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, 1998 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. X .
1 <PAGE>
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 $9,586,441,058 as of March 23,
1999.
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 23, 1999: 139,985,134 shares.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the year
ended December 31, 1998 are incorporated by reference in
Parts I and II.
2. Portions of the Proxy Statement for the 1999 Annual Meeting
of Stockholders are incorporated by reference in Parts I and
III.
2 <PAGE>
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 conducted throughout the world
through three advertising agency systems, McCann-Erickson
WorldGroup, Ammirati Puris Lintas and The Lowe Group, plus a
number of stand alone local agencies. Interpublic also carries
on a media buying business through its ownership of Western
Initiative Media Worldwide and its affiliates, as well as a
separate direct and promotional marketing business through its
ownership of DraftWorldwide Inc., a global public relations
capability through International Public Relations, and a multi-
national sports and event marketing organization, Octagon. 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 brand equity and
corporate identity services, graphic design, management
consulting, market research, sales promotion, interactive
services, sales meetings and events, and other related
specialized marketing and communications 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, cinema, radio,
magazines, newspapers, direct mail, outdoor and interactive
electronic media. 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 develops a communications strategy and 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.
3 <PAGE>
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:
Ammirati Puris Lintas Inc......... New York, New York
Campbell-Ewald Company............ Detroit (Warren),
Michigan
Campbell Mithun Esty LLC.......... Minneapolis, Minnesota
Dailey & Associates............... Los Angeles, California
DraftWorldwide, Inc............... Chicago, Illinois
Hill, Holliday, Connors
Cosmopulos, Inc................. Boston, Massachusetts
Lowe & Partners/SMS, Inc.......... New York, New York
McCann-Erickson USA, Inc.......... New York, New York
In addition to domestic operations, the Company provides
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
Azerbaijan Greece Netherlands Spain
Belgium Hungary Nigeria Sweden
Bulgaria Israel Norway Switzerland
Cameroon Ireland Pakistan Tunisia
Croatia Italy Poland Turkey
Czech Republic Ivory Coast Portugal Ukraine
Denmark Kazakhstan Romania United Arab Emirates
Estonia Kenya Russia United Kingdom
Finland Mauritius Senegal Uzbekistan
France Morocco Slovakia Zambia
Slovenia Zimbabwe
4 <PAGE>
LATIN AMERICA AND THE CARIBBEAN
Argentina Colombia Guatemala Peru
Barbados Costa Rica Honduras Puerto Rico
Bermuda Dominican Republic Jamaica Trinidad
Brazil Ecuador Mexico Uruguay
Chile El Salvador Panama Venezuela
ASIA AND THE PACIFIC
Australia Japan People's Republic Sri Lanka
Hong Kong Malaysia of China South Korea
India Nepal Philippines Taiwan
Indonesia New Zealand Singapore Thailand
Vietnam
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 Malawi and Nepal, where Interpublic or a subsidiary
holds a minority interest.
The Company also offers services in Albania, Aruba, the
Bahamas, Bahrain, Belize, Bolivia, Cambodia, Egypt, Gabon, Ghana,
Grand Cayman, Guadeloupe, Guam, Guyana, Haiti, Reunion, Ivory
Coast, Jordan, Kuwait, Lebanon, Martinique, Nicaragua, Nigeria,
Oman, Paraguay, Saudi Arabia, Senegal, Surinam, Uganda, United
Arab Emirates (Dubai) and Zaire through association arrangements
with local agencies operating in those countries.
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 12: Geographic Areas of
the Notes to the Consolidated Financial Statements in the
Company's Annual Report to Stockholders for the year ended
December 31, 1998, which Note is hereby incorporated by
reference.
Developments in 1998
The Company completed a number of acquisitions within the
United States and abroad in 1998.
5 <PAGE>
See Note 4 to the Consolidated Financial Statements
incorporated by reference in this Report on Form 10-K for a
discussion of acquisitions.
Income from Commissions and Fees
The Company generates income from planning, creating and
placing advertising in various media and from planning and
executing other communications or marketing programs.
Historically, the commission customary in the industry was 15% of
the gross charge ("billings") for advertising space or time; more
recently lower commissions have been negotiated, but often with
additional incentives for better performance. For example, an
incentive component is frequently included in arrangements with
clients based on improvements in an advertised brand's awareness
or image, or 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.
Normally, the Company, like other 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 other forms of
advertising. 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.
6 <PAGE>
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 1998 to income from commissions and fees
accounted individually for 1.7% to 7.4% of such income and in the
aggregate accounted for over 18% of such income. Twenty clients
of the Company accounted for approximately 30% of such income.
Based on income from commissions and fees, the three largest
clients of the Company are General Motors Corporation, Nestle and
Unilever. 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 Nestle began in 1940 in Argentina. 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.
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 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 1998, however, 23% 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.
7 <PAGE>
Personnel
As of January 1, 1999, the Company employed more than 34,000
persons, of whom nearly 14,000 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 and 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 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.
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, industry and self-regulatory
8 <PAGE>
bodies 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 still subject to ownership restrictions in certain
countries because they are considered an integral factor in the
communications process.
Statement Regarding Forward Looking Disclosure
Certain sections of this report, including "Business",
"Competition and Other Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
contain forward looking statements concerning future events and
developments that involve risks and uncertainties, including
those associated with the effect of national and regional
economic conditions, the ability of the Company to attract new
clients and retain existing clients, the financial success of
clients of the Company, other developments of clients of the
Company, and developments from changes in the regulatory and
legal environment for advertising agencies around the world.
Year 2000 Compliance
Many currently installed computer systems and software
products are coded to accept only two-digit entries in the date
code field. Beginning in the year 2000, these date code fields
will need to accept four-digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer
systems and/or software used by the Company will need to be
upgraded to comply with such "Year 2000" requirements. Further
discussion of this issue is contained in the section of this
Report entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
9 <PAGE>
Item 2. Properties
Most of the operations of the Company are conducted 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; Garden
City, New York; Blair, Nebraska; Warren, Michigan; Frankfurt,
Germany; Sao Paulo, Brazil; Lima, Peru; Mexico City, Mexico;
Santiago, Chile ; 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.
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 10: Long-Term Debt, of the Notes to the Consolidated
Financial Statements in the Company's Annual Report to
Stockholders for the year ended December 31, 1998, 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) 64 Chairman of the Board, President
and Chief Executive Officer
10 <PAGE>
Eugene P. Beard (1) 63 Vice Chairman-Finance and
Operations, Chief Financial Officer
Nicholas J. Camera 52 Vice President, General Counsel
and Secretary
John J. Dooner, Jr. (1) 50 Chairman and Chief Executive
Officer of McCann-Erickson
WorldGroup
C. Kent Kroeber 60 Senior Vice President-Human
Resources
Barry R. Linsky 57 Senior Vice President-Planning
and Business Development
Frank B. Lowe (1) 57 Chairman of the Board and Chief
Executive Officer of The Lowe Group
Frederick Molz 42 Vice President and Controller
Martin F. Puris (1) 60 Chairman, Chief Executive Officer
and Chief Creative Officer of
Ammirati Puris Lintas Worldwide
Thomas J. Volpe 63 Senior Vice President-Financial
Operations
(1) Also a Director
There is no family relationship among any of the executive
officers.
The employment histories for the past five years of Messrs.
Geier, Beard, Dooner, Puris and Lowe are incorporated by
reference to the Proxy Statement for Interpublic's 1999 Annual
Meeting of Stockholders.
Mr. Camera joined Interpublic on May 17, 1993. He was
elected Vice President, Assistant General Counsel and Assistant
Secretary on June 1, 1994 and Vice President, General Counsel and
Secretary on December 15, 1995.
Mr. Kroeber joined Interpublic in January 1966 as Manager of
Compensation and Training. He was elected Vice President in 1970
and Senior Vice President in May 1980.
11 <PAGE>
Mr. Linsky joined Interpublic in January, 1991 when he was
elected Senior Vice President-Planning and Business Development.
Prior to that time, he was Executive Vice President, Account
Management of Lowe & Partners, Inc. Mr. Linsky was elected to
that position in July, 1980, when the corporation was known as
The Marschalk Company and was a subsidiary of Interpublic.
Mr. Molz was elected Vice President and Controller of
Interpublic effective January 1, 1999. He joined Interpublic in
August, 1982, and his most recent position was Senior Vice
President- Financial Operations of Ammirati Puris Lintas
Worldwide, a subsidiary of Interpublic, since April, 1994. He
also held previous positions in the Interpublic Controller's
Department and Tax Department.
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.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The response to this Item is incorporated (i) by reference
to the Registrant's Annual Report to Stockholders for the year
ended December 31, 1998. See Note 11: Results by Quarter
(Unaudited), and Note 2: Stockholders' Equity, of the Notes to
the Consolidated Financial Statements and information under the
heading Transfer Agent and Registrar for Common Stock, and (ii)
on December 11, 1998, the Registrant acquired the assets and
assumed the liabilities of two companies in consideration for
which it paid cash and issued a total of 18,228 shares of its
common stock par value $.10 per share ("Interpublic Stock"), to
the acquired companies' shareholders. The shares of Interpublic
Stock had a market value of $1,250,000 on the date of issuance.
The shares of Interpublic Stock were issued by the
Registrant without registration in reliance on Rule 506 of
Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"), based on the accredited investor status or
sophistication of the shareholders of the acquired companies.
12 <PAGE>
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, 1998 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, 1998 under the heading Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1998 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, 1998 under the headings Financial
Statements and Notes to the Consolidated Financial Statements.
Reference is also made to the Financial Statement Schedule 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.
13 <PAGE>
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 1998 Annual
Meeting of Stockholders (the "Proxy Statement"), to be filed not
later than 120 days after the end of the 1998 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 Schedule, 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.
14 <PAGE>
1. Financial Statements:
See the Index to Financial Statements on page F-1.
2. Financial Statement Schedule:
See the Index to Financial Statement Schedule on
page F-1.
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-Q for the quarter ended June
30, 1997. 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.
(i) Indenture, dated as of September 16, 1997 between
Interpublic and The Bank of New York is incorporated
by reference to the Registrant's Report on Form 10-Q
for the quarter ended September 30, 1998. See
Commission file number 1-6686.
(ii) 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).
15 <PAGE>
10 Material Contracts.
(a) Purchase Agreement, dated September 10, 1997, among
The Interpublic Group of Companies, Inc.
("Interpublic"), Morgan Stanley & Co., Incorporated,
Goldman Sachs and Co. and SBC Warburg Dillon Read
Inc. is incorporated by reference to the Registrant's
Report on Form 10-Q for the quarter ended September
30, 1998. 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, 1997 inclusive, or filed
with the Registrant?s Reports on Form 10-Q for the
periods ended March 31, 1998, June 30, 1998 and
September 30, 1998 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, 1998 and thereafter, unless previously
submitted, which are filed as exhibits to this Report
on Form 10-K.
(i) Eugene P. Beard
Supplemental Agreement dated as of March 1, 1999
to an Employment Agreement dated as of July 1,
1995 between Interpublic and Eugene P. Beard.
(ii) Frank B. Lowe
Supplemental Agreement dated as of March 1, 1999
to an Employment Agreement dated as of January
1, 1996 between Interpublic and Frank B. Lowe.
(iii) Martin F. Puris
Supplemental Agreement dated as of March 1, 1999
to an Employment Agreement dated as of August
11, 1994 between Interpublic, APL and Martin F.
Puris.
16 <PAGE>
(iv) Barry R. Linsky
Executive Severance Agreement dated as of
January 1, 1998 between Interpublic and Barry R.
Linsky.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990
between Interpublic, Lintas Campbell-Ewald
Company, McCann-Erickson USA, Inc., McCann-
Erickson Marketing, Inc., Lintas, Inc. and
Chemical Bank, 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 Registrant?s Report on Form 10-Q for the
quarter ended June 30, 1995. See Commission
file number 1-6686.
(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.
17 <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.
(x) The 1996 Stock Incentive Plan of the Registrant
is incorporated by reference to the Registrant's
Report on Form 10-Q for the quarter ended June
30, 1996. See Commission file number 1-6686.
(xi) The 1997 Performance Incentive Plan of the
Registrant is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter
ended June 30, 1997. See Commission file number
1-6686.
(d) Loan Agreements.
(i) Credit Agreement Extension dated as of June 30,
1998 to a Credit Agreement dated as of July 3,
1995 between Interpublic and Lloyds Bank PLC.
(ii) Amendment No. 7, dated as of November 23, 1998
to a Credit Agreement dated as of September 30,
1992 between Interpublic and Citibank N.A.
(iii) Credit Agreement dated as of October 1, 1998
between Interpublic and Wachovia Bank.
(iv) Amendment No. 8 to a Credit Agreement dated as
of November 23, 1998 to a Credit Agreement dated
as of September 30, 1992 between Interpublic and
The First National Bank of Chicago.
18 <PAGE>
(v) Amendment No. 2, dated as of November 23, 1998
to a Credit Agreement dated as of July 3, 1995
between Interpublic and Lloyds Bank PLC.
(vi) Amendment No. 7 dated as of November 23, 1998 to
a Credit Agreement dated as of September 30,
1992 between Interpublic and The Bank of New
York.
(vii) Amendment No. 6, dated as of November 23, 1998
to a Credit Agreement dated as of September 30,
1992 between Interpublic and UBS AG (formerly
known as Union Bank of Switzerland).
(viii) Amendment No. 7, dated as of November 23, 1998
to a Credit Agreement dated as of September 30,
1992 between Interpublic and The Chase Manhattan
Bank (as successor to Chemical Bank).
(ix) Amendment No. 7 dated as of November 23, 1998 to
a Credit Agreement dated as of September 30,
1992 between Interpublic and SunTrust Bank,
Atlanta (formerly Trust Company Bank).
(x) Amendment No. 3, dated as of November 23, 1998
to a Credit Agreement dated as of December 1,
1994 between Interpublic and Bank of America NT
& SA.
(xi) 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,
Supplemental Agreements, Termination Agreements,
Loan Agreements, Note Purchase Agreements,
Guarantees and Intercreditor Agreements filed
with the Registrant's Report on Form 10-K for
the years ended December 31, 1989 through
December 31, 1997, inclusive and filed with
Registrant's Reports on Form 10-Q for the
periods ended March 31, 1998, June 30, 1998 and
September 30, 1998 are incorporated by reference
into this Report on Form 10-K. See Commission
file number 1-6686.
19 <PAGE>
(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.
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.
(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.
20 <PAGE>
(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, 1998
which are included therein under the following headings:
Financial Highlights; Vice-Chairman's Report of Management;
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
and Comprehensive Income; 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; and
Stockholders Information.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants:
PricewaterhouseCoopers LLP
Consent of Independent Auditors: Ernst & Young
Consent of Independent Auditors: Ernst & Young LLP
24 Power of Attorney to sign Form 10-K and resolution of Board
of Directors re Power of Attorney.
21 <PAGE>
27 Financial Data Schedules
99 The Company filed the following reports on Form 8-K during
the quarter ended December 31, 1998:
(a) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated October 27, 1993.
(b) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated October 29, 1998.
(c) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated November 30, 1998.
(d) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated December 4, 1998.
(e) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated December 11, 1998.
(f) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated December 16, 1998.
(g) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated December 18, 1998.
(h) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated December 18, 1998.
(i) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated December 19, 1998.
(j) Item 9: Sale of Equity Securities pursuant to
Regulation S, dated December 22, 1998.
22 <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 25, 1999 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
Philip H. Geier, Jr. Chairman of the Board, March 25, 1999
Philip H. Geier, Jr. President and Chief Executive
Officer (Principal Executive
Officer) and Director
Eugene P. Beard Vice Chairman March 25, 1999
Eugene P. Beard -Finance and Operations,
Chief Financial Officer,
(Principal Financial
Officer) and Director
*/s/ Frank J. Borelli Director March 25, 1999
Frank J. Borelli
*/s/ Reginald K. Brack Director March 25, 1999
Reginald K. Brack
*/s/ Jill M. Considine Director March 25, 1999
Jill M. Considine
23 <PAGE>
*/s/ John J. Dooner, Jr. Director March 25, 1999
John J. Dooner, Jr.
*/s/ Frank B. Lowe Director March 25, 1999
Frank B. Lowe
Frederick Molz Vice President and March 25, 1999
Frederick Molz Controller (Principal
Accounting Officer)
*/s/ Leif H. Olsen Director March 25, 1999
Leif H. Olsen
*/s/ Martin F. Puris Director March 25, 1999
Martin F. Puris
*/s/ Allen Questrom Director March 25, 1999
Allen Questrom
*/s/ J. Phillip Samper Director March 25, 1999
J. Phillip Samper
*By Nicholas J. Camera
Nicholas J. Camera
Attorney-in-fact
24 <PAGE>
INDEX TO FINANCIAL STATEMENTS
The Financial Statements appearing under the headings: Financial
Highlights, Vice-Chairman's Report of Management; Management?s Discussion
and Analysis of Financial Condition and Results of Operations, Consolidated
Financial Statements, Notes to Consolidated Financial Statements, Report of
Independent Accountants, and Selected Financial Data for Five Years
accompanying the Annual Report to Stockholders for the year ended December
31, 1998, together with the report thereon of PricewaterhouseCoopers LLP
dated February 19, 1999 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, 1998 is
deemed to be filed as part of this report on Form 10-K.
The following financial statement schedule should be read in
conjunction with the financial statements in such Annual Report to
Stockholders for the year ended December 31, 1998. 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 SCHEDULE
Page
Report of Independent Accountants on
Financial Statement Schedule F-2
Financial Statement Schedule Required to be filed by
Item 8 of this form:
VIII Valuation and Qualifying Accounts F-3
F-1 <PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
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 19, 1999 appearing in the 1998 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 Schedule listed
in Item 14 (a) of this Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
PRICEWATERHOUSECOOPERS LLP
New York, New York
February 19, 1999
F-2 <PAGE>
<TABLE>
SCHEDULE VIII
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Dollars in Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
<S> <C> <C> <C> <C> <C>
Additions
Balance Charged Charged
at to to Other Balance
Beginning Costs & Accounts- Deductions- at End
Description of Period Expenses Describe Describe of Period
Allowance for
Doubtful Accounts -
deducted from
Receivables in the
Consolidated
Balance Sheet:
1998 $44,110 $18,362 $6,471 <F1> $(15,247)<F3> $53,093
2,111 <F5> (3,310)<F4>
596 <F2>
1997 $37,049 $16,753 $2,256 <F1> $ (2,553(<F2> $44,110
848 <F5> (7,869)<F3>
(2,374)<F4>
1996 $24,571 $18,544 $ 240 <F1> $ (645)<F2> $37,049
1,060 <F5> (6,393)<F3>
(328)<F4>
<FN>
<F1> Allowance for doubtful accounts of acquired and newly consolidated
companies
<F2> Foreign currency translation adjustment
<F3> Principally amounts written off
<F4> Reversal of previously recorded allowances on accounts receivable
<F5> Miscellaneous
</FN>
</TABLE>
F-3 <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-Q
for the quarter ended June 30, 1998. 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.
(i) Indenture, dated as of September 16, 1997 between Interpublic and
The Bank of New York is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter ended September
30, 1998. See Commission file number 1-6686.
(ii) 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).
10 Material Contracts.
(a) Purchase Agreement, dated September 10, 1997, among The
Interpublic Group of Companies, Inc. ("Interpublic"), Morgan
Stanley & Co., Incorporated, Goldman Sachs and Co. and SBC
Warburg Dillon Read Inc. is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter ended September
30, 1998. 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
<PAGE>
Reports on Form 10-K for the years ended December 31, 1980
through December 31, 1997, inclusive, or filed with the
Registrant?s Reports on Form 10-Q for the periods ended March 31,
1998, June 30, 1998 and September 30, 1998 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, 1997 and thereafter,
unless previously submitted, which are filed as exhibits to this
Report on Form 10-K.
(i) Eugene P. Beard
Supplemental Agreement dated as of March 1, 1999 to an
Employment Agreement dated as of July 1, 1995 between
Interpublic and Eugene P. Beard.
(ii) Frank B. Lowe
Supplemental Agreement dated as of March 1, 1999 to an
Employment Agreement dated as of January 1, 1996 between
Interpublic and Frank B. Lowe.
(iii) Martin F. Puris
Supplemental Agreement dated as of March 1, 1999 to an
Employment Agreement dated as of August 11, 1994 between
Interpublic, APL and Martin F. Puris.
(iv) Barry R. Linsky
Executive Severance Agreement dated as of January 1, 1998
between Interpublic and Barry R. Linsky.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between
Interpublic, Lintas Campbell-Ewald Company, McCann-
Erickson USA, Inc., McCann-Erickson Marketing, Inc.,
Lintas, Inc. and Chemical Bank, 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.
<PAGE>
(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) Management Incentive Compensation Plan of the Registrant
is incorporated by reference to the Registrant?s Report on
Form 10-Q for the quarter ended June 30, 1995. See
Commission file number 1-6686.
(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).
(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.
<PAGE>
(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.
(x) The 1996 Stock Incentive Plan of the Registrant is
incorporated by reference to the Registrant's Report on
Form 10-Q for the quarter ended June 30, 1996. See
Commission file number 1-6686.
(xi) The 1997 Performance Incentive Plan of the Registrant is
incorporated by reference to the Registrant's Report on
Form 10-Q for the quarter ended June 30, 1997. See
Commission file number 1-6686.
(d) Loan Agreements.
(i) Credit Agreement Extension dated as of June 30, 1998 to a
Credit Agreement dated as of July 3, 1995 between
Interpublic and Lloyds Bank PLC.
(ii) Amendment No. 7, dated as of November 23, 1998 to a Credit
Agreement dated as of September 30, 1992 between
Interpublic and Citibank N.A.
(iii) Credit Agreement dated as of October 1, 1998 between
Interpublic and Wachovia Bank.
(iv) Amendment No. 8 to a Credit Agreement dated as of November
23, 1998 to a Credit Agreement dated as of September 30,
1992 between Interpublic and The First National Bank of
Chicago.
(v) Amendment No. 2, dated as of November 23, 1998 to a Credit
Agreement dated as of July 3, 1995 between Interpublic and
Lloyds Bank PLC.
(vi) Amendment No. 7 dated as of November 23, 1998 to a Credit
Agreement dated as of September 30, 1992 between
Interpublic and The Bank of New York.
<PAGE>
(vii) Amendment No. 6, dated as of November 23, 1998 to a Credit
Agreement dated as of September 30, 1992 between
Interpublic and UBS AG (formerly known as Union Bank of
Switzerland).
(viii) Amendment No. 7, dated as of November 23, 1998 to a Credit
Agreement dated as of September 30, 1992 between
Interpublic and The Chase Manhattan Bank (as successor to
Chemical Bank).
(ix) Amendment No. 7 dated as of November 23, 1998 to a Credit
Agreement dated as of September 30, 1992 between
Interpublic and SunTrust Bank, Atlanta (formerly Trust
Company Bank).
(x) Amendment No. 3, dated as of November 23, 1998 to a Credit
Agreement dated as of December 1, 1994 between Interpublic
and Bank of America NT & SA.
(xi) 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, Supplemental Agreements, Termination
Agreements, Loan Agreements, Note Purchase Agreements,
Guarantees and Intercreditor Agreements filed with the
Registrant's Report on Form 10-K for the years ended
December 31, 1989 through December 31, 1997, inclusive and
filed with Registrant's Reports on Form 10-Q for the
periods ended March 31, 1998, June 30, 1998 and September
30, 1998 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.
<PAGE>
(f) Acquisition Agreement for Purchase of Real Estate.
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.
(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.
<PAGE>
(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, 1998 which are included
therein under the following headings: Financial Highlights; Vice-
Chairman's Report of Management; 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 and
Comprehensive Income; 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 and
Stockholders Information.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants:
PricewaterhouseCoopers LLP
Consent of Independent Auditors: Ernst & Young
Consent of Independent Auditors: Ernst & Young LLP
24 Power of Attorney to sign Form 10-K and resolution of Board of
Directors re Power of Attorney.
27 Financial Data Schedule.
99 The Company filed the following reports on Form 8-K during the quarter
ended December 31, 1998:
(a) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated October 27, 1993.
(b) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated October 29, 1998.
<PAGE>
(c) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated November 30, 1998.
(d) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated December 4, 1998.
(e) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated December 11, 1998.
(f) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated December 16, 1998.
(g) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated December 18, 1998.
(h) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated December 18, 1998.
(i) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated December 19, 1998.
(j) Item 9: Sale of Equity Securities pursuant to Regulation S,
dated December 22, 1998.
<PAGE>
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of March 1, 1999
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a Delaware
corporation (the "Corporation") and EUGENE P. BEARD
("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 July 1, 1995 and
Supplemental Agreements made as of March 12, 1997, September
1, 1997, October 30, 1998 and January 21, 1999 (hereinafter
collectively referred to 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 3.02 of the Employment Agreement is
hereby amended, effective March 1, 1999, to provide for
payment of a salary at the rate of Eight Hundred Seventy
Thousand Dollars ($870,000) per annum.
2. Except as hereinabove amended, the Employment
Agreement shall continue in full force and effect.
3. This Supplemental Agreement shall be governed
by the laws of the State of New York, applicable to
contracts made and fully to be performed therein.
<PAGE>
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: C. KENT KROEBER
C. KENT KROEBER
EUGENE P. BEARD
EUGENE P. BEARD
<PAGE>
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of March 1, 1999
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a Delaware
corporation (the "Corporation") and FRANK B. LOWE
("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, 1996 and a
Supplemental Agreement made as of March 1, 1998 (hereinafter
collectively referred to 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. Section 3.01 of the Employment Agreement is
hereby amended, effective March 1, 1999, so as to delete
"$850,000" and to substitute therefor "$870,000".
2. Except as hereinabove amended, the Employment
Agreement shall continue in full force and effect.
<PAGE>
3. This Supplemental Agreement shall be governed
by the laws of the State of New York, applicable to
contracts made and fully to be performed therein.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: C. KENT KROEBER
C. KENT KROEBER
FRANK B. LOWE
FRANK B. LOWE
<PAGE>
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of March 1, 1999 by
and between THE INTERPUBLIC GROUP OF COMPANIES, INC., a
Delaware corporation (the "Corporation"), AMMIRATI PURIS
LINTAS INC., a New York corporation ("APL") and MARTIN F.
PURIS ("Executive").
W I T N E S S E T H:
WHEREAS, the Corporation, APL and Executive are
parties to an Employment Agreement made as of August 11,
1994 and Supplemental Agreements made as of May 10, 1995 and
September 1, 1997 (hereinafter collectively referred to as
the "Employment Agreement"); and
WHEREAS, the Corporation, APL 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 March 1, 1999, so as to delete
"$850,000" and to substitute therefor "$870,000".
2. Except as hereinabove amended, the Employment
Agreement shall continue in full force and effect.
<PAGE>
3. This Supplemental Agreement shall be governed
by the laws of the State of New York, applicable to
contracts made and fully to be performed therein.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: C. KENT KROEBER
C. KENT KROEBER
AMMIRATI PURIS LINTAS
INC.
By: MARTIN F. PURIS
MARTIN F. PURIS
<PAGE>
EXECUTIVE SEVERANCE AGREEMENT
This AGREEMENT ("Agreement") dated January 1,
1998, by and between The Interpublic Group of Companies,
Inc. ("Interpublic"), a Delaware corporation (Interpublic
and its subsidiaries being referred to herein collectively
as the "Company"), and Barry R. Linsky (the "Executive").
W I T N E S S E T H
WHEREAS, the Company recognizes the valuable
services that the Executive has rendered thereto and desires
to be assured that the Executive will continue to attend to
the business and affairs of the Company without regard to
any potential or actual change of control of Interpublic;
WHEREAS, the Executive is willing to continue to
serve the Company but desires assurance that he will not be
materially disadvantaged by a change of control of
Interpublic; and
WHEREAS, the Company is willing to accord such
assurance provided that, should the Executive's employment
be terminated consequent to a change of control, he will not
for a period thereafter engage in certain activities that
could be detrimental to the Company;
NOW, THEREFORE, in consideration of the
Executive's continued service to the Company and the mutual
agreements herein contained, Interpublic and the Executive
hereby agree as follows:
<PAGE>
ARTICLE I
RIGHT TO PAYMENTS
Section 1.1. TRIGGERING EVENTS. If Interpublic
undergoes a Change of Control, the Company shall make
payments to the Executive as provided in article II of this
Agreement. If, within two years following a Change of
Control, either (a) the Company terminates the Executive
other than by means of a termination for Cause or for death
or (b) the Executive resigns for a Good Reason (either of
which events shall constitute a "Qualifying Termination"),
the Company shall make payments to the Executive as provided
in article III hereof.
Section 1.2. CHANGE OF CONTROL. A Change of
Control of Interpublic shall be deemed to have occurred if
(a) any person (within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "1934
Act")), other than Interpublic or any of its majority-
controlled subsidiaries, becomes the beneficial owner
(within the meaning of Rule 13d-3 under the 1934 Act) of 30
percent or more of the combined voting power of
Interpublic's then outstanding voting securities; (b) a
tender offer or exchange offer (other than an offer by
Interpublic or a majority-controlled subsidiary), pursuant
to which 30 percent or more of the combined voting power of
Interpublic's then outstanding voting securities was
purchased, expires; (c) the stockholders of Interpublic
approve an agreement to merge or consolidate with another
corporation (other than a majority-controlled subsidiary of
<PAGE>
Interpublic) unless Interpublic's shareholders immediately
before the merger or consolidation are to own more than 70
percent of the combined voting power of the resulting
entity's voting securities; (d) Interpublic's stockholders
approve an agreement (including, without limitation, a plan
of liquidation) to sell or otherwise dispose of all or
substantially all of the business or assets of Interpublic;
or (e) during any period of two consecutive years,
individuals who, at the beginning of such period,
constituted the Board of Directors of Interpublic cease for
any reason to constitute at least a majority thereof, unless
the election or the nomination for election by Interpublic'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. However,
no Change of Control shall be deemed to have occurred by
reason of any transaction in which the Executive, or a group
of persons or entities with which the Executive acts in
concert, acquires, directly or indirectly, more than 30
percent of the common stock or the business or assets of
Interpublic.
