of this Agreement or the Notes.
5.6 COMPLIANCE WITH ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan and is in
compliance in all material respects with the presently applicable
provisions of ERISA and the Code except where the failure to comply
would not have a material adverse effect on the Borrower and its
Consolidated Subsidiaries taken as a whole. No member of the ERISA
Group has incurred any unsatisfied material liability to the PBGC
or a Plan under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
5.7 TAXES. United States Federal income tax returns of the
Borrower and its Consolidated Subsidiaries have been examined and
closed through the fiscal year ended December 31, 1985. The
Borrower and its Consolidated Subsidiaries have filed all United
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States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all
taxes due reported on such returns or pursuant to any assessment
received by the Borrower or any Consolidated Subsidiary, to the
extent that such assessment has become due. The charges, accruals
and reserves on the books of the Borrower and its Consolidated
Subsidiaries in respect of taxes or other governmental charges are,
in the opinion of the Borrower, adequate except for those which are
being contested in good faith by the Borrower.
5.8 SUBSIDIARIES. Each of the Borrower's Consolidated
Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, all to the
extent material to the Borrower and its Subsidiaries taken as a
whole.
SECTION 6
COVENANTS
So long as the Commitment shall be in effect or the Note is
outstanding, the Borrower agrees that:
6.1 INFORMATION. The Borrower will deliver to the Bank:
(a) as soon as available and in any event within 95 days
after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such year, and
consolidated statements of income and retained earnings and
statement of cash flows of the Borrower and its Consolidated
Subsidiaries for such year, setting forth in each case in
comparative form the figures for the preceding fiscal year,
all reported on by Price Waterhouse or other independent
certified public accountants of nationally recognized
standing;
(b) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each
fiscal year of the Borrower, an unaudited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as at
the end of such quarter and the related unaudited consolidated
statements of income and retained earnings and statement of
cash flows of the Borrower and its Consolidated Subsidiaries
for such quarter and for the portion of the Borrower's fiscal
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year ended at the end of such quarter setting forth in each
case in comparative form the figures for the corresponding
quarter and the corresponding portion of the Borrower's
previous fiscal year, all certified (subject to changes
resulting from year-end adjustments) as to fairness of
presentation, in conformity with generally accepted accounting
principles (other than as to footnotes) and consistency
(except to the extent of any changes described therein and
permitted by generally accepted accounting principles) by the
chief financial officer or the chief accounting officer of the
Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above,
a certificate of the chief financial officer or the chief
accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements
of Sections 6.6 to 6.8, inclusive, on the date of such
financial statements and (ii) stating whether any Default has
occurred and is continuing on the date of such certificate
and, if any Default then has occurred and is continuing,
setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(d) within 10 days of the chief executive officer, chief
operating officer, principal financial officer or principal
accounting officer of the Borrower obtaining knowledge of any
event or circumstance known by such person to constitute a
Default, if such Default is then continuing, a certificate of
the principal financial officer or the principal accounting
officer of the Borrower setting forth the details thereof and
within five days thereafter, a certificate of either of such
officers setting forth the action which the Borrower is taking
or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent) and
annual, quarterly or monthly reports which the Borrower shall
have filed with the Securities and Exchange Commission;
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(g) if and when the chief executive officer, chief
operating officer, principal financial officer or principal
accounting officer of the Borrower obtains knowledge that any
member of the ERISA Group (i) has given or is required to give
notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) has received notice of
complete or partial withdrawal liability under Title IV of
ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of
such notice; or (iii) has received notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any Plan, a
copy of such notice;
(h) if at any time the value of all "margin stock" (as
defined in Regulation U) owned by the Borrower and its
Consolidated Subsidiaries exceeds (or would, following
application of the proceeds of an intended Loan hereunder,
exceed) 25% of the value of the total assets of the Borrower
and its Consolidated Subsidiaries, in each case as reasonably
determined by the Borrower, prompt notice of such fact; and
(i) from time to time such additional information
regarding the financial position or business of the Borrower
as the Bank may reasonably request;
PROVIDED, HOWEVER, that the Borrower shall be deemed to have
satisfied its obligations under clauses (a) and (b) above if
and to the extent that the Borrower has provided to the Bank
pursuant to clause (f) the periodic reports on Forms 10-Q and
10-K required to be filed by the Borrower with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended, for the quarterly and annual periods
described in such clauses (a) and (b).
6.2 MAINTENANCE OF PROPERTY; INSURANCE.
(a) The Borrower will maintain or cause to be maintained
in good repair, working order and condition all properties
used and useful in the business of the Borrower and each
Consolidated Subsidiary and from time to time will make or
cause to be made all appropriate repairs, renewals and
replacement thereof, except where the failure to do so would
not have a material adverse effect on the Borrower and its
Consolidated Subsidiaries taken as a whole.
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(b) The Borrower will maintain or cause to be
maintained, for itself and its Consolidated Subsidiaries, all
to the extent material to the Borrower and its Consolidated
Subsidiaries taken as a whole, physical damage insurance on
all real and personal property on an all risks basis, covering
the repair and replacement cost of all such property and
consequential loss coverage for business interruption and
extra expense, public liability insurance in an amount not
less than $10,000,000 and such other insurance of the kinds
customarily insured against by corporations of established
reputation engaged in the same or similar business and
similarly situated, of such type and in such amounts as are
customarily carried under similar circumstances.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Borrower will continue, and will cause each Consolidated Subsidiary
to continue, to engage predominantly in business of the same
general type as now conducted by the Borrower and its Consolidated
Subsidiaries, and, except as otherwise permitted by Section 6.10
hereof, will preserve, renew and keep in full force and effect, and
will cause each Consolidated Subsidiary to preserve, renew and keep
in full force and effect their respective corporate existence and
their respective rights and franchises necessary in the normal
conduct of business, all to the extent material to the Borrower and
its Consolidated Subsidiaries taken as a whole.
6.4 COMPLIANCE WITH LAWS. The Borrower will comply, and
cause each Consolidated Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules, regulations,
and requirements of governmental authorities (including, without
limitation, ERISA and the rules and regulations thereunder and all
federal, state and local statutes laws or regulations or other
governmental restrictions relating to environmental protection,
hazardous substances or the cleanup or other remediation thereof)
except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings or where the failure to
comply would not have a material adverse effect on the Borrower and
its Consolidated Subsidiaries taken as a whole.
6.5 INSPECTION OF PROPERTY, BOOKS AND RECORDS.
(a) The Borrower will keep, and will cause each
Consolidated Subsidiary to keep, proper books of record and
account in accordance with sound business practice so as to
permit its financial statements to be prepared in accordance
with generally accepted accounting principles; and will permit
representatives of the Bank at the Bank's expense to visit and
inspect any of the Borrower's properties, to examine and make
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abstracts from any of the Borrower's corporate books and
financial records and to discuss the Borrower's affairs,
finances and accounts with the principal officers of the
Borrower and its independent public accountants, all at such
reasonable times and as often as may reasonably be necessary
to ensure compliance by the Borrower with its obligations
hereunder.
(b) With the consent of the Borrower (which consent will
not be unreasonably withheld) or, if an Event of Default has
occurred and is continuing, without the requirement of any
such consent, the Borrower will permit representatives of the
Bank, at the Bank's expense, to visit and inspect any of the
properties of and to examine the corporate books and financial
records of any Consolidated Subsidiary and make copies thereof
or extracts therefrom and to discuss the affairs, finances and
accounts of such Consolidated Subsidiary with its and the
Borrower's principal officers and the Borrower's independent
public accountants, all at such reasonable times and as often
as the Bank may reasonably request.
6.6 CASH FLOW TO TOTAL BORROWED FUNDS. The ratio of Cash
Flow to Total Borrowed Funds shall not be less than .30 for any
consecutive four quarters, such ratio to be calculated at the end
of each quarter on a trailing four quarter basis.
6.7 TOTAL BORROWED FUNDS TO CONSOLIDATED NET WORTH. Total
Borrowed Funds will not exceed 85% of Consolidated Net Worth at end
of any quarter of any fiscal year.
6.8 MINIMUM CONSOLIDATED NET WORTH. Consolidated Net Worth
will at no time be less than $440,000,000 plus 25% of the
consolidated net income of the Borrower at the end of each fiscal
quarter for each fiscal year commencing after the fiscal year
ending December 31, 1992.
6.9 NEGATIVE PLEDGE. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by it, except
for:
(a) Liens existing on the date hereof;
(b) any Lien existing on any asset of any corporation at
the time such corporation becomes a Consolidated Subsidiary
and not created in contemplation of such event;
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(c) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the
cost of acquiring such asset, PROVIDED that such Lien attaches
to such asset concurrently with or within 90 days after the
acquisition thereof;
(d) any Lien on any asset of any corporation existing at
the time such corporation is merged into or consolidated with
the Borrower or a Consolidated Subsidiary and not created in
contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Consolidated
Subsidiary and not created in contemplation of such
acquisition;
(f) any Lien created in connection with capitalized
lease obligations, but only to the extent that such Lien
encumbers property financed by such capital lease obligation
and the principal component of such capitalized lease
obligation is not increased;
(g) Liens arising in the ordinary course of its business
which (i) do not secure Debt and (ii) do not in the aggregate
materially impair the operation of the business of the
Borrower and its Consolidated Subsidiaries, taken as a whole;
(h) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted
by any of the foregoing clauses of this Section, PROVIDED that
such Debt is not increased and is not secured by any
additional assets;
(i) Liens securing taxes, assessments, fees or other
governmental charges or levies, Liens securing the claims of
materialmen, mechanics, carriers, landlords, warehousemen and
similar Persons, Liens incurred in the ordinary course of
business in connection with workmen's compensation,
unemployment insurance and other similar laws, Liens to secure
surety, appeal and performance bonds and other similar
obligations not incurred in connection with the borrowing of
money, and attachment, judgment and other similar Liens
arising in connection with court proceedings so long as the
enforcement of such Liens is effectively stayed and the claims
secured thereby are being contested in good faith by
appropriate proceedings;
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(j) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt in an aggregate
principal amount at any time outstanding not to exceed 10% of
Consolidated Net Worth; and
(k) any Liens on property arising in connection with a
securities repurchase transaction.
6.10 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The
Borrower will not (i) consolidate or merge with or into any other
Person (other than a Subsidiary of the Borrower) unless the
Borrower's shareholders immediately before the merger or
consolidation are to own more than 70% of the combined voting power
of the resulting entity's voting securities or (ii) sell, lease or
otherwise transfer all or substantially all of the Borrower's
business or assets to any other Person (other than a Subsidiary of
the Borrower). The Borrower will not permit any Significant
Subsidiary or (in a series of related transactions) any Significant
Group of Subsidiaries to consolidate with, merge with or into or
transfer all of any substantial part of its assets to any Person
other than the Borrower or a Subsidiary of the Borrower.
6.11 USE OF PROCEEDS. The proceeds of the Loans will be used
for general corporate purposes, including the making of
acquisitions. No part of the proceeds of any Loan hereunder will
be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate of buying or carrying any "margin
stock" in violation of Regulation U. If requested by the Bank, the
Borrower will furnish to the Bank in connection with any Loan
hereunder a statement in conformity with the requirements of
Federal Reserve Form U-l referred to in Regulation U.
SECTION 7
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. If any one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay (i) any principal of
any Loan when due or (ii) interest on any Loan or any
commitment fee or facility fee within four days after the same
has become due; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Section 6.1(d) or Sections 6.6 to 6.8 or
6.10 hereof; or
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(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than
those covered by clause (a) or (b) above) for 30 days after
written notice thereof has been given to the Borrower by the
Bank; or
(d) any representation, warranty or certification made
by the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect in any
material respect upon the date when made or deemed made; or
(e) (1) the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries defaults in any payment at
any stated maturity of principal of or interest on any other
obligation for money borrowed (or any capitalized lease
obligation, any obligation under a purchase money mortgage,
conditional sale or other title retention agreement or any
obligation under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided with
respect thereto or (2) the Borrower or any Significant
Subsidiary or Significant Group of Subsidiaries defaults in
any payment other than at any stated maturity of principal of
or interest on any other obligation for money borrowed (or any
capitalized lease obligation, any obligation under a purchase
money mortgage, conditional sale or other title retention
agreement or any obligation under notes payable or drafts
accepted representing extensions of credit) beyond any period
of grace provided with respect thereto, or the Borrower or any
Significant Subsidiary or Significant Group of Subsidiaries
fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such
obligation is created (or if any other event thereunder or
under any such agreement shall occur and be continuing), and
the effect of such default with respect to a payment other
than at any stated maturity, failure or other event is to
cause, or to permit the holder or holders of such obligation
(or a trustee on behalf of such holder or holders) to cause,
such obligation to become due or to require the purchase
thereof prior to any stated maturity; PROVIDED that the
aggregate amount of all obligations as to which any such
payment defaults (whether or not at stated maturity), failures
or other events shall have occurred and be continuing exceeds
$10,000,000 and PROVIDED, FURTHER, that it is understood that
the obligations referred to herein exclude those obligations
arising in connection with securities repurchase transactions;
or
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(f) the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries shall commence a voluntary
case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action
to authorize any of the foregoing; or
(g) an involuntary case or other proceeding shall be
commenced against the Borrower or any Significant Subsidiary
or Significant Group of Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed
and unstayed for a period of 60 days; or an order for relief
shall be entered against the Borrower or any Significant
Subsidiary or Significant Group of Subsidiaries under the
federal bankruptcy laws as now or hereafter in effect; or
(h) any member of the ERISA Group shall fail to pay when
due any amount or amounts aggregating in excess of $1,000,000
which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA (except where such liability is
contested in good faith by appropriate proceedings as
permitted under Section 6.4); or notice of intent to terminate
a Material Plan (other than any multiple employer plan within
the meaning of Section 4063 of ERISA) shall be filed under
Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to
be appointed to administer any such Material Plan; or
(i) judgments or orders for the payment of money in
excess of $10,000,000 in the aggregate shall be rendered
against the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries and such judgments or orders
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shall continue unsatisfied and unstayed for a period of 60
days; or
(j) any person or group of persons (within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")), other than the Borrower or
any of its Subsidiaries, becomes the beneficial owner (within
the meaning of Rule 13d-3 under the 1934 Act) of 30% or more
of the combined voting power of the Borrower's then
outstanding voting securities; or a tender offer or exchange
offer (other than an offer by the Borrower or a Subsidiary)
pursuant to which 30% or more of the combined voting power of
the Borrower's then outstanding voting securities was
purchased, expires; or during any period of two consecutive
years, individuals who, at the beginning of such period,
constituted the Board of Directors of the Borrower cease for
any reason to constitute at least a majority thereof, unless
the election or the nomination for the election by the
Borrower's stockholders of each new director was approved by
a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period;
then, and in every such event, (1) in the case of any of the
Events of Default specified in paragraphs (f) or (g) above, the
Commitment shall thereupon automatically be terminated and the
principal of and accrued interest on the Note shall automatically
become due and payable without presentment, demand, protest or
other notice or formality of any kind, all of which are hereby
expressly waived and (2) in the case of any other Event of Default
specified above, the Bank may, by notice in writing to the
Borrower, terminate the Commitment hereunder, if still in
existence, and it shall thereupon be terminated, and the Bank may,
by notice in writing to the Borrower, declare the Note and all
other sums payable under this Agreement to be, and the same shall
thereupon forthwith become, due and payable without presentment,
demand, protest or other notice or formality of any kind, all of
which are hereby expressly waived.
