================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-Q
----------------
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 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, New York, New York 10020
----------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 399-8000
--------------
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock outstanding at
July 31, 2000: 307,768,471 shares.
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
I N D E X
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet
June 30, 2000 (unaudited) and
December 31, 1999
Consolidated Income Statement
Three months ended June 30, 2000
and 1999 (unaudited)
Consolidated Income Statement
Six months ended June 30, 2000
and 1999 (unaudited)
Consolidated Statement of Comprehensive Income
Three months ended June 30, 2000
and 1999 (unaudited)
Consolidated Statement of Comprehensive Income
Six months ended June 30, 2000
and 1999 (unaudited)
Consolidated Statement of Cash Flows
Six months ended June 30, 2000
and 1999 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative disclosures about Market Risk
PART II. OTHER INFORMATION
Item 2. Changes in Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1
<TABLE>
<CAPTION>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
ASSETS
June 30, December 31,
2000 1999
(unaudited)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (includes
certificates of deposit: 2000-$85,740;
1999-$150,343) $ 687,527 $1,006,011
Marketable securities 54,630 36,765
Receivables (net of allowance for doubtful
accounts: 2000-$64,682; 1999-$60,505) 4,653,714 4,401,704
Expenditures billable to clients 429,921 332,833
Prepaid expenses and other current assets 189,756 146,019
--------------------------
Total current assets 6,015,548 5,923,332
--------------------------
OTHER ASSETS:
Investment in unconsolidated affiliates 72,139 61,987
Deferred taxes on income 78 227 --
Other investments and miscellaneous assets 588,233 718,939
--------------------------
Total other assets 738,599 780,926
--------------------------
FIXED ASSETS, at cost:
Land and buildings 156,381 164,678
Furniture and equipment 832,160 777,368
--------------------------
988,541 942,046
Less: accumulated depreciation (538,801) (504,371)
--------------------------
449,740 437,675
Unamortized leasehold improvements 164,445 145,071
--------------------------
Total fixed assets 614,185 582,746
--------------------------
INTANGIBLE ASSETS (net of accumulated
amortization: 2000-$649,817; 1999-$607,417) 2,402,265 1,879,600
--------------------------
TOTAL ASSETS $9,770,597 $9,166,604
==========================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
2000 1999
(unaudited)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Payable to banks $ 534,756 $ 262,397
Accounts payable 4,623,684 4,568,343
Accrued expenses 699,932 761,210
Accrued income taxes 203,804 160,484
--------------------------
Total current liabilities 6,062,176 5,752,434
--------------------------
NONCURRENT LIABILITIES:
Long-term debt 720,211 524,183
Convertible subordinated debentures
and notes 525,577 518,490
Deferred compensation and reserve
for termination allowances 358,958 344,999
Deferred taxes on income -- 44,744
Accrued postretirement benefits 50,541 50,226
Other noncurrent liabilities 87,961 87,548
Minority interests in consolidated
subsidiaries 84,958 81,612
--------------------------
Total noncurrent liabilities 1,828,206 1,651,802
--------------------------
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value
shares authorized: 20,000,000
shares issued: none
Common Stock, $.10 par value
shares authorized: 550,000,000
shares issued:
2000 - 312,237,591;
1999 - 309,996,727 31,224 31,000
Additional paid-in capital 881,226 784,646
Retained earnings 1,511,797 1,389,971
Accumulated other comprehensive
loss, net of tax (297,861) (76,695)
--------------------------
2,126,386 2,128,922
Less:
Treasury stock, at cost:
2000 - 4,757,252 shares;
1999 - 8,909,904 shares 145,510 289,519
Unamortized expense of restricted
stock grants 100,661 77,035
--------------------------
Total stockholders' equity 1,880,215 1,762,368
--------------------------
Commitments and contingencies
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,770,597 $9,166,604
===========================
All prior periods have been restated to reflect the aggregate effect of
acquisitions accounted for as poolings of interests. (See Note (b))
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30
(Amounts in Thousands Except Per Share Data)
(unaudited)
2000 1999
---- ----
<S> <C> <C>
Revenue $ 1,418,192 $ 1,231,113
----------- -----------
Salaries and related expenses 713,591 619,176
Office and general expenses 411,094 360,294
Restructuring and other
merger related costs 52,775 -
----------- -----------
Total operating expenses 1,177,460 979,470
----------- -----------
Income from operations 240,732 251,643
Interest expense (22,039) (20,559)
Other income, net 29,105 29,115
----------- -----------
Income before provision for income taxes 247,798 260,199
Provision for income taxes 105,065 103,989
----------- -----------
Income of consolidated companies 142,733 156,210
Income applicable to minority interests (10,287) (9,003)
Equity in net income of unconsolidated
affiliates 4,393 2,800
----------- -----------
Net income $ 136,839 $ 150,007
=========== ===========
Weighted average shares:
Basic 294,438 292,201
Diluted 317,236 311,456
Earnings Per Share:
Basic $ .46 $ .51
Diluted $ .45 $ .49
Dividends per share $ .095 $ .085
</TABLE>
All prior periods have been restated to reflect the aggregate effect of
acquisitions accounted for as poolings of interests. (See Note (b))
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
SIX MONTHS ENDED JUNE 30
(Dollars in Thousands Except Per Share Data)
(unaudited)
2000 1999
---- ----
<S> <C> <C>
Revenue $ 2,616,403 $ 2,253,547
----------- -----------