Section 1.3. TERMINATION FOR CAUSE. Interpublic
shall have Cause to terminate the Executive for purposes of
Section 1.1 of this Agreement only if, following the Change
of Control, the Executive (a) engages in conduct that
constitutes a felony under the laws of the United States or
a state or country in which he works or resides and that
results or was intended to result, directly or indirectly,
<PAGE>
in the personal enrichment of the Executive at the Company's
expense; (b) refuses (except by reason of incapacity due to
illness or injury) to make a good faith effort to
substantially perform his duties with the Company on a full-
time basis and continues such refusal for 15 days following
receipt of notice from the Company that his effort is
deficient; or (c) deliberately and materially breaches any
agreement between himself and the Company and fails to
remedy that breach within 30 days following notification
thereof by the Company. If the Company has Cause to
terminate the Executive, it may in fact terminate him for
Cause for purposes of section 1.1 hereof if (a) it notifies
the Executive of such Cause, (b) it gives him reasonable
opportunity to appear before a majority of Interpublic's
Board of Directors to respond to the notice of Cause and (c)
a majority of the Board of Directors subsequently votes to
terminate him.
Section 1.4. RESIGNATION FOR GOOD REASON. The
Executive shall have a Good Reason for resigning only if (a)
the Company fails to elect the Executive to, or removes him
from, any office of the Company, including without
limitation membership on any Board of Directors, that the
Executive held immediately prior to the Change of Control;
(b) the Company reduces the Executive's rate of regular cash
and fully vested deferred base compensation ("Regular
Compensation") from that which he earned immediately prior
to the Change of Control or fails to increase it within 12
months following the Change of Control by (in addition to
<PAGE>
any increase pursuant to section 2.2 hereof) at least the
average of the rates of increase in his Regular Compensation
during the four consecutive 12-month periods immediately
prior to the Change of Control (or, if fewer, the number of
12-month periods immediately prior to the Change of Control
during which the Executive was continuously employed by the
Company); (c) the Company fails to provide the Executive
with fringe benefits and/or bonus plans, such as stock
option, stock purchase, restricted stock, life insurance,
health, accident, disability, incentive, bonus, pension and
profit sharing plans ("Benefit or Bonus Plans"), that, in
the aggregate, (except insofar as the Executive has waived
his rights thereunder pursuant to article II hereof) are as
valuable to him as those that he enjoyed immediately prior
to the Change of Control; (d) the Company fails to provide
the Executive with an annual number of paid vacation days at
least equal to that to which he was entitled immediately
prior to the Change of Control; (e) the Company breaches any
agreement between it and the Executive (including this
Agreement); (f) without limitation of the foregoing clause
(e), the Company fails to obtain the express assumption of
this Agreement by any successor of the Company as provided
in section 6.3 hereof; (g) the Company attempts to terminate
the Executive for Cause without complying with the
provisions of section 1.3 hereof; (h) the Company requires
the Executive, without his express written consent, to be
based in an office outside of the office in which Executive
<PAGE>
is based on the date hereof or to travel substantially more
extensively than he did prior to the Change of Control;
or (i) the Executive determines in good faith that the
Company has, without his consent, effected a significant
change in his status within, or the nature or scope of his
duties or responsibilities with, the Company that obtained
immediately prior to the Change of Control (including but
not limited to, subjecting the Executive's activities and
exercise of authority to greater immediate supervision than
existed prior to the Change of Control);, HOWEVER PROVIDED,
that no event designated in clauses (a) through (i) of this
sentence shall constitute a Good Reason unless the Executive
notifies Interpublic that the Company has committed an
action or inaction specified in clauses (a) through (i) (a
"Covered Action") and the Company does not cure such Covered
Action within 30 days after such notice, at which time such
Good Reason shall be deemed to have arisen. Notwithstanding
the immediately preceding sentence, no action by the Company
shall give rise to a Good Reason if it results from the
Executive's termination for Cause or death or from the
Executive's resignation for other than a Good Reason, and no
action by the Company specified in clauses (a) through (i)
of the preceding sentence shall give rise to a Good Reason
if it results from the Executive's Disability. If the
Executive has a Good Reason to resign, he may in fact resign
for a Good Reason for purposes of section 1.1 of this
Agreement by, within 30 days after the Good Reason arises,
giving Interpublic a minimum of 30 and a maximum of 90 days
<PAGE>
advance notice of the date of his resignation.
Section 1.5. DISABILITY. For all purposes of
this Agreement, the term "Disability" shall have the same
meaning as that term has in the Interpublic Long-Term
Disability Plan.
ARTICLE II
PAYMENTS UPON A CHANGE OF CONTROL
Section 2.1. ELECTIONS BY THE EXECUTIVE. If the
Executive so elects prior to a Change of Control, the
Company shall pay him, within 30 days following the Change
of Control, cash amounts in respect of certain Benefit or
Bonus Plans or deferred compensation arrangements designated
in sections 2.2 through 2.4 hereof ("Plan Amounts"). The
Executive may make an election with respect to the Benefit
or Bonus Plans or deferred compensation arrangements covered
under any one or more of sections 2.2 through 2.4, but an
election with respect to any such section shall apply to all
Plan Amounts that are specified therein. Each election
shall be made by notice to Interpublic on a form
satisfactory to Interpublic and, once made, may be revoked
by such notice on such form at any time prior to a Change of
Control. If the Executive elects to receive payments under
a section of this article II, he shall, upon receipt of such
payments, execute a waiver, on a form satisfactory to
Interpublic, of such rights as are indicated in that
section. If the Executive does not make an election under
<PAGE>
this article with respect to a Benefit or Bonus Plan or
deferred compensation arrangement, his rights to receive
payments in respect thereof shall be governed by the Plan or
arrangement itself.
Section 2.2. ESBA. The Plan Amount in respect of
all Executive Special Benefit Agreements ("ESBA's") between
the Executive and Interpublic shall consist of an amount
equal to the present discounted values, using the Discount
Rate designated in section 5.8 hereof as of the date of the
Change of Control, of all payments that the Executive would
have been entitled to receive under the ESBA's if he had
terminated employment with the Company on the day
immediately prior to the Change of Control. Upon receipt of
the Plan Amount in respect of the ESBA's, the Executive
shall waive any rights that he may have to payments under
the ESBA's. If the Executive makes an election pursuant to,
and executes the waiver required under, this section 2.2,
his Regular Compensation shall be increased as of the date
of the Change of Control at an annual rate equal to the sum
of the annual rates of deferred compensation in lieu of
which benefits are provided the Executive under any ESBA the
Accrual Term for which (as defined in the ESBA) includes the
date of the Change of Control.
Section 2.3. MICP. The Plan Amount in respect of
the Company's Management Incentive Compensation Plans
("MICP") and/or the 1997 Performance Incentive Plan ("1997
PIP") shall consist of an amount equal to the sum of all
amounts awarded to the Executive under, but deferred
<PAGE>
pursuant to, the MICP and/or the 1997 PIP as of the date of
the Change of Control and all amounts equivalent to interest
creditable thereon up to the date that the Plan Amount is
paid. Upon receipt of that Plan Amount, the Executive shall
waive his rights to receive any amounts under the MICP
and/or the 1997 PIP that were deferred prior to the Change
of Control and any interest equivalents thereon.
Section 2.4. DEFERRED COMPENSATION. The Plan
Amount in respect of deferred compensation (other than
amounts referred to in other sections of this article II)
shall be an amount equal to all compensation from the
Company that the Executive has earned and agreed to defer
(other than through the Interpublic Savings Plan pursuant to
Section 401(k) of the Internal Revenue Code (the "Code"))
but has not received as of the date of the Change of
Control, together with all amounts equivalent to interest
creditable thereon through the date that the Plan Amount is
paid. Upon receipt of this Plan Amount, the Executive shall
waive his rights to receive any deferred compensation that
he earned prior to the date of the Change of Control and any
interest equivalents thereon.
Section 2.5. STOCK INCENTIVE PLANS. The effect
of a Change of Control on the rights of the Executive with
respect to options and restricted shares awarded to him
under the Interpublic 1986 Stock Incentive Plan, the 1996
Stock Incentive Plan and the 1997 Performance Incentive
Plan, shall be governed by those Plans and not by this
Agreement.
<PAGE>
ARTICLE III
PAYMENTS UPON QUALIFYING TERMINATION
Section 3.1. BASIC SEVERANCE PAYMENT. In the
event that the Executive is subjected to a Qualifying
Termination within two years after a Change of Control, the
Company shall pay the Executive within 30 days after the
effective date of his Qualifying Termination (his
"Termination Date") a cash amount equal to his Base Amount
times the number designated in Section 5.9 of this Agreement
(the "Designated Number"). The Executive's Base Amount
shall equal the average of the Executive's Includable
Compensation for the two whole calendar years immediately
preceding the date of the Change of Control (or, if the
Executive was employed by the Company for only one of those
years, his Includable Compensation for that year). The
Executive's Includable Compensation for a calendar year
shall consist of (a) the compensation reported by the
Company on the Form W-2 that it filed with the Internal
Revenue Service for that year in respect of the Executive or
which would have been reported on such form but for the fact
that Executive's services were performed outside of the
United States, plus (b) any compensation payable to the
Executive during that year the receipt of which was deferred
at the Executive's election or by employment agreement to a
subsequent year, minus (c) any amounts included on the Form
W-2 (or which would have been included if Executive had been
employed in the United States) that represented either (i)
amounts in respect of a stock option or restricted stock
<PAGE>
plan of the Company or (ii) payments during the year of
amounts payable in prior years but deferred at the
Executive's election or by employment agreement to a
subsequent year. The compensation referred to in clause (b)
of the immediately preceding sentence shall include, without
limitation, amounts initially payable to the Executive under
the MICP or a Long-Term Performance Incentive Plan or the
1997 PIP in that year but deferred to a subsequent year, the
amount of deferred compensation for the year in lieu of
which benefits are provided the Executive under an ESBA and
amounts of Regular Compensation earned by the Executive
during the year but deferred to a subsequent year (including
amounts deferred under Interpublic Savings Plan pursuant to
Section 401(k) of the Code); clause (c) of such sentence
shall include, without limitation, all amounts equivalent to
interest paid in respect of deferred amounts and all amounts
of Regular Compensation paid during the year but earned in a
prior year and deferred.
Section 3.2. MICP SUPPLEMENT. The Company shall
also pay the Executive within 30 days after his Termination
Date a cash amount equal to (a) in the event that the
Executive received an award under the MICP (or the Incentive
Award program applicable outside the United States) or the
1997 PIP ("Incentive Award") in respect of the year
immediately prior to the year that includes the Termination
Date (the latter year constituting the "Termination Year"),
the amount of that award multiplied by the fraction of the
Termination Year preceding the Termination Date or (b) in
<PAGE>
the event that the Executive did not receive an MICP award
(or an Incentive Award) in respect of the year immediately
prior to the Termination Year, the amount of the MICP award
(or Incentive Award) that Executive received in respect of
the second year immediately prior to the Termination Year
multiplied by one plus the fraction of the Termination Year
preceding the Termination Date.
ARTICLE IV
TAX MATTERS
Section 4.1. WITHHOLDING. The Company may
withhold from any amounts payable to the Executive hereunder
all federal, state, city or other taxes that the Company may
reasonably determine are required to be withheld pursuant to
any applicable law or regulation, but, if the Executive has
made the election provided in section 4.2 hereof, the
Company shall not withhold amounts in respect of the excise
tax imposed by Section 4999 of the Code or its successor.
Section 4.2. DISCLAIMER. If the Executive so
agrees prior to a Change of Control by notice to the Company
in form satisfactory to the Company, the amounts payable to
the Executive under this Agreement but not yet paid thereto
shall be reduced to the largest amounts in the aggregate
that the Executive could receive, in conjunction with any
other payments received or to be received by him from any
source, without any part of such amounts being subject to
the excise tax imposed by Section 4999 of the Code or its
successor. The amount of such reductions and their
<PAGE>
allocation among amounts otherwise payable to the Executive
shall be determined either by the Company or by the
Executive in consultation with counsel chosen (and
compensated) by him, whichever is designated by the
Executive in the aforesaid notice to the Company (the
"Determining Party"). If, subsequent to the payment to the
Executive of amounts reduced pursuant to this section 4.2,
the Determining Party should reasonably determine, or the
Internal Revenue Service should assert against the party
other than the Determining Party, that the amount of such
reductions was insufficient to avoid the excise tax under
Section 4999 (or the denial of a deduction under Section
280G of the Code or its successor), the amount by which such
reductions were insufficient shall, upon notice to the other
party, be deemed a loan from the Company to the Executive
that the Executive shall repay to the Company within one
year of such reasonable determination or assertion, together
with interest thereon at the applicable federal rate
provided in section 7872 of the Code or its successor.
However, such amount shall not be deemed a loan if and to
the extent that repayment thereof would not eliminate the
Executive's liability for any Section 4999 excise tax.
ARTICLE V
COLLATERAL MATTERS
Section 5.l. NATURE OF PAYMENTS. All payments to
the Executive under this Agreement shall be considered
either payments in consideration of his continued service to
<PAGE>
the Company, severance payments in consideration of his past
services thereto or payments in consideration of the
covenant contained in section 5.l0 hereof. No payment
hereunder shall be regarded as a penalty to the Company.
Section 5.2. LEGAL EXPENSES. The Company shall
pay all legal fees and expenses that the Executive may incur
as a result of the Company's contesting the validity, the
enforceability or the Executive's interpretation of, or
determinations under, this Agreement. Without limitation of
the foregoing, Interpublic shall, prior to the earlier of
(a) 30 days after notice from the Executive to Interpublic
so requesting or (b) the occurrence of a Change of Control,
provide the Executive with an irrevocable letter of credit
in the amount of $100,000 from a bank satisfactory to the
Executive against which the Executive may draw to pay legal
fees and expenses in connection with any attempt to enforce
any of his rights under this Agreement. Said letter of
credit shall not expire before 10 years following the date
of this Agreement.
Section 5.3. MITIGATION. The Executive shall not
be required to mitigate the amount of any payment provided
for in this Agreement either by seeking other employment or
otherwise. The amount of any payment provided for herein
shall not be reduced by any remuneration that the Executive
may earn from employment with another employer or otherwise
following his Termination Date.
Section 5.4. SETOFF FOR DEBTS. The Company may
reduce the amount of any payment due the Executive under
<PAGE>
article III of this Agreement by the amount of any debt owed
by the Executive to the Company that is embodied in a
written instrument, that is due to be repaid as of the due
date of the payment under this Agreement and that the
Company has not already recovered by setoff or otherwise.
Section 5.5. COORDINATION WITH EMPLOYMENT
CONTRACT. Payments to the Executive under article III of
this Agreement shall be in lieu of any payments for breach
of any employment contract between the Executive and the
Company to which the Executive may be entitled by reason of
a Qualifying Termination, and, before making the payments to
the Executive provided under article III hereof, the Company
may require the Executive to execute a waiver of any rights
that he may have to recover payments in respect of a breach
of such contract as a result of a Qualifying Termination.
If the Executive has a Good Reason to resign and does so by
providing the notice specified in the last sentence of
section l.4 of this Agreement, he shall be deemed to have
satisfied any notice requirement for resignation, and any
service requirement following such notice, under any
employment contract between the Executive and the Company.
Section 5.6. BENEFIT OF BONUS PLANS. Except as
otherwise provided in this Agreement or required by law, the
Company shall not be compelled to include the Executive in
any of its Benefit or Bonus Plans following the Executive's
Termination Date, and the Company may require the Executive,
as a condition to receiving the payments provided under
article III hereof, to execute a waiver of any such rights.
<PAGE>
However, said waiver shall not affect any rights that the
Executive may have in respect of his participation in any
Benefit or Bonus Plan prior to his Termination Date.
Section 5.7. FUNDING. Except as provided in
section 5.2 of this Agreement, the Company shall not be
required to set aside any amounts that may be necessary to
satisfy its obligations hereunder. The Company's potential
obligations to make payments to the Executive under this
Agreement are solely contractual ones, and the Executive
shall have no rights in respect of such payments except as a
general and unsecured creditor of the Company.
Section 5.8. DISCOUNT RATE. For purposes of this
Agreement, the term "Discount Rate" shall mean the
applicable Federal short-term rate determined under Section
1274(d) of the Code or its successor. If such rate is no
longer determined, the Discount Rate shall be the yield on
2-year Treasury notes for the most recent period reported in
the most recent issue of the Federal Reserve Bulletin or its
successor, or, if such rate is no longer reported therein,
such measure of the yield on 2-year Treasury notes as the
Company may reasonably determine.
Section 5.9. DESIGNATED NUMBER. For purposes of
this Agreement, the Designated Number shall be two (2.0).
Section 5.10. COVENANT OF EXECUTIVE. In the
event that the Executive undergoes a Qualifying Termination
that entitles him to any payment under article III of this
Agreement, he shall not, for 18 months following his
Termination Date, either (a) solicit any employee of
<PAGE>
Interpublic or a majority-controlled subsidiary thereof to
leave such employ and enter into the employ of the Executive
or any person or entity with which the Executive is
associated or (b) solicit or handle on his own behalf or on
behalf of any person or entity with which he is associated
the advertising, public relations, sales promotion or market
research business of any advertiser that is a client of
Interpublic or a majority-controlled subsidiary thereof as
of the Termination Date. Without limitation of any other
remedies that the Company may pursue, the Company may
enforce its rights under this section 5.l0 by means of
injunction. This section shall not limit any other right or
remedy that the Company may have under applicable law or any
other agreement between the Company and the Executive.
ARTICLE VI
GENERAL PROVISIONS
Section 6.l. TERM OF AGREEMENT. This Agreement
shall terminate upon the earliest of (a) the expiration of
five years from the date of this Agreement if no Change of
Control has occurred during that period; (b) the termination
of the Executive's employment with the Company for any
reason prior to a Change of Control; (c) the Company's
termination of the Executive's employment for Cause or
death, the Executive's compulsory retirement within the
provisions of 29 U.S.C. ?631(c) (or, if Executive is not a
citizen or resident of the United States, compulsory
<PAGE>
retirement under any applicable procedure of the Company in
effect immediately prior to the change of control) or the
Executive's resignation for other than Good Reason,
following a Change of Control and the Company's and the
Executive's fulfillment of all of their obligations under
this Agreement; and (d) the expiration following a Change of
Control of the Designated Number plus three years and the
fulfillment by the Company and the Executive of all of their
obligations hereunder.
Section 6.2. GOVERNING LAW. Except as otherwise
expressly provided herein, this Agreement and the rights and
obligations hereunder shall be construed and enforced in
accordance with the laws of the State of New York.
Section 6.3. SUCCESSORS TO THE COMPANY. This
Agreement shall inure to the benefit of Interpublic and its
subsidiaries and shall be binding upon and enforceable by
Interpublic and any successor thereto, including, without
limitation, any corporation or corporations acquiring
directly or indirectly all or substantially all of the
business or assets of Interpublic whether by merger,
consolidation, sale or otherwise, but shall not otherwise be
assignable by Interpublic. Without limitation of the
foregoing sentence, Interpublic shall require any successor
(whether direct or indirect, by merger, consolidation, sale
or otherwise) to all or substantially all of the business or
assets of Interpublic, by agreement in form satisfactory to
the Executive, expressly, absolutely and unconditionally to
assume and agree to perform this Agreement in the same
<PAGE>
manner and to the same extent as Interpublic would have been
required to perform it if no such succession had taken
place. As used in this agreement, "Interpublic" shall mean
Interpublic as heretofore defined and any successor to all
or substantially all of its business or assets that executes
and delivers the agreement provided for in this section 6.3
or that becomes bound by this Agreement either pursuant to
this Agreement or by operation of law.
Section 6.4. SUCCESSOR TO THE EXECUTIVE. This
Agreement shall inure to the benefit of and shall be binding
upon and enforceable by the Executive and his personal and
legal representatives, executors, administrators, heirs,
distributees, legatees and, subject to section 6.5 hereof,
his designees ("Successors"). If the Executive should die
while amounts are or may be payable to him under this
Agreement, references hereunder to the "Executive" shall,
where appropriate, be deemed to refer to his Successors.
Section 6.5. NONALIENABILITY. No right of or
amount payable to the Executive under this Agreement shall
be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, hypothecation, encumbrance,
charge, execution, attachment, levy or similar process or
(except as provided in section 5.4 hereof) to setoff against
any obligation or to assignment by operation of law. Any
attempt, voluntary or involuntary, to effect any action
specified in the immediately preceding sentence shall be
void. However, this section 6.5 shall not prohibit the
<PAGE>
Executive from designating one or more persons, on a form
satisfactory to the Company, to receive amounts payable to
him under this Agreement in the event that he should die
before receiving them.
Section 6.6. NOTICES. All notices provided for
in this Agreement shall be in writing. Notices to
Interpublic shall be deemed given when personally delivered
or sent by certified or registered mail or overnight
delivery service to The Interpublic Group of Companies,
Inc., l27l Avenue of the Americas, New York, New York l0020,
attention: Corporate Secretary. Notices to the Executive
shall be deemed given when personally delivered or sent by
certified or registered mail or overnight delivery service
to the last address for the Executive shown on the records
of the Company. Either Interpublic or the Executive may, by
notice to the other, designate an address other than the
foregoing for the receipt of subsequent notices.
Section 6.7. AMENDMENT. No amendment of this
Agreement shall be effective unless in writing and signed by
both the Company and the Executive.
Section 6.8. WAIVERS. No waiver of any provision
of this Agreement shall be valid unless approved in writing
by the party giving such waiver. No waiver of a breach
under any provision of this Agreement shall be deemed to be
a waiver of such provision or any other provision of this
Agreement or any subsequent breach. No failure on the part
of either the Company or the Executive to exercise, and no
delay in exercising, any right or remedy conferred by law or
<PAGE>
this Agreement shall operate as a waiver of such right or
remedy, and no exercise or waiver, in whole or in part, of
any right or remedy conferred by law or herein shall operate
as a waiver of any other right or remedy.
Section 6.9. SEVERABILITY. If any provision of
this Agreement shall be held invalid or unenforceable in
whole or in part, such invalidity or unenforceability shall
not affect any other provision of this Agreement or part
thereof, each of which shall remain in full force and
effect.
Section 6.l0. CAPTIONS. The captions to the
respective articles and sections of this Agreement are
intended for convenience of reference only and have no
substantive significance.
Section 6.ll. COUNTERPARTS. This Agreement may
be executed in any number of counterparts, each of which
shall be deemed to be an original but all of which together
shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: C. KENT KROEBER
C. KENT KROEBER
BARRY R. LINSKY
BARRY R. LINSKY
<PAGE>
June 16, 1998
Mr. Windsor R. Davies
Lloyds Bank
575 Fifth Avenue
New York, NY 10017
RE: CREDIT AGREEMENT BETWEEN THE INTERPUBLIC
GROUP OF COMPANIES, INC. AND LLOYDS BANK PLC.
Dear Windsor:
We are writing to you in connection with the Credit
Agreement between The Interpublic Group of Companies, Inc.
and Lloyds Bank Plc dated July 3, 1995 (the "Agreement").
Section 2.13 of the Agreement provides that the Borrower may
request extension of the Commitment under the Agreement for
an additional period of one year from the then current
Termination Date.
Notwithstanding the dates specified in Section 2.13 of the
Agreement for requesting such extension, we hereby request
that you extend the Termination Date of the Agreement to
July 3, 1999. If you are agreeable to our request, please
so indicate by signing and returning the duplicate copy of
this letter which we have enclosed herewith.
Thank you.
Sincerely,
ALAN M. FORSTER
ALAN M. FORSTER
ACCEPTED AND AGREED:
LLOYDS BANK PLC
By: DAVID C. RODWAY
DAVID C. RODWAY
ASSISTANT VICE PRESIDENT
BY: W. CAMPOSANO
W. CAMPOSANO
Date: ___________________
cc: Ms. Barbara Gmora
Mr. Theodore S. Paraskevas
Ms. Marti M. Spears
<PAGE>
AMENDMENT NO. 7 TO CREDIT AGREEMENT
AMENDMENT NO. 7, dated as of November 23, 1998, to the
Credit Agreement dated as of September 30, 1992 and
effective as of December 22, 1992, as amended on April 30,
1993, October 5, 1993, August 15, 1994, December 1, 1994,
August 3, 1995 and August 28, 1997 (the "Agreement"),
between The Interpublic Group of Companies, Inc. (the
"Borrower") and CITIBANK, N.A. (the "Bank").
SECTION 1. AMENDMENTS:
(a) Notwithstanding the dates specified in
Sections 1.1 and 2.13 of the Agreement and
subsequent correspondence, including the
letter dated September 20, 1996 from the
Borrower to the Bank extending the
Termination Date to December 1, 1998, Section
1.1 is hereby amended by changing the
Termination Date to "September 30, 2001".
(b) Section 2.1 of the Credit Agreement is hereby
amended by changing the figure on the fifth
line therein to the figure "$35,000,000".
(c) Exhibit A to the Credit Agreement and the
corresponding Note delivered to the Bank
thereunder are hereby amended by changing the
figure on the top left corner therein to the
figure "$35,000,000".
(d) Upon the effectiveness of this Amendment
pursuant to Section 4 hereof, the Bank shall
be authorized to endorse on the Note issued
to it the following legend: "The Commitment
of the Bank reflected on the top left corner
of this Note has been increased to
$35,000,000 pursuant to an Amendment dated as
of November 23, 1998 to the Credit Agreement
referred to in this Note", or a legend of
similar effect.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Borrower hereby represents and warrants to
the Bank that: (a) the representations and
warranties set forth in Section 5 of the
Credit Agreement are true and correct on and
as of the date hereof as if made on and as of
said date; (b) no Event of Default specified
in Section 7 of the Credit Agreement and no
event, which with the giving of notice or
lapse of time or both, would become such an
Event of Default has occurred and is
<PAGE>
continuing; (c) the execution, delivery and
performance by the Borrower of this Amendment
are within the Borrower's corporate powers,
have been duly authorized by all necessary
corporate action, and do not contravene (i)
the Borrower's charter or by-laws, or (ii)
law or any contractual restriction binding on
or affecting the Borrower; (d) no order,
consent, authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or regulatory
body, or any other person, firm, corporation
or other legal entity, is required for the
due execution, delivery and performance of
this Amendment by the Borrower; and (e) this
Amendment is the legal, valid and binding
obligation of the Borrower, enforceable
against the Borrower in accordance with its
terms.
SECTION 3. MISCELLANEOUS. (a) Unless otherwise
specifically defined herein, each term used
herein which is a defined term shall have the
meaning as defined in the Credit Agreement;
(b) 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 Credit Agreement shall from
and after the date hereof refer to the Credit
Agreement as amended hereby; and (c) except
as specifically amended above, the Credit
Agreement shall remain in full force and
effect and is hereby ratified and confirmed.
SECTION 4. COUNTERPARTS; EFFECTIVENESS. 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. This Amendment shall become
effective as of the date hereof when the Bank
shall have received duly executed
counterparts hereof signed by the parties
hereto. This Amendment shall be governed by
and construed in accordance with the law of
the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date 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
ATTORNEY-IN-FACT
<PAGE>
CREDIT AGREEMENT
BETWEEN
INTERPUBLIC GROUP OF COMPANIES, INC.
AND
WACHOVIA BANK OF GEORGIA, N.A.
__________________________
US$25,000,000
___________________________
Dated as of October 1, 1998, effective December 23, 1998
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
SECTION 1
INTERPRETATION AND DEFINITIONS
1.1 Definitions
1.2 Accounting Terms and Determinations
SECTION 2
THE LOANS
2.1 Commitment
2.2 Method of Borrowing
2.3 The Note
2.4 Maturity of Loans
2.5 Interest Rates
2.6 Fees
2.7 Optional Termination or Reduction of Commitment
2.8 Mandatory Termination or Reduction of Commitment
2.9 Optional Payments
2.10 General Provisions as to Payments
2.11 Computation of Interest and Fees
2.12 Funding Losses
2.13 Extension of Commitment
SECTION 3
CONDITIONS OF LENDING
3.1 All Loans
3.2 Initial Loan
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Basis for Determining Interest Rate Inadequate
4.2 Illegality
4.3 Increased Costs and Reduced Returns
<PAGE>
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 Corporate Existence and Power
5.2 Corporate and Governmental Authorization;
Contravention
5.3 Binding Effect
5.4 Financial Information
5.5 Litigation
5.6 Compliance with ERISA
5.7 Taxes
5.8 Subsidiaries
SECTION 6
COVENANTS
6.1 Information
6.2 Maintenance of Property; Insurance
6.3 Conduct of Business and Maintenance of Existence
6.4 Compliance with Laws
6.5 Inspection of Property, Books and Records
6.6 Cash Flow to Total Borrowed Funds
6.7 Total Borrowed Funds to Consolidated Net Worth
6.8 Minimum Consolidated Net Worth
6.9 Negative Pledge
6.10 Consolidations, Mergers and Sales of Assets
6.11 Use of Proceeds
SECTION 7
EVENTS OF DEFAULT
7.1 Events of Default
SECTION 8
MISCELLANEOUS
8.1 Notices
8.2 Amendments and Waivers, Cumulative Remedies
8.3 Successors and Assigns
8.4 Expenses; Documentary Taxes; Indemnification
8.5 Counterparts
8.6 Heading; Table of Contents
8.7 Governing Law
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of October 1, 1998 between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a Delaware corporation
(the "Borrower"), and WACHOVIA BANK OF GEORGIA, N.A., 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 EuroDollar 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 Atlanta, Georgia,
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,
provided that such sum shall not be adjusted for any
increase or decrease in deferred taxes resulting from
Quest & Associates, Inc., a Subsidiary of the Borrower,
investing in a portfolio of computer equipment leases
(it being further understood that such increase or
decrease in deferred taxes relating to such investment
shall not exceed $25,000,000).
<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.
"CONSOLIDATED 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.
"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.
<PAGE>
"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 Atlanta, Georgia are authorized by law to close.
"DOMESTIC LENDING OFFICE" means the principal
office of the Bank located at 191 Peachtree Street,
N.E., Atlanta, Georgia 30303, 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 191 Peachtree Street, N.E.,
Atlanta, Georgia 30303, 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.