SECTION 8
MISCELLANEOUS
8.1 NOTICES. Unless otherwise specified herein all notices,
requests, demands or other communications to or from the parties
hereto shall be sent by United States mail, certified, return
receipt requested, telegram, telex or facsimile, and shall be
deemed to have been duly given upon receipt thereof. In the case
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of a telex, receipt of such communication shall be deemed to occur
when the sender receives its answer back. In the case of a
facsimile, receipt of such communication shall be deemed to occur
when the sender confirms such receipt by telephone. Any such
notice, request, demand or communication shall be delivered or
addressed as follows:
(a) if to the Borrower, to it at 1271 Avenue of the
Americas, New York, New York 10020; ATTENTION: Vice President
and Treasurer (with a copy at the same address to the Senior
Vice President and General Counsel);
(b) if to the Bank, communications relating to its
Eurodollar Loans shall be delivered or addressed to the
address or telex number set forth on the signature pages
hereof for its Eurodollar Lending Office and all other
communications shall be delivered or addressed to the address
or telex number set forth on the signature pages hereof for
its Domestic Lending Office;
or at such other address or telex number as any party hereto may
designate by written notice to the other party hereto.
8.2 AMENDMENTS AND WAIVERS; CUMULATIVE REMEDIES.
(a) None of the terms of this Agreement may be waived,
altered or amended except by an instrument in writing duly
executed by the Borrower and the Bank.
(b) No failure or delay by the Bank in exercising any
right, power or privilege hereunder or the Note shall operate
as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights
and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by law.
8.3 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding
upon and shall inure to the benefit of the Borrower and the
Bank, except that the Borrower may not assign or otherwise
transfer any of its rights and obligations under this
Agreement except as provided in Section 6.10 hereof, without
the prior written consent of the Bank which the Bank shall not
unreasonably delay or withhold.
PAGE
<PAGE>
(b) The Bank may at any time grant to one or more banks
or other institutions (each a "Participant") participating
interests in its Commitment or any or all of its Loans. In
the event of any such grant by the Bank of a participating
interest to a Participant, whether or not upon notice to the
Borrower the Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower shall continue
to deal solely and directly with the Bank in connection with
the Bank's rights and obligations under this Agreement. Any
agreement pursuant to which the Bank may grant such a
participating interest shall provide that the Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; PROVIDED that
such participation agreement may provide that the Bank will
not agree to any modification, amendment or waiver of this
Agreement (i) which increases or decreases the Commitment of
the Bank (ii) reduces the principal of or rate of interest on
any Loan or fees hereunder or (iii) postpones the date fixed
for any payment of principal of or interest on any Loan or any
fees hereunder without the consent of the Participant. The
Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.12 and 4 with respect to its
participating interest.
(c) The Bank may at any time assign all or any portion
of its rights under this Agreement and the Note or Notes to a
Federal Reserve Bank. No such assignment shall release the
Bank from its obligations hereunder.
(d) No Participant or other transferee of the Bank's
rights shall be entitled to receive any greater payment under
Sections 2.12 and 4.1 through 4.3 than the Bank would have
been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's
prior written consent or by reason of the provisions of
Section 4.3(c) requiring the Bank to designate a different
Applicable Lending Office under certain circumstances or at a
time when the circumstances giving rise to such greater
payment did not exist.
8.4 EXPENSES; DOUCMENTARY TAXES, INDEMNIFICAITON.
(a) The Borrower shall pay (i) all out-of-pocket
expenses and internal charges of the Bank (including
reasonable fees and disbursements of counsel) in connection
with any Default hereunder and (ii) if there is an Event of
PAGE
<PAGE>
Default, all out-of-pocket expenses incurred by the Bank
(including reasonable fees and disbursements of counsel) in
connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom. The Borrower
shall indemnify the Bank against any transfer taxes,
documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery
of this Agreement or the Note.
(b) The Borrower agrees to indemnify the Bank and hold
the Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including,
without limitation, the reasonable fees and disbursements of
counsel for the Bank in connection with any investigative,
administrative or judicial proceeding, whether or not the Bank
shall be designated a party thereto) which may be incurred by
the Bank relating to or arising out of any actual or proposed
use of proceeds of Loans hereunder or any merger or
acquisition involving the Borrower; PROVIDED, that the Bank
shall not have the right to be indemnified hereunder for its
own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
8.5 COUNTERPARTS. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
8.6 HEADINGS; TABLE OF CONTENTS. The section and subsection
headings used herein and the Table of Contents have been inserted
for convenience of reference only and do not constitute matters to
be considered in interpreting this Agreement.
8.7 GOVERNING LAW. This Agreement and the Note shall be
construed in accordance with and governed by the law of the State
of New York.
PAGE
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their proper and duly authorized
officers as of December 1, 1994.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: ALAN FORSTER
Title: Vice President & Treasurer
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By: NANCY L. SUN
Title: Vice Presidehnt
Domestic & Eurodollar Lending Office
1850 Gateway Boulevard
Concord, CA 94520
Attn: Nina Lemmer
Account Administrator
Tel #: (510) 675-7478
Fax #: (510) 675-7531
Fed Wire: ABA 121000358
Acct.: Incoming Money Transfer
Acct No.: 12331-83980
Copy to:
Bank of America National Trust and
Savings Association
335 Madison Avenue
New York, NY 10017
Attn: Nancy Sun
Tel #: (212) 503-7352
Fax #: (212) 503-7173
<PAGE>
<TABLE>
EXHIBIT 11 Page 1 of 2
<CAPTION> THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE <F1>
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
PRIMARY:
Net Income before effect of
accounting changes $115,247 $125,279 $111,913 $ 94,557 $ 80,064
Effect of accounting changes (21,780) (512) (24,640) - -
Add: Dividends paid net
of related income tax
applicable to the
Restricted Stock Plan 349 311 365 282 166
Net income, as adjusted $ 93,816 $125,078 $ 87,638 $ 94,839 $ 80,230
Weighted average number of
common shares outstanding 73,363,084 72,607,363 72,168,964 70,440,108 65,186,536
Weighted average number of
incremental shares in
connection with assumued
exercise of stock options
based on the treasury stock
method using average market
price 1,010,179 1,088,155 1,321,447 631,682 507,860
Weighted average number of
incremental shares in
connection with the
Restricted Stock Plan
based on the treasury
stock method using average
unamortized deferred
compensation and average
market price 1,197,182 1,520,003 1,484,207 1,788,296 1,654,280
Total 75,570,445 75,215,521 74,974,618 72,860,086 67,348,676
Primary earnings per common
and common equivalent share $1.24 $1.66 $1.17 $1.30 $1.19
_______________________
<FN>
<F1> Restated to reflect the two-for-one stock split effected in June 1992 in the form of a 100%
stock dividend.
</TABLE>
PAGE
<PAGE>
<TABLE>
EXHIBIT 11 Page 2 of 2
<CAPTION> THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE <F2>
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
FULLY DILUTED:
Net Income before effect of
accounting changes $ 115,247 $ 125,279 $ 111,913 $ 94,557 $
80,064
Effect of accounting changes (21,780) (512) (24,640) -
-
After tax interest savings
on assumed conversion of
subordinated debentures 6,074 5,941 4,385 -
-Add: Dividends paid net of
related income tax applicable
to the Restricted Stock Plan 366 330 375 308
192
Net income, as adjusted $ 99,907 $ 131,038 $ 92,033 $ 94,865 $
80,256
Weighted average number of
common shares outstanding 73,363,084 72,607,363 72,168,964 70,440,108
65,186,536
Assumed conversion of
subordinated debentures 3,002,130 3,002,130 2,251,598 -
-
Weighted average number of
incremental shares in connection
with assumed exercise of stock
options based on year-end market
price when higher than average
market prices and market prices
on dates of exercise and
termination 1,015,837 1,097,745 1,333,738 743,142
587,928
Weighted average number of
incremental shares in connection
with the Restricted Stock Plan
based on ending unamortized
deferred compensation and
ending or average market price,
whichever is higher 1,247,564 1,598,026 1,525,738 1,929,348
1,816,944
Total 78,628,615 78,305,264 77,280,038 73,112,598
67,591,408
Fully diluted earnings per common
common equivalent share $1.27 $1.67 $1.19 $1.30
$1.19
__________________________
<FN>
<F2> Restated to reflect the two-for-one stock split effected in June 1992 in the form of a 100%
stock dividend.
</TABLE>
<PAGE>
EXHIBIT 13
THE INTERPUBLIC GROUP OF COMPANIES, INC.
The Interpublic Group of Companies is one of the largest
organizations of advertising agencies in the world. It includes
the parent company, The Interpublic Group of Companies, Inc.,
McCann-Erickson Worldwide, Lintas Worldwide, The Lowe Group,
Western International Media and other affiliated companies. The
Interpublic Group employs more than 18,000 people and maintains
offices in over 100 countries.
TABLE OF CONTENTS
Financial Highlights
Chairman's Report to Stockholders
Financial Statements
Board of Directors and Executive Officers
Stockholders' Information
PAGE
<PAGE>
<TABLE> FINANCIAL HIGHLIGHTS
(Dollars in Thousands Except Per Share Data)
___________________________________________________________________________
<CAPTION> Percent
1994 1993 Increase
(Decrease)
<S> <C> <C> <C>
Operating Data
Gross income $ 1,984,255 $ 1,793,856 10.6%
Income before effect of
accounting changes 115,247 125,279 (8.0)
Effect of accounting changes:
Postemployment benefits (21,780) - -
Income taxes - (512) -
Net Income 93,467 124,767 (25.1)
Per Share Data
Income before effect of
accounting changes 1.53 1.67 (8.4)
Effect of accounting changes:
Postemployment benefits (.29) - -
Income taxes - (.01) -
Net Income 1.24<F1> 1.66<F2> (25.3)
Cash dividends $ .545 $ .49 11.2
Weighted average number
of shares 75,570,445 75,215,521 .5
Financial Position
Working capital $ 80,134 $ 167,175 (52.1)
Total assets 3,793,418 2,869,817 32.2
Stockholders' equity per share:
Before effect of
accounting changes 8.64 7.54 14.6
After effect of
accounting changes $ 8.36<F1> $ 7.54<F2> 10.9
Return on stockholders' equity:
Before effect of
accounting changes 18.6% 23.3% (20.2)
After effect of
accounting changes 15.5%<F1> 23.2%<F2> (33.2)%
KEY INDICATORS
Gross Income
1994 $1,984,255
1993 $1,793,856 1991 $1,677,498
1992 $1,855,971 1990 $1,368,169
________________________________________________________________________
Earnings Per Share
1994 $ 1.53/1.24<F1>
1993 $ 1.67/1.66<F2> 1991 $ 1.30
1992 $ 1.50/1.17<F3> 1990 $ 1.19
________________________________________________________________________
Cash Dividends Per Share
1994 $ .545
1993 $ .49 1991 $ .41
1992 $ .45 1990 $ .37
________________________________________________________________________
Return On Stockholders' Equity
1994 18.6/15.5%<F1>
1993 23.3/23.2%<F2> 1991 18.5%
1992 19.1/15.4%<F3> 1990 20.3%
<F1> Includes an after-tax charge of $21,780,000 or $.29 per share for effect
of accounting change, FAS 112, "Employers' Accounting for Postemployment
Benefits".
<F2> Includes a charge of $512,000 or $.01 per share for the cumulative effect
of accounting change, FAS 109, "Accounting for Income Taxes."
<F3> Includes an after-tax charge of $24,640,000 or $.33 per share for effect
of accounting change, FAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions".
Note: All data are restated to reflect the two-for-one stock split
effected in June 1992 in the form of a 100% stock dividend.
</TAB
</TABLE>
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
Working capital decreased by $87.0 million in 1994, $57.4 million in 1993 and
increased by $46.5 million in 1992. The decline in working capital in 1994 and
1993 was due to acquisitions. The increase in 1992 was principally due to the
payment of approximately $34 million of short-term loans, from the proceeds of
the Convertible Subordinated Debentures issue. The ratio of current assets to
current liabilities was approximately 1.0 to 1 in 1994, 1993, and 1992.
The Company's principal source of working capital during the three years has
been from operations. In addition, during 1992 the Company used most of the
proceeds from the issuance of the Convertible Subordinated Debentures
(approximately $101 million net proceeds) to pay down $57.4 million of its
long-term debt and $34 million of short-term borrowings.
During 1994, the Company acquired $44.5 million (1,264,761 shares) of its own
Common Stock for purposes of fulfilling its obligations under various
compensation plans. During 1993 and 1992, $37.2 million (1,219,151 shares) and
$51.9 million (1,738,329 shares) were acquired, respectively. Quarterly
dividends paid to shareholders increased to 14.0 cents per share in 1994 from
12.5 cents per share in 1993 and 11.5 cents per share in 1992.
The Company's capital expenditures in 1994 were $55.9 million, an increase of
38.7% from 1993. Capital expenditures for 1993 were $40.3 million, an increase
of 9% from 1992. The Company's capital expenditures are typically for
furniture and fixtures, leasehold improvements, and computer and
<PAGE>
<PAGE>
telecommunications equipment. In addition, the Company purchased a building
and land in Frankfurt, Germany during 1993 for a purchase price of
approximately $41.5 million.
The Company and its domestic subsidiaries had credit lines aggregating $203.5
million in 1994, $156 million in 1993 and $144 million in 1992. At December
31, 1994, $11.5 million of these credit lines were utilized compared with $17.6
million in 1993, and $1.7 million in 1992. Subsidiaries outside the U.S. had
short- term borrowings with local banks aggregating $86.5 million, $93 million
and $76 million at December 31, 1994, 1993 and 1992, respectively. Unused
lines of credit available to these subsidiaries equaled $157 million in 1994,
$119 million in 1993 and $157 million in 1992.
The principal use of the Company's working capital is to provide for the
operating needs of its advertising agencies, which include payments for space
or time purchased from various media on behalf of clients. The Company's
practice is to bill and collect from its clients in sufficient time to pay the
amounts due media on a timely basis. Other uses of working capital include the
payment of cash dividends, acquisitions and capital expenditures.
Approximately 59%, 66% and 70% of the Company's assets at December 31, 1994,
1993 and 1992, respectively, were outside the United States. Working capital
was not significantly affected by the fluctuation of foreign currencies during
1994, but the continuation of this trend is dependent upon the future movement
of the dollar in relation to foreign currencies. The Company actively hedges
currency exposure to mitigate any negative effect on working capital.
<PAGE>
<PAGE>
During 1994, 1993 and 1992, the Company acquired several advertising agencies
with funds provided by existing cash balances and shares of the Company's
Common Stock. Some of these acquisitions provide for deferred payments which
are contingent upon future revenues or profits of the agencies acquired.
Return on average equity was 15.5%, 23.2% and 15.4% in 1994, 1993 and 1992,
respectively. The decrease in 1994 compared to 1993 is mainly due to the
effects of adopting FAS 112 "Employers' Accounting for Postemployment Benefits"
and restructuring charges. Excluding the effect of FAS 112, return on average
equity would have been 18.6% in 1994.
The U.S. dollar weakened during 1994 which resulted in a credit to the
cumulative translation adjustment account of approximately $18.9 million. The
overall strengthening of the U.S. dollar beginning in the latter part of 1992
and continuing into 1993 resulted in a charge of approximately $26 million and
$95 million to the cumulative translation adjustment account in 1993 and 1992,
respectively.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
Worldwide income from commissions and fees increased 10.2% in 1994 after a
decrease of 3.6% in 1993. The increase in 1994 was mainly attributable to the
acquisitions of Western International Media and Ammirati & Puris. The decrease
in 1993 was primarily due to the unfavorable effect of foreign exchange which
had a negative impact on revenue of $105.3 million. In 1992, revenue increased
10% resulting from the favorable effect of the acquisition of MPM:Lintas in
Brazil.