Salaries and related expenses 1,407,175 1,207,773
Office and general expenses 804,256 702,724
Restructuring and other
merger related costs 88,826 -
----------- -----------
Total operating expenses 2,300,257 1,910,497
----------- -----------
Income from operations 316,146 343,050
Interest expense (42,416) (38,012)
Other income, net 45,901 41,837
----------- -----------
Income before provision for income taxes 319,631 346,875
Provision for income taxes 135,946 139,567
----------- -----------
Income of consolidated companies 183,685 207,308
Income applicable to minority interests (15,709) (12,756)
Equity in net income of unconsolidated
affiliates 6,158 4,167
----------- -----------
Net income $ 174,134 $ 198,719
=========== ===========
Weighted average shares:
Basic 294,168 291,366
Diluted 304,390 308,903
Earnings Per Share:
Basic $ .59 $ .68
Diluted $ .57 $ .66
Dividends per share $ .18 $ .17
</TABLE>
All prior periods have been restated to reflect the aggregate effect of
acquisitions accounted for as poolings of interests. (See Note (b))
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED JUNE 30
(Dollars in Thousands)
(unaudited)
2000 1999
---- ----
Net Income $136,839 $150,007
-------- --------
Other Comprehensive Income (Loss), net of tax:
Foreign Currency Translation Adjustments (43,966) (21,509)
Net Unrealized Loss on Securities (85,235) (23,452)
-------- --------
Other Comprehensive Loss (129,201) (44,961)
-------- --------
Comprehensive Income $ 7,638 $105,046
======== ========
All prior periods have been restated to reflect the aggregate effect of
acquisitions accounted for as poolings of interests. (See Note (b))
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
SIX MONTHS ENDED JUNE 30
(Dollars in Thousands)
(unaudited)
2000 1999
---- ----
Net Income $174,134 $198,719
-------- --------
Other Comprehensive Income (Loss), net of tax:
Foreign Currency Translation Adjustments (75,742) (86,063)
Net Unrealized Loss on Securities (145,424) (679)
-------- --------
Other Comprehensive Loss (221,166) (86,742)
-------- --------
Comprehensive Income (Loss) $ (47,032) $ 111,977
========= ========
All prior periods have been restated to reflect the aggregate effect of
acquisitions accounted for as poolings of interests. (See Note (b))
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30
(Dollars in Thousands)
(unaudited)
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 174,134 $ 198,719
Adjustments to reconcile net income to cash (used in)
provided by operating activities:
Depreciation and amortization of fixed assets 67,832 56,951
Amortization of intangible assets 47,374 36,318
Amortization of restricted stock awards 16,755 12,227
Equity in net income of unconsolidated
affiliates (6,158) (4,167)
Income applicable to minority interests 15,709 12,756
Translation losses 677 798
Net gain from sale of investments (8,320) (11,832)
Restructuring charges, non cash 20,600 --
Changes in assets and liabilities, net of acquisitions:
Receivables (282,867) (548,353)
Expenditures billable to clients (86,746) (66,491)
Prepaid expenses and other assets (43,005) (19,149)
Accounts payable and other liabilities 6,071 336,090
Accrued income taxes 11,090 26,368
Deferred income taxes (20,624) (1,387)
Deferred compensation and reserve for
termination allowances 18,848 (366)
---------- ---------
Net cash (used in) provided by operating activities (68,630) 28,482
CASH FLOWS FROM INVESTING ACTIVITIES: ---------- ---------
Acquisitions (309,023) (133,426)
Proceeds from sale of assets 520 --
Proceeds from sale of investments 6,442 17,019
Capital expenditures (96,711) (60,303)
Net purchases of marketable securities (19,545) (18,308)
Other investments and miscellaneous assets (135,236) (41,685)
Investments in unconsolidated affiliates (10,319) (4,160)
---------- ---------
Net cash used in investing activities (563,872) (240,863)
CASH FLOWS FROM FINANCING ACTIVITIES: ---------- ---------
Increase in short-term borrowings 283,227 45,704
Proceeds from long-term debt 416,649 395,352
Payments of long-term debt (220,629) (35,946)
Treasury stock acquired (114,040) (126,977)
Issuance of common stock 28,534 42,657
Cash dividends - pooled (420) (1,481)
Cash dividends - Interpublic (51,869) (43,755)
---------- ---------
Net cash provided by financing activities 341,452 275,554
---------- ---------
Effect of exchange rates on cash and cash
equivalents (27,434) (29,556)
---------- ---------
Increase/(decrease) in cash and cash equivalents (318,484) 33,617
Cash and cash equivalents at
beginning of year 1,006,011 780,429
---------- ---------
Cash and cash equivalents at end of period $ 687,527 $ 814,046
========== =========
<PAGE>
All prior periods have been restated to reflect the aggregate effect of
acquisitions accounted for as poolings of interests. (See Note (b))
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Consolidated Financial Statements
(a) In the opinion of management, the consolidated balance sheet as of
June 30, 2000, the consolidated income statements for the three months
and six months ended June 30, 2000 and 1999, the consolidated
statement of comprehensive income for the three months and six months
ended June 30, 2000 and 1999, and the consolidated statement of cash
flows for the six months ended June 30, 2000 and 1999, contain all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations and cash flows at June 30, 2000 and for all periods
presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. It is suggested that
these consolidated financial statements be read in conjunction with
the consolidated financial statements and notes thereto included in
The Interpublic Group of Companies, Inc.'s (the "Company") December
31, 1999 annual report to stockholders and the supplemental
consolidated financial statements and notes thereto included in the
Company's Current Report on Form 8-K dated July 17, 2000.