"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.
<PAGE>
"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.
"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:
<PAGE>
(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.
"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.
<PAGE>
"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.
"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
<PAGE>
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 September 30, 2001 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.
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 $25,000,000 (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.
<PAGE>
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
(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
<PAGE>
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.
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.
<PAGE>
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 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.
"ASSESSMENT RATE" 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.
<PAGE>
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 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 the date hereof (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
<PAGE>
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 conditions set forth in clauses (i) and (ii) are not
satisfied. Such fees shall accrue from the date hereof 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
Atlanta, Georgia 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 shall be due on a day which is not
a Domestic Business Day, the date for payment thereof shall
<PAGE>
be extended to the next succeeding Domestic Business Day.
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
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.
<PAGE>
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;
(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;
<PAGE>
(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 thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
the Bank (or its Euro-Dollar 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
<PAGE>
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 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;
<PAGE>
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.
(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:
<PAGE>
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.
5.4 FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at
December 31, 1997 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, 1997 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.
<PAGE>
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, 1993. The Borrower and its Consolidated Subsidiaries
have filed all United 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:
<PAGE>
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 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
<PAGE>
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;
(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;
<PAGE>
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.
(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
<PAGE>
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 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 $550,000,000 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, 1994.
<PAGE>
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;
(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
<PAGE>
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;
(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 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
<PAGE>
(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
(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
<PAGE>
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 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,
<PAGE>
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 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);
<PAGE>
(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 under 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.
(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
<PAGE>
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; DOCUMENTARY TAXES; INDEMNIFICATION.
(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 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.
<PAGE>
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.
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 23, 1998.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
WACHOVIA BANK, N.A.
By: JAMES F. McCREARY
JAMES F. McCREARY
SENIOR VICE PRESIDENT
Domestic & Eurodollar Lending
Office
191 Peachtree Street, N.E.,
Atlanta, Georgia 30303
Attn: William Christie
Tel #(404) 332-1434:
Fax #(404) 332-6898
Fed Wire: ABA #061000010
Acct..:Wachovia Bank
Acct. No.:18171498
For Further credit to:
Acct.: The Interpublic Group
of Companies, Inc.
Acct. No.:089620009373
<PAGE>
The amount in brackets being rounded upwards, if necessary,
to the next higher 1/100 of 1%.
<PAGE>
AMENDMENT NO. 8 TO CREDIT AGREEMENT
AMENDMENT NO. 8, dated as of November 23, 1998, to the
Credit Agreement dated as of September 30, 1992 and
effective as of December 23, 1992, as amended on April 30,
1993, October 5, 1993, August 15, 1994, December 1, 1994,
August 3, 1995, September 20, 1996 and August 26, 1997 (the
"Agreement"), between The Interpublic Group of Companies,
Inc. (the "Borrower") and THE FIRST NATIONAL BANK OF
CHICAGO (the "Bank").
SECTION 1. AMENDMENTS:
(a) Notwithstanding the dates specified in
Sections 1.1 and 2.13 of the Agreement and
subsequent correspondence, including the
letter dated September 20, 1996 from the
Borrower to the Bank extending the
Termination Date to December 1, 1998,
Section 1.1 is hereby amended by changing
the Termination Date to "September 30,
2001".
(b) Section 2.1 of the Credit Agreement is
hereby amended by changing the figure on
the fifth line therein to the figure
"$25,000,000".
(c) Exhibit A to the Credit Agreement and the
corresponding Note delivered to the Bank
thereunder are hereby amended by changing
the figure on the top left corner therein
to the figure "$25,000,000".
(d) Upon the effectiveness of this Amendment
pursuant to Section 4 hereof, the Bank
shall be authorized to endorse on the Note
issued to it the following legend: "The
Commitment of the Bank reflected on the top
left corner of this Note has been increased
to $25,000,000 pursuant to an Amendment
dated as of November 23, 1998 to the Credit
Agreement referred to in this Note", or a
legend of similar effect.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Borrower hereby represents and warrants to
the Bank that: (a) the representations and
warranties set forth in Section 5 of the
Credit Agreement are true and correct on
and as of the date hereof as if made on and
as of said date; (b) no Event of Default
specified in Section 7 of the Credit
Agreement and no event, which with the
giving of notice or lapse of time or both,
would become such an Event of Default has
occurred and is continuing; (c) the
<PAGE>
execution, delivery and performance by the
Borrower of this Amendment are within the
Borrower's corporate powers, have been duly
authorized by all necessary corporate
action, and do not contravene (i) the
Borrower's charter or by-laws, or (ii) law
or any contractual restriction binding on
or affecting the Borrower; (d) no order,
consent, authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or regulatory
body, or any other person, firm,
corporation or other legal entity, is
required for the due execution, delivery
and performance of this Amendment by the
Borrower; and (e) this Amendment is the
legal, valid and binding obligation of the
Borrower, enforceable against the Borrower
in accordance with its terms.
SECTION 3. MISCELLANEOUS. (a) Unless otherwise
specifically defined herein, each term used
herein which is a defined term shall have
the meaning as defined in the Credit
Agreement; (b) 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 Credit Agreement
shall from and after the date hereof refer
to the Credit Agreement as amended hereby;
and (c) except as specifically amended
above, the Credit Agreement shall remain in
full force and effect and is hereby
ratified and confirmed.
SECTION 4. COUNTERPARTS; EFFECTIVENESS. 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. This Amendment shall
become effective as of the date hereof when
the Bank shall have received duly executed
counterparts hereof signed by the parties
hereto. This Amendment shall be governed
by and construed in accordance with the law
of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above
written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
BY: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
THE FIRST NATIONAL BANK OF
CHICAGO
BY: JUAN J. DUARTE
JUAN J. DUARTE
<PAGE>
AMENDMENT NO. 7 TO CREDIT AGREEMENT
AMENDMENT NO. 2, dated as of November 23, 1998, to the
Credit Agreement dated as of July 3, 1995, as amended on
August 28, 1997 (the "Agreement"), between The Interpublic
Group of Companies, Inc. (the "Borrower") and LLOYDS BANK
PLC (the "Bank).
SECTION 1. AMENDMENTS: (a) Notwithstanding the dates
specified in Sections 1.1 and 2.13 of the
Agreement and subsequent correspondence,
including the letter dated June 16, 1998
from the Borrower to the Bank extending the
Termination Date to July 3, 1999, Section
1.1 is hereby amended by changing the
Termination Date to "September 30, 2001".
(b) Section 2.1 of the Credit Agreement is
hereby amended by changing the figure on
the fifth line therein to the figure
"$25,000,000".
(c) Exhibit A to the Credit Agreement and
the corresponding Note delivered to the
Bank thereunder are hereby amended by
changing the figure on the top left
corner therein to the figure
"$25,000,000".
(d) Upon the effectiveness of this Amendment
pursuant to Section 4 hereof, the Bank
shall be authorized to endorse on the
Note issued to it the following legend:
"The Commitment of the Bank reflected on
the top left corner of this Note has
been increased to $25,000,000 pursuant
to an Amendment dated as of November 23,
1998 to the Credit Agreement referred to
in this Note", or a legend of similar
effect.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Borrower hereby represents and warrants to
the Bank that: (a) the representations and
warranties set forth in Section 5 of the
Credit Agreement are true and correct on
and as of the date hereof as if made on and
as of said date; (b) no Event of Default
specified in Section 7 of the Credit
Agreement and no event, which with the
giving of notice or lapse of time or both,
would become such an Event of Default has
occurred and is continuing; (c) the
<PAGE>
execution, delivery and performance by the
Borrower of this Amendment are within the
Borrower's corporate powers, have been duly
authorized by all necessary corporate
action, and do not contravene (i) the
Borrower' charter or by-laws, or (ii) law
or any contractual restriction binding on
or affecting the Borrower; (d) no order,
consent, authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or regulatory
body, or any other person, firm,
corporation or other legal entity, is
required for the due execution, delivery
and performance of this Amendment by the
Borrower; and (e) this Amendment is the
legal, valid and binding obligation of the
Borrower, enforceable against the Borrower
in accordance with its terms.
SECTION 3. MISCELLANEOUS. (a) Unless otherwise
specifically defined herein, each term used
herein which is a defined term shall have
the meaning as defined in the Credit
Agreement; (b) 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 Credit Agreement
shall from and after the date hereof refer
to the Credit Agreement as amended hereby;
and (c) except as specifically amended
above, the Credit Agreement shall remain in
full force and effect and is hereby
ratified and confirmed.
SECTION 4. COUNTERPARTS; EFFECTIVENESS. 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. This Amendment shall
become effective as of the date hereof when
the Bank shall have received duly executed
counterparts hereof signed by the parties
hereto. This Amendment shall be governed
by and construed in accordance with the law
of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above
written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
BY: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
LLOYDS BANK PLC
BY: DAVID C. RODWAY
DAVID C. RODWAY
ASSISTANT VICE PRESIDENT
BY: PAUL D. BRIAMONTE
PAUL D. BRIAMONTE
DIRECTOR, ACQUISITION &
PROJECT FINANCE, USA
<PAGE>
AMENDMENT NO. 7 TO CREDIT AGREEMENT
AMENDMENT NO. 3, dated as of November 23, 1998, to the
Credit Agreement dated as of December 1, 1994, as amended on
August 3, 1995 and August 28, 1997 (the "Agreement"),
between The Interpublic Group of Companies, Inc. (the
"Borrower") and BANK OF AMERICA NT & SA (the "Bank").
SECTION 1. AMENDMENTS: Notwithstanding the dates
specified in Sections 1.1 and 2.13 of the
Agreement and subsequent correspondence,
including the letter dated September 20,
1996 from the Borrower to the Bank
extending the Termination Date to December
1, 1998, Section 1.1 is hereby amended by
changing the Termination Date to "September
30, 2001".
(b) Section 2.1 of the Credit Agreement is
hereby amended by changing the figure on
the fifth line therein to the figure
"$25,000,000".
(c) Exhibit A to the Credit Agreement and
the corresponding Note delivered to the
Bank thereunder are hereby amended by
changing the figure on the top left
corner therein to the figure
"$25,000,000".
(d) Upon the effectiveness of this Amendment
pursuant to Section 4 hereof, the Bank
shall be authorized to endorse on the
Note issued to it the following legend:
"The Commitment of the Bank reflected on
the top left corner of this Note has
been increased to $25,000,000 pursuant
to an Amendment dated as of November 23,
1998 to the Credit Agreement referred to
in this Note", or a legend of similar
effect.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Borrower hereby represents and warrants to
the Bank that: (a) the representations and
warranties set forth in Section 5 of the
Credit Agreement are true and correct on
and as of the date hereof as if made on and
as of said date; (b) no Event of Default
specified in Section 7 of the Credit
Agreement and no event, which with the
giving of notice or lapse of time or both,
would become such an Event of Default has
<PAGE>
occurred and is continuing; (c) the
execution, delivery and performance by the
Borrower of this Amendment are within the
Borrower's corporate powers, have been duly
authorized by all necessary corporate
action, and do not contravene (i) the
Borrower's charter or by-laws, or (ii) law
or any contractual restriction binding on
or affecting the Borrower; (d) no order,
consent, authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or regulatory
body, or any other person, firm,
corporation or other legal entity, is
required for the due execution, delivery
and performance of this Amendment by the
Borrower; and (e) this Amendment is the
legal, valid and binding obligation of the
Borrower, enforceable against the Borrower
in accordance with its terms.
SECTION 3. MISCELLANEOUS. (a) Unless otherwise
specifically defined herein, each term used
herein which is a defined term shall have
the meaning as defined in the Credit
Agreement; (b) 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 Credit Agreement
shall from and after the date hereof refer
to the Credit Agreement as amended hereby;
and (c) except as specifically amended
above, the Credit Agreement shall remain in
full force and effect and is hereby
ratified and confirmed.
SECTION 4. COUNTERPARTS; EFFECTIVENESS. 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. This Amendment shall
become effective as of the date hereof when
the Bank shall have received duly executed
counterparts hereof signed by the parties
hereto. This Amendment shall be governed
by and construed in accordance with the law
of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above
written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
BY: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
THE BANK OF NEW YORK
BY: GEORGIA PAN-KITA
GEORGIA PAN-KITA
VICE PRESIDENT
<PAGE>
AMENDMENT NO. 6 TO CREDIT AGREEMENT
AMENDMENT NO. 6, dated as of November 23, 1998, to the
Credit Agreement dated as of September 30, 1992 and
effective as of December 29, 1992, as amended on April 30,
1993, October 5, 1993, August 15, 1994, December 1, 1994,
and August 3, 1995 (the "Agreement"), between The
Interpublic Group of Companies, Inc. (the "Borrower") and
UBS AG (formerly known as UNION BANK OF SWITZERLAND) (the
"Bank").
SECTION 1. AMENDMENTS:
(a) Notwithstanding the dates specified in
Sections 1.1 and 2.13 of the Agreement
and subsequent correspondence, including
the letter dated September 20, 1996 from
the Borrower to the Bank extending the
Termination Date to December 1, 1998,
Section 1.1 is hereby amended by
changing the Termination Date to
"December 1, 1999".
(b) Section 2.1 of the Credit Agreement is
hereby amended by changing the figure on
the fifth line therein to the figure
"$25,000,000".
(c) Exhibit A to the Credit Agreement and
the corresponding Note delivered to the
Bank thereunder are hereby amended by
changing the figure on the top left
corner therein to the figure
"$25,000,000".
(d) Upon the effectiveness of this Amendment
pursuant to Section 4 hereof, the Bank
shall be authorized to endorse on the
Note issued to it the following legend:
"The Commitment of the Bank reflected on
the top left corner of this Note has
been increased to $25,000,000 pursuant
to an Amendment dated as of November 23,
1998 to the Credit Agreement referred to
in this Note", or a legend of similar
effect.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Borrower hereby represents and warrants to
the Bank that: (a) the representations and
warranties set forth in Section 5 of the
Credit Agreement are true and correct on
and as of the date hereof as if made on and
<PAGE>
as of said date; (b) no Event of Default
specified in Section 7 of the Credit
Agreement and no event, which with the
giving of notice or lapse of time or both,
would become such an Event of Default has
occurred and is continuing; (c) the
execution, delivery and performance by the
Borrower of this Amendment are within the
Borrower's corporate powers, have been duly
authorized by all necessary corporate
action, and do not contravene (i) the
Borrower's charter or by-laws, or (ii) law
or any contractual restriction binding on
or affecting the Borrower; (d) no order,
consent, authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or regulatory
body, or any other person, firm,
corporation or other legal entity, is
required for the due execution, delivery
and performance of this Amendment by the
Borrower; and (e) this Amendment is the
legal, valid and binding obligation of the
Borrower, enforceable against the Borrower
in accordance with its terms.
SECTION 3. MISCELLANEOUS. (a) Unless otherwise
specifically defined herein, each term used
herein which is a defined term shall have
the meaning as defined in the Credit
Agreement; (b) 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 Credit Agreement
shall from and after the date hereof refer
to the Credit Agreement as amended hereby;
and (c) except as specifically amended
above, the Credit Agreement shall remain in
full force and effect and is hereby
ratified and confirmed.
SECTION 4. COUNTERPARTS; EFFECTIVENESS. 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. This Amendment shall
become effective as of the date hereof when
the Bank shall have received duly executed
counterparts hereof signed by the parties
hereto. This Amendment shall be governed
by and construed in accordance with the law
of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above
written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
BY: ALAN M. FORSTER
ALAN M. FORSTER
UBS AG, STAMFORD BRANCH
(FORMERLY KNOWN AS UNION BANK
OF SWITZERLAND)
BY: ROBERT W. CASEY, JR.
ROBERT W. CASEY, JR.
EXECUTIVE DIRECTOR
BY: ERIC HANSON
ERIC HANSON
ASSOCIATE DIRECTOR
<PAGE>
AMENDMENT NO. 7 TO CREDIT AGREEMENT
AMENDMENT NO. 7, dated as of November 23, 1998, to the
Credit Agreement dated as of September 30, 1992 and
effective as of December 23, 1992, as amended on April 30,
1993, October 5, 1993, August 15, 1994, December 1, 1994,
August 3, 1995 and August 28, 1997 (the "Agreement"),
between The Interpublic Group of Companies, Inc. (the
"Borrower") and THE CHASE MANHATTAN BANK (as successor to
CHEMICAL BANK) (the "Bank").
SECTION 1. AMENDMENT: Notwithstanding the dates
specified in Sections 1.1 and 2.13 of the
Agreement and subsequent correspondence,
including the letter dated September 20,
1996 from the Borrower to the Bank
extending the Termination Date to December
1, 1998, Section 1.1 is hereby amended by
changing the Termination Date to "September
30, 2001".
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Borrower hereby represents and warrants to
the Bank that: (a) the representations and
warranties set forth in Section 5 of the
Credit Agreement are true and correct on
and as of the date hereof as if made on and
as of said date; (b) no Event of Default
specified in Section 7 of the Credit
Agreement and no event, which with the
giving of notice or lapse of time or both,
would become such an Event of Default has
occurred and is continuing; (c) the
execution, delivery and performance by the
Borrower of this Amendment are within the
Borrower's corporate powers, have been duly
authorized by all necessary corporate
action, and do not contravene (i) the
Borrower's charter or by-laws, or (ii) law
or any contractual restriction binding on
or affecting the Borrower; (d) no order,
consent, authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or regulatory
body, or any other person, firm,
corporation or other legal entity, is
required for the due execution, delivery
and performance of this Amendment by the
Borrower; and (e) this Amendment is the
legal, valid and binding obligation of the
Borrower, enforceable against the Borrower
in accordance with its terms.
<PAGE>
SECTION 3. MISCELLANEOUS. (a) Unless otherwise
specifically defined herein, each term used
herein which is a defined term shall have
the meaning as defined in the Credit
Agreement; (b) 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 Credit Agreement
shall from and after the date hereof refer
to the Credit Agreement as amended hereby;
and (c) except as specifically amended
above, the Credit Agreement shall remain in
full force and effect and is hereby
ratified and confirmed.
SECTION 4. COUNTERPARTS; EFFECTIVENESS. 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. This Amendment shall
become effective as of the date hereof when
the Bank shall have received duly executed
counterparts hereof signed by the parties
hereto. This Amendment shall be governed
by and construed in accordance with the law
of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above
written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
BY: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
BY: THE CHASE MANHATTAN BANK
(AS SUCCESSOR TO CHEMICAL
BANK)
BY: MITCHELL GERVIS
MITCHELL GERVIS
VICE PRESIDENT
<PAGE>
AMENDMENT NO. 7 TO CREDIT AGREEMENT
AMENDMENT NO. 7, dated as November 23, 1998, 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, August 15, 1994, December 1, 1994,
August 3, 1995 and August 28, 1997 (the "Agreement"),
between The Interpublic Group of Companies, Inc. (the
"Borrower") and SUNTRUST BANK, ATLANTA (formerly TRUST
COMPANY BANK) (the "Bank").
SECTION 1. AMENDMENTS:
(a) Notwithstanding the dates specified in
Sections 1.1 and 2.13 of the Agreement
and subsequent correspondence, including
the letter dated September 20, 1996 from
the Borrower to the Bank extending the
Termination Date to December 1, 1998,
Section 1.1 is hereby amended by
changing the Termination Date to
"September 30, 2001".
(b) Section 2.1 of the Credit Agreement is
hereby amended by changing the figure on
the fifth line therein to the figure
"$25,000,000".
(c) Exhibit A to the Credit Agreement and
the corresponding Note delivered to the
Bank thereunder are hereby amended by
changing the figure on the top left
corner therein to the figure
"$25,000,000".
(d) Upon the effectiveness of this Amendment
pursuant to Section 4 hereof, the Bank
shall be authorized to endorse on the
Note issued to it the following legend:
"The Commitment of the Bank reflected on
the top left corner of this Note has
been increased to $25,000,000 pursuant
to an Amendment dated as of November 23,
1998 to the Credit Agreement referred to
in this Note", or a legend of similar
effect.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Borrower hereby represents and warrants to
the Bank that: (a) the representations and
warranties set forth in Section 5 of the
Credit Agreement are true and correct on
and as of the date hereof as if made on and
<PAGE>
as of said date; (b) no Event of Default
specified in Section 7 of the Credit
Agreement and no event, which with the
giving of notice or lapse of time or both,
would become such an Event of Default has
occurred and is continuing; (c) the
execution, delivery and performance by the
Borrower of this Amendment are within the
Borrower's corporate powers, have been duly
authorized by all necessary corporate
action, and do not contravene (i) the
Borrower's charter or by-laws, or (ii) law
or any contractual restriction binding on
or affecting the Borrower; (d) no order,
consent, authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or regulatory
body, or any other person, firm,
corporation or other legal entity, is
required for the due execution, delivery
and performance of this Amendment by the
Borrower; and (e) this Amendment is the
legal, valid and binding obligation of the
Borrower, enforceable against the Borrower
in accordance with its terms.
SECTION 3. MISCELLANEOUS. (a) Unless otherwise
specifically defined herein, each term used
herein which is a defined term shall have
the meaning as defined in the Credit
Agreement; (b) 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 Credit Agreement
shall from and after the date hereof refer
to the Credit Agreement as amended hereby;
and (c) except as specifically amended
above, the Credit Agreement shall remain in
full force and effect and is hereby
ratified and confirmed.
SECTION 4. COUNTERPARTS; EFFECTIVENESS. 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. This Amendment shall
become effective as of the date hereof when
the Bank shall have received duly executed
counterparts hereof signed by the parties
hereto. This Amendment shall be governed
by and construed in accordance with the law
of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above
written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
BY: ALAN M. FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
SUNTRUST BANK, ATLANTA
(FORMERLY TRUST COMPANY BANK)
BY: LAURA G. HARRISON
LAURA G. HARRISON
ASSISTANT VICE PRESIDENT
BY: W. DAVID WISDOM
W. DAVID WISDOM
GROUP VICE PRESIDENT
<PAGE>
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT NO. 3, dated as of November 23, 1998, to the
Credit Agreement dated as of December 1, 1994, as amended on
August 3, 1995 and August 28, 1997 (the "Agreement"),
between The Interpublic Group of Companies, Inc. (the
"Borrower") and BANK OF AMERICA NT & SA (the "Bank").
SECTION 1. AMENDMENTS:
(a) Notwithstanding the dates specified in
Sections 1.1 and 2.13 of the Agreement
and subsequent correspondence, including
the letter dated September 20, 1996 from
the Borrower to the Bank extending the
Termination Date to December 1, 1998,
Section 1.1 is hereby amended by
changing the Termination Date to
"September 30, 2001".
(b) Section 2.1 of the Credit Agreement is
hereby amended by changing the figure on
the fifth line therein to the figure
"$25,000,000".
(c) Exhibit A to the Credit Agreement and
the corresponding Note delivered to the
Bank thereunder are hereby amended by
changing the figure on the top left
corner therein to the figure
"$25,000,000".
(d) Upon the effectiveness of this Amendment
pursuant to Section 4 hereof, the Bank
shall be authorized to endorse on the
Note issued to it the following legend:
"The Commitment of the Bank reflected on
the top left corner of this Note has
been increased to $25,000,000 pursuant
to an Amendment dated as of November 23,
1998 to the Credit Agreement referred to
in this Note", or a legend of similar
effect.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Borrower hereby represents and warrants to
the Bank that: (a) the representations and
warranties set forth in Section 5 of the
Credit Agreement are true and correct on
and as of the date hereof as if made on and
as of said date; (b) no Event of Default
specified in Section 7 of the Credit
Agreement and no event, which with the
<PAGE>
giving of notice or lapse of time or both,
would become such an Event of Default has
occurred and is continuing; (c) the
execution, delivery and performance by the
Borrower of this Amendment are within the
Borrower's corporate powers, have been duly
authorized by all necessary corporate
action, and do not contravene (i) the
Borrower's charter or by-laws, or (ii) law
or any contractual restriction binding on
or affecting the Borrower; (d) no order,
consent, authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or regulatory
body, or any other person, firm,
corporation or other legal entity, is
required for the due execution, delivery
and performance of this Amendment by the
Borrower; and (e) this Amendment is the
legal, valid and binding obligation of the
Borrower, enforceable against the Borrower
in accordance with its terms.
SECTION 3. MISCELLANEOUS. (a) Unless otherwise
specifically defined herein, each term used
herein which is a defined term shall have
the meaning as defined in the Credit
Agreement; (b) 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 Credit Agreement
shall from and after the date hereof refer
to the Credit Agreement as amended hereby;
and (c) except as specifically amended
above, the Credit Agreement shall remain in
full force and effect and is hereby
ratified and confirmed.
SECTION 4. COUNTERPARTS; EFFECTIVENESS. 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. This Amendment shall
become effective as of the date hereof when
the Bank shall have received duly executed
counterparts hereof signed by the parties
hereto. This Amendment shall be governed
by and construed in accordance with the law
of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above
written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
BY: ALAN M.FORSTER
ALAN M. FORSTER
VICE PRESIDENT & TREASURER
BANK OF AMERICA NT & SA
BY: MICHAEL R. HEREDIA
MICHAEL R. HEREDIA
SENIOR VICE PRESIDENT
<PAGE>
EXHIBIT 11
<TABLE> Page 1 of 3
<CAPTION> THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
1998 1997<F1> 1996<F1> 1995<F1> 1994<F1>
<S> <C> <C> <C> <C> <C>
BASIC:
Net income before effect of
accounting changes $309,905 $200,378 $214,619 $134,311 $108,767
Effect of accounting change - - - - (34,325)
________ ________ ________ ________ ________
Net income, as adjusted $309,905 $200,378 $214,619 $134,311 $ 74,442
Weighted average number of
common shares outstanding 135,485,326 130,249,946 130,297,369 127,802,633 125,563,727
Basic earnings per share data:
Income before effect of
accounting change $2.29 $1.54 $1.65 $1.05 $.87
Effect of accounting change - - - - (.27)
________ _______ _______ _______ _______
Net Income $2.29 $1.54 $1.65 $1.05 $.60
</TABLE>
<PAGE>
<TABLE> EXHIBIT 11
<CAPTION> Page 2 of 3
THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
1998 1997<F1> 1996<F1> 1995<F1> 1994<F1>
<S> <C> <C> <C> <C> <C>
DILUTED:
Net income before effect of
accounting change $ 309,905 $ 200,378 $ 214,619 $134,311 $ 108,767
Effect of accounting change - - - - (34,325)
After tax interest savings
on assumed conversion of
subordinated debentures<F2> - 5,929 6,410 - -
Add: Dividends paid net of
related income tax applicable
to the Restricted Stock Plan 541 447 384 461 366
Net income, as adjusted $ 310,446 $ 206,754 $ 221,413 $ 134,772 $ 74,808
Weighted average number of
common shares outstanding 135,485,326 130,249,946 130,297,369 127,802,633 125,563,727
Assumed conversion of
subordinated debentures<F2> 2,660 4,010,291 4,466,502 - -
Weighted average number of
incremental shares in
connection with assumed
exercise of stock options 3,310,367 2,910,648 2,219,373 1,921,923 1,523,756
Weighted average number of
incremental shares in
connection with the
Restricted Stock Plan 1,726,919 1,638,647 1,605,564 2,080,067 1,871,346
Total 140,525,272 138,809,532 138,588,808 131,804,623 128,958,829
Diluted Earnings Per Share Data:
Income before effect of
accounting change $2.21 $1.49 $1.60 $1.02 $ .84
Effect of accounting change - - - - (.27)
Net Income $2.21 $1.49 $1.60 $1.02 $ .57
<PAGE>
Page 3 of 3
<FN>
<F1> Restated to reflect the aggregate effect of acquisitions accounted for as poolings of interests.
<F2> The computation of diluted EPS for 1998 and 1997 excludes the assumed conversion of the 1.80% Convertible Subordinated Notes
due 2004 because they were antidilutive. Similarly, the computation of diluted EPS for 1995 and 1994 excludes the assumed
conversion of the 3 3/4% Convertible Subordinated Debentures due 2002 as they were antidilutive.
</TABLE>
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC.
Look behind Mankind's greatest achievements and - even when they bear a
single name - you are likely to find that they are the result of a team of
people working for a common goal. The theme of this annual report,
Partners in Global Communications, reflects our conviction at The
Interpublic Group of Companies, Inc. ("Interpublic") that partnerships are
the building blocks that create success in the world of business, just as
they do in the world at large. As one of the largest advertising and
marketing communications companies in the world, our contributors to these
partnerships include the parent company, Interpublic; McCann-Erickson
WorldGroup; Ammirati Puris Lintas; The Lowe Group; Western Initiative
Media Worldwide; DraftWorldwide; International Public Relations; Octagon
and many other related companies. Our more than 34,000 employees in more
than 120 countries work continually to create, build and help maintain
strong partnerships with their Clients and in partnership between Clients
and Consumers through their Brands and services. It was the spirit of
partnership that sparked some of history's most innovative thinking and
resulted in the historic achievements of such people as the Wright
Brothers, Marie and Pierre Curie and the New York Yankees, to name but a
few. It is our ambition at Interpublic to follow, in our own way, in that
great tradition.
<PAGE>
FINANCIAL HIGHLIGHTS
(Dollars in Thousands Except Per Share Data)
______________________________________________________________________
December 31
Percent
1998 1997 Increase
______________________________________________________________________
Operating Data
Gross Income $ 3,968,728 $ 3,482,384 14.0%
Net Income $ 309,905 $ 200,378 54.7%
Per Share Data
Basic EPS $ 2.29 $ 1.54 48.7%
Diluted EPS $ 2.21 $ 1.49 48.3%
Cash Dividends $ .58 $ .50 16.0%
Share Price at December 31 $ 79 3/4 $ 49 13/16 60.1%
Weighted-average shares:
Basic 135,485,326 130,249,946 4.0%
Diluted 140,525,272 138,809,532 1.2%
Financial Position
Cash and Cash Equivalents $ 808,803 $ 738,112 9.6%
Total Assets $ 6,942,823 $ 5,983,443 16.0%
Book Value Per Share $ 9.07 $ 7.39 22.7%
Return on AverAge
Stockholders' Equity 27.1% 21.8% 24.3%
Gross Income
1998 $3,968,728
1997 $3,482,384<F2>
1996 $2,983,899<F2>
Diluted Earnings Per Share
1998 $ 2.21
1997 $ 1.49<F2>
1996 $ 1.60<F2><F1>
Cash Dividends Per Share
1998 $ .58
1997 $ .50
1996 $ .44<F1>
Return On Average Stockholders' Equity
1998 27.1%
1997 21.8%<F2>
1996 28.3%<F2>
________________________________________________________________________
<F1> Restated to reflect a three-for-two stock split effected July 1997.