Revenue from outside the United States increased $45.3 million in 1994 after
a decrease of $86.4 million in 1993. The decrease in 1993 was mainly due to
the unfavorable effects of foreign exchange. In 1992, revenue from outside the
U.S. increased by $125.8 million. Foreign revenue accounted for 64%, 67% and
69% of worldwide revenue in 1994, 1993 and 1992, respectively.
Commissions and fees from domestic operations increased 22.0% in 1994, 3.9% in
1993 and 8.5% in 1992. The increases in 1994 and 1993 are largely attributable
to acquisitions of Western International Media and Ammirati & Puris in 1994 and
Scali, McCabe, Sloves in 1993.
Other income increased 25.5% in 1994, 4.9% in 1993 and 20.4% in 1992. The
increases are primarily due to interest income from international operations.
<PAGE>
<PAGE>
Total costs and expenses worldwide increased 14.0% in 1994, decreased 5% in
1993, and increased 11% in 1992. The increase in 1994 is primarily due to the
restructuring charges and acquisitions. A significant portion of the Company's
expenses relate to compensation and various employee incentive and benefit
programs which are based principally upon operating results. Costs and
expenses outside the United States decreased in 1994 and 1993 following an
increase in 1992. The decreases in 1994 and 1993 are attributable to the
Company's continuing cost containment efforts. The increase in 1992 is in line
with the movement of revenue. Domestic costs increased 28.9% in 1994, 1% in
1993, 10% in 1992. The increase in 1994 primarily resulted from the
acquisitions of Western International Media and Ammirati & Puris in 1994.
The Company recorded restructuring charges of approximately $48.7 million in
the fourth quarter of 1994. The net effect of such charges on net income was
$25.7 million or $.34 per share. These restructuring charges, which were of
a one-time nature, related principally to terminations and office
consolidations resulting from the merger of the Lintas New York and Ammirati
& Puris agencies and various other international offices. The Company believes
these charges will permit it to operate effectively and efficiently in serving
its growing list of clients and to concentrate its resources on creative talent
and client service.
Restructuring charges included severance costs of $38.3 million for involuntary
terminations of approximately 600 employees. The Company expects to realize
a reduction of approximately $19.0 million in salary costs in 1995 from these
terminations. As a direct result of the Lintas New York and Ammirati & Puris
merger, the Company discontinued and sold its Fahlgren Martin and GS&B
operations, incurring charges of $6.7 million. Other costs related to the
consolidation of the Lintas New York and Ammirati & Puris agencies amounted to
$3.7 million.
At December 31, 1994, the liability related to these restructuring charges
amounted to $29.6 million, which includes $27.6 million for severance and $2.0
million for the consolidation of facilities. This liability is expected to be
paid out in 1995 and will be funded by continuing operations.
<PAGE>
<PAGE>
Interest expense increased 24.5% in 1994, decreased 20.4% in 1993 and was flat
in 1992. The increase in 1994 was primarily due to increases in borrowings
and interest rates. The decrease in 1993 is mainly due to the effects of
foreign currency exchange and the general decline in interest rates worldwide.
Equity in net income of unconsolidated affiliates increased in 1994 after a
decrease in 1993. The increase in 1994 resulted from the Company's equity
interest in All-American Communications, Inc. The decrease in 1993 was mainly
due to the consolidation of additional subsidiaries in 1993. This followed an
increase in 1992. Income applicable to minority interests decreased in 1994
after increases in 1993 and 1992. The decrease in 1994 is due to the purchase
of the remaining interest of McCann Hakuhodo, Inc. in the latter part of 1993,
and the sale of Fremantle International, Inc. in 1994.
The Company adopted FAS 106 effective January 1, 1992, and FAS 112 effective
January 1, 1994. The Company recorded a one-time after tax charge of $24.6
million related to FAS 106 and a net charge of $21.8 million related to FAS
112.
The effective income tax rates were 43.0% in 1994, 43.1% in 1993 and 44.1% in
1992. The reduction in the effective rate during 1994 and 1993 is due
predominantly to the mix of foreign earnings. The Company changed its
accounting for income taxes effective January 1, 1993, as required by FAS 109,
"Accounting for Income Taxes". The impact of adoption was a $.5 million
reduction in net income.
<PAGE>
<PAGE>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in Thousands Except Per Share Data)
ASSETS 1994 1993
Current Assets:
Cash and cash equivalents (includes
certificates of deposit: 1994-$151,341;
1993-$94,451) $ 413,709 $ 292,268
Marketable securities, at cost which
approximates market 27,893 30,106
Receivables (less allowance for doubtful
accounts: 1994-$22,656; 1993-$16,834) 2,072,764 1,525,717
Expenditures billable to clients 104,787 100,230
Prepaid expenses and other current assets 56,154 54,835
Total current assets 2,675,307 2,003,156
Other Assets:
Investment in unconsolidated affiliates 63,824 28,182
Deferred taxes on income 84,788 38,570
Other investments and miscellaneous
assets 120,242 92,048
Total other assets 268,854 158,800
Fixed Assets, at cost:
Land and buildings 73,370 65,327
Furniture and equipment 320,164 268,387
393,534 333,714
Less accumulated depreciation 212,755 170,998
180,779 162,716
Unamortized leasehold improvements 67,348 53,975
Total fixed assets 248,127 216,691
Intangible Assets (less accumulated
amortization: 1994-$130,045;
1993-$111,710) 601,130 491,170
Total Assets $3,793,418 $2,869,817
The notes on pages 21 to 34 are an integral part of these statements.
<PAGE>
<PAGE>
FINANCIAL STATEMENTS
INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in Thousands Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
Current Liabilities:
Payable to banks $ 128,529 $ 147,075
Accounts payable 2,090,406 1,428,442
Accrued expenses 292,436 183,501
Accrued income taxes 83,802 76,963
Total current liabilities 2,595,173 1,835,981
Noncurrent Liabilities:
Long-term debt 131,276 118,088
Convertible subordinated debentures 110,527 107,997
Deferred compensation and reserve
for termination allowances 215,893 146,774
Accrued postretirement benefits 45,751 44,480
Other noncurrent liabilities 32,886 39,274
Minority interests in consolidated
subsidiaries 12,485 13,208
Total noncurrent liabilities 548,818 469,821
Stockholders' Equity:
Preferred Stock, no par value
shares authorized: 20,000,000
shares issued: none
Common Stock, $.10 par value
shares authorized: 100,000,000
shares issued:
1994 - 87,705,760;
1993 - 86,299,688 8,771 8,630
Additional paid-in capital 383,678 335,340
Retained earnings 619,627 570,267
Adjustment for minimum pension liability (6,422) (704)
Cumulative translation adjustments (97,587) (116,432)
908,067 797,101
Less:
Treasury stock, at cost:
1994 - 10,001,680 shares;
1993 - 11,449,031 shares 222,698 208,821
Unamortized expense of restricted
stock grants 35,942 24,265
Total stockholders' equity 649,427 564,015
Commitments and Contingencies (see notes)
Total Liabilities and Stockholders'
Equity $3,793,418 $2,869,817
PAGE
<PAGE>
<TABLE> FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31
<CAPTION> (Dollars in Thousands Except Per Share Data)
<S> <C> <C> <C>
1994 1993 1992
Income:
Commissions and fees $1,916,376 $1,739,778 $1,804,421
Other income 67,879 54,078 51,550
Gross income 1,984,255 1,793,856 1,855,971
Costs and Expenses:
Salaries and related expenses 1,040,579 917,185 993,077
Office and general expenses 661,238 618,466 622,515
Interest expense 32,924 26,445 33,221
Restructuring charges 48,715 - -
Total costs and expenses 1,783,456 1,562,096 1,648,813
Income before provision for
income taxes and effect of
accounting changes 200,799 231,760 207,158
Provision for Income Taxes:
United States - federal 26,816 29,277 23,719
- state and local 9,862 14,289 12,181
Foreign 49,655 56,253 55,435
Total taxes 86,333 99,819 91,335
Income of consolidated
companies 114,466 131,941 115,823
Income applicable to
minority interests (3,262) (7,606) (6,728)
Equity in net income of
unconsolidated affiliates 4,043 944 2,818
Income before effect of
accounting changes 115,247 125,279 111,913
Effect of accounting changes:
Postemployment benefits (21,780) - -
Income taxes - (512) -
Postretirement benefits - - (24,640)
Net Income $ 93,467 $ 124,767 $ 87,273
Per Share Data:
Income before effect of
accounting changes $ 1.53 $ 1.67 $ 1.50
Effect of accounting changes:
Postemployment benefits (.29) - -
Income taxes - (.01) -
Postretirement benefits - - (.33)
Net Income $ 1.24 $ 1.66 $ 1.17
The notes on pages 21 to 34 are an integral part of these statements.
</TABLE>
PAGE
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION> YEAR ENDED DECEMBER 31
<S> (Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES: <C>1994 <C>1993 <C>1992
Net Income $ 93,467 $124,767 $ 87,273
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization of fixed assets 45,565 42,537 39,586
Amortization of intangible assets 18,335 18,730 19,573
Amortization of restricted stock awards 11,694 8,837 7,401
Provision for deferred income taxes (16,609) (524) 8,179
Equity in net income of unconsolidated affiliates (4,043) (944) (2,817)
Income applicable to minority interests 3,262 7,606 6,728
Translation losses 13,962 15,513 3,780
Effect of accounting changes 21,780 512 24,640
Restructuring charges-non cash 14,001 - -
Other (8,272) (7,647) (8,085)
Change in assets and liabilities, net of acquisitions
Receivables (114,077) (66,374) 20,307
Expenditures billable to clients (2,120) 15,570 3,570
Prepaid expenses and other assets 3,207 (29,232) (16,738)
Accounts payable and accrued expenses 192,600 59,363 (16,497)
Accrued income taxes 3,233 8,576 (5,019)
Deferred compensation and reserve for termination allowances 9,293 5,343 16,572
Net cash provided by operating activities 285,278 202,633 188,453
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (54,926) (76,528) (19,774)
Capital expenditures (55,925) (78,813) (36,928)
Proceeds from sales of assets 34,057 1,513 2,636
Net proceeds from (purchase of) sales of marketable securities 5,161 2,807 (1,606)
Unconsolidated affiliates - (9,490) (500)
Net cash used in investing activities (71,633) (160,511) (56,172)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in short-term borrowings (44,007) 35,467 (69,798)
Proceeds from long-term debt 33,026 42,409 113,345
Payments of long-term debt (24,528) (15,533) (68,634)
Treasury stock acquired (44,520) (37,153) (51,883)
Issuance of Common Stock 12,977 19,413 10,414
Cash dividends (40,360) (35,901) (32,483)
Net cash provided by (used in) financing activities (107,412) 8,702 (99,039)
Effect of exchange rates on cash and cash equivalents 15,208 (14,334) (17,192)
Increase in cash and cash equivalents 121,441 36,490 16,050
Cash and cash equivalents at beginning of year 292,268 255,778 239,728
Cash and cash equivalents at end of year $413,709 $292,268 $255,778
<FN>
The notes on pages 21 to 34 are an integral part of these statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE> FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Three-Year Period Ended December 31, 1994
<CAPTION> (Dollars in Thousands)
Unamortized
Additional Cumulative Expense
Common Paid-In Retained Translation Treasury of Restricted
Stock Capital Earnings Other Adjustments Stock Stock Grants
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1991 $8,381<F4> $287,393 $433,486<F4> $ - $ 4,249 $116,891 $29,822
Net income before effect of
accounting change 111,913
Effect of accounting change (24,640)
Cash dividends (32,483)
Foreign currency translation
adjustment (94,721)
Awards of Common Stock under
Company Plans:
Achievement Stock Award Plan 291 (124)
1986 Stock Incentive
Plan - Restricted Stock 13 5,457 5,355
Employee Stock Purchase Plan 13 4,298
Exercise of stock options 33 5,093
Purchase of Company's own stock 51,883
Tax benefit relating to
exercise of stock options 977
Restricted Stock: Forfeitures 724 (496)
Amortization (7,401)
Issuance of shares for acquisitions
and pooling of interests 52 4,868 (6,849)
Par value of shares issued for
two-for-one stock split 26 (26)
Balances, December 31, 1992 $8,518 $308,377 $481,401 $ - $(90,472) $169,374 $27,280
<FN>
<F4> Restated to reflect two-for-one stock split effective June 1992.
The notes on pages 21 to 34 are an integral part of these statements.
</TABLE>
PAGE
<PAGE>
<TABLE> FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Three-Year Period Ended December 31, 1994
<CAPTION> (Dollars in Thousands)
Unamortized
Additional Cumulative Expense
Common Paid-In Retained Translation Treasury of Restricted
Stock Capital Earnings Other Adjustments Stock Stock Grants
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1993 $8,630 $335,340 $570,267 $(704) $(116,432) $208,821 $24,265
Net income before effect of
accounting change 115,247
Effect of accounting change (21,780)
Cash dividends (40,360)
Foreign currency translation
adjustment 18,845
Awards of Common Stock under
Company Plans:
Achievement Stock Award Plan 209 (119)
1986 Stock Incentive
Plan - Restricted Stock 63 23,386 (1,749) 25,087
Employee Stock Purchase Plan 15 3,910
Exercise of stock options 63 8,988
Purchase of Company's own stock 44,520
Tax benefit relating to
exercise of stock options 2,923
Restricted Stock: Forfeitures 2,283 (1,716)
Amortization (11,694)
Issuance of shares for acquisitions
and pooling of interests 8,922 (3,747) (31,058)
Adjustment for miniumum pension
liability (5,718)
Balances, December 31, 1994 $8,771 $383,678 $619,627 $(6,422) $(97,587) $222,698 $35,942
</TABLE>
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION> FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1994
(Dollars in Thousands)
Unamortized
Additional Cumulative Expense
Common Paid-In Retained Translation Treasury of Restricted
Stock Capital Earnings Other Adjustments Stock Stock Grants
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1992 $8,518 $308,377 $481,401 $ - $ (90,472) $169,374 $27,280
Net income before effect of
accounting change 125,279
Effect of accounting change (512)
Cash dividends (35,901)
Foreign currency translation
adjustment (25,960)
Awards of Common Stock under
Company Plans:
Achievement Stock Award Plan 239 (96)
1986 Stock Incentive
Plan - Restricted Stock 14 6,548 (945) 7,507
Employee Stock Purchase Plan 17 4,359
Exercise of stock options 81 12,303
Purchase of Company's own stock 37,153
Tax benefit relating to
exercise of stock options 2,653
Restricted Stock: Forfeitures 3,739 (1,685)
Amortization (8,837)
Issuance of shares for acquisitions 861 (404)
Adjustment for minimum pension
liability (704)
Balances, December 31, 1993 $8,630 $335,340 $570,267 $(704) $(116,432) $208,821 $24,265
</TABLE>
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated statements include the
accounts of the Company and its subsidiaries, most of which are wholly
owned. The investment in unconsolidated affiliates is carried on the
equity basis.
Translation of Foreign Currencies: Balance sheet accounts are translated
principally at rates of exchange prevailing at the end of the year except
that fixed assets and related depreciation in countries with highly
inflationary economies are translated at rates in effect on dates of
acquisition. Revenue and expense accounts are translated at average rates
of exchange in effect during each year. Translation adjustments are
included as a separate component of stockholders' equity except for
countries with highly inflationary economies, which are included in
current operations.