The Company's consolidated financial statements, including the related
notes, have been restated for the prior periods presented to include
the results of operations, financial position and cash flows of NFO
Worldwide, Inc. ("NFO"). (See Note (b)). Additionally, the results of
several other recent acquisitions, all of which have been accounted
for as poolings of interests, have been included in the restated
financial statements. Other than NFO, none of the acquisitions was
individually, or in aggregate, material.
The accompanying income statements have been prepared in a format
different than that used in the originally filed Form 10-Q for the
quarterly period ended June 30, 1999. The accompanying financial
statements include the line - "Income from operations". Amounts
previously included in "Other income, net" as part of "Gross Income"
are now included elsewhere in the Consolidated Statement of Income.
(b) In April 2000, the Company issued approximately 12.6 million shares of
its common stock in connection with the acquisition of NFO. The
acquisition has been accounted for as a pooling of interests.
(C) During the second quarter, the Company recorded pre-tax restructuring
and other merger related costs of $52.8 million ($35 million net of
tax). The amount included a pre-tax amount of $38.4 million related to
the previously announced restructuring of Lowe Lintas & Partners
Worldwide. The remaining costs relate principally to transaction costs
related to the previously announced merger with NFO.
<PAGE>
Lowe Lintas & Partners
-----------------------
In October 1999, the Company announced the merger of two of its
advertising networks. The networks affected, Lowe & Partners Worldwide
and Ammirati Puris Lintas were combined to form a new agency network
called Lowe Lintas & Partners Worldwide. The merger involves the
consolidation of operations in Lowe Lintas agencies in approximately
24 cities in 22 countries around the world. Once complete, the newly
merged agency network will have offices in over 80 countries around
the world.
Since the fourth quarter of 1999, the Company has been executing the
restructuring in connection with the merger. As of the current date,
substantially all restructuring activities have been completed except
for some real estate and other activities principally related to
Germany.
In the second quarter of 2000, the Company recognized pre-tax
restructuring and other merger related costs of $38.4 million, related
to Lowe Lintas, including $28 million of cash charges. For the first
six months of 2000, the Company recognized $74.4 million in pre-tax
costs of which $53.8 million were cash charges.
A summary of the components of the restructuring and other merger
related costs for Lowe Lintas is as follows:
<TABLE>
<CAPTION>
(Dollars in millions)
Year to Date June 30, 2000
---------------------------------
Balance Expense Cash Asset Balance
at 12/31/99 recognized Paid Write-offs at 6/30/00
----------- ------------- ---- ---------- ----------
<S> <C> <C> <C> <C> <C>
TOTAL BY TYPE
Severance and
termination costs $43.6 $32.0 $21.4 -- $54.2
Fixed asset write-offs 11.1 9.3 -- 20.4 --
Lease termination costs 3.8 13.6 7.2 -- 10.2
Investment write-offs
and other 23.4 19.5 6.0 36.9 --
--------------------------------------------------------------
Total $81.9 $74.4 $34.6 $57.3 $64.4
==============================================================
</TABLE>
The severance and termination costs recorded 2000 relate to
approximately 360 employees who have been terminated or notified that
they will be terminated. The employee groups affected include
management, administrative, account management, creative and media
production personnel, principally in the U.S. and several European
countries.
The fixed asset write-offs relate largely to the abandonment of
leasehold improvements as part of the merger. The amount recognized in
2000 relates to fixed asset write-offs in 3 offices, the largest of
which is in the U.K.
<PAGE>
Lease termination costs relate to the offices vacated as part of the
merger. The lease terminations are substantially complete, with the
cash portion to be paid out over a period of up to five years.
The investment write-offs relate to the loss on sale or closing of
certain business units. In 2000, $19.5 million has been recorded, the
majority of which results from the decision to sell or abandon 3
businesses located in Asia and Europe. In the aggregate, the
businesses being sold or abandoned represent an immaterial portion of
the revenue and operations of Lowe Lintas & Partners. The write-off
amount was computed based upon the difference between the estimated
sales proceeds (if any) and the carrying value of the related assets.
These sales or closures are expected to be completed by mid 2000.