<F2> Restated to reflect the aggregate effect of poolings of interests
transactions.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
During the second quarter of 1998, the Company acquired three companies
which were accounted for as poolings of interests. At that time, the
Company's financial statements, including the related notes, were restated
to include the results of operations, financial position and cash flows of
those pooled entities, in addition to all prior pooled entities. The
periods restated included all periods presented in the Company's 1997
annual report, as well as the first quarter results for 1998.
During the second half of 1998, two additional companies were acquired
which were accounted for as poolings of interests. As a result of those
acquisitions, the Company's financial statements have been restated for a
second time this year. The results for the first three quarters of 1998,
as well as all prior periods presented, have been restated in this report
to give effect to all of the 1998 pooled entities.
A noteworthy item is that one of the pooled companies acquired in the
second quarter of 1998 recorded after-tax special compensation charges in
the fourth quarter of 1997 totaling $29.7 million, as further explained in
Note 7. The following discussion relates to the combined results of the
Company after giving effect to all pooled companies.
RESULTS OF OPERATIONS
Worldwide income from commissions and fees increased 14.7% in 1998, to
more than $3.8 billion. This follows an increase of 16.6% in 1997. The
continued growth in revenue was mainly due to the expansion of the
business and new business gains.
International revenue, which represented 50% of worldwide revenue in 1998,
increased $237.1 million or 14.1% over 1997. International revenue would
have increased an additional $78.4 million, or 4.7% except for the
strengthening of the U.S. dollar against major currencies. During 1997,
revenue from international operations increased $133.0 million, or 8.6%
compared to 1996. During 1998, commissions and fees from domestic
operations increased 15.2%, primarily due to the effect of new business
gains and acquisitions. Commissions and fees from domestic operations
increased 26.1% in 1997.
<PAGE>
Other income, net includes interest and other finance income, gains and
losses from investments, and other nonoperating and miscellaneous items.
During 1998, other income, net decreased 4% compared to 1997 and included
net gains recorded in connection with the Company's investment in CKS
Group, Inc., as well as other equity gains. In 1997 other income, net
increased 18.4% over the 1996 level. The 1997 increase was primarily due
to the gain on the sale of investments, including All American
Communications, Inc. and CKS Group, Inc.
Worldwide operating expenses increased 12% in 1998. Operating expenses
outside the United States increased 14.7%, while domestic operating
expenses increased 9.2%. These increases were commensurate with the
increases in revenue, as continuing cost containment efforts kept costs at
appropriate levels. During 1997, worldwide operating expenses increased
16.8%, comprised of a 13.9% increase in international expenses and a 20%
increase in domestic expenses.
Significant portions of the Company's expenses relate to employee
compensation and various employee incentive and benefit programs, which
are based primarily upon operating results. In 1997, as part of its
continuing cost containment efforts, the Company announced that it was
curtailing its domestic pension plan effective April 1, 1998 and recorded
pre-tax charges of approximately $16.7 million. The Company continues to
sponsor a domestic defined contribution plan.
Interest expense increased only 1.6% in 1998 after increasing 11.8% in
1997. The increase in 1997 was primarily attributable to the issuance of
the 1.80% Convertible Subordinated Notes due 2004 and additional financing
of acquisitions.
Equity in net income of unconsolidated affiliates increased slightly in
1998, due primarily to the acquisition of several unconsolidated
affiliates in 1998. Equity income decreased by $5.9 million in 1997
compared to 1996, due to the consolidation of a company previously
accounted for on the equity basis.
<PAGE>
Income applicable to minority interests increased by $4.4 million in 1998
and by $8.8 million in 1997. The 1998 increase was primarily due to the
strong performance of companies that were not wholly owned, as well as the
acquisition of additional such entities during 1998. The 1997 increase was
also impacted by the consolidation of a company with a significant
minority interest, which was previously accounted for on the equity basis.
The Company's effective income tax rate was 41.2% in 1998, 46.1% in 1997
and 41.9% in 1996. The higher rate in 1997 was largely attributable to the
special compensation charges recorded by one of the pooled companies, as
described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position continued to be strong during 1998, with
cash and cash equivalents of $808.8 million, an increase of $70.7 million
over the 1997 year-end balance. Working capital was $118.6 million, which
was $97.8 million below the unusually high level at the end of 1997. The
high level of working capital in 1997 was a result of growing operations
and the payment of short-term borrowings with some of the proceeds from
the 1.80% Convertible Subordinated Notes due 2004 issued during the latter
part of 1997. The current ratio was slightly above 1 to 1 for 1998 and
1997. The Company utilized its strong financial position to obtain short-
term and long-term financing on competitive terms.
The principal use of the Company's working capital is to provide for the
operating needs of its subsidiaries, which includes 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 for media on a timely basis. Other uses of working capital
include the repurchase of the Company's common stock, payment of cash
dividends, capital expenditures and acquisitions.
The Company acquires shares of its stock on an ongoing basis. During 1998,
the Company purchased approximately 2.7 million shares of its common
stock, compared to 3.5 million shares in 1997. The Company repurchases its
stock to meet its obligations under various compensation plans.
<PAGE>
The Company, excluding pooled entities, paid $76.9 million ($.58 per
share) in dividends to stockholders in 1998, a 26% increase over the $61.2
million ($.50 per share) paid during 1997.
The Company's capital expenditures in 1998 were $136.7 million. The
primary purpose of these expenditures was to modernize the offices and
upgrade the computer and communications systems to better serve clients.
During 1997, the Company spent $107 million for capital expenditures. The
increase in capital expenditures resulted from the continuing growth of
operations.
During 1998, the Company paid approximately $660 million in cash and stock
to acquire a number of marketing communications companies to complement
its existing agency systems and to optimally position itself in the ever-
broadening communications marketplace. This amount includes the value of
stock issued for pooled companies.
The Company and its subsidiaries maintained credit facilities in the
United States and in countries where they conduct business to manage their
future liquidity requirements.
Summary of
Short-term Credit Facilities at December 31
(Dollars in millions)
Domestic International
Available Utilized Available Utilized
1998 $319 $12 $257 $106
1997 $327 $20 $211 $ 86
In the fourth quarter of 1997, the Company redeemed its 3 3/4% Convertible
Subordinated Debentures due 2002. Substantially all of the outstanding
debentures were converted into approximately 4.3 million shares of the
Company's common stock.
Approximately 49% and 46% of the Company's assets at December 31, 1998 and
1997, respectively, were outside the United States. The Company actively
hedges to minimize the impact of foreign exchange exposure. However, the
notional value and fair value of all outstanding forwards and options
contracts at the end of the year were not significant.
<PAGE>
The Company's management continuously evaluates and manages its exposure
to foreign exchange, economic and political risks. The foreign exchange
crisis in Asia had a minimal impact on the Company partly due to the
agency systems' contingency plans that included active hedging,
repatriation of cash, cost-cutting and limiting capital expenditures.
Additionally, the Company believes that the more recent economic
developments in Brazil will not have a significant impact.
Return on average stockholders' equity was 27.1% in 1998 and 21.8% in
1997.
The Company is not aware of any significant occurrences that could
negatively impact its liquidity. However, should such a trend develop, the
Company believes that there are sufficient funds available under its
existing lines of credit and from internal cash-generating capabilities to
meet future needs.
OTHER MATTERS
Year 2000 Issue
The Year 2000 (or "Y2K") Issue refers to the problem caused by computer
programs that have been written to reflect two-digit years, with the
century being assumed as "19". This practice was widely accepted by the
applications development community in the 1960's through the early 1980's,
with many of these programs remaining in use today. As a result, programs
that are date sensitive may recognize the year "00" as 1900, rather than
the year 2000. This may cause programs to fail or cause them to
incorrectly report and accumulate data.
The Company and its operating subsidiaries are in the final phases of
executing a Year 2000 readiness program with the goal of having all
"mission critical" systems functioning properly prior to January 1, 2000.
Many of the subsidiaries in the Company's larger markets are dependent
upon third party systems providers, while subsidiaries in the secondary
markets rely primarily on off-the-shelf applications or home-grown
applications. Considerable progress has been made with third party
systems providers in larger markets with respect to remediating their Year
2000 issues. Although the secondary markets present a greater challenge,
they typically involve smaller offices that are less dependent upon
automated solutions.
<PAGE>
In 1997, the Company established a Y2K Project Management Office and
shortly thereafter created a Y2K Task Force, comprised of representatives
from the operating companies. Through the Y2K Task Force, the Company in
conjunction with outside consultants, is working to address the impact of
the Year 2000 Issue on the Company. The Company has inventoried and
assessed date sensitive computer software applications, and approximately
35% of systems were identified as requiring some degree of remediation. In
addition, the Company has reviewed all of its hardware believed to contain
embedded chips, including personal computers, file servers, mid-range and
mainframe computers, telephone switches and routers. The Company has also
investigated its security systems, life safety systems, HVAC systems and
elevators in the majority of its facilities. As part of this effort, the
Company has identified those systems and applications that are deemed
"mission critical", which are being handled on a priority basis and has
developed a detailed project and remediation plan that includes system
testing schedules and contingency planning. To date the Company has
completed approximately 90% of its remediation and compliance testing for
"mission critical" applications, with the remaining 10% scheduled for
completion by April 30, 1999. The Company's Board of Directors, through
the Audit Committee, has been monitoring the progress of this project.
Project progress reports are given to the Audit Committee at each
regularly scheduled Audit Committee meeting.
The Company estimates that the modification and testing of its hardware
and software will cost approximately $20 million, of which 50% has been
spent to date. In addition, the Company has accelerated the implementation
of a number of business process re-engineering projects over the past few
years that have provided both Year 2000 readiness and increased
functionality of certain systems. The Company estimates that the hardware
and software costs incurred in connection with these projects are
approximately $60 million, which are being capitalized. Included in the
above-mentioned Y2K costs are internal costs incurred for the Y2K project
which are primarily payroll related costs for the information systems
groups. A substantial portion of these estimated costs relates to systems
and applications that were anticipated and budgeted. All of the above
amounts have been updated to include companies acquired during 1998.
<PAGE>
The Company is also in the process of developing contingency plans for
affected areas of its operations. The Y2K Project Management Office has
drafted a Contingency Plan Guideline. This guideline requires the
development of contingency plans for applications, vendors, facilities,
business partners and clients. The contingency plans are being developed
to cover those elements of the business that have been deemed "mission
critical" and extend beyond software applications. The contingency plans
will include procedures for workforce mobilization, crisis management,
facilities management, disaster recovery and damage control, and are
scheduled for completion by April 30, 1999. The Company recognizes that
contingency plans may need to be adjusted during 1999 and therefore
considers them working documents.
The Company is assessing the Year 2000 readiness of material third parties
by asking all critical vendors, business partners and facility managers to
provide letters of compliance. In addition to sending out over 70,000
vendor compliance letters, the Company is conducting detailed tests and
face to face Y2K working sessions with those identified as key vendors
with respect to "mission critical" systems. Furthermore, the Company is
working with the American Association of Advertising Agencies and other
trade associations to form Year 2000 working groups that are addressing
the issues on an industry level.
The Company's efforts to address the Year 2000 Issue are designed to avoid
any material adverse effect on its operations or financial condition.
Notwithstanding these efforts, however, there is no assurance that the
Company will not encounter difficulties due to the Year 2000 Issue. The
"most reasonably likely worst case scenario" would be a significant
limitation on the Company's ability to continue to provide business
services for an undetermined duration. The Company also recognizes that
it is dependent upon infrastructure services and third parties, including
suppliers, broadcasters, utility providers and business partners, whose
failure may also significantly impact its ability to provide business
services.
<PAGE>
Cautionary Statement
Statements by the Company in this document and in other contexts
concerning its Year 2000 compliance efforts that are not historical fact
are forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results
to differ materially from those anticipated in the forward-looking
statements, including, but not limited to, the following: (i)
uncertainties relating to the ability of the Company to identify and
address Year 2000 issues successfully and in a timely manner and at costs
that are reasonably in line with the Company's estimates; and (ii) the
ability of the Company's vendors, suppliers, other service providers and
customers to identify and address successfully their own Year 2000 issues
in a timely manner.
New Accounting Guidance
As more fully described in Note 13, in June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS
133), which the Company is required to adopt effective January 1, 2000.
The Company does not believe the effect of adopting SFAS 133 will be
material to its financial condition.
Conversion to the Euro
On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and
the European Union's common currency (the "Euro"). The Company conducts
business in member countries. The transition period for the introduction
of the Euro will be between January 1, 1999, and June 30, 2002. The
Company is addressing the issues involved with the introduction of the
Euro. The major important issues facing the Company include: converting
information technology systems; reassessing currency risk; negotiating and
amending contracts; and processing tax and accounting records.
Based upon progress to date the Company believes that use of the Euro will
not have a significant impact on the manner in which it conducts its
business affairs and processes its business and accounting records.
Accordingly, conversion to the Euro is not expected to have a material
effect on the Company's financial condition or results of operations.
<PAGE>
Report of Independent Accountants
1301 Avenue of the Americas
New York, New York 10019
To the Board of Directors and Stockholders of February 19,1999
The Interpublic Group of Companies, Inc.
In our opinion, based upon our audits and the reports of other auditors,
the accompanying consolidated balance sheets and the related consolidated
statements of income, of cash flows, and of stockholders' equity and
comprehensive income present fairly, in all material respects, the
financial position of The Interpublic Group of Companies, Inc. and its
subsidiaries (the "Company") at December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1998, 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
did not audit the financial statements of International Public Relations
plc ("IPR"), a wholly-owned subsidiary, which statements reflect revenues
constituting approximately 6% and 7% of the related 1997 and 1996
consolidated financial statement total. Additionally, we did not audit
the financial statements of Hill, Holliday, Connors, Cosmopulos, Inc.
("Hill Holliday"), a wholly-owned subsidiary, which statements reflect
total net loss constituting approximately 17% of the related 1997
consolidated financial statement total. Those statements were audited by
other auditors whose reports thereon have been furnished to us, and our
opinion expressed herein, insofar as it relates to the amounts included
for IPR and Hill Holliday, is based solely on the reports of the other
auditors. 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 and the reports of other auditors provide a reasonable basis
for the opinion expressed above.
/s/ By: PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
New York, New York
February 19, 1999
REPORT OF INDEPENDENT AUDITORS TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF INTERNATIONAL PUBLIC RELATIONS PLC
We have audited the consolidated balance sheets of International Public
Relations plc and subsidiaries as of 31 December 1997 and 31 October 1996,
and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the two years in the periods ended 31 December
1997 and 31 October 1996, all expressed in pounds sterling. These
financial statements, which are not separately presented herein, are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United Kingdom, which are similar to those generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of
International Public Relations plc and subsidiaries at 31 December 1997
and 31 October 1996, and the consolidated results of their operations and
their cash flows for each of the two years in the periods ended 31
December 1997 and 31 October 1996 in conformity with generally accepted
accounting principles in the United States.
Ernst & Young
London
3 February 1999
Report of Independent Auditors
Board of Directors
Hill, Holliday, Connors, Cosmopulos, Inc.
We have audited the consolidated balance sheet of Hill, Holliday, Connors,
Cosmopulos, Inc. and Subsidiaries (the Company) as of December 31, 1997,
and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the twelve-month period then ended
(not separately presented herein). These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Hill, Holliday, Connors, Cosmopulos, Inc. and Subsidiaries at
December 31, 1997, and the consolidated results of their operations and
their cash flows for the twelve-month period then ended, in conformity
with generally accepted accounting principles.
/s/Ernst & Young LLP
Boston, Massachusetts
March 13, 1998
<PAGE>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
ASSETS 1998 1997
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (includes
certificates of deposit: 1998-$152,064;
1997-$256,934) $ 808,803 $ 738,112
Marketable securities 31,733 31,944
Receivables (net of allowance for doubtful
accounts: 1998-$53,093; 1997-$44,110) 3,522,616 3,104,606
Expenditures billable to clients 276,610 242,965
Prepaid expenses and other current assets 137,183 115,895
Total current assets 4,776,945 4,233,522
OTHER ASSETS:
Investment in unconsolidated affiliates 47,561 46,665
Deferred taxes on income 97,350 75,661
Other investments and miscellaneous
assets 299,967 223,832
Total other assets 444,878 346,158
FIXED ASSETS, AT COST:
Land and buildings 95,228 83,621
Furniture and equipment 650,037 554,608
745,265 638,229
Less: accumulated depreciation 420,864 365,877
324,401 272,352
Unamortized leasehold improvements 115,200 103,494
Total fixed assets 439,601 375,846
Intangible assets (net of accumulated
amortization: 1998-$504,787;
1997-$448,952) 1,281,399 1,027,917
TOTAL ASSETS $6,942,823 $5,983,443
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in thousands except per share data)
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
<S> <C> <C>
CURRENT LIABILITIES:
Payable to banks $ 214,464 $ 187,820
Accounts payable 3,613,699 3,189,137
Accrued expenses 624,517 478,962
Accrued income taxes 205,672 161,236
Total current liabilities 4,658,352 4,017,155
NONCURRENT LIABILITIES:
Long-term debt 298,691 317,268
Convertible subordinated debentures
and notes 207,927 201,768
Deferred compensation and reserve
for termination allowances 319,526 273,408
Accrued postretirement benefits 48,616 47,404
Other noncurrent liabilities 88,691 72,986
Minority interests in consolidated
subsidiaries 55,928 31,917
Total noncurrent liabilities 1,019,379 944,751
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value
shares authorized: 20,000,000
shares issued: none
Common Stock, $.10 par value
shares authorized: 225,000,000
shares issued:
1998 - 145,722,579;
1997 - 143,567,843 14,572 14,357
Additional paid-in capital 652,692 515,892
Retained earnings 1,116,365 886,201
Adjustment for minimum pension liability (36,612) (13,207)
Net unrealized gain on equity securities 9,889 12,405
Cumulative translation adjustment (133,753) (158,969)
1,623,153 1,256,679
Less:
Treasury stock, at cost:
1998 - 6,187,172 shares;
1997 - 5,271,046 shares 286,713 171,088
Unearned ESOP compensation - 7,420
Unamortized expense of restricted
stock grants 71,348 56,634
Total stockholders' equity 1,265,092 1,021,537
Commitments and contingencies (See Note 14)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,942,823 $5,983,443
Information for 1997 has been restated to reflect the aggregate effect of
the acquisitions accounted for as poolings of interests.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31
(Dollars in thousands except per share data)
<TABLE>
1998 1997 1996
<S> <C> <C> <C>
Commissions and fees $3,844,340 $3,352,776 $2,874,417
Other income, net 124,388 129,608 109,482
Gross income 3,968,728 3,482,384 2,983,899
Salaries and related expenses 2,167,931 1,913,356 1,619,619
Office and general expenses 1,179,227 1,075,176 938,717
Interest expense 58,699 57,793 51,695
Special compensation
charges - 32,229 -
Total costs and expenses 3,405,857 3,078,554 2,610,031
Income before provision for
income taxes 562,871 403,830 373,868
Provision for income taxes 232,005 186,246 156,783
Income of consolidated
companies 330,866 217,584 217,085
Income applicable to minority
interests (28,125) (23,754) (14,914)
Equity in net income of
unconsolidated affiliates 7,164 6,548 12,448
Net Income $ 309,905 $ 200,378 $ 214,619
Per Share Data:
Basic EPS $2.29 $1.54 $1.65
Diluted EPS $2.21 $1.49 $1.60
The accompanying notes are an integral part of these financial statements.
Information for 1996 and 1997 has been restated to reflect the aggregate
effect of the acquisitions accounted for as poolings of interests.
</TABLE>
<PAGE>
<TABLE> FINANCIAL STATEMENTS
(Dollars in thousands) THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<S> YEAR ENDED DECEMBER 31
CASH FLOWS FROM OPERATING ACTIVITIES: <C>1998 <C>1997 <C>1996
Net Income $309,905 $200,378 $214,619
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization of fixed assets 103,029 84,371 69,997
Amortization of intangible assets 55,835 41,110 36,858
Amortization of restricted stock awards 20,272 16,222 14,451
Stock bonus plans/ESOP - 1,389 4,067
Provision for deferred income taxes (12,941) 7,743 3,661
Noncash pension plan charges - 16,700 -
Equity in net income of unconsolidated affiliates (7,164) (6,548) (12,448)
Income applicable to minority interests 28,125 23,754 14,914
Translation losses/(gains) 1,847 (319) 3,262
Special compensation charges - 31,553 -
Net gain on investments (34,737) (44,626) (35,211)
Other 9,519 (11,092) 4,091
Change in assets and liabilities, net of acquisitions:
Receivables (243,966) (340,804) (291,351)
Expenditures billable to clients (25,988) (46,512) (26,809)
Prepaid expenses and other assets (38,613) (13,483) (39,188)
Accounts payable and accrued expenses 305,076 296,849 302,676
Accrued income taxes 20,108 2,311 27,015
Deferred compensation and reserve for
termination allowances 14,398 18,397 (13,503)
Net cash provided by operating activities 504,705 277,393 277,101
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net (121,751) (90,297) (55,833)
Capital expenditures (136,738) (107,065) (91,904)
Proceeds from sales of assets 27,483 114,023 40,146
Net proceeds from marketable securities 3,934 324 476
Investment in unconsolidated affiliates (16,660) (8,371) 17,210
Net cash used in investing activities (243,732) (91,386) (89,905)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings 15,304 31,188 (28,450)
Proceeds from long-term debt 12,253 256,337 152,058
Payments of long-term debt (25,882) (31,223) (128,717)
Proceeds from ESOP 7,420 - -
Treasury stock acquired (164,928) (144,094) (86,949)
Issuance of common stock 33,688 37,750 20,091
Cash dividends - Interpublic (76,894) (61,242) (51,786)
Cash dividends - pooled companies (2,847) (10,770) (6,933)
Net cash (used in) provided by financing activities (201,886) 77,946 (130,686)
Effect of exchange rates on cash and cash equivalents 11,604 (41,892) (2,554)
Increase in cash and cash equivalents 70,691 222,061 53,956
Cash and cash equivalents at beginning of year 738,112 516,051 462,095
Cash and cash equivalents at end of year $808,803 $738,112 $516,051
The accompanying notes are an integral part of these financial statements.
Information for 1996 and 1997 has been restated to reflect the aggregate effect of the acquisitions accounted for as
poolings of interests.
</TABLE
</TABLE>
<TABLE> FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(Dollars in thousands) FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1998
Accumulated Unamortized
Additional Other Expense Unearned
Common Paid-In Retained Comprehensive Treasury of Restricted ESOP
Stock Capital Earnings Income (loss) Stock Stock Grants Plan Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1997 $14,357 $515,892 $886,201 $(159,771) $(171,088) $(56,634) $(7,420) $1,021,537
Comprehensive income:
Net income $309,905 $ 309,905
Adjustment for minimum pension
liability (23,405) (23,405)
Change in market value of
securities available-for-sale (2,516) (2,516)
Foreign currency translation
adjustment 25,216 25,216
Total comprehensive income $ 309,200
Cash dividends - IPG (76,894) (76,894)
Equity adjustments-
pooled companies (2,847) (2,847)
Awards of stock under
Company plans:
Achievement stock and
incentive awards 274 110 384
Restricted stock,
net of forfeitures 63 36,619 (2,406) (14,714) 19,562
Employee stock purchases 26 13,325 13,351
Exercise of stock options,
including tax benefit 123 42,518 42,641
Purchase of Company's own stock (164,928) (164,928)
Issuance of shares
for acquisitions 43,062 51,599 94,661
Conversion of convertible
debentures 3 1,002 1,005
Payments from ESOP 7,420 7,420
_______________________________________________________________________________________________________________________________
BALANCES, DECEMBER 31, 1998 $14,572 $ 652,692 $1,116,365 $(160,476) $(286,713) $(71,348) $ - $1,265,092
</TABLE>
<PAGE>
<TABLE> FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(Dollars in thousands) FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1998
Accumulated Unamortized
Additional Other Expense Unearned
Common Paid-In Retained Comprehensive Treasury of Restricted ESOP
Stock Capital Earnings Income (loss) Stock Stock Grants Plan Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1996 $13,641 $246,063 $759,987 $ (96,972) $ (49,082) $(47,350) $(7,800) $ 818,487
Comprehensive income:
Net income $200,378 $ 200,378
Adjustment for minimum pension
liability (228) (228)
Change in market value of
securities available-for-sale 12,405 12,405
Foreign currency translation
adjustment (74,976) (74,976)
Total comprehensive income $137,579
Cash dividends - IPG (61,242) (61,242)
Equity adjustments-
pooled companies (12,922) (12,922)
Awards of stock under
Company plans:
Achievement stock and
incentive awards 787 175 962
Restricted stock,
net of forfeitures 53 27,821 (3,664) (9,284) 14,926
Employee stock purchases 23 9,684 9,707
Exercise of stock options,
including tax benefit 138 40,855 40,993
Purchase of Company's own stock (144,094) (144,094)
Issuance of shares
for acquisitions 49,877 25,577 75,454
Conversion of convertible
debentures 443 118,357 118,800
Par value of shares issued
for three-for-two stock split 59 59
Payments from ESOP 380 380
Special compensation
charges 27,324 27,324
Deferred stock bonus charges (4,876) (4,876)
BALANCES, DECEMBER 31, 1997 $14,357 $ 515,892 $ 886,201 $(159,771) $(171,088) $(56,634) $(7,420) $1,021,537
</TABLE>
<TABLE>
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(Dollars in thousands) FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1998
Accumulated Unamortized
Additional Other Expense Unearned
Common Paid-In Retained Comprehensive Treasury of Restricted ESOP
Stock Capital Earnings Income (loss) Stock Stock Grants Plan Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1995 $ 8,963 $234,007 $609,683 $(106,280) $ - $(39,664) $(9,900) $696,809
Comprehensive income:
Net income $214,619 $214,619
Adjustment for minimum pension
Liability (3,891) (3,891)
Foreign currency translation
adjustment 13,199 13,199
Total comprehensive income $223,927
Cash dividends - IPG (51,786) (51,786)
Equity adjustments-
pooled companies (40,874) (7,982) 40,874 (7,982)
Awards of stock under
Company plans:
Achievement stock and
incentive awards 331 103 434
Restricted stock,
net of forfeitures 49 22,831 (1,244) (7,686) 13,950
Employee stock purchases 19 7,273 7,292
Exercise of stock options,
including tax benefit 61 17,119 17,180
Purchase of Company's own stock (86,949) (86,949)
Issuance of shares
for acquisitions 4,453 (1,866) 2,587
Conversion of convertible
debentures 2 923 925
Par value of shares issued
for three-for-two stock split 4,547 (4,547) -
Payments from ESOP 2,100 2,100
BALANCES, DECEMBER 31, 1996 $13,641 $246,063 $759,987 $ (96,972) $(49,082) $(47,350) $(7,800) $818,487
The accompanying notes are an integral part of these financial statements.
Information for 1995, 1996 and 1997 has been restated to reflect the aggregate effect of the acquisitions accounted for as
poolings of interests.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company is a worldwide provider of advertising agency and related
services. The Company conducts business through the following subsidiaries:
McCann-Erickson WorldGroup, Ammirati Puris Lintas, The Lowe Group, Western
Initiative Media Worldwide, DraftWorldwide, Allied Communications Group,
Octagon, International Public Relations and other related companies. The
Company also has arrangements through association with local agencies in
various parts of the world. Other "marketing communications" activities
conducted by the Company are market research, sales promotion, product
development, direct marketing, telemarketing, public relations and other
related services.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries, most of which are wholly owned. The Company also has
certain investments in unconsolidated affiliates that are carried on the
equity basis. The Company acquired five companies in 1998 which were
accounted for as poolings of interests. The Company's consolidated
financial statements, including the related notes, have been restated as of
the earliest period presented to include the results of operations,
financial position and cash flows of the 1998 pooled entities in addition
to all prior pooled entities.
Short-term and Long-term Investments
The Company's investments in marketable and equity securities are
categorized as available-for-sale securities, as defined by Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain
Investments in Debt and Equity Securities". Unrealized holding gains and
losses are reflected as a net amount as a separate component of
stockholders' equity until realized. The cost of securities sold is based
on the average cost of securities when computing realized gains and losses.
<PAGE>
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Translation of Foreign Currencies
Balance sheet accounts are translated principally at rates of exchange
prevailing at the end of the year except for fixed assets and related
depreciation in countries with highly inflationary economies which 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, in which case they 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.
Leasehold improvements and rights are amortized over the terms of related
leases. Company policy provides for the capitalization of all major
expenditures for renewal and improvements and for current charges to income
for repairs and maintenance.
Long-lived Assets
The excess of purchase price over the fair value of net tangible assets
acquired is amortized on a straight-line basis over periods not exceeding
40 years.
<PAGE>
The Company evaluates the recoverability of the carrying value of long-
lived assets whenever events or changes in circumstances indicate that the
net book value of an operation may not be recoverable. If the sum of
projected future undiscounted cash flows of an operation is less than its
carrying value, an impairment loss is recognized. The impairment loss is
measured by the excess of the carrying value over fair value based on
estimated discounted future cash flows or other valuation measures.
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.
Earnings per Common and Common Equivalent Share
As further discussed in Note 3, the Company adopted Statement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings Per Share", in the
fourth quarter of 1997. Basic earnings per share is based on the weighted-
average number of common shares outstanding during each year. Diluted
earnings per share also includes common equivalent shares applicable to
grants under the stock incentive and stock option plans and the assumed
conversion of convertible subordinated debentures and notes, if they are
determined to be dilutive.
Treasury Stock
Treasury stock is acquired at market value and is recorded at cost.
Issuances are accounted for on a first-in, first-out basis.