Commissions, Fees and Costs: Commissions and fees are generally
recognized when media placements appear and production costs are incurred.
Salaries and other agency costs are generally expensed as incurred.
Depreciation and Amortization: Depreciation is computed principally using
the straight-line method over estimated useful lives of the related
assets, ranging generally from 3 to 20 years for furniture and equipment
and from 10 to 45 years for various component parts of buildings.
PAGE
<PAGE>
Leasehold improvements and rights are amortized over the terms of related
leases. Company policy provides for capitalization of all major
expenditures for renewal and improvements and for current charges to
income for repairs and maintenance.
Intangible Assets: The excess of purchase price over the value of net
tangible assets acquired is being amortized on a straight-line basis over
periods not exceeding 40 years.
Income Taxes: Deferred income taxes reflect the impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and such amounts recognized for income tax
purposes. The total amount of the undistributed earnings of the foreign
subsidiaries for income tax purposes was approximately $214,725,000 at
December 31, 1994. No provision has been made for foreign withholding
taxes or United States income taxes which may become payable if the
undistributed earnings of the foreign subsidiaries for tax purposes were
paid as dividends to the Company, since a major portion of these earnings
has been reinvested in working capital and other business needs. The
additional income taxes on that portion of undistributed earnings which
is available for dividends, are not readily determinable.
Earnings per Common and Common Equivalent Share: Earnings per share are
based on the weighted average number of common shares outstanding during
each year and, if dilutive, common equivalent shares applicable to grants
under the stock incentive and stock option plans, and conversion of
Convertible Subordinated Debentures.
PAGE
<PAGE>
Concentrations of Credit Risk: The Company's clients are in various
businesses, primarily in North America, Latin America, Europe and the
Pacific Region. The Company performs ongoing credit evaluation of its
clients. Reserves for credit losses are maintained at levels considered
adequate by management. The Company invests its excess cash in deposits
with major banks and in money market securities. These securities
typically mature within 90 days and bear minimal risk.
PAGE
<PAGE>
NOTE 2: STOCKHOLDERS' EQUITY
In May 1992, the Company's certificate of incorporation was amended to
increase the number of authorized shares of Common Stock from 75,000,000
to 100,000,000.
In June 1992, a two-for-one stock split was effected by the payment of a
100 percent stock dividend. This split has been reflected retroactively
in the consolidated financial statements. The number of shares of Common
Stock reserved for issuance pursuant to various plans under which stock
is issued was increased by 100 percent. All earnings per share and
outstanding share data included in the consolidated financial statements
and notes thereto have been adjusted to give effect to the stock split.
The Company has a Preferred Share Rights Plan designed to deter coercive
takeover tactics. Pursuant to this plan, common stockholders are entitled
to purchase 1/100 of a share of preferred stock at an exercise price of
$100 if a person or group acquires or commences a tender offer for 15% or
more of Interpublic's Common Stock. Rights holders (other than the 15%
stockholder) will also be entitled to buy, for the $100 exercise price,
shares of Interpublic's Common Stock with a market value of $200 in the
event a person or group actually acquires 15% or more of Interpublic
Common Stock. Rights may be redeemed at $.01 per right under certain
circumstances.
<PAGE>
<PAGE>
NOTE 3: ACQUISITIONS
During 1994, the Company acquired several advertising agencies and related
companies for an aggregate purchase price of approximately $100.2 million.
The 1994 acquisitions included Ammirati & Puris, Alice France, Lowe Adam
Turkey, the minority interest in Fremantle International and a pooling of
interests with Western International Media. The Company acquired Ammirati
& Puris effective September 1994 for $56.0 million, which included cash
payments of $21.9 million and the issuance of $1,092,629 shares of the
Company's Common Stock. The Company acquired a 50% interest in Alice
France for $7.7 million. The Company purchased the remaining 20%
ownership interest in Fremantle for $6.3 million and the issuance of
112,000 shares of the Company's Common Stock. The Company subsequently
sold Fremantle for $31.5 million and a 39% ownership interest in All
American Communications Inc. valued at $31.5 million. The Company issued
1,472,393 shares of Common Stock in exchange for all the issued and
outstanding common stock of Western International Media. This acquisition
was accounted for as a pooling of interests; however, the Company's
financial statements were not restated for prior periods as the Company's
consolidated results would not have changed significantly. During 1994,
the Company made deferred payments of $18.3 million relating to prior year
acquisitions.
During 1993, the Company acquired several advertising agencies and related
companies for an aggregate purchase price of approximately $88.6 million.
The 1993 acquisitions included Scali, McCabe, Sloves, Inc., the minority
interest in McCann-Erickson Hakuhodo, Inc. in Japan and an ownership
PAGE
<PAGE>
interest in Atlantis Communications, Inc. The Company acquired Scali,
McCabe, Sloves, Inc. effective September 1993 for $49.1 million, which
included cash payments of $37.8 million, the issuance of 37,625 shares of
the Company's Common Stock, and $10.1 million for deferred payments, of
which $5.3 million were made in 1994 with the remaining payments to be
made in 1995 and thereafter. The Company acquired the remaining 49%
ownership interest in McCann-Erickson Hakuhodo, Inc. in Japan for $23.6
million. The Company acquired a 20% interest in Atlantis Communications,
Inc., a Canadian television production company, through cash payments,
conversion of debt to equity and a transfer of Canadian programming rights
for a total of approximately $12.5 million. These acquisitions were
accounted for as purchases. During 1993, the Company made deferred
payments of $15.4 million relating to prior year acquisitions.
During 1992, the Company acquired several advertising agencies and related
companies for an aggregate purchase price of approximately $10 million.
The Company acquired a 51% ownership interest in JBR Advertising in
Norway, an additional 34% ownership interest in Baader-Lang-Behnken
(bringing the Company's ownership to 75%), and the remaining 16.7%
ownership interest in Still, Price, Court, Twivy, D'Souza; Lintas Group
Ltd. in the United Kingdom. These acquisitions were accounted for as
purchases. During the second quarter of 1992 the Company made a $9.8
million deferred payment and issued 161,164 shares of its Common Stock for
the 1991 acquisition of Kuiper & Schouten by The Lowe Group. In October
1992, the Company acquired Brindfors Intressenter AB ("Lowe Brindfors")
in exchange for 442,431 shares of its Common Stock and $1.3 million in
cash, which was accounted for as a pooling of interests.
PAGE
<PAGE>
For each of the three years presented, the Company's consolidated results
would not have changed significantly had the revenue and net income of the
companies acquired as purchases been fully included in each year.
<PAGE>
<PAGE>
NOTE 4: PROVISION FOR INCOME TAXES
Effective January 1, 1993 the Company adopted FAS 109, "Accounting for
Income Taxes". This statement applies an asset and liability approach
that requires the recognition of deferred tax assets and liabilities with
respect to the expected future tax consequences of events that have been
recognized in the consolidated financial statements and tax returns.
The components of income before taxes are as follows:
(Dollars in Thousands) 1994 1993 1992
Domestic $ 70,135 $ 78,488 $ 60,453
Foreign 130,664 153,272 146,705
Total $200,799 $231,760 $207,158
The provision for income taxes consisted of:
(Dollars in Thousands) 1994 1993 1992
Federal income taxes (including foreign
withholding taxes):
Current $ 29,657 $ 28,071 $ 10,982
Deferred (2,841) 1,206 12,737
26,816 29,277 23,719
State and local income taxes:
Current 12,293 14,682 10,483
Deferred (2,431) (393) 1,698
9,862 14,289 12,181
Foreign income taxes:
Current 60,992 57,590 61,692
Deferred (11,337) (1,337) (6,257)
49,655 56,253 55,435
Total $ 86,333 $ 99,819 $ 91,335
PAGE
<PAGE>
At December 31, 1994 and 1993 the deferred tax assets and (liabilities)
consisted of the following items:
1994 1993
Postretirement/postemployment benefits $ 39,236 $ 20,822
Deferred compensation 15,006 9,519
Pension costs 8,294 3,561
Depreciation (1,775) (3,970)
Rent 1,402 -
Interest 2,779 1,634
Accrued Reserves 5,678 1,914
Tax loss/tax credit carryforwards 25,022 24,279
Other 9,195 2,050
Total deferred tax assets 104,837 59,809
Deferred tax valuation allowance 20,049 21,239
Net deferred tax assets $ 84,788 $ 38,570
The valuation allowance of $20,049,000 and $21,239,000 at December 31,
1994 and 1993, respectively, represents a provision for uncertainty as
to the realization of certain deferred tax assets, including U.S. tax
credit carryforwards and net operating loss carryforwards in certain
jurisdictions. At December 31, 1994 there were $12,189,000 of tax credit
carryforwards with expiration periods through 1999 and net operating loss
carryforwards with a tax effect of $12,833,000 with various expiration
periods. The Company has concluded that it is more likely than not that
the net deferred tax asset balance will be realized based upon future
results.
In 1992, the provision for income taxes included deferred taxes of
$8,179,000 resulting from the effect of timing differences. This
provision resulted principally from $14,284,000 due to current tax
deductions in excess of book expenses related to stock incentive awards,
and $539,000 due to pension deductions in excess of book expenses. This
provision was partly offset by deferred tax credits of $2,902,000 from
deferred compensation and incentive accruals, and $2,592,000 of interest
PAGE
<PAGE>
expense recognized for accounting purposes but not currently deductible.
A reconciliation of the effective income tax rate as shown in the
consolidated statement of income to the federal statutory rate is as
follows:
1994 1993 1992
Statutory federal income tax rate 35.0% 35.0% 34.0%
State and local income taxes,
net of federal income tax benefit 2.5 4.0 3.9
Impact of foreign operations, including
withholding taxes 5.4 3.3 3.4
Amortization of intangible assets not
deductible for tax purposes 3.1 2.7 3.1
Other (3.0) (1.9) (0.3)
Effective tax rate 43.0% 43.1% 44.1%
PAGE
<PAGE>
NOTE 5: LONG-TERM PERFORMANCE INCENTIVE PLAN
Under the Long-Term Performance Incentive Plan (the "Plan"), grants
consisting of performance units are awarded to certain key employees of
the Company and its subsidiaries. The ultimate value of these performance
units is contingent upon the annual growth of profit (as defined in the
Plan) of the Company or its operating components or both, over a four-year
performance period, and is generally payable in cash. The projected value
of these units is accrued by the Company and charged to expense over the
four-year performance period.
The Plan also provides that a portion of each participant's grant may be
issued as performance units deemed to be the equivalent of "phantom"
shares of the Company's Common Stock, at the rate of thirty-six phantom
shares for each performance unit. The value of phantom shares is a
function of the amount, if any, by which the market value of the Company's
Common Stock increases during the performance period and is payable either
in cash or in shares of the Company's Common Stock. The increase in the
value of these units is accrued and expensed over the four-year
performance period. In addition, amounts of cash equivalent to the
quarterly dividends paid on the Company's Common Stock are paid to phantom
share recipients and expensed pursuant to the provisions of the Plan.
For all such performance units, costs charged to income were $8.5 million
in 1994, $10.0 million in 1993 and $17.0 million in 1992. As of December
31, 1994, the Company's liability was $26.7 million, which represents the
estimated amounts payable for the 1991-1994 and 1993-1996 performance
periods. The Company's liability for the 1991-1994 performance period was
$12.5 million which will be paid in the first quarter of 1995. The
Company's liability for the 1989-1992 performance period was $18.8 million
of which $10.1 million was paid in December 1992 with the remaining
balance paid in the first quarter of 1993.
PAGE
<PAGE>
NOTE 6: EMPLOYEE STOCK PLANS
The 1986 Stock Incentive Plan, United Kingdom Stock Option Plan and 1988
Stock Option Plan
The 1986 Stock Incentive Plan ("the Plan") incorporates both stock option
and restricted stock award features. Under the Plan, 20,000,000 shares
of Common Stock of the Company are reserved for issuance pursuant to the
exercise of nonqualified stock options granted during the period ending
May 20, 1996. Key employees of the Company and its subsidiaries are
eligible to participate in the Plan. At December 31, 1994, there were
unexercised options under this plan for 5,751,101 shares of the Company's
Common Stock.
Stock options under the plan have been awarded by the Compensation
Committee ("the Committee") at prices not less than 85 percent of the fair
market value of the Company's Common Stock on the date each option is
granted. The options become exercisable on the basis of a schedule
determined by the Committee. Those awarded prior to December 20, 1988 are
exercisable in increments of 25 percent per year commencing on the first
anniversary of the grant of the option. Awards issued on and after
December 20, 1988 generally become exercisable in three annual
installments of 40 percent in the first year and 30 percent in the
succeeding two years, commencing on the third anniversary of the grant of
the option. All options expire ten years from the grant date.
Shares of restricted stock awarded under the 1986 Stock Incentive Plan are
subject to certain restrictions and vesting requirements. No monetary
consideration is paid by a recipient for a restricted stock award. During
1994 and 1993 the Company awarded 810,517 shares and 242,132 shares,
respectively. The Company recognized expense of approximately $11.6
PAGE
<PAGE>
million, $8.8 million and $7.4 million for amortization related to all
restricted awards in 1994, 1993 and 1992, respectively. At December 31,
1994 there were outstanding a total of 2,745,445 shares of restricted
stock awarded under this Plan. The cost of these shares is being
amortized over the restriction periods. The Plan also authorizes the
Compensation Committee to direct that discretionary tax assistance
payments may be made to recipients when the restrictions lapse. Such
payments are expensed as awarded.
The 1986 United Kingdom Stock Option Plan ("UK Plan") is similar to the
stock option portion of the 1986 Stock Incentive Plan, except that the
exercise price of options granted under the UK Plan may not be less than
the fair market value at the date of grant. Stock options awarded under
the UK Plan come within the 20,000,000 share limit provided for in the
1986 Stock Incentive Plan. At December 31, 1994 there were unexercised
options for 267,895 shares of the Company's Common Stock under the UK
Plan.
Under the 1988 Stock Option Plan the Company can grant, through 1998,
options to purchase 600,000 shares of the Company's Common Stock to key
employees who are employed outside the United States. Exercise
requirements are similar to those under the 1986 Plan; however, grants may
be made at prices which are less than 85 percent of the fair market value
of the Company's Common Stock on the date the option is granted. At
December 31, 1994, there were unexercised options under this plan for
65,500 shares of the Company's Common Stock.
<PAGE>
<PAGE>
Following is a summary of stock option transactions during the three-year
period ended December 31, 1994:
________________________________________________________________________
Number of Shares Option Price Range
Under Option Per Share
________________________________________________________________________
Balances, December 31, 1991 6,510,338
New Awards:
1986 Stock Incentive Plan 1,375,564 $23.269 - $34.000
1986 United Kingdom Stock Option
Plan 257,934 29.563 - 34.000
Exercised (423,836) 6.951 - 21.250
Cancelled (583,278) 8.837 - 23.269
Balance, December 31, 1992 7,136,722
New Awards:
1986 Stock Incentive Plan 667,820 21.463 - 34.063
1986 United Kingdom Stock Option
Plan 33,720 28.688 - 31.938
Exercised (810,009) 6.951 - 24.172
Cancelled (301,033) 9.083 - 34.000
Balance, December 31, 1993 6,727,220
New Awards:
1986 Stock Incentive Plan 342,658 24.756 - 34.250
1986 United Kingdom Stock Option
Plan 44,666 31.125 - 32.750
Exercised (627,374) 6.951 - 28.688
Cancelled (397,028) 6.951 - 34.000
Balance, December 31, 1994 6,090,142 $ 6.951 - $34.250
Exercisable, December 31, 1994 1,563,498 $ 6.951 - $34.250
Under the Company's Achievement Stock Award Plan, awards may be made up
to an aggregate of 1,248,000 shares of Common Stock together with cash
awards to cover any applicable withholding taxes. As of December 31,
1994, 1,163,432 shares had been awarded, with 10,580 shares awarded during
1994.