NFO Merger Related Costs
------------------------
In addition to the restructuring and other merger related costs noted
above, an additional $14.4 million in cash costs was recorded by the
Company in the second quarter of 2000. This amount relates largely to
the non-recurring transaction costs related to the recently completed
acquisition of NFO. (See Note (b)).
(d) In addition to the acquisition mentioned in (b), during the second
quarter the Company made several other acquisitions, including
Nationwide Advertising Services and substantial assets of the
Communications Division of Caribiner International, Inc. The
acquisitions have been accounted for as purchases.
(e) On June 27, 2000, the Company entered into a syndicated credit
agreement under which a total of $750 million may be borrowed; $375
million may be borrowed under a 364-day facility and $375 million
under a five-year facility. The facilities bear interest at variable
rates based on either LIBOR or a bank's base rates, at the Company's
option. As of June 30, 2000, approximately $409 million had been
borrowed under the facilities. The weighted-average interest rate on
the borrowings at June 30, 2000 was 8%. The proceeds from the
syndicated credit agreement were used to refinance borrowings and to
fund general corporate purposes including acquisitions and other inv-
estments. The pre-existing borrowing facilities were subsequently
terminated.
(f) In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"), which sets out the required accounting
treatment for derivatives and hedging activities. In June 1999, the
Financial Accounting Standards Board issued Statement No. 137,
"Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133", which
delays implementation of SFAS No. 133 until fiscal years beginning
after June 15, 2000. In June 2000, the Financial Accounting Standards
Board issued Statement No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", which provides additional
guidance related to accounting for derivative instruments and hedging
activities as addressed by SFAS No. 133. The Company does not believe
that the effect of adopting SFAS No. 133 and SFAS No. 138 will be
material to its financial condition or results of operations.
<PAGE>
Item 2
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
As discussed in Note (b), the Company acquired NFO Worldwide, Inc. ("NFO"), a
leading provider of research based marketing information and counsel to the
business community, in a transaction accounted for as a pooling of interests in
April 2000. The Company's consolidated financial statements and other financial
information for prior periods have been restated to reflect the effect of the
NFO pooling and the results of several other acquisitions, which have been
accounted for as poolings of interests. The following discussion relates to the
combined results of the Company after giving effect to the pooled companies.
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
-----------------------------------------------------------------------------
The Company reported net income of $136.8 million or $.45 diluted earnings per
share for the three months ended June 30, 2000. Excluding the impact of
restructuring and other merger related costs, which are discussed below, net
income was $171.9 million or $.56 diluted earnings per share, compared to $150.0
million or $.49 diluted earnings per share for the three months ended June 30,
1999.
The following table sets forth net income and earnings per share before and
after restructing and other merger related costs:
<TABLE>
<CAPTION>
(Dollars in thousands, except
per share date)
2000 1999
----- ------
<S> <C> <C>
Net income as reported $136,839 $150,007
Earnings per share:
Basic .46 .51
Diluted .45 .49
Net income before restructuring
and other merger related costs $171,878 $150,007
Earnings per share:
Basic .58 .51
Diluted .56 .49
</TABLE>
Worldwide revenue for the three months ended June 30, 2000 increased $187
million, or 15%, to $1.4 billion compared to the same period in 1999. Domestic
revenue increased $126 million or 20% from 1999 levels. International revenue
increased $61 million or 10% during the second quarter of 2000 compared to 1999.
International revenue would have increased 16%, excluding the effect of the
strengthening of the U.S. dollar. The increase in worldwide revenue is a result
of both new business growth and growth from acquisitions. Exclusive of
acquisitions, worldwide revenue on a constant dollar basis increased 13% for the
second quarter of 2000 compared to the prior year quarter.
Revenue from other specialized marketing services, which include media buying,
market research, relationship (direct) marketing, sales promotion, public
relations, sports and event marketing, healthcare marketing and e-business
consulting and communications, comprised approximately 47% of the total
worldwide revenue for the three months ended June 30, 2000, compared to 44% for
the prior year quarter.
<PAGE>
Income from operations was $240 million for the second quarter of 2000.
Excluding restructuring and other merger related costs, income from operations
was $294 million for the second quarter of 2000, compared to $252 million for
the second quarter of 1999, an increase of 17%. Amortization of intangible
assets was $24 million for the second quarter of 2000, compared to $19 million
for the second quarter of 1999. Exclusive of acquisitions, foreign exchange
fluctuations and amortization of intangible assets, income from operations
increased 17% for the second quarter of 2000 compared to the second quarter of
1999.
Worldwide operating expenses for the second quarter 2000, excluding
restructuring and other merger related costs were $1.1 billion, an increase of
15% over the prior year quarter. This increase is consistent with the 15%
increase in revenue for the same period. Salaries and related expenses were $714
million or 50% of revenue for the second quarter of 2000 as compared to $619
million or 50% of revenue for the second quarter of 1999. Office and general
expenses were $411 million for the second quarter of 2000 compared to $360
million for the second quarter of 1999.