Concentrations of Credit Risk
The Company's clients are in various businesses, located primarily in North
America, Latin America, Europe and the Pacific Region. The Company
performs ongoing credit evaluations 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>
Segment Reporting
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 131 (SFAS 131),
"Disclosures about Segments of an Enterprise and Related Information,"
which changes the way public companies report financial and descriptive
information about their operating segments. The Company provides
advertising and many other closely related marketing communications
services. All of these services fall within one reportable segment as
defined in SFAS 131.
Retirement Plans
In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132 (SFAS 132), "Employers' Disclosures about Pensions and
Other Postretirement Benefits." SFAS 132 does not change the measurement or
recognition of such plans, but does standardize the disclosure requirements
for pensions and other postretirement benefits to the extent practicable.
SFAS 132 also requires disclosures of additional information about changes
in benefit obligations and fair values of plan assets, and eliminates
certain other disclosures that were previously required. The Company has
adopted SFAS 132 for its 1998 financial statements (See Note 8).
Reclassifications
Certain amounts for prior years have been reclassified to conform with
current year presentation.
NOTE 2: STOCKHOLDERS' EQUITY
On May 19, 1997, the stockholders approved an increase in the number of
authorized common shares from 150,000,000 shares to 225,000,000 shares. The
stockholders also approved a three-for-two stock split, effected in the
form of a 50% stock dividend paid on July 15, 1997 to stockholders of
record as of June 27, 1997. The number of shares reserved for issuance
pursuant to various plans under which stock is issued was increased by 50%.
The three-for-two stock split has been reflected retroactively in the
consolidated financial statements and all per share data, shares, and
market prices of the Company's common stock included in the consolidated
financial statements and notes thereto have been adjusted to give effect to
the stock split.
<PAGE>
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's
common stock. Rights may be redeemed at $.01 per right under certain
circumstances.
<PAGE>
NOTE 3: EARNINGS PER SHARE
In the fourth quarter of 1997, the Company adopted SFAS 128, which specifies the
method of computation, presentation and disclosure for earnings per share
(EPS). SFAS 128 replaces the presentation of primary EPS with basic EPS and
requires dual presentation of basic and diluted EPS. All prior period EPS
data has been restated to comply with SFAS 128.
In accordance with SFAS 128, the following is a reconciliation of the
components of the basic and diluted EPS computations for income available
to common stockholders:
<TABLE>
FOR THE YEAR ENDED DECEMBER 31,
(Dollars in thousands
except per share data)
1998 1997 1996
Per Per Per
Share Share Share
Income Shares Amount Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BASIC EPS
Income available
to common stockholders $309,905 135,485,326 $2.29 $200,378 130,249,946 $1.54 $214,619 130,297,369 $1.65
Effect of Dilutive Securities:
Options 3,310,367 2,910,648 2,219,373
Restricted stock 541 1,726,919 447 1,638,647 384 1,605,564
3/4% Convertible
subordinated debentures 2,660 5,929 4,010,291 6,410 4,466,502
DILUTED EPS $310,446 140,525,272 $2.21 $206,754 138,809,532 $1.49 $221,413 138,588,808 $1.60
The computation of diluted EPS for 1998 and 1997 excludes the assumed conversion of the 1.80% Convertible Subordinated Notes (See
Note 10), because they were antidilutive.
</TABLE>
<PAGE>
NOTE 4: ACQUISITIONS
The Company acquired a number of advertising and communications companies
during the three-year period ended December 31, 1998. The aggregate
purchase price, including cash and stock payments, was $660 million, $302
million and $173 million in 1998, 1997 and 1996, respectively. The
aggregate purchase price includes the value of stock issued for pooled
companies.
In 1998, 7,478,267 shares of the Company's common stock were issued for
acquisitions accounted for as poolings of interests. The companies pooled
and the respective shares of the Company's common stock issued were:
International Public Relations - 2,640,173 shares, Hill, Holliday, Connors,
Cosmopulos, Inc. ("Hill Holliday") - 2,062,434 shares, The Jack Morton
Company - 2,135,996 shares, Carmichael Lynch, Inc. - 486,904 shares and KBA
Marketing - 152,760 shares.
The Company's consolidated financial statements, including the related
notes, have been restated as of the earliest period presented to include
the results of operations, financial position and cash flows of the above
1998 pooled entities in addition to all prior pooled entities. A gross
income and net income reconciliation for the years ending December 31, 1997
and 1996 is summarized below:
Gross Income Net Income/(Loss)
(Dollars in thousands)
For the Year 1997:
As Reported $3,264,120 $205,033
Pooled Companies 218,264 (4,655)
As Restated $3,482,384 $200,378
For the Year 1996:
As Reported $2,786,655 $211,113
Pooled Companies 197,244 3,506
As Restated $2,983,899 $214,619
<PAGE>
The "As Reported" balances shown above reflect amounts previously reported,
which were restated to incorporate the results of three companies acquired
in April 1998 as well as all prior pooled entities. The "As Restated"
balances reflect the restatement for two companies pooled in the second
half of 1998.
In 1998, the Company also paid $140 million in cash and issued 1,359,252
shares of its common stock for acquisitions accounted for as purchases and
equity investments. These acquisitions included Gillespie, Ryan McGinn,
CSI, Flammini, Gingko and Defederico and Herrero Y Ochoa. The Company also
recorded a liability for acquisition related deferred payments of $24
million.
In 1997, the Company issued 4,059,255 shares of its common stock for
acquisitions accounted for as poolings of interests. Some of the companies
pooled and the respective shares of the Company's common stock issued were:
Complete Medical Group - 708,789 shares, Integrated Communications
Corporation - 585,054 shares, Advantage International - 579,206 shares and
Ludgate - 539,459 shares. Additional companies accounted for as poolings of
interests include Adler Boschetto Peebles, Barnett Fletcher, Davies Baron,
Diefenbach Elkins, D.L. Blair, Rubin Barney & Birger, Inc. and Technology
Solutions Inc.
In 1997, the Company also paid $81 million in cash and issued 1,200,059
shares of its common stock for acquisitions accounted for as purchases and
equity investments. These acquisitions included Marketing Corporation of
America, Medialog, The Sponsorship Group, Kaleidoscope and Addis Wechsler
(51% interest). The Company increased its interest in Campbell Mithun Esty
by 25%. The Company also recorded a liability for acquisition related
deferred payments of $38 million.
In 1996, the Company issued 3,519,847 shares of its stock for acquisitions
accounted for as poolings of interests. Pooled companies included
DraftDirect- 2,736,914 shares, The Weber Group- 495,996 shares and Torre
Renta Lazur- 286,937 shares.
<PAGE>
During 1996, the Company paid $57 million in cash and issued 190,653 shares
of its common stock for acquisitions accounted for as purchases and equity
investments. These acquisitions included Angotti Thomas Hedge, Jay
Advertising, Media Inc., McAdams Healthcare, GGK (49% interest) and
Goldberg Moser O'Neill (49% interest).
Deferred payments of both cash and shares of the Company's common stock for
prior years' acquisitions were $75 million, $43 million, and $20 million in
1998, 1997 and 1996, respectively.
During 1998, the Company sold a portion of its investments in Applied
Graphics Technologies, Inc., CKS Group, Inc. and Lycos with combined
proceeds of approximately $20 million. These investments are being
accounted for as available-for-sale securities, pursuant to the
requirements of SFAS 115. During 1997, the Company sold its investment in
All American Communications, Inc. for approximately $77 million. During
1996, the Company sold its 50% investment in Mark Goodson Productions for
approximately $29 million, a portion of its investment in CKS Group, Inc.
for $37.6 million and its investment in Spotlink for $11.7 million in
shares of the purchaser's common stock.
NOTE 5: PROVISION FOR INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes".
SFAS 109 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 provision for income taxes are as follows:
(Dollars in thousands) 1998 1997 1996
Domestic $292,931 $174,177 $178,717
Foreign 269,940 229,653 195,151
Total $562,871 $403,830 $373,868
<PAGE>
The provision for income taxes consisted of:
(Dollars in thousands) 1998 1997 1996
Federal Income Taxes (Including Foreign
Withholding Taxes):
Current $105,049 $ 68,920 $ 59,414
Deferred 3,669 4,312 (78)
108,718 73,232 59,336
State and Local Income Taxes:
Current 21,285 22,350 20,759
Deferred 725 393 2,581
22,010 22,743 23,340
Foreign Income Taxes:
Current 118,612 87,233 72,949
Deferred (17,335) 3,038 1,158
101,277 90,271 74,107
Total $232,005 $186,246 $156,783
At December 31, 1998 and 1997 the deferred tax assets/(liabilities)
consisted of the following items:
(Dollars in thousands) 1998 1997
Postretirement/postemployment benefits $ 46,394 $ 40,978
Deferred compensation 34,285 25,468
Pension costs 13,715 12,094
Depreciation (6,102) (8,824)
Rent (6,424) (842)
Interest 4,598 2,056
Accrued reserves 8,569 11,708
Investments in equity securities (10,677) (1,375)
Tax loss/tax credit carryforwards 46,682 35,000
Other (2,279) (2,904)
Total deferred tax assets 128,761 113,359
Deferred tax valuation allowance 31,411 37,698
Net deferred tax assets $ 97,350 $ 75,661
The valuation allowance of $31.4 million and $37.7 million at December 31,
1998 and 1997, respectively, represents a provision for uncertainty as to
the realization of certain deferred tax assets, including U.S. tax credit
<PAGE>
and net operating loss carryforwards in certain jurisdictions. The change
during 1998 in the deferred tax valuation allowance primarily relates to
changes in the deferred compensation tax item, net operating loss
carryforwards and tax credits. At December 31, 1998, there was $6.9 million
of tax credit carryforwards with expiration periods through 2003 and net
operating loss carryforwards with a tax effect of $39.8 million with
various expiration periods. The Company has concluded that based upon
expected future results, it is more likely than not that the net deferred
tax asset balance will be realized.
A reconciliation of the effective income tax rate as shown in the
consolidated statement of income to the federal statutory rate is as
follows:
1998 1997 1996
Statutory federal income tax rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal income tax benefit 3.7 4.1 3.0
Impact of foreign operations, including
withholding taxes 0.4 0.3 1.0
Goodwill and intangible assets 2.8 2.7 2.4
Effect of pooled companies (0.1) 3.9 1.1
Other (0.6) 0.1 (0.6)
Effective tax rate 41.2% 46.1% 41.9%
The total amount of undistributed earnings of foreign subsidiaries for
income tax purposes was approximately $497.6 million at December 31, 1998.
No provision has been made for foreign withholding taxes or United States
income taxes which may become payable if undistributed earnings of foreign
subsidiaries 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 taxes on that portion of undistributed earnings which
is available for dividends are not practicably determinable.
NOTE 6: SUPPLEMENTAL CASH FLOW INFORMATION
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments with a maturity of three months or
less to be cash equivalents.
<PAGE>
Income Tax and Interest Payments
Cash paid for income taxes was approximately $193.9 million, $126.9 million
and $106.9 million in 1998, 1997 and 1996, respectively. Interest payments
were approximately $37.2 million in 1998, $31.2 million in 1997 and $35.9
million in 1996.
Noncash Financing Activity
As more fully described in Note 10, during 1997 the Company redeemed all
outstanding issues under the 3 3/4% Convertible Subordinated Debentures due
2002. Substantially all of the outstanding debentures were converted into
approximately 4.3 million shares of the Company's common stock.
Acquisitions
As more fully described in Note 4, the Company issued 8,837,519 shares,
5,259,314 shares, and 3,710,500 shares of the Company's common stock in
connection with acquisitions during 1998, 1997 and 1996, respectively.
Details of businesses acquired in transactions accounted for as purchases
were as follows:
1998 1997 1996
(Dollars in thousands)
Fair value of assets acquired $452,237 $263,312 $186,557
Liabilities assumed 184,187 89,686 106,289
Net assets acquired 268,050 173,626 80,268
Less: noncash consideration 86,446 76,794 7,568
Less: cash acquired 59,853 6,535 16,867
Net cash paid for acquisitions $121,751 $ 90,297 $ 55,833
The amounts shown above exclude acquisition related deferred payments due
in subsequent years, but include cash deferred payments of $55 million, $30
million and $18 million made during 1998, 1997 and 1996, respectively.
<PAGE>
NOTE 7: INCENTIVE PLANS
The 1997 Performance Incentive Plan ("1997 PIP Plan"), approved by the
Company's stockholders in May 1997, replaced the Company's Management
Incentive Compensation Plan, Long-Term Performance Incentive Plan, 1996
Stock Incentive Plan and the 1986 Stock Incentive Plan ("Predecessor
Plans"). Awards made under the Predecessor Plans remain subject to their
terms and conditions. The 1997 PIP Plan includes the following types of
awards: (1) stock options, (2) stock appreciation rights, (3) restricted
stock, (4) phantom shares, (5) performance units and (6) management
incentive compensation performance awards.
The maximum number of shares of the Company's common stock which may be
granted in any year under the 1997 PIP Plan, excluding management incentive
compensation performance awards, is equal to a base amount (1.85% of the
total number of shares of the Company's common stock outstanding on the
first day of the year) supplemented by additional shares as defined in the
1997 PIP Plan document. The 1997 PIP Plan also limits the number of shares
available with respect to stock option and stock appreciation rights awards
made each year to any one participant as well as the number of shares
available under certain types of awards.
The following discussion relates to transactions under the 1997 PIP Plan,
the Predecessor Plans and other incentive plans. Except as otherwise noted,
awards under the 1997 PIP Plan have terms similar to awards made under the
respective Predecessor Plans.
Stock Options
The 1997 PIP Plan provides for the granting of either incentive stock
options (ISO's) or nonstatutory options to purchase shares at the fair
value of the Company's common stock on the date of grant. The Compensation
Committee of the Board of Directors ( the "Committee"), is responsible for
determining the vesting terms and the exercise period of each grant within
the limitations set forth in the 1997 PIP Plan document.
Outstanding options are generally granted at the fair market value of the
Company's common stock on the date of grant and are exercisable based on a
schedule determined by the Committee. Generally, options become exercisable
between two and five years after the date of grant and expire ten years
from the date of grant.
<PAGE>
The Company also maintains a stock plan for outside directors. Under this
plan, 300,000 shares of common stock of the Company are reserved for
issuance. Stock options under this plan are awarded at the fair market
value of the Company's common stock on the date the option is granted.
Options generally become exercisable three years after the date of grant
and expire ten years from the date of grant.
Following is a summary of stock option transactions during the three-year
period ended December 31, 1998:
Number of Weighted-
Shares Average
Under Option Exercise Price
Balance, December 31, 1995 9,937,152 $18
Exercisable, December 31, 1995 4,538,483 11
New Awards 3,503,580 31
Exercised (907,866) 14
Cancelled (466,923) 22
Balance, December 31, 1996 12,065,943 22
Exercisable, December 31, 1996 3,846,002 14
New Awards 2,210,980 38
Exercised (1,733,559) 16
Cancelled (521,160) 24
Balance, December 31, 1997 12,022,204 26
Exercisable, December 31, 1997 4,201,219 17
New Awards 3,949,191 64
Exercised (1,495,003) 16
Cancelled (618,748) 29
Balance, December 31, 1998 13,857,644 37
Exercisable, December 31, 1998 2,988,719 18
<PAGE>
The following table summarizes information about stock options outstanding
at December 31, 1998:
Weighted-
Average Weighted- Weighted-
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/31/98 Life Price at 12/31/98 Price
$8.66 to $19.99 2,349,972 3.25 $16 2,343,222 $16
20.00 to 29.99 2,675,726 6.04 22 624,047 22
30.00 to 34.99 3,235,123 7.44 32 21,450 32
35.00 to 69.19 5,596,823 9.34 56 - -
Stock Appreciation Rights
The 1997 PIP Plan permits the Company to grant stock appreciation rights.
A stock appreciation right entitles the holder to receive an amount equal
to the fair market value of a share of common stock of the Company on the
date of exercise over a base price. No such awards have been made to date.
Restricted Stock
Various incentive plans, including the 1997 PIP Plan, incorporate the
issuance of restricted stock subject to certain restrictions and vesting
requirements determined by the Committee. The vesting period is generally
five to seven years. No monetary consideration is paid by a recipient for a
restricted stock award and the grant date fair value of these shares is
amortized over the restriction periods. The Committee is authorized to
direct that discretionary tax assistance payments may be made to recipients
when the restrictions lapse. Such payments are expensed as awarded. At
December 31, 1998, there were a total of 3,571,097 shares of restricted
stock outstanding. During 1998, 1997 and 1996, the Company awarded 629,978
shares, 699,257 shares and 720,903 shares of restricted stock with a
weighted-average grant date fair value of $57.97, $38.96 and $31.14,
respectively.
Restricted shares under the Outside Directors' Plan generally vest after
five years. At December 31, 1998, there were 18,000 shares of restricted
stock outstanding. During 1998, no shares were awarded under this Plan.
<PAGE>
Phantom Shares
The 1997 PIP Plan permits the Company to grant phantom shares. A phantom
share represents the right of the holder to receive an amount determined by
the Committee based on the achievement of performance goals. No such grants
have been made under the 1997 PIP Plan.
Performance Units
The 1997 PIP Plan and its predecessor, the Long-Term Performance Incentive
Plan, permit the Company to grant performance units. Performance units
represent the contractual right of the holder to receive a payment that
becomes vested upon the attainment of performance objectives determined by
the Committee.
Grants consisting of performance units have been awarded to certain key
employees of the Company and its subsidiaries. The ultimate value of these
performance units is contingent upon the annual growth in profits (as
defined) of the Company, its operating components or both, over the 1995-
1998 and 1997-2000 performance periods. The awards are generally paid in
cash. The projected value of these units is accrued by the Company and
charged to expense over the four-year performance period.
The Company expensed $19.9 million in each of 1998 and 1997 and $13.6
million in 1996 relating to performance units. As of December 31, 1998,
the Company's liability for the 1995-1998 and 1997-2000 performance periods
was $54.7 million, which represents a proportionate part of the total
estimated amounts payable for the two performance periods. The Company's
liability to participants for the 1995-1998 performance period as of
December 31, 1998 was approximately $34.6 million.
Management Incentive Compensation Plan
Under the management incentive compensation component of the 1997 PIP Plan
management incentive compensation awards are made to selected employees of
the Company in the form of cash or stock, subject to the limitation that no
individual may receive in excess of $2 million and certain limitations on
common shares issued.
<PAGE>
Other Incentive Arrangements
Under the Employee Stock Purchase Plan (ESPP), employees may purchase
common stock of the Company through payroll deductions not exceeding 10% of
their compensation. The price an employee pays for a share of stock is 85%
of the market price on the last business day of the month. The Company
issued 262,153 shares, 281,852 shares and 279,879 shares during 1998, 1997
and 1996, respectively, under the ESPP. An additional 8,043,225 shares were
reserved for issuance at December 31, 1998.
Under the Company's Achievement Stock Award Plan, awards may be made up to
an aggregate of 1,872,000 shares of common stock together with cash awards
to cover any applicable withholding taxes. The Company issued 4,305 shares,
10,130 shares and 8,505 shares during 1998, 1997 and 1996, respectively,
under this Plan. The weighted-average fair value on the dates of grant in
1998, 1997 and 1996 was $56.69, $42.25 and $30.86, respectively.
SFAS 123 Disclosures
The Company adopted Statement of Financial Accounting Standards No. 123
(SFAS 123), "Accounting for Stock-Based Compensation" in the fourth quarter
of 1996. As permitted by the provisions of SFAS 123, the Company applies
APB Opinion 25, "Accounting for Stock Issued to Employees", and related
interpretations in accounting for its stock-based employee compensation
plans. Accordingly, no compensation cost has been recognized for the
Company's stock options or for shares purchased under the ESPP. The cost
recorded for restricted stock and achievement stock awards in 1998, 1997
and 1996 was $20.5 million, $16.7 million and $14.5 million, respectively.
If compensation cost for the Company's stock option plans and its ESPP had
been determined based on the fair value at the grant dates as defined by
SFAS 123, the Company's pro forma net income and earnings per share would
have been as follows:
<PAGE>
1998 1997 1996
(Dollars in thousands except per share data)
Net Income As reported $309,905 $200,378 $214,619
Pro forma $295,059 $190,542 $207,633
Earnings Per Share
Basic As reported $2.29 $1.54 $1.65
Pro forma $2.18 $1.46 $1.59
Diluted As reported $2.21 $1.49 $1.60
Pro forma $2.10 $1.42 $1.55
For purposes of this pro forma information, the fair value of shares issued
under the ESPP was based on the 15% discount received by employees. The
weighted-average fair value (discount) on the date of purchase for stock
purchased under this Plan was $7.64, $5.36 and $4.60 in 1998, 1997 and
1996, respectively.
For purposes of this pro forma information, the fair value of each option
grant is estimated on the date of grant using the Black-Scholes option-
pricing model with the following weighted-average assumptions used for
grants in 1998, 1997 and 1996, respectively: dividend yield of 0.95%, 1.3%
and 1.41%; expected volatility of 19.17%, 19.17% and 20.71%; risk-free
interest rate of 4.87%, 6.51% and 6.43%; and expected life of six years for
each of the three years.
The weighted-average fair value on the dates of grant for options granted
in 1998, 1997 and 1996 was $17.70, $11.83 and $9.63, respectively. As
required by SFAS 123, this pro forma information is based on stock awards
beginning in 1995 and accordingly is not likely to be representative of the
pro forma effects in future years because options vest over several years
and additional awards generally are made each year.
Hill Holliday Compensation Plans
Hill Holliday had an Equity Participation Plan (the "EPP") for various
members of management and certain agreements (the "Awards") with three key
members of their management, which provided for participants to receive a
portion of the proceeds in the event of the sale or merger of Hill
<PAGE>
Holliday. As a result of the merger discussions initiated in November 1997
and the subsequent agreement entered into on February 19, 1998, Hill
Holliday recognized $26.0 million of compensation expense based on
management's assessment that as of December 31, 1997, it was probable that
the obligations under the EPP and the Awards would become payable. Also
included in the special compensation charge was $.9 million related to the
value of certain compensatory stock options and $.5 million related to
other stock grants. The remaining balance of the special charge consisted
of $4.2 million of payments on a consulting and supplemental retirement
agreement under which no future services are expected, $1.0 million payable
under an employment agreement in the event of the sale of Hill Holliday and
$1.0 million of other expenses.
Carmichael Lynch, Inc. Compensation Plans
Carmichael Lynch maintained an Employee Stock Ownership Program ("ESOP")
which was funded by a loan in the original amount of $10.5 million and
contributions from Carmichael Lynch which were approximately $.7 million in
1997 and $2.4 million in 1996. At December 31, 1997, the loan had a balance
of $7.4 million, which was repaid from proceeds from the sale of Company
stock received in the merger, and the Plan was terminated. Carmichael Lynch
also had a deferred stock equivalent plan payable in cash or stock. In
1997, it was determined that the units would be paid in cash and
accordingly the balance of $4.9 million was reclassified from "Additional
Paid in Capital" to "Deferred Compensation". At December 31, 1998, the
outstanding units had been paid.
International Public Relations Compensation Plans
International Public Relations maintained several stock option plans, which
will expire in early 1999, and a maximum of 60,000 shares of the Company's
common stock may be issued on exercise of the options.
NOTE 8: RETIREMENT PLANS
Defined Benefit Pension Plans
Through March 31, 1998 the Company and certain of its domestic subsidiaries
had a defined benefit plan ("Domestic Plan") which covered substantially
all regular domestic employees. Effective April 1, 1998 this Plan was
<PAGE>
curtailed, and participants with five or less years of service became fully
vested in the Plan. Participants with five or more years of service as of
March 31, 1998 retain their vested balances and participate in a new
compensation plan. Under the new plan, each participant's account will be
credited with an annual allocation, equal to the projected discounted
pension benefit accrual plus interest, while they continue to work for the
Company. Participants in active service will be eligible to receive up to
ten years of allocations coinciding with the number of years of service
with the Company after March 31, 1998. As a result of the change in the
Domestic Plan, the Company recorded charges of approximately $16.7 million
in the fourth quarter of 1997.
The Company's policy was to fund pension costs as permitted by applicable
tax regulations. Pension costs were determined by the projected unit credit
method based upon career average pay. Funding requirements for the Domestic
Plan were determined using the accrued benefit unit credit method. Under
the "cash balance" formula, the participant's account balance was credited
each year with an amount equal to the percentage of the year's annual
compensation, plus interest credits.
The Company recorded a reduction to stockholders' equity for minimum
pension liability of $36.6 million, $13.2 million and $13.0 million in
1998, 1997 and 1996, respectively.
The Company also 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 periodic pension costs for the Domestic Plan for 1998, 1997 and 1996
included the following components:
(Dollars in thousands) 1998 1997 1996
Service cost $ 16 $ 4,179 $ 4,057
Interest cost 9,841 10,567 10,248
Expected return on plan assets (11,575) (11,011) (10,854)
Amortization of unrecognized
transition obligation - 1,887 1,887
<PAGE>
(Dollars in thousands) 1998 1997 1996
Amortization of prior
service cost - (1,276) (1,769)
Recognized actuarial loss 2,601 943 1,005
Curtailment charge - 9,727 -
Net periodic pension cost $ 883 $ 15,016 $ 4,574
Net periodic pension costs for foreign pension plans for 1998, 1997 and
1996 included the following components:
(Dollars in thousands) 1998 1997 1996
Service cost $ 6,847 $ 5,460 $ 5,130
Interest cost 10,908 10,633 10,150
Expected return on plan assets (9,437) (10,537) (9,112)
Amortization of unrecognized
transition obligation 373 324 544
Amortization of
prior service cost 482 552 732
Recognized actuarial (gain) (70) (1,440) (2,026)
Other - - (50)
Net periodic pension cost $ 9,103 $ 4,992 $ 5,368
The following table sets forth the change in the benefit obligation, the
change in plan assets, the funded status and amounts recognized for the
pension plans in the Company's consolidated balance sheet at December 31,
1998, and 1997:
<PAGE>
(Dollars in thousands)
Domestic Foreign
Pension Plan Pension Plans
1998 1997 1998 1997
Change in benefit obligation
Beginning obligation $134,347 $139,142 $179,016 $165,654
Service cost 16 4,179 6,847 5,460
Interest cost 9,841 10,567 10,908 10,633
Benefits paid (12,244) (17,016) (9,447) (11,677)
Participant contributions - - 1,606 1,311
Actuarial losses 26,363 6,070 29,882 18,022
Curtailment - (8,595) - -
Currency effect - - 5,245 (10,387)
Other - - (3,093) -
Ending obligation 158,323 134,347 220,964 179,016
Change in plan assets
Beginning fair value 115,943 112,284 145,942 136,575
Actual return on plan assets 11,932 14,346 17,363 18,309
Employer contributions 7,638 6,329 2,473 3,592
Participant contributions - - 1,606 1,311
Benefits paid (12,244) (17,016) (9,447) (11,677)
Currency effect - - 1,300 (4,427)
Other - - 2,738 2,259
Ending fair value 123,269 115,943 161,975 145,942
Funded status of the plans (35,054) (18,404) (58,989) (33,074)
Unrecognized net actuarial
loss/(gain) 36,612 13,207 11,536 (12,711)
Unrecognized prior service cost - - 2,921 3,524
Unrecognized transition cost - - 3,796 2,980
Net amount recognized $ 1,558 $(5,197) $(40,736) $(39,281)
At December 31, 1998 and 1997, the assets of the Domestic Plan and the
foreign pension plans were primarily invested in fixed income and equity
securities.
<PAGE>
For the Domestic Plan, a discount rate of 6.75% in 1998, 7.25% in 1997 and
7.5% in 1996 and a salary increase assumption of 6% in 1998, 1997 and 1996
were used in determining the actuarial present value of the projected
benefit obligation. The expected return on Domestic Plan assets was 10% in
1998, 1997 and 1996. For the foreign pension plans, discount rates ranging
from 4.0% to 14% in 1998, 3.5% to 14% in 1997, and 5.5% to 12% in 1996 and
salary increase assumptions ranging from 2.0% to 10% in 1998, 1997, and
1996, were used in determining the actuarial present value of the projected
benefit obligation. The expected rates of return on the assets of the
foreign pension plans ranged from 2.0% to 14% in 1998, 3.5% to 14% in 1997,
and 4.0% to 12% in 1996.
The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the Domestic Plan were $158 million, $158 million
and $123 million, respectively, as of December 31, 1998, and $134 million,
$134 million, and $116 million, respectively, as of December 31, 1997. The
projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the foreign pension plans with accumulated benefit
obligations in excess of plan assets were $81.4 million, $74 million, and
$3.3 million respectively, as of December 31, 1998, and $74 million, $66
million, and $4.7 million respectively, as of December 31, 1997.
Other Benefit Arrangements
The Company also has special unqualified deferred benefit arrangements with
certain key employees. Vesting is based upon the age of the employee and
the terms of the employee's contract. Life insurance contracts have been
purchased in amounts which may be used to fund these arrangements.
In addition to the defined benefit plan described above, the Company also
sponsors a defined contribution plan ("Savings Plan") that covers
substantially all domestic employees of the Company and participating
subsidiaries. The Savings Plan permits participants to make contributions
on a pre-tax and/or after-tax basis. The Savings Plan allows participants
to choose among several investment alternatives. The Company matches a
portion of participants' contributions based upon the number of years of
service. The Company contributed $8.1 million, $6.3 million and $5.4
million to the Savings Plan in 1998, 1997 and 1996, respectively. One of
<PAGE>
the 1998 pooled companies also had a defined contribution plan in which a
percentage of the participants' contributions were matched. Contributions
were $.7 million, $2.2 million and $2.4 million in 1998, 1997 and 1996,
respectively.
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 certain 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.
The coverage is self-insured, but is administered by an insurance company.