<PAGE>
<PAGE>
The Employee Stock Purchase Plan was adopted by the stockholders in 1985,
and allows employees an opportunity to purchase Common Stock of the
Company through ten consecutive annual offerings, which commenced on July
1, 1985. Under the Plan, employees may purchase Common Stock of the
Company through payroll deductions not exceeding 10 percent of their
compensation. The price an employee pays for a share of stock is 85
percent of the average market price on the last business day of the month.
At December 31, 1994, 882,528 shares had been issued, including 144,662
shares issued during 1994. An additional 3,998,008 shares were reserved
for issuance at that date.
<PAGE>
<PAGE>
NOTE 7: RETIREMENT PLANS
Domestic Retirement Plan
The Company and certain of its domestic subsidiaries have a defined
benefit plan ("Domestic Plan") which covers substantially all employees.
The Company's policy is to fund pension costs as permitted by applicable
tax regulations. Pension costs are determined by the projected unit
credit method based upon career average pay. Funding requirements for the
Domestic Plan are determined using the accrued benefit unit credit method.
The pension plan was amended as of January 1, 1992 to provide that pension
benefits accrued after that date would be calculated under a new "cash
balance" formula. Under the cash balance formula, the participant's
account balance is credited each year with an amount equal to a percentage
of that year's annual compensation, plus interest credits. Participants
in the pension plan on December 31, 1991 who continued to work for the
Company after that date had their normal retirement benefit under the plan
as of that date converted on an actuarial basis into an opening account
balance as of January 1, 1992.
In accordance with FAS 87, "Employers' Accounting for Pensions", the
Company recorded an additional minimum pension liability for the Domestic
Plan of $17.2 million and $11.9 million at December 31, 1994 and 1993,
respectively, representing the excess of unfunded accumulated benefit
obligation over previously recorded pension cost liabilities. A
corresponding amount was recognized as an intangible asset to the extent
of unrecognized prior service cost and net transition obligation, with the
balance recorded as a separate reduction of stockholders' equity. In 1994
and 1993, respectively, the Company recorded an intangible asset of $10.8
million and $11.2 million and a charge to stockholders' equity of $6.4
million and $.7 million.
<PAGE>
<PAGE>
Net pension cost for the Domestic Plan for 1994, 1993 and 1992 included
the following components:
(Dollars in Thousands) 1994 1993 1992
Service cost-benefits earned
during the year $ 3,688 $ 3,735 $ 3,654
Interest cost on projected benefit
obligation 9,768 9,943 9,454
Actual return on plan assets 2,457 (10,831) (4,479)
Net amortization and deferral (13,025) 1,050 (5,222)
Total pension cost $ 2,888 $ 3,897 $ 3,407
The following table sets forth the funded status and amounts recognized
for the Domestic Plan in the Company's consolidated balance sheet at
December 31, 1994 and 1993:
(Dollars in Thousands) 1994 1993
Actuarial present value of accumulated
benefit obligation (including vested
benefits of $112,251 in 1994 and
$120,185 in 1993) $115,675 $124,138
Actuarial present value of projected benefit
obligation 121,111 136,561
Plan assets at fair value 99,819 110,913
Projected benefit obligation in excess of
plan assets (21,292) (25,648)
Unrecognized net loss 11,858 13,127
Unrecognized prior service cost (2,411) (3,871)
Unrecognized net obligation 13,211 15,099
Additional minimum liability (17,222) (11,932)
Accrued pension liability
$(15,856) $(13,225)
PAGE
<PAGE>
At December 31, 1994, pension assets were primarily invested in fixed
income and equity securities. Prior service costs are being amortized
over the estimated average remaining service period of active employees.
The initial net obligation is being amortized over 15 years.
A discount rate of 8.5% in 1994 and 7.5% in 1993 and 8.5% in 1992 and a
salary increase assumption of 6% in 1994 and 1993 and 7% in 1992 were used
in determining the actuarial present value of the projected benefit
obligation. The expected return on assets was 10% for 1994, 1993 and
1992.
Foreign Retirement Plans
The Company has several foreign pension plans in which benefits are based
primarily on years of service and employee compensation. It is the Company's
policy to fund these plans in accordance with local laws and income tax
regulations.
Net pension costs for foreign pension plans for 1994, 1993 and 1992 included
the following components:
(Dollars in Thousands) 1994 1993 1992
Service cost-benefits earned during
the year $ 6,215 $ 5,117 $ 4,860
Interest cost on projected benefit
obligation 9,726 10,204 10,026
Actual return on plan assets 5,109 (21,029) (15,307)
Net amortization and deferral (12,608) 13,943 7,699
Total pension cost $ 8,442 $ 8,235 $ 7,278
PAGE
<PAGE>
<TABLE>
The following table sets forth the funded status and amounts recognized for the
foreign pension plans in the Company's consolidated balance sheet at December 31, 1994 and 1993:
<CAPTION>
1994 1993
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
<S> <C> <C> <C> <C>
Actuarial present value of
accumulated benefit obligation
(including vested benefits of:
1994 - $51,978 and $69,315
1993 - $61,117 and $53,062) $52,093 $76,929 $61,477 $ 59,388
Actuarial present value of
projected benefit obligation 58,949 87,499 69,152 72,574
Plan assets at fair value 87,998 10,047 92,868 5,813
Projected benefit obligation
(in excess of) less than
plan assets 29,049 (77,452) 23,716 (66,761)
Unrecognized net (gain)/loss (22,383) (2,495) (19,140) (2,322)
Unrecognized prior service
costs 4,944 - 5,349 -
Unrecognized net (asset)/
obligation (2,239) 8,746 (2,153) 8,347
Prepaid (accrued) pension cost at
December 31, 1994 and 1993 $ 9,371 $(71,201) $ 7,772 $(60,736)
</TABLE>
<PAGE>
<PAGE>
Foreign plans utilized discount rates ranging from 4.0% to 12.0% and 5.5%
to 12.5% in 1994 and 1993, respectively, and salary increase assumptions
ranging from 2.0% to 10.0% and 4.0% to 12.0% in 1994 and 1993,
respectively, to determine the actuarial present value of the projected
benefit obligation. The expected rates of return on assets of foreign
plans ranged from 5.5% to 12.0% in 1994 and 6.5% to 12.5% in 1993.
The Company also has Special Deferred Benefit Arrangements with certain
key employees. Vesting is based upon age and the terms of the employee's
contract. Life insurance contracts have been purchased in amounts which
may be used to fund these arrangements.
PAGE
<PAGE>
NOTE 8: POSTRETIREMENT & POSTEMPLOYMENT BENEFITS
Postretirement Benefit Plans
The Company and its subsidiaries provide certain postretirement health
care benefits for employees who were in the employ of the Company as of
January 1, 1988, and life insurance benefits for employees who were in the
employ of the Company as of December 1, 1961. The plans cover employees
in the United States and certain key employees in foreign countries.
Effective January 1, 1993, the Company's plan covering postretirement
medical benefits was amended to place a cap on annual benefits payable to
retirees. Such coverage is self-insured, but is administered by an
insurance company.
Effective January 1, 1992, the Company adopted FAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", and recorded
a one-time, after-tax charge of $24.6 million. This statement requires
that the Company accrue the expected cost of postretirement benefits other
than pensions over the period in which the active employees become
eligible for such postretirement benefits.
The components of periodic expense for these postretirement benefits for
1994 and 1993 were as follows:
(Dollars in Thousands) 1994 1993
Service cost (benefits earned during the year) $ 653 $ 675
Interest cost on accumulated postretirement
benefit obligation 2,714 2,869
Net amortization and deferral (463) (791)
Total postretirement cost $2,904 $2,753
PAGE
<PAGE>
The following table sets forth the funded status and amounts recognized
for the Company's postretirement benefit plans in its consolidated balance
sheet at December 31, 1994 and 1993:
1994 1993
Accumulated postretirement benefit
obligation:
Retirees $ 24,392 $ 24,739
Fully eligible active plan participants 4,764 5,177
Other active plan participants 6,914 7,515
Total accumulated postretirement
benefit obligation 36,070 37,431
Plan assets at fair value - -
Accumulated postretirement benefit
obligation in excess of plan assets (36,070) (37,431)
Unrecognized net gain (9,681) (7,049)
Accrued postretirement benefit liability
$(45,751) $(44,480)
A discount rate of 8.5% and 7.5% in 1994 and 1993, respectively, and a
salary increase assumption of 6% in 1994 and 1993, were used in
determining the accumulated postretirement benefit obligation. An 11.0%
and a 10.5% increase in the cost of covered health care benefits were
assumed for the years 1994 and 1993, respectively. The rate is assumed
to decrease incrementally to 6% in the year 2002 and remain at that level
thereafter. The health care cost trend rate assumption does not have a
significant effect on the amounts reported. For example, a 1% increase
in the health care cost trend rate would increase the accumulated
postretirement benefit obligation at December 31, 1994 by approximately
$1.5 million, and the net periodic cost for 1994 by $.1 million.
Postemployment Benefits
Effective January 1, 1994, the Company adopted FAS 112, "Employer's
Accounting for Postemployment Benefits", and recognized a one-time after-
tax charge of $21.8 million. This statement requires the Company to
accrue the costs of certain benefits, including severance, worker's
compensation and health care coverage over an employee's service life.
The Company's liability for postemployment benefits totalled $34.6
million, and is included in deferred compensation and reserve for
termination allowances. The net periodic expense recognized in 1994 was
$5.9 million.
PAGE
<PAGE>
NOTE 9: SHORT-TERM BORROWINGS AND FINANCIAL INSTRUMENTS
The Company and its domestic subsidiaries have lines of credit with
various banks. These credit lines permit borrowings at fluctuating
interest rates determined by the banks. Short-term borrowings by
subsidiaries outside the United States principally consist of drawings
against bank overdraft facilities and lines of credit. These borrowings
bear interest at the prevailing local rates. Where required, the Company
has guaranteed the repayment of the borrowings. Unused lines of credit
by the Company and its subsidiaries at December 31, 1994 and 1993
aggregated $349 million and $257 million, respectively.
The Company occasionally uses forwards and options to hedge a portion of
its net investment in foreign subsidiaries and certain intercompany
transactions in order to mitigate any impact of changes in foreign
exchange rates on working capital. The amount of such hedges at the end
of the year was not significant.
PAGE
<PAGE>
NOTE 10: LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
(Dollars in Thousands) 1994 1993*
Convertible Subordinated Debentures - 3.75% $110,527 $107,997
Term loans-5.5% to 14.0%.(5.5% to 9.0% in 1993 106,667 90,000
Mortgage notes payable and other long term loans-
7.6% to 9.7% (5.7% to 9.0% in 1993) 39,507 44,706
256,701 242,703
Less: current portion 14,899 16,618
$241,802 $226,085
*Reclassified for comparative purposes
The increase in long-term debt during 1994 primarily resulted from an
increase in the private placement with the Prudential Insurance Company
(Prudential) of $25.0 million at 7.9% which was used to finance
acquisitions. In addition, the Company assumed a $5 million 14.0% note
payable in connection with the acquisition of Ammirati & Puris.
The Convertible Subordinated Debentures were issued in April 1992 and
mature on April 1, 2002 for a face value of $135 million. The term of the
bond offering included an issuance price equal to 77% of the face value
with a coupon of 3.75%. The debentures are convertible into Common Stock
of the Company at a rate of 22.238 shares per each U.S. $1,000 principal
amount. Most of the proceeds were used to pay down existing debt.
The term loans at December 31, 1994 consisted of $75 million of private
placements with Prudential, $17 million term loan with Trust Company Bank,
$10 million term loan with National Bank of Detroit and $5 million private
placement loan with Massachusetts Mutual. The private placements with
Prudential have payments due in 1996, 1997, 1998 and 2004. The other term
loans have payments each year until maturity in 1998.
Mortgage notes payable and other long-term debt at December 31, 1994
primarily related to a $36.1 million mortgage which was used to finance
PAGE
<PAGE>
the purchase of a building and land by one of the Company's subsidiaries
during 1993. The terms of the mortgage call for payments of approximately
$.5 million from 1995-2000 with a balloon payment of $32.9 million
thereafter. The remaining other long-term loans at December 31, 1993 with
Morgan Guaranty U.K. and New York Life Mortgage were paid off during 1994.
Under various loan agreements, the Company must maintain specified levels
of net worth and meet certain cash flow requirements, and is limited in
the level of indebtedness. The Company has complied with the limitations
under the terms of these loan agreements.
Long-term debt maturing over the next five years is as follows: 1995:$14.9
million; 1996:$33.3 million; 1997:$19.3 million; 1998:$19.0 million and
1999:$.7 million. Of the remaining debt of $169.1 million, $136.2 million
matures during the years 2000-2004 while $32.9 million matures in
subsequent years.
All material financial instruments are carried in the consolidated balance
sheet at amounts which approximate fair values. The fair value was
estimated by obtaining quotes from brokers.
PAGE
<PAGE>
NOTE 11: DISCLOSURES UNDER FAS 95
This accounting standard requires disclosures of specific cash payments
and non-cash investing and financing activities. The Company considers
all highly liquid investments with a maturity of three months or less to
be cash equivalents.
Cash paid for income taxes was $67.1 million, $78.5 million, $74.9
million, in 1994, 1993 and 1992, respectively. Interest payments were
$23.0 million in 1994, $24.1 million in 1993 and $30.4 million in 1992.
As more fully described in Note 3, in 1994 the Company issued 1,092,629
of its shares in conjunction with the acquisition of Ammirati & Puris and
a total of 1,472,393 shares of its Common Stock in connection with the
pooling of interest with Western International Media. During 1993, the
Company issued 37,625 shares in conjunction with the acquisition of Scali,
McCabe, Sloves, Inc. In 1992, the Company issued 603,595 shares for the
acquisition of several advertising agencies.
Details of businesses acquired in transactions accounted for as purchases
were as follows:
(Dollars in Thousands) 1994 1993 1992
Fair value of assets acquired $163,423 $172,166 $28,483
Liabilities assumed 64,998 91,736 5,326
Net assets acquired 98,425 80,430 23,157
Less: non-cash consideration 38,525 1,135 4,644
Less: cash acquired 4,974 2,767 -
Net cash paid for acquisitions $ 54,926 $ 76,528 $18,513
PAGE
<PAGE>
The 1994 amounts shown above exclude deferred payments of $9.5 million in
connection with acquisition of various advertising agencies, which are
payable in 1995 and thereafter, but include $18.3 million of deferred
payments made during 1994 relating to various prior year acquisitions.
The 1993 amounts shown above exclude deferred payments of $10.1 million
in connection with the Scali acquisition, which were paid or are payable
in 1994 and 1995, but include $15.4 million of deferred payments made
during 1993 relating to various prior year acquisitions. The 1992 amounts
shown above include a deferred payment of $9.8 million in connection with
the 1991 acquisition of Kuiper and Schouten by the Lowe Group, but exclude
a payment of $1.3 million in connection with the 1992 acquisition of Lowe
Brindfors.