Interest expense was $22.0 million for the three months ended June 30, 2000,
compared to $20.6 million for the prior year quarter. The increase is primarily
a result of higher debt levels and higher interest rates in 2000.
Other income, net, which consists of interest income, investment income and net
gains from equity investments, remained flat at $29 million for the three months
ended June 30, 2000 and for the prior year quarter.
The effective tax rate for the three months ended June 30, 2000 was 42.4%,
compared to 40.0% in 1999. The difference between the effective and statutory
rates is primarily due to state and local taxes, foreign withholding taxes on
dividends and nondeductible goodwill expense.
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999
-------------------------------------------------------------------------
Net income was $174.1 million or $.57 diluted earnings per share for the six
months ended June 30, 2000. Excluding the impact of restructuring and other
merger related costs, which are discussed below, net income was $229.9 million
or $.75 diluted earnings per share, compared to $198.7 million or $.66 diluted
earnings per share.
The following table sets forth net income and earnings per share before and
after restructing and other merger related costs:
<TABLE>
<CAPTION>
(Dollars in thousands, except
per share data)
2000 1999
----- ----
<S> <C> <C>
Net income as reported $174,134 $198,719
Earnings per share:
Basic .59 .68
Diluted .57 .66
Net income before restructuring
and other merger related costs $229,903 $198,719
Earnings per share:
Basic .78 .68
Diluted .75 .66
</TABLE>
Worldwide revenue for the six months ended June 30, 2000, increased $363
million, or 16%, to $2.6 billion compared to the same period in 1999. Domestic
revenue increased $264 million or 23% during the first six months of 2000
compared to 1999. International revenue increased $99 million or 9% during the
first six months of 2000 compared to 1999. International revenue would have
increased 14%, excluding the effect of the strengthening of the U.S. dollar. The
increase in worldwide revenue is a result of both new business growth and growth
from acquisitions. Exclusive of acquisitions, worldwide revenue on a constant
dollar basis increased 13% for the first six months of 2000 compared to the
prior year period.
Revenue from other specialized marketing services, which include media buying,
market research, relationship (direct) marketing, sales promotion, public
relations, sports and event marketing, healthcare marketing and e-business
consulting and communications, comprised approximately 47% of the total
worldwide revenue for the six months ended June 30, 2000, compared to 44% for
the first six months of 1999.
<PAGE>
Income from operations was $316 million for the six months ended June 30, 2000.
Excluding restructuring and other merger related costs, income from operations
was $405 million for the first six months of 2000, compared to $343 million for
the first six months of 1999, an increase of 18%. Amortization of intangible
assets was $47 million for the first six months of 2000, compared to $36 million
for the first six months of 1999. Exclusive of acquisitions, foreign exchange
fluctuations and amortization of intangible assets, income from operations
increased 18% for the first six months of 2000 compared to the first six months
of 1999.
Worldwide operating expenses for the six months ended June 30, 2000, excluding
restructuring and other merger related costs were $2.2 billion, an increase of
16% over the prior year period. This increase is consistent with the 16%
increase in revenue for the same period. Salaries and related expenses were $1.4
billion or 54% of revenue for the first six months of 2000 as compared to $1.2
billion or 54% of revenue for the first six months of 1999. Office and general
expenses were $804 million for the first six months of 2000 compared to $703
million for the first six months of 1999.
Interest expense was $42.4 million for the six months ended June 30, 2000,
compared to $38.0 million for the prior year. The increase is primarily a result
of higher debt levels and higher interest rates in 2000.
Other income, net, which consists of interest income, investment income and net
gains from equity investments, all have increased at comparable rates over the
prior year.
The effective tax rate for the six months ended June 30, 2000 was 42.5%,
compared to 40.2% in 1999. The difference between the effective and statutory
rates is primarily due to, state and local taxes, foreign withholding taxes on
dividends and nondeductible goodwill expense.
Restructuring and Other Merger Related Costs
--------------------------------------------
During the second quarter, the Company recorded pre-tax restructuring and other
merger related costs of $52.8 million ($35 million net of tax). The amount
included a pre-tax amount of $38.4 million related to the previously announced
restructuring of Lowe Lintas & Partners Worldwide. The remaining costs relate
principally to transaction costs related to the previously announced merger with
NFO.
Lowe Lintas & Partners
In October 1999, the Company announced the merger of two of its advertising
networks. The networks affected, Lowe & Partners Worldwide and Ammirati Puris
Lintas were combined to form a new agency network called Lowe Lintas & Partners
Worldwide. The merger involves the consolidation of operations in Lowe Lintas
agencies in approximately 24 cities in 22 countries around the world. Once
complete, the newly merged agency network will have offices in over 80 countries
around the world.
Since the fourth quarter of 1999, the Company has been executing the
restructuring in connection with the merger. As of the current date,
substantially all restructuring activities have been completed except for some
real estate and other activities principally related to Germany.
In the second quarter of 2000, the Company recognized pre-tax restructuring and
other merger related costs of $38.4 million, related to Lowe Lintas, including
$28 million of cash charges. For the first six months of 2000, the Company
recognized $74.4 million in pre-tax costs of which $53.8 million were cash
charges.