The Company accrues 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
1998, 1997 and 1996 were as follows:
(Dollars in thousands) 1998 1997 1996
Service cost $ 682 $ 612 $ 610
Interest cost 3,082 2,958 2,824
Amortization of prior service cost (934) (934) (934)
Total periodic expense $2,830 $2,636 $2,500
The following table sets forth the change in benefit obligation, change in
plan assets, funded status and amounts recognized for the Company's
postretirement benefit plans in the consolidated balance sheet at December
31, 1998 and 1997:
<PAGE>
1998 1997
Change in benefit obligation
Beginning obligation $41,637 $38,757
Service cost 682 612
Interest cost 3,082 2,958
Participant contributions 77 89
Benefits paid (1,695) (1,958)
Actuarial (gain)/loss (3,190) 1,179
Ending obligation 40,593 41,637
Change in plan assets
Beginning fair value - -
Actual return on plan assets - -
Employer contributions 1,618 1,869
Participant contributions 77 89
Benefits paid (1,695) (1,958)
Ending fair value - -
Funded status of the plans (40,593) (41,637)
Unrecognized net actuarial gain (5,195) (2,004)
Unrecognized prior service cost (2,829) (3,763)
Net amount recognized $(48,617) $(47,404)
A discount rate of 6.75% in 1998, 7.25% in 1997 and 7.50% in 1996 and a
salary increase assumption of 6.0% in 1998, 1997 and 1996 were used in
determining the accumulated postretirement benefit obligation. An 8.0% and
a 9.0% increase in the cost of covered health care benefits was assumed for
1998 and 1997, respectively. This rate is assumed to decrease incrementally
to 5.5% 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, 1998 by approximately $2.8 million, and the combination of the
service cost and the interest cost for 1998 by approximately $.2 million. A
1% decrease in the health care cost trend rate would decrease the
accumulated postretirement benefit obligation at December 31, 1998 by
approximately $3.2 million, and the combination of the service cost and the
interest cost for 1998 by approximately $.3 million.
<PAGE>
Postemployment Benefits
In accordance with SFAS 112 "Employers' Accounting for Postemployment
Benefits", the Company accrues costs relating to certain benefits including
severance, worker's compensation and health care coverage over an
employee's service life.
The Company's liability for postemployment benefits totaled $50.3 million
and $56.7 million at December 31, 1998 and 1997, respectively, and is
included in deferred compensation and reserve for termination allowances.
The net periodic expense recognized in 1998, 1997 and 1996 was $32.2
million, $31.3 million and $23.4 million, respectively.
NOTE 9: SHORT-TERM BORROWINGS
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 these borrowings. Unused lines of credit by the Company and
its subsidiaries at December 31, 1998 and 1997 aggregated $458 million and
$432 million, respectively. The weighted-average interest rate on
outstanding balances at December 31, 1998 was approximately 7.3%. Current
maturities of long-term debt are included in the payable to banks balance.
NOTE 10: LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
(Dollars in thousands) 1998 1997
Convertible Subordinated Notes - 1.80% $207,927 $201,768
Term loans - 6.45% to 7.91%
(6.45% to 14.0% in 1997) 255,000 276,833
Germany mortgage note payable - 7.6% 31,680 29,846
Other mortgage notes payable and
long-term loans - generally 2% to 10% 34,513 40,845
529,120 549,292
Less: current portion 22,502 30,256
Long-term debt $506,618 $519,036
<PAGE>
On September 16, 1997, the Company issued $250 million face amount of
Convertible Subordinated Notes due 2004 ("2004 Notes") with a coupon rate
of 1.80%. The 2004 Notes were issued at an original price of 80% of the
face amount, generating proceeds of approximately $200 million. The notes
are convertible into 3.3 million shares of the Company's common stock at a
conversion rate of 13.386 shares per $1,000 face amount. These shares have
been reserved for the conversion of the notes. The fair value of the 2004
Notes as of December 31, 1998 was approximately $283 million and was
determined by obtaining quotes from brokers.
In the fourth quarter of 1997, the Company redeemed its 3 3/4% Convertible
Subordinated Debentures due 2002. Substantially all of the outstanding
debentures were converted into approximately 4.3 million shares of the
Company's common stock.
The decrease in term loans during 1998 was primarily due to the payment of
various loans with Prudential.
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: 1999-$22.5
million; 2000-$24.0 million; 2001-$25.5 million; 2002-$61.5 million; 2003-
$30.4 million and $365.2 million thereafter.
All material long-term debt is carried in the consolidated balance sheet at
amounts which approximate fair values based upon current borrowing rates
available to the Company unless otherwise disclosed.
<PAGE>
<TABLE>
NOTE 11: RESULTS BY QUARTER (UNAUDITED)
___________________________________________________________________________________________________________________
(Dollars in thousands 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
except per share data)
1998 Restated As Reported Restated As Reported Restated As Reported_____________
<S> <C> <C> <C> <C> <C> <C> <C>
Gross income $831,183 $775,300 $1,032,242 $972,363 $910,530 $861,448 $1,194,773
Operating expenses 752,956 700,567 807,560 751,522 804,912 759,869 981,730
Interest expense 12,801 10,936 14,564 12,672 16,029 14,210 15,305
Income before provision
for income taxes 65,426 63,797 210,118 208,169 89,589 87,369 197,738
Provision for income taxes 25,498 25,768 86,665 86,871 38,604 38,207 81,238
Net equity interests (2,189) (2,189) (4,942) (4,945) (3,997) (4,000) (9,833)
Net income $ 37,739 $ 35,840 $ 118,511 $116,353 $ 46,988 $ 45,162 $ 106,667
Per share data:
Basic EPS $ .28 $ .27 $ .87 $ .88 $ .35 $ .34 $ .79
Diluted EPS $ .27 $ .26 $ .84 $ .84 $ .34 $ .33 $ .76
Cash dividends per share (IPG) $.130 $.130 $.150 $.150 $.150 $.150 $.150
Weighted-Average Shares:
Basic 135,187,048 132,394,115 135,718,669 132,925,736 135,457,584 132,792,504 135,578,003
Diluted 140,238,988 137,446,055 144,477,785 141,684,852 140,232,121 137,567,041 143,845,195
Stock price:
High $62 5/8 $62 5/8 $64 1/2 $64 1/2 $64 7/8 $64 7/8 $79 3/4
Low $47 11/16 $47 11/16 $55 5/16 $55 5/16 $52 3/16 $52 3/16 $47
___________________________________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
NOTE 11: RESULTS BY QUARTER (UNAUDITED)
_____________________________________________________________________________________________________________________________
(Dollars in thousands 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
except per share data)
1997 Restated As Reported Restated As Reported Restated As Reported Restated As Reported
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross income $730,068 $679,297 $881,316 $825,358 $787,151 $732,959 $1,083,849 $1,026,506
Operating expenses 660,541 614,874 701,278 649,291 713,034 660,465 913,679 850,181
Special compensation charges - - - - - - 32,229 32,229
Interest expense 12,406 10,698 13,113 11,306 15,967 14,343 16,307 14,227
Income before provision
for income taxes 57,121 53,725 166,925 164,761 58,150 58,151 121,634 129,869
Provision for income taxes 22,524 21,590 66,901 66,428 27,246 26,124 69,575 70,085
Net equity interests (2,698) (2,704) (5,100) (5,113) (935) (942) (8,473) (8,487)
Net income $ 31,899 $ 29,431 $ 94,924 $ 93,220 $ 29,969 $ 31,085 $43,586 $ 51,297
Per share data:
Basic EPS $ .25 $ .23 $ .73 $ .73 $ .23 $ .24 $ .33 $ .40
Diluted EPS $ .24 $ .23 $ .70 $ .70 $ .22 $ .24 $ .32 $ .38
Cash dividends per share (IPG) $.113 $.113 $ .130 $.130 $.130 $.130 $ .130 $.130
Weighted-Average Shares:
Basic 129,527,439 126,734,506 129,954,447 127,161,514 129,871,194 127,078,261 131,646,705 128,853,772
Diluted 133,462,189 130,669,256 138,837,723 136,044,790 134,974,614 132,181,681 136,385,441 133,592,508
Stock price:
High $36 5/8 $36 5/8 $41 3/8 $41 3/8 $51 3/8 $51 3/8 $52 1/2 $52 1/2
Low $32 1/4 $32 1/4 $35 $35 $41 1/2 $41 1/2 $45 1/4 $45 1/4
_____________________________________________________________________________________________________________________________
The "As Reported" balances reflect amounts previously reported, which incorporated the results of three companies acquired
in April 1998 as well as all prior pooled entities. The "Restated" balances reflect the restatement for two companies pooled in
the second half of 1998.
</TABLE>
NOTE 12: 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) 1998 1997 1996
Total Assets:
United States $3,506,826 $3,229,797 $2,500,938
International
United Kingdom 676,664 664,698 556,485
All other Europe 1,760,551 1,107,774 1,139,166
Asia Pacific 558,532 583,975 558,504
Latin America 313,615 257,730 224,683
Other 126,635 139,469 140,151
Total International 3,435,997 2,753,646 2,618,989
Total Consolidated $6,942,823 $5,983,443 $5,119,927
Income From Commissions and Fees:
United States $1,925,030 $1,670,555 $1,325,167
International
United Kingdom 387,618 301,883 244,066
All other Europe 880,919 748,720 723,329
Asia Pacific 325,758 348,707 338,416
Latin America 232,940 204,894 170,024
Other 92,075 78,017 73,415
Total International 1,919,310 1,682,221 1,549,250
Total Consolidated $3,844,340 $3,352,776 $2,874,417
Income Before Provision for Income Taxes:
United States $ 330,268 $ 216,057 $ 216,428
International
United Kingdom 47,788 23,102 19,006
All other Europe 140,749 110,376 85,910
Asia Pacific 53,658 53,414 57,617
Latin America 50,473 48,067 35,578
Other (1,366) 10,607 11,024
Total International 291,302 245,566 209,135
<PAGE>
Items not allocated to operations,
principally interest expense:
United States (37,337) (41,880) (37,711)
International (21,362) (15,913) (13,984)
Total Consolidated $ 562,871 $ 403,830 $ 373,868
Commissions and fees are attributed to geographic areas based on where the
services are performed.
The largest client of the Company contributed approximately 7% in 1998,
10% in 1997 and 9% in 1996 to income from commissions and fees. The
Company's second largest client contributed approximately 5% in 1998, 6% in
1997 and 7% in 1996 to income from commissions and fees.
Dividends received from foreign subsidiaries were approximately $51.1
million in 1998, $40.8 million in 1997 and $35.2 million in 1996.
Consolidated net income includes losses from exchange and translation of
foreign currencies of $3.2 million, $5.6 million and $4.1 million in 1998,
1997 and 1996, respectively.
NOTE 13: FINANCIAL INSTRUMENTS
Financial assets, which include cash and cash equivalents, marketable
securities and receivables, have carrying values which approximate fair
value. Long-term equity securities, included in other investments and
miscellaneous assets in the Consolidated Balance Sheet, are deemed to be
available-for-sale as defined by SFAS 115 and accordingly are reported at
fair value, with net unrealized gains and losses reported within
stockholders' equity. At December 31, 1998, long-term equity securities had
a cost basis of $73 million with a market value of $91 million, and an
unrealized pre-tax gain of $18 million. At December 31, 1997, the cost
basis was $20 million with a market value of $42 million, and an unrealized
pre-tax gain of $22 million.
Financial liabilities with carrying values approximating fair value include
accounts payable and accrued expenses, as well as payable to banks and
long-term debt. As of December 31, 1998, the 1.80% Convertible Subordinated
Notes due 2004 had a cost basis of $208 million with a market value of $283
million. As of December 31, 1997, the cost basis was $202 million with a
market value of $208 million. The fair values were determined by obtaining
quotes from brokers (refer to Note 10 for additional information on long-
term debt).
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 the impact of changes in foreign exchange
rates on working capital. The notional value and fair value of all
outstanding forwards and options contracts at the end of the year as well
as the net cost of all settled contracts during the year were not
significant.
The Company's management continuously evaluates and manages its exposure to
foreign exchange, economic and political risks. The foreign exchange crisis
in Asia had a minimal impact on the Company partly due to the agency
systems' contingency plans that included active hedging, repatriation of
cash, cost-cutting and limiting capital expenditures. Additionally, the
Company believes that the more recent economic developments in Brazil will
not have a significant impact.
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133), which the
Company is required to adopt effective January 1, 2000. SFAS 133 will
require the Company to record all derivatives on the balance sheet at fair
value. Changes in derivative fair values will either be recognized in
earnings as offsets to the changes in fair value of related hedged assets,
liabilities and firm commitments or, for forecasted transactions, deferred
and later recognized in earnings. The impact of SFAS 133 on the Company's
financial statements will depend on a variety of factors, including future
interpretative guidance from the FASB, the future level of forecasted and
actual foreign currency transactions, the extent of the Company's hedging
activities, the types of hedging instruments used and the effectiveness of
such instruments. However, the Company does not believe the effect of
adopting SFAS 133 will be material to its financial condition.
NOTE 14: COMMITMENTS AND CONTINGENCIES
At December 31, 1998 the Company's subsidiaries operating primarily outside
the United States were contingently liable for discounted notes receivable
of $10.8 million.
The Company and its subsidiaries lease certain facilities and equipment.
Gross rental expense amounted to approximately $208 million for 1998, $217
million for 1997 and $208 million for 1996, which was reduced by sublease
income of $16 million in 1998, $30.5 million in 1997 and $29.1 million in
1996.
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 1999 and
thereafter, are as follows:
(Dollars in thousands) Gross Rental Sublease
Period Commitment Income
1999 $187,472 $16,969
2000 167,548 14,357
2001 149,724 12,030
2002 126,489 9,366
2003 108,302 4,948
2004 and thereafter 445,604 6,844
Certain of the Company's acquisition agreements provide for deferred
payments by the Company, contingent upon future revenues or profits of the
companies acquired.
<PAGE>
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 the settlement of
such assessments or open examinations would not have a material adverse
effect on the consolidated financial statements.
<PAGE>
<TABLE> SELECTED FINANCIAL DATA FOR FIVE YEARS
(Dollars in thousands except per share data)
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Operating Data
Gross income $ 3,968,728 $ 3,482,384 $ 2,983,899 $ 2,606,467 $ 2,350,809
Operating expenses 3,347,158 2,988,532 2,558,336 2,257,138 2,059,233
Restructuring charge - - - - 48,715
Write-down of goodwill and other
related assets - - - 38,687 -
Special compensation charge - 32,229 - - -
Interest expense 58,699 57,793 51,695 47,940 41,500
Provision for income taxes 232,005 186,246 156,783 126,537 92,311
Income before effect of accounting
change 309,905 200,378 214,619 134,311 108,767
Effect of accounting change<F1> - - - - (34,325)
Net Income $ 309,905 $ 200,378 $ 214,619 $ 134,311 $ 74,442
Per Share Data
Basic
Income before effect of accounting
change $ 2.29 $ 1.54 $ 1.65 $ 1.05 $ .87
Effect of accounting change<F1> - - - - (.27)
Net Income $ 2.29 $ 1.54 $ 1.65 $ 1.05 $ .60
Weighted-average shares 135,485,326 130,249,946 130,297,369 127,802,633 125,563,727
Diluted
Income before effect of accounting
Change $ 2.21 $ 1.49 $ 1.60 $ 1.02 $ 84
Effect of accounting change<F1> - - - - (.27)
Net Income $ 2.21 $ 1.49 $ 1.60 $ 1.02 $ .57
Weighted-average shares 140,525,272 138,809,532 138,588,808 131,804,623 128,958,829
Financial Position
Working capital $ 118,593 $ 216,367 $ 128,808 $ 101,833 $ 56,748
Total assets 6,942,823 5,983,443 5,119,927 4,631,912 4,090,906
Long-term debt 506,618 519,036 418,618 361,945 320,902
Book value per share $ 9.07 $ 7.39 $ 6.14 $ 5.19 $ 4.47
Other Data
Cash dividends (Interpublic) $ 76,894 $ 61,242 $ 51,786 $ 46,124 $ 40,360
Cash dividends per share
(Interpublic) $ .58 $ .50 $ .44 $ .40 $ .36
Number of employees 34,200 31,100 25,500 23,700 21,400
All periods prior to 1998 have been restated to reflect the aggregate effect of acquisitions accounted
for as poolings of interests.
<F1> Reflects the cumulative effect of adopting SFAS 112, "Employers' Accounting for Postemployment Benefits."
</TABLE>
<PAGE
VICE CHAIRMAN'S REPORT OF MANAGEMENT
The financial statements, including the financial analysis 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 judgments, 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 Finance Committee of the Board of Directors, which is
comprised of the Company's Chairman and Vice Chairman and three
outside Directors, is responsible for defining these lines of
responsibility and delegating the authority to management to
conduct the day-to-day financial affairs of the Company. In
carrying out its duties, the Finance Committee primarily focuses
on monitoring financial and operational goals and guidelines;
approving and monitoring specific proposals for acquisitions;
approving capital expenditures; working capital, cash and balance
sheet management; and overseeing the hedging of foreign exchange,
interest-rate and other financial risks. The Committee meets
regularly to review presentations and reports on these and other
financial matters to the Board. It also works closely with, but
is separate from, the Audit Committee of the Board of Directors.
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
four 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.
The Company is addressing the Year 2000 Compliance Project with
the mobilization of required resources at the Corporate offices
and all operating units. Project plans have been developed to
assess and prioritize the operational applications, supplier and
network compliance and required remediation. The Audit Committee
is overseeing the timely implementation and completion of this
project.
The independent accountants, PricewaterhouseCoopers LLP, were
recommended by the Audit Committee of the Board of Directors and
selected by the Board of Directors, and their appointment was
ratified by the stockholders. The independent accountants have
examined the financial statements of the Company and their
opinion is presented on page 53.
54
<TABLE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 1
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
DOMESTIC:
<S> <C> <C> <C>
The Interpublic Group of Companies, Inc. Delaware - -
(Registrant)
Casablanca Productions California 100 Registrant
Conan Entertainment LLC California 50 Western Int'l Syndication Corp.
Dailey & Associates, Inc. California 100 Registrant
Diefenbach-Elkins International, Inc. California 100 Registrant
D.L. Blair/West, Inc. California 100 D.L. Blair, Inc.
Eidolon Corporation California 100 Registrant
International Business Services, Inc. California 100 Infoplan Int'l, Inc.
Main Street Media, LLC California 100 Western Int'l Media Corp.
North Light, Ltd. California 100 Dailey & Associates, Inc.
Outdoor Advertising Group, Inc. California 100 Registrant
The Phillips-Ramsey Co. California 100 Registrant
Western International Media Corporation California 100 Registrant
Western International Syndication Corporation California 100 Registrant
Western Motivational Incentives Group California 100 Western Int'l Media Corp.
Western Traffic, Inc. California 100 Registrant
Momentum IMC Company Colorado 100 McCann-Erickson USA, Inc.
H & C Holdings Limited Connecticut 100 Advantage Int'l Holdings Inc.
Advantage International Holdings, Inc. Delaware 100 Registrant
Ammirati Puris Lintas Canada Ltd. Delaware 100 Ammirati Puris Lintas Inc.
Ammirati Puris Lintas Inc. Delaware 100 Registrant
Ammirati Puris Lintas USA, Inc. Delaware 100 Registrant
Anderson & Lembke, Inc. Delaware 100 Registrant
Angotti, Thomas, Hedge, Inc. Delaware 100 Registrant
Asset Recovery Group, Inc. Delaware 100 Registrant
Business Science Research Corporation, Inc. Delaware 100 Registrant
Campbell-Ewald Company Delaware 100 Registrant
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 2
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
DOMESTIC:
<S> <C> <C> <C>
Campbell Mithun Esty LLC Delaware 75 Registrant
Columbian Advertising, Inc. Delaware 100 Registrant
Communications Services International Inc. Delaware 100 CSI Limited
DraftWorldwide, Inc. Delaware 100 Registrant
Global Event Marketing & Management (GEMM) Inc. Delaware 100 Registrant
Healthcare Capital, Inc. Delaware 100 McCann Healthcare, Inc.
HCG/ISO Inc. Delaware 100 Registrant
Hypermedia Solutions, LLC Delaware 55 The Coleman Group, LLC
Infoplan International, Inc. Delaware 100 Registrant
Interpublic Game Shows, Inc. Delaware 100 Registrant
International Cycling Productions Inc. Delaware 100 H & C Holdings Limited
Interpublic Television, Inc. Delaware 100 Registrant
Jack Tinker Advertising, Inc. Delaware 100 Registrant
Jay Advertising, Inc. Delaware 100 Registrant
Kaleidoscope Sports and Entertainment LLC Delaware 100 Registrant
LFS, Inc. Delaware 100 Registrant
Lowe Fox Pavlika Inc. Delaware 100 Lowe & Partners/SMS Inc.
Lowe & Partners/SMS Interactive Inc. Delaware 100 Lowe & Partners/SMS Inc.
LMMS-USA, Inc. Delaware 100 McCann-Erickson USA, Inc.
Market Reach Retail LLC Delaware 50 Skott, Inc.
MarketCorp Promotions, Inc. Delaware 100 DraftWorldwide, Inc.
Marketing Corporation of America Delaware 100 Registrant
McAvey & Grogan, Inc. Delaware 100 Registrant
McCann-Erickson USA, Inc. Delaware 100 Registrant
McCann-Erickson Corporation (S.A.) Delaware 100 Registrant
McCann-Erickson Corporation (International) Delaware 100 Registrant
McCann-Erickson (Paraguay) Co. Delaware 100 Registrant
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 3
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
DOMESTIC:
<S> <C> <C> <C>
McCann-Erickson Worldwide, Inc. Delaware 100 Registrant
McCann Healthcare, Inc. Delaware 100 McCann-Erickson USA, Inc.
McCann Worldwide Marketing Communications Co. Delaware 100 Registrant
Media Inc. Delaware 100 Registrant
Media Direct Partners, Inc. Delaware 100 Media, Inc.
Media Partnership Corporation Delaware 100 Registrant
Newspaper Services of America, Inc. Delaware 100 Registrant
Octagon Worldwide Inc. Delaware 100 Registrant
Octagon Worldwide Brazil Inc. Delaware 100 Octagon Worldwide Inc.
Player, LLC Delaware 51 Registrant
Player Development LLC Delaware 100 Player LLC
Player Management LLC Delaware 100 Player LLC
Regan, Campbell & Ward LLC Delaware 60 McCann-Erickson Worldwide
USA, Inc.
Skott, Inc. Delaware 100 Newspaper Services of
America, Inc.
Special Event Suppliers Inc. Delaware 100 H & C Holdings Limited
The Coleman Group, LLC Delaware 51 Interpublic Television, Inc.
The Coleman Group Worldwide LLC Delaware 100 Registrant
The Jack Morton Company Delaware 100 Registrant
The Lowe Group, Inc. Delaware 100 Lowe Worldwide Holdings B.V.
Thunder House Online Marketing Delaware 100 Registrant
Communications, Inc.
Weller & Klein Research, Inc. Delaware 100 Registrant
World Cycling Limited. Delaware 100 H & C holdings Limited
WPR Acquisition Corp. Delaware 100 McCann-Erickson USA, Inc.
Advantage International, Inc. District of 100 Advantage Int'l Holdings, Inc.
Columbia
Advantage Investments, Inc. District of 100 Advantage Int'l Holdings, Inc.
Columbia
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 4
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
DOMESTIC:
<S> <C> <C> <C>
Accentmarketing Corporation Florida 51 Registrant (51%) and individual
Shareholder (49%)
Ben Disposition, Inc. Florida 100 LFS, Inc.
Rubin Barney & Birger, Inc. Florida 100 Registrant
Championship Sports Marketing Inc. Georgia 70 The Sponsorship Group Limited
Fitzgerald & Company Georgia 100 Registrant
Creative Retail Environments Worldwide, Inc. Illinois 100 Kevin Berg & Associates, Inc.
International Public Relations Illinois 100 Registrant
Kevin Berg & Associates, Inc. Illinois 100 Registrant
Quest Futures Group, Inc. Kansas 100 Registrant
Adware Systems, Inc. Kentucky 100 McCann-Erickson USA, Inc.
Hill, Holliday, Connors, Cosmopulos, Inc. Massachusetts 100 Registrant
Lowe Grob Health & Science, Inc Massachusetts 80 Lowe Group Holdings Inc
Neva Group, Inc. Massachusetts 100 Registrant
Carmichael Lynch, Inc. Minnesota 100 Registrant
Lawton Sport & Financial, Inc. Minnesota 100 Advantage International Inc
C-E Communications Company Michigan 100 Registrant
Biogenesis Communications, Inc. New Jersey 100 Registrant
Curry, Martin and Schiavelli, Inc. New Jersey 100 Registrant
Genquest, Biomedical Education Services, Inc. New Jersey 100 Biogenesis Communications, Inc.
Global Healthcare Associates, Inc. New Jersey 100 Registrant
Health Vizion Communications, Inc. New Jersey 100 Torre Lazur, Inc.
Horizon Communications, Inc. New Jersey 100 McCann-Erickson USA, Inc.
Integrated Communications Corp. New Jersey 100 Registrant
Internal Oncology Network, Inc. New Jersey 100 Torre Lazur, Inc.
Interpublic, Inc. New Jersey 100 Registrant
MPE Communications, Inc. New Jersey 100 Registrant
Pace, Inc. New Jersey 100 Registrant
Sound Vision, Inc. New Jersey 100 Torre Lazur, Inc.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 5
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
DOMESTIC:
<S> <C> <C> <C>
Spectral Fusion, Inc. New Jersey 100 Torre Lazur, Inc.
Torre Lazur, Inc. New Jersey 100 Registrant
ABP\DraftWorldwide, Inc. New York 100 Registrant
D.L. Blair, Inc. New York 100 Registrant
GDL, Inc. New York 100 The Lowe Group, Inc.(100% of Common
Stock) and Goldschmidt Dunst &
Lawson Corp. (100% of Preferred
Stock)
Goldschmidt Dunst & Lawson Corp. New York 100 The Lowe Group, Inc.
Herbert Zeltner, Inc. New York 100 Registrant
LCF&L, Inc. New York The Lowe Group, Inc. (99.9%) and
GDL, Inc. (.1%)
Lowe Group Holdings, Inc. New York 100 Registrant
Lowe McAdams Healthcare Inc. New York 100 Lowe & Partners/SMS Inc.
Lowe & Partners/SMS Inc. New York 100 Lowe International (16%), Lowe
Worldwide Holdings B.V. (4%)
and Registrant (80%)
Ludgate Communications, Inc. New York 100 Ludgate Group Limited
McCann Direct, Inc. New York 100 Registrant
McCann-Erickson Marketing, Inc. New York 100 Registrant
Promotion & Merchandising, Inc. New York 100 D.L. Blair, Inc.
T.C. Promotions I, Inc. New York 100 Registrant
T.C. Promotions II, Inc. New York 100 Registrant
Technology Solutions, Inc. New York 100 Registrant
The Gotham Group, Inc. New York 100 Registrant
Western Trading LLC New York 55 Western International Media Corp.
Long Haymes Carr, Inc. North Carolina 100 Registrant
F&S Disposition, Inc. Ohio 100 Ammirati Puris Lintas Inc.
Marketing Arts Corporation Virginia 100 The Martin Agency, Inc.
Cabell Eanes, Inc. Virginia 100 The Martin Agency, Inc.
The Martin Agency, Inc. Virginia 100 Lowe & Partners/SMS Inc.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 6
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Interpublic S.A. de Publicidad Argentina 100 Registrant
IM Naya Argentina 50 Registrant
Adlogic Proprietary Limited Australia 50 Merchant Partners Australia Ltd.
Advantage International Pty. Limited Australia 80 Advantage Holdings Pty Limited
Advantage Holdings Pty. Ltd. Australia 100 Advantage Int'l Holdings, Inc.
Advantage International Racing Pty. Ltd. Australia 80 Advantage Holdings Pty Limited
Ammirati Puris Lintas Proprietary Limited Australia 100 Registrant
Ammirati Puris Lintas Melbourne Australia 100 Ammirati Puris Lintas Proprietary
Proprietary Limited Limited
CWFS Australia 100 McCann Australia (50%) and
McCann-Erickson Limited(50%)
CSI (Australia) Pty Limited Australia 100 CSI Limited
Harrison Advertising Pty Limited Australia 100 McCann-Erickson Advertising Ltd.
Impulse Art Proprietary Limited Australia 100 Ammirati Puris Lintas Prop. Ltd.
Interpublic Australia Proprietary Limited Australia 100 Registrant
Interpublic Limited Proprietary Limited Australia 100 Registrant
Lintas: Hakuhodo Pty. Limited Australia 50 Ammirati Puris Lintas Prop. Ltd.
Marplan Proprietary Limited Australia 100 Registrant
McCann-Erickson Advertising Pty. Limited Australia 100 Registrant
McCann-Erickson Sydney Proprietary Limited Australia 100 McCann-Erickson Advertising Ltd.
Merchant and Partners (Sydney) Pty. Ltd. Australia 100 Merchant and Partners Australia
Pty. Limited
Merchant and Partners Australia Pty. Limited Australia 100 Registrant
Round Australia Trial Pty Limited Australia 100 Advantage International Pty Ltd.
Universal Advertising Placement Pty. Limited Australia 100 McCann-Erickson Advertising Ltd.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 7
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Ammirati Puris Lintas Werbeagentur Austria 70 Registrant
Gesellschaft m.b.H.
Campbell Ewald Werbeagentur Ges.m.b.H. Austria 100 Lowe Worldwide Holdings B.V.
Initiatives Media Werbemittlung Ges.m.b.H. Austria 100 Ammirati Puris Lintas Werbeagentur
Gesellschaft m.b.H.
McCann-Erickson Gesellschaft m.b.H. Austria 100 Registrant
Panmedia Holding AG Austria 51 Lowe International Holdings BV
Panmedia Werbeplanung AG Austria 100 Panmedia holding AG
PCS Werbeagentur Ges.m.b.H. Austria 100 Ammirati Puris Lintas Werbeagentur
Gesellschaft m.b.H.
A.C.E. Advertising Creation Marketing N.V. Belgium 100 Ammirati Puris Lintas Brussels S.A.
Advantage International S.A. Belgium 100 Advantage Int'l Holdings Inc.
Advertising Tractor S.A. Belgium 100 Draft Belgium Holding S.P.R.L. (80%)
and Karamba S.A. (20%)
Ammirati Puris Lintas Brussels S.A. Belgium 100 Ammirati Puris Lintas Holding B.V.
Direct Creations S.A. Belgium 100 Lowe Troost S.A.