PAGE
<PAGE>
<TABLE>
NOTE 12: RESULTS BY QUARTER (UNAUDITED)
<CAPTION>
_____________________________________________________________________________________________________________
(Dollars in Thousands 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Except Per Share Data) 1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross income $420,962 $389,785 $497,505 $483,758 $440,508 $411,027 $625,280 $509,286
Operating expenses 389,688 360,731 396,331 377,990 400,591 376,697 515,207 420,233
Restructuring charges - - - - - - 48,715 -
Provision for income
taxes 10,367 10,018 39,268 44,892 14,279 13,058 22,419 31,851
Net income before effect of
accounting changes 12,990 11,025 54,099 48,987 17,404 14,690 30,754 50,577
Effect of accounting changes:
Postemployment benefits (21,780) - - - - - - -
Income taxes - (512) - - - - - -
Net income/(loss) (8,790) 10,513 54,099 48,987 17,404 14,690 30,754 50,577
Earnings per Common and
Common Equivalent Share:
Before effect of accounting
changes .17 .15 .72 .65 .23 .20 .40 .67
Effect of accounting changes:
Postemployment benefits (.29) - - - - - - -
Income taxes - (.01) - - - - - -
Net income/(loss) (.12) .14 .72 .65 .23 .20 .40 .67
Cash dividends per share .125 .115 .140 .125 .140 .125 .140 .125
Price range per share:
High 34 35 1/2 33 31 1/4 34 3/4 31 3/4 35 3/8 32 7/8
Low $29 5/8 $28 $27 7/8 $25 1/8 $30 1/2 $23 7/8 $29 1/2 $29 3/4
</TABLE>
PAGE
<PAGE>
NOTE 13: GEOGRAPHIC AREAS
Total assets, income from commissions and fees, and income before
provision for income taxes are presented below by major geographic area.
(Dollars in Thousands) 1994 1993 1992
Total Assets:
United States $1,559,768 $ 970,242 $ 798,764
International
Europe 1,372,466 1,133,057 1,171,061
Far East 560,965 457,444 379,325
Latin America 183,701 171,826 145,228
Other 116,518 137,248 128,967
Total International 2,233,650 1,899,575 1,824,581
Total Consolidated $3,793,418 $2,869,817 $2,623,345
Income From Commissions and Fees:
United States $ 713,497 $ 582,183 $ 560,431
International
Europe 719,881 710,386 842,150
Far East 268,124 242,255 210,302
Latin America 153,469 136,509 117,383
Other 61,405 68,445 74,155
Total International 1,202,879 1,157,595 1,243,990
Total Consolidated $1,916,376 $1,739,778 $1,804,421
PAGE
<PAGE>
(Dollars in Thousands) 1994 1993 1992
Income Before Provision for Income Taxes:
Operating income:
United States $ 88,208 $ 94,475 $ 75,337
International
Europe 56,281 80,139 102,307
Far East 43,376 44,193 31,010
Latin America 40,975 34,021 30,094
Other 4,884 5,376 1,632
Total International 145,516 163,729 165,043
Items not allocated to operations,
principally interest expense:
United States (18,073) (15,987) (14,884)
International (14,852) (10,457) (18,338)
Total Consolidated $ 200,799 $ 231,760 $ 207,158
The largest client of the Company contributed approximately 10% in 1994
and 1993 and 9% in 1992 to income from commissions and fees. The
Company's second largest client contributed approximately 8% in 1994, 10%
in 1993 and 8% in 1992 to income from commissions and fees.
Dividends received from foreign subsidiaries were $43.6 million in 1994,
$40.1 million in 1993 and $38.4 million in 1992. Net assets of foreign
subsidiaries were approximately $558 million, $512 million and $446
million at December 31, 1994, 1993 and 1992, respectively. Undistributed
earnings of foreign subsidiaries at December 31, 1994 were approximately
$189 million.
PAGE
<PAGE>
Consolidated net income includes losses from exchange and translation of
foreign currencies of $10.6 million, $13.9 million and $4.6 million in
1994, 1993 and 1992, respectively.
PAGE
<PAGE>
NOTE 14: RESTRUCTURING CHARGES
In the fourth quarter of 1994, the Company recorded restructuring charges
of $48.7 million in connection with the elimination of duplicate
facilities and excess personnel resulting primarily from the merger of
Lintas New York and Ammirati & Puris agencies and certain international
offices. This amount includes $38.3 million of severance charges for
involuntary terminations of approximately 600 employees, $6.7 million
related to the abandonment of operations and $3.7 million for the
consolidation of facilities. At December 31, 1994, the Company's
liability related to these restructuring charges totalled $27.6 million
for severance and $2.0 million for the consolidation of facilities, and
is included in accrued expenses.
PAGE
<PAGE>
NOTE 15: COMMITMENTS AND CONTINGENT LIABILITIES
At December 31, 1994, subsidiaries which operate outside the United States
were contingently liable for discounted notes receivable of approximately
$17.1 million.
The Company and its subsidiaries lease certain facilities and equipment.
Gross rental expense amounted to approximately $141 million for 1994, $135
million for 1993 and $134 million for 1992, which was reduced by sublease
income of $10.8 million, $15.4 million and $12.5 million in 1994, 1993 and
1992, respectively. Minimum rental commitments for the rental of office
premises and equipment under noncancellable leases, some of which provide
for rental adjustments due to increased property taxes and operating costs
for 1994 and thereafter, are as follows:
(Dollars in Thousands)
Gross Sublease
Period Amount Income
1995 $117,242 $6,366
1996 93,990 5,648
1997 83,560 5,348
1998 73,568 4,638
1999 66,960 4,307
2000 and thereafter 288,744 23,372
The Company and certain of its subsidiaries are party to various tax
examinations, some of which have resulted in assessments. The Company
intends to vigorously defend any and all assessments and believes that
additional taxes (if any) that may ultimately result from settlement of
such assessments and open examinations would not have a material adverse
effect on the consolidated financial statements.
PAGE
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
_______________________________________________________________________
1177 Avenue of the Americas
New York, New York 10036
To the Board of Directors and Stockholders of
The Interpublic Group of Companies, Inc. February 13, 1995
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of stockholders' equity and of
cash flows present fairly, in all material respects, the financial
position of The Interpublic Group of Companies, Inc. and its subsidiaries
(the "Company") at December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards
which 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,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
the opinion expressed above.
As discussed in Notes 8 and 4 to the consolidated financial statements,
effective January 1, 1994, the Company changed its method of accounting
for postemployment benefits as required by Statement of Financial
Accounting Standards Number 112, effective January 1, 1993 the Company
changed its method of accounting for income taxes as required by Statement
of Financial Accounting Standards Number 109 and effective January 1, 1992
the Company changed its method of accounting for postretirement benefits
as required by Statement of Financial Accounting Standards Number 106.
Price Waterhouse LLP
<PAGE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA FOR FIVE YEARS
<CAPTION>
__________________________________________________________________________________________________
(Dollars in Thousands
Except Per Share Data) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Operating Data
Gross income $ 1,984,255 $ 1,793,856 $ 1,855,971 $ 1,677,498 $ 1,368,169
Operating expenses 1,701,817 1,535,651 1,615,592 1,458,716 1,199,759
Restructuring charges 48,715 - - - -
Interest expense 32,924 26,445 33,221 33,499 18,872
Provision for income taxes:
United States - federal 26,816 29,277 23,719 24,740 17,698
- state and local 9,862 14,289 12,181 11,451 6,590
Foreign 49,655 56,253 55,435 51,493 48,176
Total taxes 86,333 99,819 91,335 87,684 72,464
Income before effect of accounting
changes 115,247 125,279 111,913 94,557 80,064
Effect of accounting changes:
Postemployment benefits (21,780) - - - -
Income taxes - (512) - - -
Postretirement benefits - - (24,640) - -
Net Income $ 93,467 124,767 87,273 94,557 80,064
Cash dividends $ 40,360 35,901 32,483 29,265 24,403
Per Share Data
Income before effect of accounting
changes $ 1.53 1.67 1.50 1.30 1.19
Effect of accounting changes:
Postemployment benefits (.29) - - - -
Income taxes - (.01) - - -
Postretirement benefits $ - - (.33) - -
Net Income $ 1.24 1.66 1.17 1.30 1.19
Cash dividends $ .545 .49 .45 .41 .37
Financial Position
Working capital $ 80,134 167,175 224,534 178,004 145,468
Total assets $ 3,793,418 2,869,817 2,623,345 2,784,300 2,584,111
Long-term debt $ 241,803 226,085 200,237 170,458 144,468
Stockholders' equity per share $ 8.36 $ 7.54 $ 6.81 $ 7.78 $ 6.94
Other Data
Weighted average number
of shares 75,570,445 75,215,521 74,974,618 72,860,086 67,348,676
Number of employees 18,100 17,600 16,800 16,800 16,800
<FN>
______________________________________________________________________________________________
Note: Restated to reflect the two-for-one stock split during 1992.
______________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
REPORT OF MANAGEMENT
The financial statements, including the financial analyses and all other
information in this Annual Report, were prepared by management, who is
responsible for their integrity and objectivity. Management believes the
financial statements, which require the use of certain estimates and
judgements, reflect the Company's financial position and operating results
in conformity with generally accepted accounting principles. All
financial information in this Annual Report is consistent with the
financial statements.
Management maintains a system of internal accounting controls which
provides reasonable assurance that, in all material respects, assets are
maintained and accounted for in accordance with management's authorization
and transactions are recorded accurately in the books and records. To
assure the effectiveness of the internal control system, the
organizational structure provides for defined lines of responsibility and
delegation of authority. The Company has formally stated and communicated
policies requiring of employees high ethical standards in their conduct
of its business. As a further enhancement of the above, the Company's
comprehensive internal audit program is designed for continual evaluation
of the adequacy and effectiveness of its internal controls and measures
adherence to established policies and procedures.
The Audit Committee of the Board of Directors is comprised of three
directors who are not employees of the Company. The Committee reviews
audit plans, internal controls, financial reports and related matters, and
meets regularly with management, internal auditors and independent
accountants. The independent accountants and the internal auditors have
free access to the Audit Committee, without management being present, to
discuss the results of their audits or any other matters.
PAGE
<PAGE>
The independent accountants, Price Waterhouse, are recommended by the
Audit Committee of the Board of Directors and selected by the Board of
Directors, and their appointment is ratified by the shareholders. The
independent accountants have examined the financial statements of the
Company and their opinion is presented on page 35.
<PAGE>
<TABLE>
EXHIBIT 21 - MARCH 27 1995
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
NAME ORGANIZED PARENT (%) IMMEDIATE PARENT
<S> <C> <C> <C>
Domestic:
The Interpublic Group of Companies, Inc. Delaware - -
(Registrant)
Casablanca Productions California 100 Registrant
The Fulfillment House California 100 Registrant
Dailey & Associates California 100 Registrant
International Business Services, Inc. California 100 Infoplan International, Inc.
NRG Vitamins California 100 Registrant
North Light, Ltd. California 100 Dailey & Associates
Radio Home Shopping Network California 100 Registrant
Specialized Media/Marketing Services, Inc. California 100 Registrant
Sports Call, Inc. California 100 Registrant
Spotlink Incorporated California 100 Registrant
Television Marketing Group, Inc. California 100 Registrant
The Phillips-Ramsey Co. California 100 Registrant
University Sports Connection California 100 Registrant
US Yellow Pages, Inc. California 100 Registrant
Western International Media Corporation California 100 Registrant
Western International Entertainment California 100 Registrant
Corporation
Western International Premiums Corporation California 100 Registrant
Western International Syndication Corporation California 100 Registrant
Western Media Associates, Inc. California 100 Registrant
PAGE
<PAGE>
McCann-Erickson Event Marketing, Inc. Colorado 100 McCann-Erickson USA, Inc.
Ammirati & Puris Holdings, Inc. Delaware 100 Registrant
Ammirati & Puris, Ltd. Delaware 100 Registrant
Asian Media Corporation Delaware 100 Registrant
Asset Recovery Group, Inc. Delaware 100 Registrant
Broadcast Audit Bureau Delaware 100 Registrant
Business Science Research Corporation, Inc. Delaware 100 Registrant
Healthcare Capital, Inc. Delaware 100 McCann Healthcare, Inc.
Infoplan International, Inc. Delaware 100 Registrant
Interpublic Television, Inc. Delaware 100 Registrant
LFS, Inc. Delaware 100 Registrant
Lintas Campbell-Ewald Company Delaware 100 Registrant
Lintas, Inc. Delaware 100 Registrant
Lintas USA, Inc. Delaware 100 Registrant
Jack Tinker Advertising, Inc. Delaware 100 Registrant
McCann-Erickson USA, Inc. Delaware 100 Registrant
McCann-Erickson Corporation (International) Delaware 100 Registrant
McCann-Erickson Corporation (S.A.) Delaware 100 Registrant
McCann-Erickson (Paraguay) Co. Delaware 100 Registrant
McCann-Erickson Worldwide, Inc. Delaware 100 Registrant
McCann Healthcare, Inc. Delaware 100 McCann-Erickson USA, Inc.
The Lowe Group, Inc. Delaware 100 Deo Nederland B.V.
Time Machine, Inc. Delaware 100 Registrant
Benito Advertising, Inc. Florida 100 LFS, Inc.
Quest & Associates, Inc. Kansas 100 Registrant
ZML Software Systems, Inc. Kentucky 100 McCann-Erickson USA, Inc.
Lintas Marketing Communications, Inc. Michigan 100 Registrant
Western International Media Corporation of Michigan 100 Registrant
Michigan
Interpublic, Inc. New Jersey 100 Registrant
Ammirati & Puris, Inc. New York 100 Registrant
McCann Direct, Inc. New York 100 Registrant
PAGE
<PAGE>
Western International Media Corporation of New York 100 Registrant
New York
The Gotham Group, Inc. New York 100 Registrant
McCann-Erickson Marketing, Inc. New York 100 Registrant
Lowe & Partners Inc. New York 100 Lowe International Limited (80%) and
Lowe Worldwide Holdings B.V. (20%)
LCF&L, Inc. New York The Lowe Group, Inc. (99.9%) and
GDL, Inc. (.1%)
Goldschmidt Dunst & Lawson Corp. New York 100 The Lowe Group, Inc.
GDL, Inc. New York 100 The Lowe Group, Inc.(100% of Common
Stock) and Goldschmidt Dunst &
Lawson Corp. (100% of Preferred Stock)
Scali, McCabe, Sloves, Inc. New York 100 Registrant
Long Haymes Carr Lintas, Inc. North Carolina 100 Registrant
The Martin Agency, Inc. Virginia 91 Scali, McCabe, Sloves, Inc.
Alan S. Newman Associates, Inc. Virginia 100 The Martin Agency, Inc.
The Stenrich Group Inc. Virginia 100 The Martin Agency, Inc.
Cabell Eanes, Inc. Virginia 100 The Martin Agency, Inc.
Foreign:
Interpublic S.A. de Publicidad Argentina 100 Registrant
Lintas Proprietary Limited Australia
(New South Wales) 100 Registrant
Lintas Communications Pty. Limited Australia
(New South Wales) 100 Lintas Proprietary Limited
Underline Design Group Pty. Limited Australia 51 Lintas Communications Pty. Limited
McCann-Erickson Advertising Pty. Limited Australia
(New South Wales) 100 Registrant
Sales Communications International Pty. Limited Australia
(New South Wales) 100 McCann Erickson Advertising Pty. Ltd.