<PAGE>
The restructuring and other merger related costs for Lowe Lintas included
$32 million in severance and termination costs, $9.3 million in fixed asset
write-offs, $13.6 million in lease termination costs and $19.5 million in
investment write-offs and other costs.
The severance and termination costs recorded 2000 relate to approximately 360
employees who have been terminated or notified that they will be terminated. The
employee groups affected include management, administrative, account management,
creative and media production personnel, principally in the U.S. and several
European countries.
The fixed asset write-offs relate largely to the abandonment of leasehold
improvements as part of the merger. The amount recognized in 2000 relates to
fixed asset write-offs in 3 offices, the largest of which is in the U.K. Lease
termination costs relate to the offices vacated as part of the merger.
The investment write-offs relate to the loss on sale or closing of certain
business units. In 2000, $19.5 million has been recorded, the majority of which
results from the decision to sell or abandon 3 businesses located in Asia and
Europe.
NFO Merger Related Costs
In addition to the restructuring and other merger related costs noted above, an
additional $14.4 million in cash costs was recorded by the Company in the second
quarter of 2000. This amount relates largely to the non-recurring transaction
costs related to the recently completed acquisition of NFO. (See Note (b)).
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The ratio of current assets to current liabilities was approximately 1 to 1 at
June 30, 2000. Working capital decreased by $218 million from December 31, 1999
to June 30, 2000. Total debt at June 30, 2000 was $1.78 billion, an increase of
$476 million from December 31, 1999. The reduction in working capital and
increase in debt are attributable to the net effect of payments made for
acquisitions. Cash flow from operations and availability under existing credit
facilities will be the Company's primary source of working capital.
On June 27, 2000, the Company entered into a syndicated credit agreement
under which a total of $750 million may be borrowed; $375 million may be
borrowed under a 364-day facility and $375 million under a five-year facility.
The facilities bear interest at variable rates based on either LIBOR or a bank's
base rates, at the Company's option. As of June 30, 2000, approximately $409
million had been borrowed under the facilities. The weighted-average interest
rate on the borrowings at June 30, 2000 was 8%. The proceeds from the syndicated
credit agreement were used to refinance borrowings and to fund general corporate
purposes including acquisitions and other investments. The pre-existing
borrowing facilities were subsequently terminated.
Net cash used in operating activities was $69 million for the six months ended
June 30, 2000. Net cash provided by operations was $28 million for the six
months ended June 30, 1999. The principal use of the Company's working capital
is to provide for the operating needs of its advertising agencies, which include
payments for space or time purchased from various media on behalf of its
clients. The Company's practice is to bill and collect from its clients in
sufficient time to pay the amounts due media. Other uses of working capital
include the payment of cash dividends, acquisitions and capital expenditures. In
addition, during the first six months of 2000, the Company acquired 2.1 million
shares of its own stock for approximately $114 million for the purpose of
fulfilling the Company's obligations under its various compensation plans.
OTHER MATTERS
Acquisitions
------------
In connection with the NFO acquisition completed on April 20, 2000, the Company
assumed approximately $180 million in debt. Additionally, during the second
quarter, the Company made several other acquisitions, including Nationwide
Advertising Services ("NAS") and substantial assets of the Communications
Division of Caribiner International, Inc. ("Caribiner"). NAS and Caribiner have
been accounted for as purchases.
Cautionary Statement
--------------------
Statements by the Company in this document 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.
New Accounting Guidance
-----------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS No. 133), which had an initial adoption date of
January 1, 2000. In June 1999, the FASB postponed the adoption date of SFAS No.
133 until January 1, 2001. In June 2000, the FASB issued SFAS No. 133 which
provides additional guidance on SFAS No. 138. The Company does not believe the
effect of adopting SFAS No. 133 and SFAS No. 138 will be material to its
financial condition or results of operations.
<PAGE>
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 is 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 has not, and is not expected to have a material effect on
the Company's financial condition or results of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's financial market risk arises from fluctuations in interest rates
and foreign currencies. Most of the Company's debt obligations are at fixed
interest rates. A 10% change in market interest rates would not have a material
effect on the Company's pre-tax earnings, cash flows or fair value. At June 30,
2000, the Company had an insignificant amount of foreign currency derivative
financial instruments in place. The Company does not hold any financial
instrument for trading purposes.
<PAGE>
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
(1) On March 31, 2000, the Registrant paid $84,000 and issued 5,013
shares of Common Stock, par value $.10 per share of the Registrant (the
"Interpublic Stock") to former shareholders of a foreign company which was
acquired in the Fourth Quarter of l998. This represented a deferred payment of
the purchase price. The shares of Interpublic Stock were valued at $197,008 on
the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act
of 1933, as amended (the "Securities Act").