Draft Belgium Holdings S.P.R.L. Belgium 100 DraftWorldwide Limited
Feedback S.P.R.L. Belgium 100 DraftWorldwide, Inc.
Initiative Media Brussels S.A. Belgium 100 Ammirati Puris Lintas Brussels S.A.
(96%) and Initiative Media (4%)
Initiative Media International S.A. Belgium 100 Lintas Holding B.V.
Karamba S.A. Belgium 100 Draft Belgium Holding S.P.R.L.
Lowe Troost S.A. Belgium 100 Lowe Worldwide Holdings B.V.
McCann-Erickson Co. S.A. Belgium 100 Registrant
P.R. International N.V. Belgium 100 Ammirati Puris Lintas Brussels S.A.
Programming Media International-PMI S.A. Belgium 100 Registrant
Promo Sapiens S.A. Belgium 100 Draft Belgium Holding S.P.R.L. (85%)
and Karamba S.A. (15%)
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 8
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Universal Media, S.A. Belgium 100 McCann-Erickson Co., S.A. (50%) and
Lowe Troost S.A. (50%)
The Advanced Marketing Centre S.A. Belgium 100 Draft Belgium Holding S.P.R.L. (0.2%)
and Karamba S.A. (99.8%)
Triad Assurance Limited Bermuda 100 Registrant
Ammirati Puris Lintas Ltda. Brazil 98.75 Registrant
DraftWorldwide Ltda. Brazil 66 DraftWorldwide, Inc.
DraftWorldwide Sao Paulo Ltda. Brazil 66 DraftWorldwide, Inc.
Interpublic Publicidade e Pesquisas Brazil 100 International Business Services, Inc.
Sociedade Limitada
McCann-Erickson Publicidade Ltda. Brazil 100 Registrant
MPMPPA Profissionais de Promocao Associados Ltda. Brazil 100 MPM Lintas Communicacoes Ltda.
Octagon do Brazil Participacoes S/C Ltda Brazil 100 Octagon Worldwide Brazil Inc.
Universal Publicidade Ltda Brazil 100 Interpublic Publicidade
E Pesquisas Sociedade Ltda.
API Prism International Inc. Brit. Virgin 100 API Prism Limited
Islands
CSI Holdings S.A. Brit. Virgin 100 Communication Services Int'l
Islands (Holdings) S.A.
CSI International Holdings S.A. Brit. Virgin 100 CSI Holdings S.A.
Islands
Lowe Holdings BVI Limited Brit. Virgin 100 Lowe Group Holdings Inc.
Islands
Octagon Motorsports Limited Brit. Virgin 66.6 Octagon Worldwide Inc.
Islands
SBK Superbike International Limited Brit. Virgin 50 Octagon Motorsports Limited
Islands
Adware Systems Canada Inc. Canada 100 Adware Systems, Inc.
Ammirati Puris Lintas Canada Ltd. Canada 100 Registrant
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 9
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Diefenbach-Elkins Limited Canada 100 Diefenbach-Elkins
Durnan Communications Canada 100 Ammirati Puris Lintas Canada Ltd.
FSA Targeting Inc. Canada 100 Registrant
Gingko Direct Ltd. Canada 100 The Gingko Group Ltd.
Hawgtown Creative Ltd. Canada 100 DraftWorldwide, Inc.
ISOGROUP Canada, Inc. Canada 100 Registrant
Lowe Investments Limited Canada 100 Lowe Group Holdings Inc. (54%)
Lowe Worldwide Holdings BV (46%)
MacLaren McCann Canada Inc. Canada 100 Registrant
Promaction Corporation Canada 100 McCann-Erickson Advertising of Canada
Promaction 1986 Inc. Canada 100 MacLaren McCann Canada, Inc.
The Gingko Group Ltd. Canada 100 DraftWorldwide, Inc.
The Medicine Group Limited Canada 51 Complete Medical Group Ltd.
Tribu Lintas Inc. Canada 100 MacLaren McCann Canada, Inc.
Ammirati Puris Lintas Chile S.A. Chile 100 Ammirati Puris Lintas Holding B.V.
Dittborn, Urzueta y Asociados Marketing Chile 60 McCann-Erickson S.A. de Publicidad
Directo S.A.
Initiative Media Servicios de Medios Ltda. Chile 99 Ammirati Puris Lintas Chile S.A.
Lowe (Chile) Holdings SA Chile 100 Lowe & Partners South America Holdings SA
McCann-Erickson S.A. de Publicidad Chile 100 Registrant
Ammirati Puris Lintas China China 50 Registrant & Shanghai Bang Da
Advertising
McCann-Erickson Guangming Advertising Limited China 51 McCann-Erickson Worldwide
Ammirati Puris Lintas Colombia Colombia 100 Registrant
Epoca S.A. Colombia 60 Registrant
Harrison Publicidad De Colombia S.A. Colombia 100 Registrant
Initiative Media Columbia S.A. Columbia 100 Ammirati Puris Lintas Columbia
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 10
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
McCann-Erickson Centroamericana Costa Rica 100 Registrant
(Costa Rica) Ltda.
McCann-Erickson Zagreb Croatia 100 McCann-Erickson International GmbH
McCann-Erickson Prague
Ammirati Lintas Praha Spol. S.R.O. Czech Republic 100 Ammirati Puris Lintas Deutschland GmbH
McCann-Erickson Prague, Spol. S.R.O. Czech Republic 100 McCann-Erickson International GmbH
Pool Media International srl Czech Republic 100 McCann-Erickson Prague, Spol. s.r.o.
Femencom Limited Cyprus 100 Third Dimension Limited
Ammirati Puris Lintas Denmark A/S Denmark 100 Ammirati Puris Lintas Holding B.V.
Campbell-Ewald Aps Denmark 100 Registrant
Initiative Universal Aps Denmark 100 Registrant
Job A/S Denmark 100 Ammirati Puris Lintas Denmark
McCann-Erickson A/S Denmark 100 Registrant
Medialog A/S Denmark 100 Registrant
Parafilm A/S Denmark 100 Registrant
Progaganda, Reuther, Lund & Priesler Denmark 75 Registrant
Reklamebureau Aps
Signatur APS Denmark 100 Ammirati Puris Lintas Denmark A/S
McCann-Erickson Dominicana, S.A. Dominican
Republic 100 Registrant
McCann-Erickson (Ecuador) Publicidad S.A. Ecuador 96 McCann-Erickson Corporation (Int'l)
McCann-Erickson Centro Americana El Salvador 100 Registrant
(El Salvador) S.A.
Ammirati Puris Lintas Oy Finland 100 Lintas Holding B.V.
Hasan & Partners Oy Finland 100 Registrant
Lintas Service Oy Finland 100 Lintas Oy
Lowe Brindfors Oy Finland 100 Lowe Sweden AB
Lowe Brindfors Production Oy Finland 100 Lowe Brindfors Oy
Mainostoinisto Ami Hasan & Company Oy Finland 100 Hasan & Partners, Inc.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 11
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Mainostoinisto Womena - McCann Oy Finland 100 Registrant
McCann-Pro Oy Finland 100 Oy Liikemainonta-McCann AB
Oy Liikemainonta-McCann AB Finland 100 Registrant
PMI - Mediaporssi Oy Finland 66 Oy Liikemainonta-McCann AB (33%) and
Lintas Oy (33%)
Womena-Myynninvauhdittajat Oy Finland 100 Oy Liikemainonta-McCann AB
Advantage International Sarl France 100 Advantage International Holdings Inc.
Alice SNC France 50 Lowe Alice S.A.
Ammirati Puris Lintas S.A. France 100 France C.C.P.M.
CDRG France France 74 McCann-Erickson France Holding Co.
Creation Sarl France 97.5 SP3 S.A.
Creative Marketing Service SAS France 100 France C.C.P.M.
DCI Pharma Sarl France 100 Zeta S.A.
D.L. Blair Europe SNC France 100 T.C. Promotions, I, Inc. (50%) and
T.C. Promotions II, Inc. (50%)
DraftDirect Worldwide Sante Sarl France 100 DraftWorldwide S.A.
DraftWorldwide S.A. France 100 DraftWorldwide Limited
E.C. Television/Paris, S.A. France 100 France C.C.P.M.
Fab + S.A. France 99.4 SP3 S.A.
France C.C.P.M. France 100 Ammirati Puris Lintas Holding B.V.
Huy Oettgen Oettgen S.A. France 100 DraftWorldwide S.A.
Infernal Sarl France 100 SP3 S.A.
Initiatives Media Paris S.A. France 100 France C.C.P.M.
Leuthe il-autre Agence France 85 McCann-Erickson (France) Holding Co.
Lowe Alice S.A. France 100 Lowe Worldwide Holdings B.V.
MacLaren Lintas S.A. France 100 France C.C.P.M.
McCann Communications France 75 McCann-Erickson (France) Holding Co.
McCann-Promotion S.A. France 99.8 McCann-Erickson (France) Holding Co.
McCann-Erickson (France) Holding Co. France 100 Registrant
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 12
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
McCann-Erickson (Paris) S.A. France 100 McCann-Erickson (France) Holding Co.
McCann-Erickson Rhone Alpes S.A. France 100 McCann-Erickson (France) Holding Co.
McCann-Erickson Thera France France 74 CDRG Communications
MDEO France 80 McCann-Erickson France
Menu & Associes France 51 The Coleman Group Worldwide LLC
Pschitt S.A. France 100 Zeta S.A.
Publi Media Service France 50 Owned in quarters by McCann,
Ammirati Puris Lintas agencies in
France, Publicis and Idemedia
Slad France 60 McCann-Erickson (France) Holding Co.
SP3 S.A. France 100 McCann-Erickson (France) Holding Co.
Strateus France 72 France C.C.P.M.
Synthese Marketing S.A. France 100 DraftWorldwide S.A.
Universal Media S.A. France 100 McCann-Erickson (France) Holding Co.
Valefi France 55 McCann-Erickson (France) Holding Co.
Virtuelle France 60 Fieldplan Limited
Western International Media Holdings Sarl France 100 Alice SNC
Zeta S.A. France 100 DraftDirect Worldwide Sante Sarl
Adplus Werbeagentur GmbH Germany 100 Lowe & Partners GmbH Frankfurt
Advantage International AG Germany 100 Advantage International holdings Inc.
Ammirati Puris Lintas Deutschland GmbH Germany 100 Registrant
Ammirati Puris Lintas Service GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
Ammirati Puris Lintas Hamburg GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
Ammirati Puris Lintas S Communications GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
Baader, Lang, Behnken Werbeagentur GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
Creative Media Services GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
DCM Dialog-Creation-Munchen Agentur fur Germany 80 M&V Agentur fur Dialogmarketing und
Dialogmarketing GmbH Verkaufsforderung GmbH
Draft Direct Worldwide Holdings GmbH Germany 100 DraftWorldwide Limited
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 13
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Hamall GmbH Germany 100 Lowe & Partners Gmbh Frankfurt
Heinrich Hoffman & Partner GmbH Germany 100 Lowe & Partners GmbH Frankfurt
Initiativ Media GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
Interpublic GmbH Germany 100 Registrant
K&S Marketing and Consultant GmbH Germany 100 Adplus GmbH
Kolitho Repro GmbH Germany 100 Peter Reincke Direkt-Marketing GmbH
Krakow McCann Werbeagentur GmbH Germany 100 McCann-Erickson Deutschland GmbH
Kreatives Direktmarketing Beteiligungs GmbH Germany 100 DraftWorldwide Limited
Lowe & Partners GmbH Dusseldorf Germany 100 Lowe Worldwide Holdings B.V. (75%)
and Registrant (25%)
Lowe & Partners GmbH Frankfurt Germany 100 Lowe & Partners GmbH Dusseldorf
Lowe & Partners GmbH Hamburg Germany 100 Lowe & Partners GmbH Dusseldorf
Mailpool Adressen-Management GmbH Germany 100 DraftDirect Worldwide Holdings GmbH Germany
Max W.A. Kramer GmbH Germany 100 Ammirati Puris Lintas Deutschland GmbH
McCann Direct GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Dusseldorf Germany 100 McCann-Erickson Deutschland
McCann-Erickson (International) GmbH Germany 100 Registrant
McCann-Erickson Deutschland GmbH Germany 100 McCann-Erickson (International) GmbH
McCann-Erickson Deutschland GmbH & Co.
Mgmt. Prop. KG (Partnership) Germany 100 Registrant
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 Management Property GmbH Germany 100 McCann-Erickson Deutschland GmbH (80%)
Interpublic GmbH (20%)
McCann-Erickson Nurnberg GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Thunderhouse Germany 100 Registrant
McCann-Erickson Service GmbH Germany 100 McCann-Erickson Deutschland GmbH
MCS Medizinischer Creativ Service, GmbH Germany 60 McCann-Erickson Deutschland GmbH
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 14
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
M&V Agentur fur Dialogmarketing und Germany 82 DraftDirect Worldwide Holdings GmbH Germany
Verkaufsforderung GmbH
M&V Hamburg Agentur fur direkte und Germany 70 M&V Agentur fur Dialogmarketing und
Strategische Marketing-Kommunikation GmbH Verkaufsforderung GmbH
Peter Reincke Direkt-Marketing GmbH Germany 76 DraftDirect Worldwide Holdings GmbH Germany
PWS Germany 100 McCann-Erickson Deutschland GmbH
Scherer MRM Holding GmbH Germany 75 McCann-Erickson Deutschland
Scherer Team GmbH Germany 100 Scherer MRM Holding GmbH
Typo-Wenz Artwork GmbH Germany 100 Interpublic GmbH
Universalcommunication Media Intensiv GmbH Germany 100 Interpublic GmbH
Unterstuetzungskasse der H.K. Germany 100 McCann-Erickson (International) GmbH
McCann Company GmbH
Wolff & Partner, Kreatives Direktmarketing GmbH Germany 100 DraftDirect Worldwide Holdings GmbH Germany
Ammirati Puris Lintas Advertising Company S.A. Greece 100 Interpublic Ltd. (95%), Fieldplan Ltd.
(5%)
Ammirati Puris Lintas Worldwide Greece 100 Interpublic Limited
Advertising (Hellas) L.L.C.
Ashley And Holmes S.A. Greece 51 Interpublic
International Media Advertising S.C.A. Greece 100 Fieldplan Ltd.
McCann-Erickson Athens S.A. Greece 100 Registrant
Sprint Advertising S.A. Greece 51 Fieldplan Limited
Initiative Media Advertising S.A. Greece 100 Fieldplan Limited
Universal Media Hellas S.A. Greece 100 McCann-Erickson (International) GmbH
Publicidad McCann-Erickson Centroamericana Guatemala 100 Registrant
(Guatemala), S.A.
McCann-Erickson Centroamericana S. de R.L. Honduras 100 Registrant
(Honduras)
Anderson & Lembke Asia Limited Hong Kong 100 Anderson & Lembke, Inc.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 15
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
API Prism Limited Hong Kong 85 The Sponsorship Group Limited
Ammirati Puris Lintas Hong Kong Limited Hong Kong 54 Lintas Holdings B.V. (54%) and
Wilson Chan (46%)
Communications Services International Asia Hong Kong 100 CSI International Holdings S.A.
Pacific Limited
Dailey International enterprises Ltd. Hong Kong 100 Registrant (50%), Ammirati Puris
Lintas (50%)
Dailey Investments Limited Hong Kong 100 Registrant (50%), Ammirati Puris
Lintas (50%)
DraftWorldwide Limited Hong Kong 100 DraftWorldwide, Inc.
Infoplan (Hong Kong) Limited Hong Kong 100 McCann-Erickson (HK) Limited
Lowe & Partners/Live Limited Hong Kong 74 Lowe Group Holdings Inc.
Ludgate Asia Ltd. Hong Kong 100 Ludgate Group Limited
McCann-Erickson, Guangming Ltd. Hong Kong 100 Registrant
McCann-Erickson (HK) Limited Hong Kong 100 Registrant
Prism Golf Management Limited Hong Kong 50 API Prism Limited
Prism Holdings Limited Hong Kong 100 API Prism Limited
Ammirati Puris Lintas Budapest Reklam Es Hungary 100 Ammirati Puris Lintas Deutschland GmbH
Marketing Kommunikacios Kft (90%) and Ammirati Puris Lintas
Hamburg GmbH (10%)
Initiative Media Hungary Hungary 100 Lintas Budapest
McCann Communications Budapest KFT Hungary 100 Registrant
McCann-Erickson Interpress International Hungary 100 Registrant
Advertising Agency Ltd.
Associate Corp. Consl. (India) Pvt.Ltd. India 99.60 McCann-Erickson (India) Private Ltd.
Karishma Advertising Ltd. India 99.95 Lintas India Ltd.
McCann-Erickson (India) Pvt. India 60 McCann-Erickson Worldwide Inc.
Quadrant Communications Pvt. Ltd. India 50 Lintas India Limited (50%) and
Pratibha Advertising (50%)
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 16
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Result Services Private Ltd. India 99.10 McCann-Erickson (India) Private Ltd.
McCann-Erickson, Limited Ireland 100 Registrant
Ammirati Puris Lintas Milano S.p.A. Italy 100 Ammirati Puris Lintas Holding B.V.
Centro Media Planning-Buying-Booking S.r.l. Italy 100 Ammirati Puris Lintas Milano S.p.A.
Chorus Media Srl Italy 51 Pirella Gottsche Lowe S.p.A.
DraftWorldwide Italia Srl. Italy 100 DraftWorldwide, Inc.
Exel S.R.L. Italy 99 Ammirati Puris Lintas S.P.A.
Initiative Media S.R.L. Italy 100 Ammirati Puris Lintas S.P.A.
Infoplan Italiana S.P.A. Italy 100 Registrant
McCann-Erickson Italiana S.p.A. Italy 100 Registrant
McCann Marketing Communications S.p.A. Italy 100 McCann-Erickson Italiana S.p.A.
Octagon Motorsport Srl. Italy 100 Inka AG
Pirella Gottsche Lowe S.p.A. Italy 95 Lowe Worldwide Holdings B.V.
Pool Media International (P.M.I.) S.r.l. Italy 100 Registrant (95%) and Business Science
Research Corp (5%)
SBK Motorsport Srl Italy 100 SBK Superbike International Limited
Spring S.R.L. Italy 99 Ammirati Puris Lintas S.P.A.
Universal S.R.L. Italy 100 Registrant
Universal Media Srl Italy 100 McCann-Erickson Italiana S.p.A.
Ammirati Puris Lintas S.A. Ivory Coast 67 France C.C.P.M.
McCann-Erickson Ivory Coast Ivory Coast 98.80 McCann-Erickson France
Nelson Ivory Coast Ivory Coast 100 McCann-Erickson France
McCann-Erickson (Jamaica) Limited Jamaica 100 Registrant
Ammirati Puris Lintas K.K. Japan 100 Ammirati Puris Lintas Nederland B.V.
Hakuhodo Lintas K.K. Japan 50 Registrant
Infoplan, Inc. Japan 100 McCann-Erickson Inc.
K.K. Momentum Japan 100 McCann-Erickson Inc.
K.K. Standard McIntyre Japan 50 McCann-Erickson Healthcare, Inc.
McCann-Erickson Inc. Japan 100 Registrant
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 17
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Third Dimension Limited Jersey 100 Registrant
McCann-Erickson (Kenya) Limited Kenya 73 Registrant
Communication Services (International) Luxembourg 100 Registrant
Holdings S.A.
Inka AG Luxembourg 100 Octagon Motorsport Limited
API Sponsorship SDM.BHD Malaysia 100 API Sponsorship Canada Ltd. (50%) and
The Sponsorship Group Ltd. (50%)
DraftWorldwide Sdn. Bhd. Malaysia 98.8 DraftWorldwide, Inc.
Initiative Media (M) Sdn. Bhd. Malaysia 100 Ammirati Puris Lintas (Malaysia)
Sdn. Bhd.
McCann-Erickson (Malaysia) Sdn. Bhd. Malaysia 100 Registrant
Mutiara-McCann (Malaysia) Sdn. Bhd. Malaysia 83.50 Registrant
Universal Communication Sdn. Bhd. Malaysia 100 McCann-Erickson (Malaysia) Sdn. Bhd.
Lowe Mauritius Limited Mauritius 100 Lowe Group Holdings Inc.
Ammirati Puris Lintas 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
Initiative Media, S.a. de C.V. Mexico 100 Registrant
Initiative Media Mexico Mexico 100 Ammirati Puris Lintas Mexico
Inversionistas Asociados, S.A. De C.V. Mexico 100 Registrant
Lowe & Partners/SMS De Mexico, S.A. Mexico 74 Interpublic Holding Company SA de CV
Publicidad Nortena, S. De R.L. De C.V. Mexico 100 Registrant
CSI International SAM Monaco 100 Communication Services International
(Holdings) S.A.
Advantage International Benelux B.V. Netherlands 75 Advantage International Holdings Inc.
Ammirati Puris Lintas Direct B.V. Netherlands 80 Ammirati Puris Lintas Nederland B.V.
Ammirati Puris Lintas Holding B.V. Netherlands 100 Registrant
Ammirati Puris Lintas Nederland B.V. Netherlands 100 IPG Nederland B.V.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 18
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Anderson & Lembke Europe B.V. Netherlands 100 Anderson & Lembke, Inc.
CSI International B.V. Netherlands 100 CSI International N.V.
Data Beheer B.V. Netherlands 100 Data Holding B.V.
Data Holding B.V. Netherlands 100 IPG Nederland B.V.
Gold Reclame En Marketing Advisers B.V. Netherlands 100 IPG Nederland B.V.
Initiative Media Programming B.V. Netherlands 100 Ammirati & Puris Lintas B.V.
IPG Nederland B.V. Netherlands 100 Registrant
ISOGROUP Europe BV Netherlands 100 Registrant
Lowe Digital B.V. Netherlands 80 Lowe Direct (22.5%), Lowe Kuiper
& Schouten (57.5%)
Lowe Direct B.V. Netherlands 60 Lowe Kuiper & Schouten
Lowe Holland B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lowe International Holdings B.V. Netherlands 100 Registrant
Lowe Kuiper & Schouten B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lowe Worldwide Holdings B.V. Netherlands 100 Poundhold Ltd.
McCann-Erickson (Nederland) B.V. Netherlands 100 IPG Nederland B.V.
Octagon Worldwide Holdings B.V. Netherlands 100 Octagon Worldwide Inc
Pacific Investments Trust BV Netherlands 100 SBK Superbike International Limited
P. Strating Promotion B.V. Netherlands 100 IPG Nederland B.V.
Programming Media International B.V. Netherlands 100 Registrant
Reclame-Adviesbureau Via B.V. Netherlands 100 IPG Nederland B.V.
Roomijsfabriek "De Hoop" B.V. Netherlands 100 Ammirati Puris Lintas Holding B.V.
Universal Media B.V. Netherlands 100 IPG Nederland B.V.
Western International Media Holdings B.V. Netherlands 100 Lowe Group Holdings, Inc. (52%),
Ammirati Puris Lintas (38%), and
Western Media (10%)
Zet Zet B.V. Netherlands 100 Data Gold B.V.
Ammirati Puris Lintas (NZ) Limited New Zealand 51 Registrant
Initiative Media (NZ) Limited New Zealand 99 Ammirati Puris Lintas (NZ) Ltd.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 19
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
McCann-Erickson Limited New Zealand 100 Registrant
Pritchard Wood-Quadrant Limited New Zealand 100 Registrant
Universal Media Limited New Zealand 100 McCann-Erickson Limited
Digit A/S Norway 100 JBR/McCann/A/S
JBR Film A/S Norway 100 JBR Reklamebyra A/S
JBR McCann A/S Norway 100 McCann-Erickson A/S
JBR McCann Signatur A/S Norway 100 McCann-Erickson A/S
JBR Purkveien A/S Norway 100 McCann-Erickson A/S
JBR Riddeersvoldgate A.S. Norway 100 McCann-Erickson A/S
Lowe Norway A/S Norway 100 Lowe Sweden AB
Lowe & Partners Norway A/S Norway 66.6 Lowe Norway A/S
McCann-Erickson A/S Norway 100 McCann-Erickson Marketing
Scandinavian Design Group AS Norway 75 McCann-Erickson AS
Showproduksjon AS Norway 100 McCann-Ercikson AS
Epoca McCann S.A. Panama 100 Registrant
Ammirati Puris Lintas Manila Philippines 58 Registrant
H.K. McCann Communications Company, Inc. Philippines 100 McCann-Erickson (Philippines) Inc.
McCann-Erickson (Philippines), Inc. Philippines 58 Registrant (30%), Business Science
Research Corp. (28%)
McCann Group of Companies, Inc. Philippines 100 Registrant
Ammirati Puris Lintas Warsawa Sp. Poland 100 Ammirati Puris Lintas Deutschland GmbH
IM Warsaw Poland 100 Ammirati Puris Lintas Warsaw
ITI McCann-Erickson International Advertising Poland 50 McCann-Erickson International GmbH
McCann Communications - Poland Poland 100 Registrant
McCann-Erickson Prague Spol. s.r.o. Poland 100 McCan-Erickson International GmbH
Ammirati Puris Lintas, Lda. Portugal 100 Interpublic SGPS/Lda.
Iniciativas De Meios-Actividades Publicitarias, Portugal 98 Ammirati Puris Lintas, Ltda.
Limitada
Interpublic SGPS/Lda Portugal 100 Registrant
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 20
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Kramaidem-Publicidade E Marketing, S.A. Portugal 100 Registrant
Lowe Portuguesa Publicidade a Estudios de Portugal 100 Interpublic SGPS/Lda
Mercado, S.A.
McCann-Erickson/Portugal Limitada Portugal 100 Interpublic SGPS/Lda
MKM Markimage, Marketing E Imagem, S.A. Portugal 100 McCann-Erickson Portugal
Publicidade Ltda.
Universal Media Publicidade, Limitada Portugal 100 McCann-Erickson/Portugal Limitada
Ammirati Puris Lintas Puerto Rico, Inc. Puerto Rico 100 Ammirati Puris Lintas, Inc.
McCann-Erickson, Dublin Limited Republic of 100 Registrant
Ireland
B.V. McCann-Erickson Romania Romania 70 Registrant
McCann-Erickson Moscow Russia 100 McCann-Erickson International GmbH
Ammirati Puris Lintas (Singapore) Pte. Ltd. Singapore 100 Registrant
Draftworldwide Pte. Ltd. Singapore 60 DraftWorldwide, Inc.
Lowe & Partners/Monsoon Advertising Pte. Ltd. Singapore 80 Lowe Group Holdings Inc.
McCann-Erickson (Singapore) Singapore 100 Registrant
CPM Slovakia SRO Slovak Rep 50 Panmedia Werbeplanung GmbH
McCann-Erickson Bratislava Slovak Rep. 100 McCann-Erickson Prague Spol. s.r.o.
Adsearch Proprietary Limited South Africa 100 Registrant
Ammirati Puris Lintas (Proprietary) Limited South Africa 100 Ammirati Puris Lintas Holding B.V. (76%)
Registrant (24%)
Advantage Sports Marketing (Pty) Limited South Africa 95 The Sponsorship Group Limited
Advantage Sponsorship Pty Limited South Africa 100 Advantage Sports Marketing Pty. Limited
API Sportshows Limited South Africa 50 Advantage Sports Marketing Pty. Limited
Campbell-Ewald Proprietary Limited South Africa 100 McCann-Erickson South Africa
Proprietary Limited
Column Communications CC South Africa 100 Ammirati Puris Lintas (Properietary) Ltd.
Fibre Design Communication (Proprietary) ltd. South Africa 100 Registrant
McCann Cape Town (Proprietary) Limited South Africa 100 McCann Group
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 21
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
McCann Durban (Proprietary) Limited South Africa 100 McCann Group
McCann-Erickson Promotions (Proprietary) Ltd. South Africa 100 Registrant
McCann-Erickson South Africa (Pty.) South Africa 100 Registrant
Ltd. ("McCann Group")
McCann International (Proprietary) Limited South Africa 100 McCann Group
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
McCannix Proprietary Limited South Africa 100 McCann-Erickson Johannesburg
(Proprietary) Limited
Media Initiative (Proprietary) Limited South Africa 100 Ammirati Puris Lintas (Proprietary)
Limited
PULA API (Pty) Limited South Africa 100 Advantage Sports Marketing Pty Ltd.
The Loose Cannon Company Proprietary Limited South Africa 100 McCann-Erickson South Africa
Proprietary Limited
Universal Media (Proprietary) Limited South Africa 100 McCann Group
Lintas Korea, Inc. South Korea 100 Registrant
McCann-Erickson, Inc. South Korea 51 McCann-Erickson Marketing, Inc.
Ammirati Puris Lintas S.A. Spain 100 Ammirati Puris Lintas Holding B.V.
Cachagua S.A. Spain 100 The Interpublic Group of Companies
de Espana S.A.
Clarin, S.A. Spain 100 McCann-Erickson S.A.
Coleman Schmidlin & Partner S.A. Spain 71 Coleman Group Worldwide, LLC
Common Sense Publicidad Y Diseno, S.A. Spain 80 McCann-Erickson S.A.
Directing MRM S.A. Spain 99.99 The Interpublic Group of Companies de
Espana S.A.
DraftDirect Worldwide S.A. Spain 70 DraftWorldwide Limited
Encuadre S.A. Spain 67 Clarin, S.A.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 22
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Events & Programming International Spain 100 The Interpublic Group of Companies de
Consultancy, S.A. (EPIC) Espana S.A.
Iniciativas de Medios, S.A. Spain 100 Ammirati Puris Lintas, S.A.
Lowe & Partners Espana S.A. Spain 98 Lowe Worldwide Holdings B.V. (91%)
Lowe Int'l Holdings B.V. (7%)
McCann-Erickson S.A. Spain 100 The Interpublic Group of Companies
de Espana S.A.
McCann-Erickson Barcelona S.A. Spain 100 The Interpublic Group of Companies
de Espana S.A.
Pool Media International S.A. Spain 100 The Interpublic Group of Companies
de Espana S.A.
The Interpublic Group of Companies de Espana Spain 100 Registrant
Universal Media S.A. Spain 100 McCann-Erickson S.A.
Valmorisco Communications Spain 100 The Interpublic Group of Companies
de Espana S.A.