PAGE
<PAGE>
Merchant and Partners (Sydney) Pty. Ltd. Australia 100 Merchant and Partners Australia Pty.
Limited
Merchant and Partners Australia Pty. Limited Australia 100 Registrant
Lintas Melbourne Proprietary Limited Australia
(Victoria) 100 Lintas Proprietary Limited
Initiatives Media Werbemittlung Ges. m.b.H. Austria 100 Lintas Werbeagentur
Gesellschaft m.b.H.
Lintas Werbeagentur Gesellschaft m.b.H. Austria 100 Registrant
McCann-Erickson Gesellschaft m.b.H. Austria 100 Registrant
PCS Werbeagentur Ges. m.b.H. Austria 100 Lintas Werbeagentur Gesellschaft m.b.H.
Campbell Ewald Werbeagentur Ges.m.b.H. Austria 100 Lowe Worldwide Holdings B.V.
Initiative Media Brussels S.A. Belgium 100 Lintas Brussels S.A. (96%) and
Initiatives Media (a French
corporation) (4%)
Programming Media International-PMI S.A. Belgium 100 Registrant
Initiative Media International S.A. Belgium 100 Lintas Holding B.V.
McCann-Erickson Co. S.A. Belgium 100 Registrant
Lintas Brussels S.A. Belgium 100 Lintas Holding B.V.
Universal Media, S.A. Belgium 100 McCann Belgium (50%)
Lowe Troost S.A. (50%)
A.C.E. Advertising Creation Marketing N.V. Belgium 100 Lintas Brussels S.A.
De Roeck En Heering P.R. Consultants N.V. Belgium 100 Lintas Brussels
S.A.
Lowe Troost S.A. Belgium 100 Lowe Worldwide Holdings B.V.
Direct Creations S.A. Belgium 51 Lowe Troost S.A.
Triad Assurance Limited Bermuda 100 Registrant
Interpublic Publicidade e Pesquisas Brazil 100 International Business Services, Inc.
Sociedade Limitada
McCann-Erickson Publicidade Ltda. Brazil 100 Registrant
MPM Lintas Communicacoes Ltda. Brazil 98.75 Registrant
PPA Profissionais de Promocao Associados Ltda. Brazil 100 MPM Lintas Communicacoes Ltda.
PAGE
<PAGE>
Universal Publicidade Ltda Brazil 100 Interpublic Publicidate
E Pesquisas Sociedade Ltda.
Harrod & Mirlin, Inc. Canada 100 Registrant (61.5%) and McCann-Erickson
Advertising of Canada Ltd. (38.5%)
McCann-Erickson Advertising of Canada Ltd. Canada (Federal) 100 Registrant
MacLaren Lintas Inc. Canada (Federal) 100 Registrant
Promaction Corporation Canada 100 McCann-Erickson Advertising of Canada
Lowe SMS Ltd. Canada 100 Lowe Worldwide Holdings B.V. (43%)
and Scali, McCabe, Sloves, Inc. (57%)
West-Can Communications Ltd. Canada 100 Scali, McCabe, Sloves,Inc.
C.L.A. Commercial Productions, Ltd. Canada 100 West Can Communications Ltd.
McCann-Erickson S.A. de Publicidad Chile 100 Registrant
Lintas Chile S.A. Chile 100 Lintas Holding B.V.
Harrison Publicidad De Colombia S.A. Colombia 100 Registrant
McCann-Erickson Centroamericana Costa Rica 100 Registrant
(Costa Rica) Ltda.
McCann-Erickson Zagreb Croatia 100 McCann-Erickson International
GmbH McCann-Erickson Prague
Czech Republic 100 McCann-Erickson International GmbH
Lintas Praha Spol. s.r.o. Czech Republic 100 Lintas Deutschland GmbH
Milvang/GR2 A/S Denmark 100 Lintas Danmark A/S
Signatur APS Denmark 100 Lintas Danmark A/S
Lintas Danmark A/S Denmark 100 Lintas Holding B.V.
McCann-Erickson A/S Denmark 100 Registrant
Pool Media International Aps Denmark 100 Registrant
McCann-Erickson Dominicana, S.A. Dominican Republic 100 Registrant
McCann-Erickson (Ecuador) Publicidad S.A. Ecuador 96 McCann-Erickson Corporation
(International)
McCann-Erickson Centro Americana El Salvador 100 Registrant
(El Salvador) S.A.
Artel Studios Limited England 100 Stowe, Bowden, Wilson Limited
The Below the Line Agency Limited England 100 Interpublic Limited
PAGE
<PAGE>
Bureau of Commercial Information Limited England 100 Registrant
Bureau of Commercial Research Limited England 100 Registrant
CM Lintas International Ltd. England 100 Interpublic Limited
Epic (Events & Programming International England 100 Interpublic Limited
Consultancy) Limited
H.K. McCann Limited England 100 McCann Erickson Advertising Limited
Initiative Media Limited England 100 Interpublic Limited
Interpublic Limited England 100 Registrant
Fieldplan Ltd. England 100 Interpublic Limited
Interpublic Pension Fund Trustee England 100 Interpublic Limited
Company Limited
Lintas International Limited England 100 Interpublic Limited
Lintas Overseas Limited England 100 Interpublic Limited
Lintas Superannuation Trustees Limited England 100 Lintas International Limited
Talbot Television Limited England 100 Fremantle International Inc.
Lintas W.A. Limited England 100 Interpublic Limited
Still Price Court Twivy D'Souza England 100 Interpublic Limited
Lintas Group Limited
Still Price Court Twivy D'Souza Lintas England 100 Still Price Court Twivy D'Souza
Limited Lintas Group Limited
Initiative Media London Limited England 99.5 Still Price Court Twivy D'Souza
Lintas Group Limited
Brilliant Pictures Limited England 100 Still Price Court Twivy D'Souza
Lintas Group Limited
Lintas Supplementary Pension Trustees Limited England 100 Lintas International Limited
Matter of Fact Communications Limited England 100 McCann-Erickson Bristol Limited
Orkestra Ltd. England 100 Interpublic Limited
Adware Systems Limited England 100 Orkestra Limited
McCann Communications Limited England 100 Interpublic Limited
McCann-Erickson Advertising Limited England 100 Interpublic Limited
McCann-Erickson Bristol Limited England 100 McCann-Erickson United Kingdom Limited
McCann-Erickson Central Limited England 100 McCann-Erickson United Kingdom Limited
PAGE
<PAGE>
McCann-Erickson United Kingdom Limited England 100 Interpublic Limited
McCann-Erickson Manchester Limited England 100 McCann-Erickson United Kingdom Limited
McCann Properties Limited England 100 McCann-Erickson United Kingdom Limited
The Howland Street Studio Ltd. England 100 Interpublic Limited
Coachouse Ltd. England 100 McCann-Erickson Manchester Limited
Salesdesk Limited England 100 Orkestra Ltd.
Stowe, Bowden, Wilson Limited England 100 McCann-Erickson United Kingdom Limited
Universal McCann Limited England 100 Interpublic Limited
Lowe International Limited England 100 Interpublic Limited
The Brompton Group Ltd. England 100 Lowe International Limited
Brompton Advertising Ltd. England 100 The Brompton Group Ltd.
Brompton Promotions Ltd. England 100 The Brompton Group Ltd.
Orbit International (1990) Ltd. England 100 Lowe International Limited
Lowe Howard-Spink Ltd. England 100 Lowe International Limited
International Poster Management Ltd. England 100 Interpublic Limited
Tavistock Advertising Limited England 100 Lowe International Limited
Allen Brady & Marsh Ltd. England 100 Tavistock Advertising Limited
Poundhold Ltd. England 100 Lowe International Limited
Colourwatch Ltd. England 100 Lowe International Limited
Kenlarton Ltd. England 100 Lowe International Limited
S.C. Advertising (UK) Limited England 100 Lowe International Limited
Colourwheel Limited England 100 Lighthold Limited
Face Photosetting Ltd. England 100 Smithfield Lease Limited
Smithfield Lease Limited England 100 Lowe International Limited
Two Six Seven Limited England 100 Lowe International Limited
Lighthold Limited England 100 Lowe International Limited
ABM Kershaw Limited England 100 Lowe International Limited
The Lowe Group Limited England 100 Lowe International Limited
Relationship Marketing Limited England 100 Lowe International Limited
The Results Machine Limited England 100 Lowe International Limited
LHSB Management Services Ltd. England 100 Lowe International Limited
Lowe & Howard-Spink Media Limited England 100 Lighthold Limited
The Lowe Group Nominees Ltd. England 100 Lowe International Limited
PAGE
<PAGE>
Impulse International Oy Finland 100 Lintas Oy
Lintas Oy Finland 100 Lintas Holding B.V.
Lintas Make Direct Oy Finland 100 Lintas Oy
Lintas Service Oy Finland 100 Lintas Oy
Womena-Myynninvauhdittajat Oy Finland 100 Oy Liikemainonta-McCann AB
Oy Liikemainonta-McCann AB Finland 100 Registrant
McCann-Pro Oy Finland 100 Oy Liikemainonta-McCann AB
Mainostoinisto Womena - McCann Oy Finland 100 Registrant
PMI - Mediaporssi Oy Finland 66 Oy Liikemainonta-McCann AB (33%) and
Lintas Oy (33%)
Lowe Brindfors Oy Finland 100 Lowe Scandinavia AB
Brindfors Production Oy Finland 100 Lowe Brindfors Oy
E.C. Television/Paris, S.A. France 100 France C.C.P.M.
France C.C.P.M. France 100 Lintas Holding B.V.
Initiatives Media Paris France 100 France C.C.P.M.
Initiative Media International S.A. France 100 Lintas Holding B.V.
JSC McCann Direct France 75 McCann-Erickson (France)
McCann - Promotion S.A. France 99.8 McCann-Erickson (France)
Lintas-Paris France 100 France C.C.P.M.
McCann-Erickson (France) France 100 Registrant
McCann-Erickson (Paris) S.A. France 100 McCann-Erickson (France)
SP3 Conseil S.A. France 100 SP3 S.A.
Creation Sarl France 97.5 SP3 S.A.
Fab + S.A. France 99.4 SP3 S.A.
Infernal Sarl France 100 SP3 S.A.
SP3 Conseils Paris S.A. France 99.8 SP3 S.A.
SP3 Lyon S.A. France 95 SP3 S.A.
SP3 S.A. France 100 McCann-Erickson (France)
Delacroix et Gervasi S.A. France 100 SP3
McCann Rhone Alpes S.A. France 100 McCann-Erickson (France)
Delacroix S.A. France 60.1 McCann-Erickson (France)
PAGE
<PAGE>
Publi Media Service France 50 Owned in quarters by McCann,
Lintas agencies in France,
Publicis and Idemedia
Sprint S.A. France 100 France C.C.P.M.
Universal Media S.A. France 100 McCann-Erickson (France)
Lowe et Associes S.A. France 100 Lowe Worldwide Holdings B.V.
Audour, Soum, Larue/Scali, McCabe, Sloves, S.A. France 60 Scali, McCabe, Sloves, Inc.
Vibalm S.A. France France 100 Lowe et Associes
S.A.
Alice SNC France France 50 Vibalm S.A. France
SFA S.A. France France 52.55% Alice SNC France
Initiativ Media GmbH Germany 100 Lintas Deutschland GmbH
Initiativ Verkaufsforderung GmbH Germany 100 Lintas Hamburg GmbH
Interpublic GmbH Germany 100 Registrant
Krakow McCann-Erickson GmbH Germany 100 McCann-Erickson Deutschland GmbH
Lintas Deutschland GmbH Germany 100 Registrant
Lintas Direct GmbH Germany 100 Lintas Deutschland GmbH
Lintas Frankfurt GmbH Germany 100 Lintas Hamburg GmbH
Lintas Hamburg GmbH Germany 100 Lintas Deutschland GmbH
Lintas S Sales Communications GmbH Germany 100 Lintas Deutschland GmbH
Max W.A. Kamer GmbH Germany 100 Lintas Deutschland GmbH
Baader-Lang-Behnken GmbH Germany 75 Lintas Deutschland GmbH
Creative Media Services GmbH Germany 100 Lintas Deutschland GmbH
McCann Direct GmbH Agentur fuer Direktmarketing Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson (International) GmbH Germany 100 Registrant
McCann-Erickson Deutschland GmbH Germany 100 McCann-Erickson (International) GmbH
McCann-Erickson Scope GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Frankfurt GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Hamburg GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Nurnberg GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Service GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Promotion GmbH Germany 100 McCann-Erickson Deutschland GmbH
Universalcommunication Media Intensiv GmbH Germany 100 Interpublic GmbH
PAGE
<PAGE>
McCann Healthcare Pharma Kommunikation GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Management Property GmbH Germany 100 McCann-Erickson Deutschland GmbH (80%)
Interpublic GmbH (20%)
Typo-Wenz Artwork GmbH Germany 100 Interpublic GmbH
Unterstuetzungskasse der H.K. Germany 100 McCann-Erickson (International) GmbH
McCann Company mbH
Lowe & Partners GmbH Dusseldorf Germany 100 Lowe Worldwide Holdings B.V. (75%)
and Registrant (25%)
Heinrich Hoffman & Partner GmbH Germany 100 Lowe & Partners GmbH Frankfurt
Lowe & Partners GmbH Frankfurt Germany 100 Lowe & Partners GmbH Dusseldorf
Adplus GmbH Germany 100 Lowe & Partners GmbH Frankfurt
K&S Werbeagentur Marketing und Consulting GmbH Germany 100 Adplus GmbH
Lowe & Partners GmbH Hamburg Germany 100 Lowe & Partners GmbH Dusseldorf
Fremantle (Deutschland) Fernsehproduktions GmbH Germany 100 Fremantle International, Inc.
McCann-Erickson (Hellas) E.P.E. Greece 100 Registrant
Universal Media Greece Greece 100 McCann-Erickson (International) GmbH
Lintas Worldwide Advertising (Hellas) L.L.C. Greece 100 Interpublic Limited
Sprint Advertising S.A. Greece 51 Fieldplan Limited
Initiative Media Advertising S.A. Greece 100 Fieldplan Limited
Fremantle Hellas Greece 95 Talbot Television Limited
Publicidad McCann-Erickson Centroamericana Guatemala 100 Registrant
(Guatemala), S.A.
McCann-Erickson Centroamericana S. de R.L. Honduras 100 Registrant
(Honduras)
Interpublic (China) Limited Hong Kong 100 Registrant
Lintas Hong Kong Limited Hong Kong 100 Lintas Holding B.V.
Infoplan (Hong Kong) Limited Hong Kong 100 McCann-Erickson (HK) Limited
McCann-Erickson (HK) Limited Hong Kong 100 Registrant
McCann-Erickson Interpress International Hungary 100 Registrant
Advertising Agency Ltd.
Lintas Budapest Reklam es Marketing Hungary 90 Lintas Deutschland GmbH
Kommunicacios Kft
Centro Media Planning-Buying-Booking S.r.l. Italy 100 Lintas Milano S.p.A.
PAGE
<PAGE>
Harrison McCann S.r.l. Italy 100 McCann-Erickson Italiana S.p.A.
Lintas Milano S.p.A. Italy 100 Lintas Holding B.V.
McCann-Erickson Italiana S.p.A. Italy 100 Registrant
McCann Marketing Communications S.p.A. Italy 100 McCann-Erickson Italiana S.p.A.