(2) On March 31, 2000, the Registrant issued 11,098 shares of
Interpublic Stock to former shareholders of a foreign company which was acquired
in the Fourth Quarter of l998. This represented a deferred payment of the
purchase price. The shares of Interpublic Stock were valued at $436,140 on the
date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(3) On April 1, 2000, the Registrant paid $177,000 in cash and issued
1,501 shares of Interpublic Stock to former shareholders of a foreign company
which was acquired in the Fourth Quarter of l998. This represented a deferred
payment of the purchase price. The shares of Interpublic Stock were valued at
$58,983 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(4) On April 6, 2000 the Registrant issued 7,523 shares of Interpublic
Stock and paid $2,087,000 to the former shareholders of a domestic company which
was acquired in the last quarter of l999. This represented a deferred payment of
the purchase price. The shares of Interpublic Stock were valued at $319,820 on
the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in reliance on Section 4(2) under the Securities Act, based
on the sophistication of the acquired company's former stockholder.
(5) On April 11, 2000, the Registrant issued 41,561 shares of
Interpublic Stock and paid $1,825,028 in cash to the former shareholders of a
domestic company which was acquired in the fourth quarter of 1998. This
represented a deferred payment of the purchase price. The shares of Interpublic
Stock were valued at $1,825,028 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in reliance on Section 4(2) under the Securities Act, based
on the sophistication of the acquired company's former stockholder.
(6) On April 17, 2000, the Registrant issued 8,834 shares of
Interpublic Stock to the former shareholder of a company which was acquired in
the first quarter of 1999. This represented a deferred payment of the purchase
price. The shares of Interpublic Stock were valued at $358,500 on the date of
issuance.
<PAGE>
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(7) On April 24, 2000, the Registrant issued 4,392 shares of
Interpublic Stock and on June 15, 2000 paid $342,022 in cash to former
shareholders of a foreign company which was acquired in the Third Quarter of
l998. This represented a deferred payment of the purchase price. The shares of
Interpublic Stock were valued at $184,165 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(8) On April 28, 2000, Registrant paid $111,079 in cash and on May 1,
2000 issued 2,238 shares of Interpublic Stock to the former shareholders of a
foreign company which was acquired in the Fourth Quarter of 1998. This
represented a deferred payment of the purchase price. The shares of Interpublic
Stock were valued at $123,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(9) On April 30, 2000, the Registrant paid $1,000,000 in cash and
issued 25,924 shares of Interpublic Stock to former shareholders of a foreign
company which was acquired in the First Quarter of l999. This represented a
deferred payment of the purchase price. The shares of Interpublic Stock were
valued at $1,000,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(10) On May 18, 2000, the Registrant paid $861,000 in cash and issued
7,016 shares of Interpublic Stock to former shareholders of a foreign company as
an installment payment of purchase price for 55% of the capital stock of the
foreign company. The shares of Interpublic Stock were valued at $287,136 on the
date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b) (3) of Regulation S under the Securities
Act.
(11) On May 19, 2000, Registrant paid $380,530 in cash and issued
7,458 shares of Interpublic Stock to the former shareholders of a foreign
company which was acquired in the Fourth Quarter of 1998. This represented a
deferred payment of the purchase price. The shares of Interpublic Stock were
valued at $314,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(12) On June 9, 2000, the Registrant issued 13,308 shares of
Interpublic Stock and $140,000 in cash to the former shareholders of a domestic
company which was acquired in the first quarter of 1998. This represented a
deferred payment of the purchase price. The shares of Interpublic Stock were
valued at $560,000 on the date of issuance.
<PAGE>
The shares of Interpublic Stock were issued by the Registrant
without registration in reliance on Section 4(2) under the Securities Act, based
on the sophistication of the acquired company's former stockholder.
(13) On June 21, 2000, a subsidiary of the Registrant acquired 100% of
the capital stock of a domestic company in consideration for which Registrant
paid $1,600,062 in cash and issued 9,080 shares of Interpublic Stock to the
shareholders of the acquired company. The shares of Interpublic Stock were
valued at $428,462.50 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in reliance on Section 4(2) under the Securities Act, based
on the sophistication of the acquired company's shareholders.
(14) On June 22, 2000, the Registrant acquired 100% of the Class A
capital stock of a domestic company (such stock constituting 51% of the equity
and 86% of the voting power) and $60.75 million of the debt of such company, in
consideration for which, on July 13, 2000, Registrant issued 2,116,592 shares of
Interpublic Stock to the shareholders of the acquired company and 1,483,408
shares of Interpublic Stock to the owner of the debt of the acquired company.
The shares of Interpublic Stock were valued at $152,100,000 on the July 13, 2000
date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in reliance on Section 4(2) under the Securities Act, based
on the sophistication of the acquired company's shareholders and debt holder.
(15) On June 23, 2000, the Registrant issued 5,649 shares of
Interpublic Stock to the former shareholder of a domestic company which was
acquired in the first quarter of 1998. This represented a deferred payment of
the purchase price. The shares of Interpublic Stock were valued at $244,674 on
the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in reliance on Section 4(2) under the Securities Act, based
on the sophistication of the acquired company's former stockholder.