Western International Media SA Spain 100 Western Int'l Media Holdings BV
Advantage International AB Sweden 100 Advantage Int'l Holdings Inc.
Ammirati Puris Lintas Shoppen AB Sweden 100 Ammirati Puris Lintas AB
Ammirati Puris Lintas AB Sweden 100 Ammirati Puris Lintas Holding B.V.
Anderson & Lembke AB Sweden 100 Anderson & Lembke, Inc.
Infoplan AB Sweden 100 McCann-Erickson AB
Large Medium AB Sweden 50 Lowe Sweden AB
Lowe Sweden AB Sweden 100 Lowe International Holdings B.V.
Lowe Brindfors Annonsbyra AB Sweden 91 Lowe Sweden AB
McCann Annonsbyra AB Sweden 100 McCann-Erickson AB
McCann Annonsbyra I Malmoe AB Sweden 100 McCann-Erickson AB
McCann-Erickson AB Sweden 100 Registrant
Message Plus Media AB Sweden 100 Lowe Sweden AB
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 23
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
PMI Initiative Universal Media AB Sweden 100 Ammirati Puris Lintas AB (50%)
McCann-Erickson AB (50%)
Ronnberg & McCann A.B. Sweden 100 McCann-Erickson AB
Message Plus digital AB Sweden 100 Lowe Sweden AB
Advantage AG. Switzerland 100 Advantage Int'l Holdings, Inc.
Bosch & Butz Werbeagenter AG Switzerland 80 Lowe International Holdings B.V.
Coleman Schmidlin Partner AG Switzerland 71 Coleman Group Worldwide LLC
Fisch Meier Direkt AG Switzerland 100 Ammirati Puris Lintas Deutschland GmbH
Fisch Meier Promotion AG Switzerland 100 Fisch Meier Direkt AG
Get Neue Gestaltungstechnik AG Switzerland 100 Bosch & Butz Werbeagenter
Lowe GGK AG Switzerland 80 Lowe International Holdings BV
Initiative Media Western AG Switzerland 100 Western Int'l Media Holdings BV
Initiative Media Switzerland Switzerland 100 Ammirati Puris Lintas Holding B.V.
McCann-Erickson S.A. Switzerland 100 Registrant
McCann-Erickson Services S.A. Switzerland 100 Registrant
P.C.M. Marketing AG Switzerland 100 Ammirati Puris Lintas Deutschland GmbH
Pool Media-PMI S.A. Switzerland 100 Registrant
Target Group AG Switzerland 51 McCann-Erickson
Unimedia S.A. Switzerland 100 Registrant
Ammirati Puris Lintas Taiwan Ltd. Taiwan 100 Registrant
McCann-Erickson Communications Group Co. Ltd. Taiwan 100 Registrant
Ammirati Puris Lintas (Thailand) Ltd. Thailand 100 Registrant
McCann-Erickson (Thailand) Ltd. Thailand 100 Registrant
Lintas Gulf Limited U.A.E. 51 Ammirati Puris Lintas Worldwide Limited
McCann-Erickson (Trinidad) Limited Trinidad 100 Registrant
Adam Turkey 80 The Lowe Group
Grafika Lintas Reklamcilik A.S. Turkey 51 Registrant
Initiative Media Istanbul Turkey 70 Registrant
Link Ajams Limited Sirketi Turkey 100 PARS
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 24
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Lowe Adam Tanitim Hizmetleri AS Turkey Turkey 80 Lowe International Holdings B.V.
McCann-Direct Reklam Tanitama Servisleri A.S. Turkey 100 PARS
PARS McCann-Erickson Reklamcilik A.S.("PARS") Turkey 100 Registrant
Universal Media Planlama Ve Dagitim Turkey 100 PARS
Addison Whitney Worldwide Ltd. United Kingdom 100 Interpublic Limited (50%), Business
Science Research (50%)
Addition Communications Limited United Kingdom 100 SP Group Limited
Addition Marketing Group Limited United Kingdom 100 SP Group Limited
Advantage International Limited United Kingdom 100 Interpublic Limited
Adware Systems Limited United Kingdom 100 Orkestra Limited
Ammirati Puris Lintas Limited United Kingdom 100 Interpublic Limited
Ammirati Puris Lintas International Limited United Kingdom 100 Interpublic Limited
Ammirati Puris Lintas Worldwide Limited United Kingdom 100 Interpublic Limited (50%), Business
Science Research (50%)
API Consulting Limited United Kingdom 100 The Sponsorship Group Limited
API Personality Management Limited United Kingdom 100 The Sponsorship Group Limited
API Soccer Limited United Kingdom 100 The Sponsorship Group Limited
API Sponsorship Canada Limited United Kingdom 100 The Sponsorship Group Limited
API Sponsorship Europe Limited United Kingdom 100 The Sponsorship Group Limited
API Sponsorship USA Limited United Kingdom 100 The Sponsorship Group Limited
API Sponsorship Limited United Kingdom 100 The Sponsorship Group Limited
API Sports Media Limited United Kingdom 100 The Sponsorship Group Limited
API Television Limited United Kingdom 100 The Sponsorship Group Limited
Artel Studios Limited United Kingdom 100 Stowe, Bowden, Wilson Limited
Barnett Fletcher Promotions Company Limited United Kingdom 100 Interpublic Limited
Brand Matters Limited United Kingdom 100 Registrant
Brilliant Pictures Limited United Kingdom 100 Still Price Court Twivy D'Souza
Lintas Group Limited
Brompton Advertising Ltd. United Kindgom 100 The Brompton Group Ltd.
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 25
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Brompton Promotions Ltd. United Kingdom 100 The Brompton Group Ltd.
Bureau of Commercial Information Limited United Kingdom 100 Registrant
Bureau of Commercial Research Limited United Kingdom 100 Registrant
Business Geographics United Kingdom 70 International Poster Management Ltd.
Campbell-Ewald Limited United Kingdom 100 Interpublic Limited (50%), Business
Science Research (50%)
CM Lintas International Ltd. United Kingdom 100 Interpublic Limited
Coachouse Ltd. United Kingdom 100 McCann-Erickson Manchester Limited
Coleman Planet & Partners Limited United Kingdom 71 Registrant
Colourwatch Group Limited United Kingdom 100 Lowe International Limited
Complete Congress Services Limited United Kingdom 67 Complete Medical Group Limited
Complete Exhibition Services Ltd. United Kingdom 80 Complete Medical Group Limited
Complete Healthcare Training Limited United Kingdom 75 Complete Medical Group Limited
Complete Market Research Limited United Kingdom 75 Complete Medical Group Limited
Complete Medical Communications International Ltd. United Kingdom 85 Complete Medical Group Limited
Complete Medical Communications (UK) Limited United Kingdom 80 Complete Medical Group Limited
Complete Medical Group Ltd. United Kingdom 100 Interpublic Limited
CSI Limited United Kingdom 100 Third Dimension Limited
Davies/Baron Limited United Kingdom 100 Interpublic Limited
Decifer Limited United Kingdom 100 Lowe International Limited
Design Principles Limited United Kingdom 100 Marketing Principles Limited
Diagnosis Limited CMC house United Kingdom 80 Complete Medical Group Limited
DraftWorldwide Limited United Kingdom 100 Interpublic Limited
Epic (Events & Programming International United Kingdom 100 Interpublic Limited
Consultancy) Limited
Fieldplan Ltd. United Kingdom 100 Interpublic Limited
Gotham Limited United Kingdom 100 Interpublic Limited
Grand Slam Millennium Television Limited United Kingdom 100 The Sponsorship Group Limited
Grand Slam Sports Limited United Kingdom 100 The Sponsorship Group Limited
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 26
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Harrison Advertising (International) Limited United Kingdom 100 Interpublic Limited
H.K. McCann Limited United Kingdom 100 McCann Erickson Advertising Ltd.
Initiative Media Limited United Kingdom 100 Interpublic Limited
Initiative Media London Limited United Kingdom 99.5 Still Price Court Twivy D'Souza
Lintas Group Limited
Interfocus Group Limited United Kingdom 75 Lowe International limited
Interfocus Network Ltd. United Kingdom 100 Interfocus Group Ltd.
International Poster Management Ltd. United Kingdom 100 Interpublic Limited
Interpublic Limited United Kingdom 100 Registrant
Interpublic Pension Fund Trustee United Kingdom 100 Interpublic Limited
Company Limited
J V Knightsbridge Travel Limited United Kingdom 50 Lowe International limited
LHSB Management Services Ltd. United Kingdom 100 Lowe International Limited
Lintas W.A. Limited United Kingdom 100 Interpublic Limited
Lovell Vass Boddey Limited United Kingdom 100 DraftWorldwide Limited
Lowe Azure Limited United Kingdom 100 Lowe International limited
Lowe Digital Limited United Kingdom 100 Lowe International Limited
Lowe Direct Limited United Kingdom 75 Lowe International Limited
Lowe Fusion Limited United Kingdom 100 Lowe International limited
Lowe Howard-Spink Ltd. United Kingdom 100 Lowe International Limited
Lowe & Howard-Spink Media Limited United Kingdom 100 Lowe International Limited
Lowe International Limited United Kingdom 100 Interpublic Limited
Lowe & Partners Financial Limited United Kingdom 100 Lowe International Limited
Lowe & Partners UK Limited United Kingdom 100 Lowe International limited
Lowe Plus Limited United Kingdom 100 Lowe International limited
Ludcom PLC United Kingdom 100 Ludgate Group Limited
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 27
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Ludgate Bachard Limited United Kingdom 100 Ludgate Group Limited
Ludgate Communications Limited United Kingdom 100 Ludgate Group Limited
Ludgate Design Limited United Kingdom 100 Ludgate Group Limited
Ludgate Group Limited United Kingdom 100 Interpublic Limited
Ludgate Laud Limited United Kingdom 100 Ludgate Group Limited
MLS Soccer Limited United Kingdom 100 The Sponsorship Group Limited
Marketing Principles Direct Limited United Kingdom 100 Marketing Principles Limited
Marketing Principles Limited United Kingom 75% Registrant
Matter of Fact Communications Limited United Kingdom 100 McCann-Erickson Bristol Limited
McCann Communications Limited United Kingdom 100 Interpublic Limited
McCann Direct Limited United Kingdom 100 Interpublic Limited
McCann-Erickson Advertising Limited United Kingdom 100 Interpublic Limited
McCann-Erickson Belfast Limited United Kingdom 100 McCann-Erickson United Kingdom Limited
McCann-Erickson Bristol Limited United Kingdom 100 McCann-Erickson United Kingdom Limited
McCann-Erickson Central Limited United Kingdom 100 McCann-Erickson United Kingdom Limited
McCann-Erickson Manchester Limited United Kingdom 100 McCann-Erickson United Kingdom Limited
McCann-Erickson Payne, Golley Ltd. United Kingdom 75.9 McCann-Erickson United Kingdom Limited
McCann-Erickson Scotland Limited United Kingdom 100 McCann-Erickson United Kingdom Limited
McCann-Erickson United Kingdom Limited United Kingdom 100 Interpublic Limited
McCann-Erickson Wales United Kingdom 100 McCann-Erickson Payne Golley
McCann-Erickson Payne Golley Limited United Kingdom 100 McCann-Erickson United Kingdom Limited
McCann-Erickson Scotland Limited United Kingdom 100 McCann-Erickson United Kingdom Limited
McCann Media Limited United Kingdom 100 McCann-Erickson Bristol
McCann Properties Limited United Kingdom 100 McCann-Erickson United Kingdom Limited
MSW Management Limited United Kingdom 100 The Sponsorship Group Limited
Neva Europe Limited United Kingdom 100 Registrant
Octagon Worldwide Limited United Kingdom 100 Interpublic Limited
Orbit International (1990) Ltd. United Kingdom 100 Lowe International Limited
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 28
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
Orkestra Ltd. United Kingdom 100 Interpublic Limited
Packaging Brands Limited United Kingdom 100 Registrant
Packaging Matters Limited United Kingdom 100 Registrant
Planet Packaging Consultants, Ltd. United Kingdom 71 The Coleman Group Worldwide LLC
Poundhold Ltd. United Kingdom 100 Lowe International Limited
P.R. Principles Limited United Kingdom 100 Marketing Principles limited
Pritchard Wood and Partners Limited United Kingdom 100 Interpublic Limited (50%), Business
Science Research (50%)
Research Matters Limited United Kingdom 100 Registrant
Royds London Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
Salesdesk Limited United Kingdom 100 Orkestra Ltd.
Smithfield Lease Limited United Kingdom 100 Lowe International Limited
Sports Management Limited United Kingdom 100 The Sponsorship Group Limited
SP Group Limited United Kingdom 100 Interpublic Limited
Still Price Court Twivy D'Souza Lintas Limited United Kingdom 100 SP Group Limited
Stowe, Bowden, Wilson Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
Talbot Television Limited United Kingdom 100 Fremantle International Inc.
Tavistock Advertising Limited United Kingdom 100 Lowe International Limited
Team GB Limited United Kingdom 100 The Sponsorship Group Limited
The Barnett Fletcher Promotions Company, Ltd. United Kingdom 100 Registrant
The Below the Line Agency Limited United Kingdom 100 Interpublic Limited
The Big Events Company Limited United Kingdom 100 CSI Limited
The Brompton Group Ltd. United Kingdom 100 Lowe International Limited
The Championship Group Limited United Kingdom 100 The Sponsorship Group Limited
The Howland Street Studio Ltd. United Kingdom 100 Interpublic Limited
The Line Limited United Kingdom 100 SP Group Limited
The Lowe Group Limited United Kingdom 100 Lowe International Limited
The Medicine Group (Education) Ltd. United Kingdom 60 Complete Medical Group Ltd.
The Really Big Promotions Company Limited United Kingdom 100 Interpublic Limited
<PAGE>
NAME PERCENTAGE EXHIBIT 21
OF VOTING PAGE 29
SECURITIES MARCH 19, 1999
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
FOREIGN:
<S> <C> <C> <C>
The Sponsorship Group Limited United Kingdom 100 Interpublic Limited
Tinker and Partners Limited United Kingdom 100 Interpublic Limited
Tweak Limited United Kingdom 100 SP Group Limited
Two Six Seven Limited United Kingdom 100 Lowe International limited
Universal Advertising Limited United Kingdom 100 Interpublic Limited
Universal Communications Worldwide Limited United Kingdom 100 Interpublic Limited
Virtual Reality Sports Limited United Kingdom 100 The Sponsorship Group Limited
Washington Soccer Limited United Kingdom 100 The Sponsorship Group Limited
Weber Europe Limited United Kingdom 100 Interpublic Limited
Western International Media Limited. United Kingdom 100 Lowe International Limited
Western International Media Europe Limited. United Kingdom 100 Lowe International Limited
WIMC UK Limited United Kingdom 100 Interpublic Limited
Octagon Motorsports Marketing Limited. United Kingdom 100 Octagon Motorsports Limited
Lingfield S.A. (S.A.F.I.) Uruguay 100 Registrant
Lowe & Partners South America Holdings, S.A. Uruguay 100 Lowe Group Holdings, Inc.
McCann-Erickson Latin America, S.A. Uruguay 100 Registrant
Rockdone Corporation S.A. (S.A.F.I.) Uruguay 100 Universal Publicidade S.A. (safi)
Steffen Corporation Uruguay 100 Ammirati Puris Lintas Brasil
Universal Publicidad S.A. (S.A.F.I.) Uruguay 100 McCann-Erickson Publicidade Ltda.
McCann-Erickson Publicidad De Venezuela, S.A. Venezuela 100 Registrant
Afamal Advertising (Rhodesia) Private Limited Zimbabwe 100 Registrant
Lintas (Private) Limited Zimbabwe 80 Fieldplan Ltd.
</TABLE>
<PAGE>
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". Ammirati Puris Lintas, Inc. conducts business through its
Ammirati Puris Lintas New York division. McCann-Erickson conducts some of
its business in the states of Kentucky and Michigan under the name "McGraphics".
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.
<PAGE>
EXHIBIT 23
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 19, 1999, appearing in the 1998
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; No. 33-64062 and No. 33-61371, relating
variously to the Employee Stock Purchase Plan (1975), the Employee Stock
Purchase Plan (1985) and the Employee Stock Purchase Plan of the Company
(1995); Registration Statements No. 33-20291 and No. 33-2830 relating to the
Management Incentive Compensation Plan of the Company; Registration Statements
No. 33-5352; No. 33-21605; No. 333-4747 and No. 333-23603 relating to the 1986
Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996
Stock Incentive Plan, of the Company; Registration Statements No. 33-10087 and
No. 33-25555 relating to the Long-Term Performance Incentive Plan of the
Company; Registration Statement No. 333-28029 relating to The Interpublic
Outside Directors' Stock Incentive Plan of the Company; and Registration
Statement No. 33-42675 relating to the 1997 Performance Incentive Plan of the
Company. We also consent to the incorporation by reference of our report on
the Financial Statement Schedule, which appears above.
PRICEWATERHOUSECOOPERS LLP
New York, New York
March 26, 1999
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements on Form S-8 of The Interpublic Group of Companies, Inc. ("IPG"
or the "Company"), of our report dated February 3, 1999, included in this
Annual Report on Form 10-K, with respect to the consolidated financial
statements of International Public Relations plc for the years ended
December 31, 1997 and October 31, 1996 (not separately presented herein),
which statements are included in the consolidated financial statements of
IPG.
(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, No. 33-64062, and No.
33-61371; relating variously to the Employee Stock Purchase Plan (1975),
the Employee Stock Purchase Plan (1985) and the Employee Stock Purchase
Plan of the Company (1995); Registration Statements No. 33-20291 and No.
33-2830 relating to the Management Incentive Compensation Plan of the
Company. Registration Statements No. 33-5352, No. 33-21605, No. 333-4747,
and No. 333-23603 relating to the 1986 Stock Incentive Plan, the 1986
United Kingdom Stock Option Plan and the 1996 Stock Incentive Plan, of the
Company; Registration Statements No. 33-10087 and No. 33-25555 relating to
the Long-Term Performance Incentive Plan of the Company; Registration
Statement No. 333-28029 relating to The Interpublic Outside Directors'
Stock Incentive Plan of the Company; Registration Statement No. 33-42675
relating to the 1997 Performance Incentive Plan of the Company).
Ernst & Young
London, England
March 24, 1999
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements on Form S-8 of The Interpublic Group of Companies, Inc. ("IPG"
or the "Company"), of our report dated March 13, 1998, included in the
Company's 1998 Annual Report on Form 10-K, with respect to the consolidated
financial statements of Hill, Holliday, Connors, Cosmopulos, Inc. for the
twelve-month period ended December 31, 1997 (not separately presented),
which statements are included in the consolidated financial statements of
IPG in its Annual Report on Form 10-K for the year ended December 31,
1998,: 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; No. 33-64062 and No. 33-
61371, relating variously to the Employee Stock Purchase Plan (1975), the
Employee Stock Purchase Plan (1985) and the Employee Stock Purchase Plan
(1995) of the Company; Registration Statements No. 33-20291 and No. 33-2830
relating to the Management Incentive Compensation Plan of the Company;
Registration Statements No. 33-5352; No. 33-21605; No. 333-4747 and No.
333-23603 relating to the 1986 Stock Incentive Plan, the 1986 United
Kingdom Stock Option Plan and the 1996 Stock Incentive Plan of the Company;
Registration Statements No. 33-10087 and No. 33-25555 relating to the Long-
Term Performance Incentive Plan of the Company; Registration Statement No.
333-28029 relating to The Interpublic Outside Directors' Stock Incentive
Plan of the Company; and Registration Statement No. 33-42675 relating to
the 1997 Performance Incentive Plan of the Company.
/s/Ernst & Young LLP
Boston, Massachusetts
March 24, 1999
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual
whose signature appears below constitutes and appoints PHILIP H.
GEIER, JR., EUGENE P. BEARD, FREDERICK MOLZ and NICHOLAS J.
CAMERA, 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, 1998, 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 25, 1999
PHILIP H. GEIER, JR. JOHN J. DOONER, JR.
PHILIP H. GEIER, JR. JOHN J. DOONER, JR.
EUGENE P. BEARD FRANK B. LOWE
EUGENE P. BEARD FRANK B. LOWE
FRANK J. BORELLI LEIF H. OLSEN
FRANK J. BORELLI LEIF H. OLSEN
REGINALD K. BRACK MARTIN F. PURIS
REGINALD K. BRACK MARTIN F. PURIS
JILL M. CONSIDINE ALLEN QUESTROM
JILL M. CONSIDINE ALLEN QUESTROM
J. PHILLIP SAMPER
J. PHILLIP SAMPER
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC.
CERTIFIED RESOLUTIONS
I, Nicholas J. Camera, Secretary of The Interpublic
Group of Companies, Inc. (the "Corporation"), hereby certify that
the resolutions attached hereto were duly adopted on March 25,
1999 by the Board of Directors of the Corporation and that such
resolutions have not been amended or revoked.
WITNESS my hand and the seal of the Corporation this
25th day of March, 1999.
NICHOLAS J. CAMERA
NICHOLAS J. CAMERA
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC.
MEETING OF THE BOARD OF DIRECTORS
RESOLUTIONS RE FROM 10-K
RESOLVED, that the Chairman of the Board and President
and the Vice Chairman-Finance and Operations of the Corporation
be, and each of them hereby is, authorized to execute and deliver
on behalf of the Corporation an annual report on Form 10-K for
the year ended December 31, 1998, in the form presented to this
meeting with such changes therein as either of them with the
advice of the General Counsel shall approve; and further
RESOLVED, that the Chairman of the Board and President
in his capacity as Chief Executive Officer, the Vice
Chairman-Finance and Operations in his capacity as Chief
Financial Officer, and the Vice President and Controller in his
capacity as Chief Accounting Officer of the Corporation be, and
each of them hereby is, authorized to execute such annual report
on Form 10-K; and further
RESOLVED, that the officers of the Corporation be and
each of them hereby is, authorized and directed to file such
annual report on Form 10-K, with all the exhibits thereto and any
<PAGE>
other documents that may be necessary or desirable in connection
therewith, after its execution by the foregoing officers and by a
majority of this Board of Directors, with the Securities and
Exchange Commission and the New York Stock Exchange; and further
RESOLVED, that the officers and directors of the
Corporation who may be required to execute such annual report on
Form 10-K be, and each of them hereby is, authorized to execute a
power of attorney in the form submitted to this meeting
appointing Philip H. Geier, Jr., Eugene P. Beard, Frederick Molz
and Nicholas J. Camera, and each of them, severally, his or her
true and lawful attorneys and agents to act in his or her name,
place and stead, to execute said annual report on Form 10-K and
any and all amendments and supplements thereto and all other
instruments necessary or desirable in connection therewith; and
further
RESOLVED, that the signature of any officer of the
Corporation required by law to affix his signature to such annual
report on Form 10-K or to any amendment or supplement thereto and
such additional documents as they may deem necessary or advisable
in connection therewith, may be affixed by said officer
personally or by any attorney-in-fact duly constituted in writing
by said officer to sign his name thereto; and further
<PAGE>
RESOLVED, that the officers of the Corporation be, and
each of them hereby is, authorized to execute such amendments or
supplements to such annual report on Form 10-K and such
additional documents as they may deem necessary or advisable in
connection with any such amendment or supplement and to file the
foregoing with the Securities and Exchange Commission and the New
York Stock Exchange; and further
RESOLVED, that the officers of the Corporation be, and
each of them hereby is, authorized to take such actions and to
execute such other documents, agreements or instruments as may be
necessary or desirable in connection with the foregoing.
<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
FINANCIAL STATEMENTS. THE EPS PRIMARY NUMBER BELOW REFLECTS THE BASIC
EARNINGS PER SHARE AS REQUIRED BY FINANCIAL ACCOUNTING STANDARDS NUMBER 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 488,102 441,917
<SECURITIES> 45,868 42,690
<RECEIVABLES> 3,035,671 2,839,329
<ALLOWANCES> 43,149 38,336
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,959,254 3,651,848
<PP&E> 653,371 581,707
<DEPRECIATION> 376,138 336,408
<TOTAL-ASSETS> 5,807,336 5,179,420
<CURRENT-LIABILITIES> 3,798,738 3,608,622
<BONDS> 201,018 115,929
0 0
0 0
<COMMON> 14,432 13,695
<OTHER-SE> 1,068,510 775,950
<TOTAL-LIABILITY-AND-EQUITY> 5,807,336 5,179,420
<SALES> 0 0
<TOTAL-REVENUES> 831,183 730,068
<CGS> 0 0
<TOTAL-COSTS> 765,757 672,947
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 12,801 12,406
<INCOME-PRETAX> 65,426 57,121
<INCOME-TAX> 25,498 22,524
<INCOME-CONTINUING> 37,739 31,899
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 37,739 31,899
<EPS-PRIMARY> .28 .25
<EPS-DILUTED> .27 .24
<PAGE>
</TABLE>
<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
FINANCIAL STATEMENTS. THE EPS PRIMARY NUMBER BELOW REFLECTS THE BASIC
EARNINGS PER SHARE AS REQUIRED BY FINANCIAL ACCOUNTING STANDARDS NUMBER 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 638,991 422,209
<SECURITIES> 55,575 52,383
<RECEIVABLES> 3,391,757 3,051,305
<ALLOWANCES> 47,189 25,699
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,522,967 3,904,808
<PP&E> 683,356 594,574
<DEPRECIATION> 391,763 341,017
<TOTAL-ASSETS> 6,452,587 5,515,411
<CURRENT-LIABILITIES> 4,360,594 3,885,478
<BONDS> 202,558 116,626
0 0
0 0
<COMMON> 14,483 13,820
<OTHER-SE> 1,125,192 850,875
<TOTAL-LIABILITY-AND-EQUITY> 6,452,587 5,515,411
<SALES> 0 0
<TOTAL-REVENUES> 1,863,425 1,611,384
<CGS> 0 0
<TOTAL-COSTS> 1,587,881 1,387,338
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 27,365 25,519
<INCOME-PRETAX> 275,544 224,046
<INCOME-TAX> 112,163 89,425
<INCOME-CONTINUING> 156,250 126,823
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 156,250 126,823
<EPS-PRIMARY> 1.15 .98
<EPS-DILUTED> 1.11 .94
<PAGE>
</TABLE>
<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
FINANCIAL STATEMENTS. THE EPS PRIMARY NUMBER BELOW REFLECTS THE BASIC
EARNINGS PER SHARE AS REQUIRED BY FINANCIAL ACCOUNTING STANDARDS NUMBER 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> SEP-30-1998 SEP-30-1997
<CASH> 623,777 456,732
<SECURITIES> 46,440 47,679
<RECEIVABLES> 3,205,398 2,803,391
<ALLOWANCES> 53,777 42,124
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,362,123 3,695,483
<PP&E> 713,683 624,191
<DEPRECIATION> 414,480 365,349
<TOTAL-ASSETS> 6,309,527 5,354,294
<CURRENT-LIABILITIES> 4,174,089 3,511,107
<BONDS> 201,847 315,459
0 0
0 0
<COMMON> 14,537 13,892
<OTHER-SE> 1,161,208 834,994
<TOTAL-LIABILITY-AND-EQUITY> 6,309,527 5,354,294
<SALES> 0 0
<TOTAL-REVENUES> 2,773,955 2,398,535
<CGS> 0 0
<TOTAL-COSTS> 2,408,822 2,116,339
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 43,394 41,486
<INCOME-PRETAX> 365,133 282,196
<INCOME-TAX> 150,767 116,671
<INCOME-CONTINUING> 203,238 156,792
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 203,238 156,792
<EPS-PRIMARY> 1.50 1.21
<EPS-DILUTED> 1.45 1.17
<PAGE>
</TABLE>
<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
FINANCIAL STATEMENTS. THE EPS PRIMARY NUMBER BELOW REFLECTS THE BASIC
EARNINGS PER SHARE AS REQUIRED BY FINANCIAL ACCOUNTING STANDARDS NUMBER 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 738,112 516,051
<SECURITIES> 31,944 36,940
<RECEIVABLES> 3,104,606 2,796,783
<ALLOWANCES> 44,110 37,049
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,233,522 3,631,478
<PP&E> 638,229 584,283
<DEPRECIATION> 365,877 338,313
<TOTAL-ASSETS> 5,983,443 5,119,927
<CURRENT-LIABILITIES> 4,017,155 3,502,670
<BONDS> 201,768 115,192
0 0
0 0
<COMMON> 14,357 13,641
<OTHER-SE> 1,021,537 818,486
<TOTAL-LIABILITY-AND-EQUITY> 5,983,443 5,119,927
<SALES> 0 0
<TOTAL-REVENUES> 3,482,384 2,983,899
<CGS> 0 0
<TOTAL-COSTS> 3,078,554 2,610,031
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 57,793 51,695
<INCOME-PRETAX> 403,830 373,868
<INCOME-TAX> 186,246 156,783
<INCOME-CONTINUING> 200,378 214,619
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 200,378 214,619
<EPS-PRIMARY> 1.54 1.65
<EPS-DILUTED> 1.49 1.60
<PAGE>
</TABLE>
<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
FINANCIAL STATEMENTS. THE EPS PRIMARY NUMBER BELOW REFLECTS THE BASIC
EARNINGS PER SHARE AS REQUIRED BY FINANCIAL ACCOUNTING STANDARDS NUMBER 128.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 808,803
<SECURITIES> 31,733
<RECEIVABLES> 3,522,616
<ALLOWANCES> 53,093
<INVENTORY> 0
<CURRENT-ASSETS> 4,776,945
<PP&E> 745,265
<DEPRECIATION> 420,864
<TOTAL-ASSETS> 6,942,823
<CURRENT-LIABILITIES> 4,658,352
<BONDS> 207,927
0
0
<COMMON> 14,572
<OTHER-SE> 1,265,092
<TOTAL-LIABILITY-AND-EQUITY> 6,942,823
<SALES> 0
<TOTAL-REVENUES> 3,968,728
<CGS> 0
<TOTAL-COSTS> 3,405,857
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,699
<INCOME-PRETAX> 562,871
<INCOME-TAX> 232,005
<INCOME-CONTINUING> 309,905
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 309,905
<EPS-PRIMARY> 2.29
<EPS-DILUTED> 2.21
<PAGE>
</TABLE>