Pool Media International (P.M.I.) S.r.l. Italy 100 Registrant (95%) and Business Science
Research Corp (5%)
Universal Media S.r.l. Italy 100 McCann-Erickson Italiana S.p.A. (50%)
Pirella Gottsche Lowe S.p.A. (50%)
Universal S.r.l. Italy 100 McCann-Erickson Italiana S.p.A.
Pirella Gottsche Lowe S.p.A. Italy 95 Lowe Worldwide Holdings B.V.
De Toffel & PG S.r.l. Italy 100 Pirella Gottsche Lowe S.p.A.
Europa Immagine & Comunicazione Srl Italy 90 Pirella Gottsche Lowe S.p.A.
Lintas - Abidjan Ivory Coast 67 France C.C.P.M.
McCann-Erickson (Jamaica) Limited Jamaica 100 Registrant
Cato Design, Inc. Japan 51 McCann-Erickson Worldwide, Inc.
Hakuhodo Lintas K.K. Japan 50 Registrant
McCann-Erickson Inc. Japan 100 Registrant
Lintas Japan K.K. Japan 100 Lintas Nederland B.V.
McCann-Erickson (Kenya) Limited Kenya 73 Registrant
McCann-Erickson (Malaysia) Sdn. Bhd. Malaysia 100 Registrant
Mutiara-McCann (Malaysia) Sdn. Bhd. Malaysia 83.50 Registrant
Lintas Worldwide (Malaysia) Sdn. Bhd. Malaysia 100 Registrant
Initiative Media (M) Sdn. Bhd. Malaysia 100 Lintas Worldwide (Malaysia) Sdn. Bhd.
Universal Communication Sdn. Bhd. Malaysia 100 McCann-Erickson (Malaysia) Sdn. Bhd.
Lintas Direct S.A. de C.V. Mexico 100 Registrant
Corporacion Interpublic Mexicana, S.A. de C.V. Mexico 100 Registrant and Inversionistas Asociados,
S.A. de C.V.
Inversionistas Asociados, S.A. de C.V. Mexico 100 Registrant
Lintas Mexico S.A. de C.V. Mexico 100 Registrant
Lintas Worldwide Namibia (Pty) Limited Namibia 100 Fieldplan Ltd.
Data Gold B.V. Netherlands 100 IPG Nederland B.V.
Initiative Media B.V. Netherlands 100 Lintas Nederland B.V.
IPG Nederland B.V. Netherlands 100 Registrant
PAGE
<PAGE>
Lintas Direct B.V. Netherlands 80 Lintas Nederland B.V.
Lintas Holding B.V. Netherlands 100 Registrant
Lintas Nederland B.V. Netherlands 100 IPG Nederland B.V.
McCann-Direct B.V. Netherlands 100 McCann-Erickson (Nederland) B.V.
McCann-Erickson (Nederland) B.V. Netherlands 100 IPG Nederland B.V.
McCann-Erickson Industrieel B.V. Netherlands 100 McCann-Erickson (Nederland) B.V.
P. Strating Promotion B.V. Netherlands 100 IPG Nederland B.V.
Reclame-Adviesbureau Via B.V. Netherlands 100 IPG Nederland B.V.
Programming Media International B.V. Netherlands 100 Registrant
Universal Media B.V. Netherlands 100 IPG Nederland B.V.
Zet Zet B.V. Netherlands 100 Data Gold B.V.
Lowe Worldwide Holdings B.V. Netherlands 100 Poundhold Ltd.
Lowe International Holdings B.V. Netherlands 100 Registrant
Deo Nederland B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lowe Kuiper & Schouten B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lowe Europa B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lintas (NZ) Limited New Zealand 100 Registrant
McCann-Erickson Limited New Zealand 100 Registrant
Universal Media Limited New Zealand 100 McCann-Erickson Limited
McCann-Erickson Belfast Limited Northern Ireland 100 McCann-Erickson United Kingdom Limited
McCann-Erickson A/S Norway 100 Registrant
Universal Media A/S Norway 100 McCann-Erickson A/S
McCann Production A/S Norway 100 McCann-Erickson A/S
JBR Reklamebyra A/S Norway 100 McCann-Erickson A/S
JBR Filialen A/S Norway 100 JBR Reklamebyra A/S
JBR Film A/S Norway 100 JBR Reklamebyra A/S
JBR Invest A/S Norway 100 JBR Reklamebyra A/S
Lowe Brindfors A/S Norway 100 Lowe Scandinavia AB
McCann-Erickson de Panama, S.A. Panama 100 Registrant
Universal Ideas S.A. Panama 100 McCann-Erickson de Panama, S.A.
Conte/McCann-Erickson de Panama S.A. Panama 51 McCann-Erickson de Panama, S.A.
PAGE
<PAGE>
McCann-Erickson (Paraguay) Company Paraguay 100 McCann-Erickson (Paraguay) Co.
(Delaware)
McCann-Erickson Guangming Advertising Limited People's Republic 51 McCann-Erickson Worldwide
of China
McCann-Erickson Corporacion Publicidad S.A. Peru 100 Registrant
McCann Group of Companies, Inc. Philippines 100 Registrant
ITI McCann-Erickson International Advertising Poland 51 McCann-Erickson International GmbH
Lintas Warszawa Poland 100 Lintas Deutschland GmbH
Lintas, Agencia Internacional de Portugal 100 Lintas Holding B.V.
Publicidade, Ltda.
Inciativas De Meios-Actividades Publicitarias, Portugal 98 Lintas, Agencia Internacional de
Limitada Publicidade, Ltda.
McCann-Erickson/Portugal Limitada Portugal 100 Business Science Research Corporation
Universal Media Publicidade, Limitada Portugal 100 McCann-Erickson/Portugal Limitada
Lowe Portuguesa Publicidade a Estudios de
Mercado, S.A. Portugal 100 Lowe Worldwide Holdings B.V.
Fremantle Portugal, Producoes Televisas, LDA Portugal 100 Talbot Television Limited (95%) and
Lintas Puerto Rico, Inc. Puerto Rico 100 Lintas, Inc.
McCann-Erickson, Limited Republic of Ireland 100 Registrant
McCann-Erickson Moscow Russia 100 McCann-Erickson International GmbH
McCann-Erickson Scotland Limited Scotland 100 McCann-Erickson United Kingdom Limited
McCann-Erickson (Singapore) Private Limited Singapore 100 Registrant
Lintas Worldwide (Singapore) Private Limited Singapore 100 Registrant (95%)
Fremantle International Inc. (5%)
McCann-Erickson South Africa (Pty.) South Africa 100 Registrant
Ltd. ("McCann Group")
McCann Cape Town (Proprietary) Limited South Africa 100 McCann Group
McCann Durban (Proprietary) Limited South Africa 100 McCann Group
McCann International (Proprietary) Limited South Africa 100 McCann Group
Media Solutions (Proprietary) Limited South Africa 100 McCann Group
Universal Media (Proprietary) Limited South Africa 100 McCann Group
PAGE
<PAGE>
McCannix Proprietary Limited South Africa 100 McCann-Erickson Johannesburg
(Proprietary) Limited
McCann South Africa Proprietary Limited South Africa 100 McCann-Erickson Johannesburg
(Proprietary) Limited
McCann-Erickson Johannesburg (Proprietary) South Africa 100 McCann-Erickson South Africa
Limited (Proprietary) Limited
Media Initiative (Proprietary) Limited South Africa 100 Lintas (Proprietary) Limited
Lintas (Proprietary) Limited South Africa 100 Lintas Holding B.V. (76%)
Registrant (24%)
McCann-Erickson, Inc. South Korea 51 McCann-Erickson Marketing, Inc.
Lintas Korea, Inc. South Korea 100 Registrant
Clarin, S.A. Spain 100 McCann-Erickson S.A.
Events & Programming International Spain 100 Registrant
Consultancy, S.A. (EPIC)
Cinestar S.A. Spain 100 Clarin, S.A.
Encuadre S.A. Spain 67 Clarin, S.A.
Iniciativas de Medios, S.A. Spain 100 Lintas, S.A.
Lintas S.A. Spain 100 Lintas Holding B.V.
McCann-Erickson S.A. Spain 100 Registrant
McCann-Erickson Barcelona S.A. Spain 100 Registrant
Pool Media International S.A. Spain 100 Registrant
Universal Media S.A. Spain 100 McCann-Erickson S.A.
Lowe Dospordos S.A. Spain 83.7 Lowe Worldwide Holdings B.V.
Lowe RZR S.A. Spain 80 Lowe Worldwide Holdings B.V.
Lowe MBAC S.A. Spain 100 Lowe Worldwide Holdings B.V.
Fremantle de Espana S.L. Spain 100 Fremantle International
Inc.
AB Lintas Shoppen Sweden 100 Lintas AB
McCann-Erickson AB Sweden 100 Registrant
Lintas AB Sweden 100 Lintas Holding B.V.
Werne & Co. Annonsbyra I Malmoe AB Sweden 100 McCann-Erickson AB
Werne & Co. Annonsbyra AB Sweden 100 McCann-Erickson AB
PAGE
<PAGE>
Ronnberg & Co. A.B. Sweden 100 McCann-Erickson AB
PMI Initiative Universal Media AB Sweden 100 Lintas AB (50%)
McCann-Erickson AB (50%)
Lowe Scandinavia AB Sweden 100 Interpublic Svenska AB (66.9%)
and Brindfors Intressenter Invest AB
(33.1%)
Brindfors Intressenter Invest AB Sweden 100 Interpublic Svenska AB
Interpublic Svenska AB Sweden 100 Lowe International Holdings B.V.
Lowe Brindfors AB Sweden 100 Lowe Scandinavia AB
Lowe Brindfors Annonsbyra AB Sweden 100 Lowe Scandinavia AB
Boxer Film Produktion AB Sweden 100 Lowe Scandinavia AB
Ulla Andersson Mediaaktiebolag Sweden 85 Lowe Scandinavia AB
Message Mediaformedling AB Sweden 100 Lowe Scandinavia AB
Boisen & Partners Annonsbyra AB Sweden 100 Lowe Scandinavia AB
Lintas A.G. Switzerland 100 Lintas Holding B.V.
Max W.A. Kamer AG Switzerland 100 Lintas Deutschland GmbH
McCann-Erickson S.A. Switzerland 100 Registrant
McCann-Erickson Services S.A. Switzerland 100 Registrant
P.C.M. Marketing AG Switzerland 100 Lintas Deutschland GmbH
Pool Media-PMI S.A. Switzerland 100 Registrant
Unimedia S.A. Switzerland 100 Registrant
Lintas Taiwan Limited Taiwan 100 Registrant
McCann-Erickson Taiwan Company Taiwan 100 Registrant
Harrison Communications, Ltd. Taiwan 100 Registrant
McCann-Erickson (Thailand) Ltd. Thailand 100 Registrant
Lintas (Thailand) Ltd. Thailand 80 Registrant
Lintas Gulf Limited Tortola 51 Lintas International Limited
McCann-Erickson (Trinidad) Limited Trinidad 100 Registrant
PARS McCann-Erickson Reklamcilik A.S.("PARS") Turkey 100 Registrant
Link Ajams Limited Sirketi Turkey 100 PARS
Universal Media Planlama Ve Dagitim Turkey 100 PARS
McCann-Direct Reklam Tanitama Servisleri A.S. Turkey 100 PARS
Grafika Lintas Reklamcilik A.S. Turkey 51 Registrant
McCann-Erickson Publicidad De Venezuela, S.A. Venezuela 99.67 Registrant
McCann-Erickson Payne, Golley Ltd. Wales 75.9 McCann-Erickson United Kingdon Limited
Lintas (Private) Limited Zimbabwe 85 Fieldplan Ltd.
PAGE
<PAGE>
<FN>
A number of inactive subsidiaries and other subsidiaries, all of which considered in the aggregate as a single
subsidiary would not constitute a significant subsidiary, are omitted from the above list.
These subsidiaries normally do business under their official corporate names. International Business
Services, Inc. does business in Michigan under the name "McCann-I.B.S., Inc." and in New York under the name
"McCann International Business Services". Lintas, Inc. conducts business through its Lintas New York
division. McCann-Erickson conducts some of its business in the states of Kentucky and Michigan under the
name "McGraphics". ZML Software Systems, Inc. also does business under the name "Adware". McCann-Erickson
USA, Inc. does business in Michigan under the name SAS and does business in Indiana, Michigan, New York,
Pennsylvania and Wisconsin under the name of McCann-Erickson Universal Group. Dailey & Associates Inc. does
business in New York under the name "Dailey & Associates of California".
<PAGE>
</TABLE>
EXHIBIT 23
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
The Interpublic Group of Companies, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 13, 1995 appearing in the 1994 Annual Report to
Stockholders of The Interpublic Group of Companies, Inc. (which report
and consolidated financial statements are incorporated by reference in
this Annual Report on Form 10-K) also included an audit of the Financial
Statement Schedules listed in Item 14 (a) of this Form 10-K. In our
opinion, these Financial Statement Schedules present fairly, in all
material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE, LLP
New York, New York
February 13, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 of The Interpublic Group of Companies, Inc. (the
"Company"), of our report dated February 13, 1995, appearing in the 1994
Annual Report to Stockholders which is incorporated in this Annual Report
on Form 10-K: Registration Statements No. 2-79071; No. 2-43811; No. 2-
56269; No. 2-61346; No. 2-64338; No. 2-67560; No. 2-72093; No. 2-88165;
No. 2-90878, No. 2-97440 and No. 33-28143, relating variously to the
Stock Option Plan (1971), the Stock Option Plan (1981), the Stock Option
Plan (1988) and the Achievement Stock Award Plan of the Company;
Registration Statements No. 2-53544; No. 2-91564, No. 2-98324, No. 33-
22008 and No. 33-64062, relating variously to the Employee Stock Purchase
Plan (1975) and the Employee Stock Purchase Plan (1985) of the Company;
Registration Statements No. 33-20291 and No. 33-2830 relating to the
Management Incentive Compensation Plan of the Company; Registration
Statement No. 33-5352 and No. 33-21605 relating to the 1986 Stock
Incentive Plan and 1986 United Kingdom Stock Option Plan of the Company;
and Registration Statement No. 33-10087 and No. 33-25555 relating to the
Long-Term Performance Incentive Plan of the Company. We hereby consent
to the incorporation by reference in the Prospectus constituting part of
the Registration Statement on Form S-3 (No. 33-37346) of the Interpublic
Group of Companies, Inc. of our report dated February 13, 1995, appearing
in the 1994 Annual Report to Stockholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which
appears above.
PRICE WATERHOUSE, LLP
New York, New York
March 24, 1995
<PAGE>
POWER OF ATTORNEY Exhibit No. 24
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints PHILIP H. GEIER, JR.,
EUGENE P. BEARD, JOSEPH STUDLEY and CHRISTOPHER RUDGE, and each of
them, as true and lawful attorneys-in-fact and agents with full power
of substitution and resubstitution, for him, and in his name, place and
stead, in any and all capacities, to sign the Report on Form 10-K for
the year ended December 31, 1994, for The Interpublic Group of
Companies, Inc., S.E.C. File No. 1-6686, and any and all amendments and
supplements thereto and all other instruments necessary or desirable in
connection therewith, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and
Exchange Commission and the New York Stock Exchange, granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents
and purposes as he might do or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents or any of them or
their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: March 21, 1995
Philip H. Geier, Jr. J. Phillip Samper
Eugene P. Beard Joseph J. Sisco
Lynne V. Cheney Frank Stanton
Frank B. Lowe Joseph Studley
Leif H. Olsen Jacqueline G. Wexler
Kenneth L. Robbins
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND THE INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
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0
0
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