(16) On June 27, 2000, a subsidiary of the Registrant acquired 100% of
the issued and outstanding membership interests of a domestic company in
consideration for which the Registrant paid $108,000,000 in cash, agreed to
issue $63,000,000 of Interpublic Stock to such company's members upon the
effectiveness of a registration statement, and issued 198,000 shares of
Interpublic Stock that were valued on the date of issuance at $9,000,000 and
that were held back for up to one year to satisfy any potential indemnification
claim.
The 198,000 shares of Interpublic Stock were issued by the
Registrant without registration in reliance on Section 4(2) of the Securities
Act, based on the sophistication of the company's selling members.
(17) On June 28, 2000, a subsidiary of the Registrant acquired 30% of
the issued and outstanding membership interests of a domestic company in
consideration for which the Registrant (i) paid $1,486,875 in cash and issued
17,650 shares of Interpublic Stock to such company's stockholders and (ii) made
a capital contribution to such domestic company in an amount equal to
$5,947,000. The shares of Interpublic Stock issued to such company's members had
a market value of $800,625 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in reliance on Section 4(2) of the Securities Act, based on
the sophistication of the company's selling members.
<PAGE>
(18) On June 29, 2000, a subsidiary of the Registrant acquired
substantially 100% of the assets of a domestic company in consideration for
which the Registrant paid $15,253,134.49 in cash and issued 141,961 shares of
Interpublic Stock to the shareholders of the company and their designees. The
shares of Interpublic Stock had a market value of $6,665,050 as of the date of
issuance. The shares of Interpublic Stock were issued by the Registrant without
registration in reliance on Section 4(2) under the Securities Act, based on the
sophistication of the company's stockholders and their designees.
(19) On June 30, 2000, the Registrant acquired 100% of the capital
stock of a domestic company in consideration for which Registrant issued 328,058
shares of Interpublic Stock to the shareholders of the acquired company. The
shares of Interpublic Stock were valued at $14,250,000 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in reliance on Section 4(2) under the Securities Act, based
on the sophistication of the acquired company's shareholders.
(20) On June 30, 2000, a subsidiary of the Registrant acquired 100% of
the capital stock of a foreign company in consideration for which Registrant
paid $2,398,893 in cash and issued without registration 17,707 shares of
Interpublic Stock to the shareholders of the acquired company. The shares of
Interpublic Stock were valued at $799,631 on the date of issuance.
The shares of Interpublic Stock were issued by the Registrant
without registration in an "offshore transaction" and solely to "non-U.S.
persons" in reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(21) On June 30, 2000, a subsidiary of the Registrant acquired
substantially 100% of the assets of a domestic company in consideration for
which the Registrant paid $3,107,086 in cash and issued 36,466 shares of
Interpublic Stock to the shareholder of the company. The shares of Interpublic
Stock had a market value of $1,673,046 on the date of issuance. The shares of
Interpublic Stock were issued by the Registrant without registration in reliance
on Section 4(2) under the Securities Act, based on the sophistication of the
company's stockholder.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) This item is answered in respect of the Annual Meeting of
Stockholders held on May 15, 2000.
(b) No response is required to Paragraph (b) because (i) proxies for
the meeting were solicited pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended; (ii) there was no
solicitation in opposition to Management's nominees as listed in
the proxy statement; and (iii) all such nominees were elected.
(c) At the Annual Meeting, the following number of shares were cast
with respect to each matter voted upon:
-- Proposal to approve Management's nominees for director as
follows:
<PAGE>
BROKER
NOMINEE FOR WITHHELD NONVOTES
------- --- -------- --------
Frank J. Borelli 233,549,145 1,079,314 0
Reginald K. Brack 232,641,982 1,986,477 0
Jill M. Considine 233,521,097 1,107,362 0
John J. Dooner, Jr. 232,770,054 1,858,405 0
Philip H. Geier, Jr. 233,896,119 732,340 0
Frank B. Lowe 233,869,626 758,833 0
Michael A. Miles 233,267,782 1,360,677 0
Leif H. Olsen 232,732,426 1,896,033 0
Sean F. Orr 232,798,589 1,829,870 0
J. Phillip Samper 232,775,394 1,853,065 0
-- Proposal to approve confirmation of independent accountants.
BROKER
FOR AGAINST ABSTAIN NONVOTES
--- ------- ------- --------
233,928,485 97,993 601,981 0
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
EXHIBIT NO. DESCRIPTION
Exhibit 10(a) 364-Day Credit Agreement, dated as of June 27, 2000, among
the Registrant, the Initial Lenders named therein as initial
lenders, Citibank, N.A. as Administrative Agent, Salomon
Smith Barney Inc. as Lead Arranger and Book Manager, Bank
One, NA, Suntrust Bank and HSBC Bank USA as Co-arrangers,
Bank One, NA as Documentation Agent and Suntrust Bank as
Syndication Agent.
Exhibit 10(b)(1) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $47,500,000.
Exhibit 10(b)(2) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the Principal amount of $37,500,000.
Exhibit 10(b)(3) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000.
Exhibit 10(b)(4) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(b)(5) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(b)(6) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000
Exhibit 10(b)(7) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(b)(8) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000.
Exhibit 10(b)(9) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(b)(10) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(b)(11) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(b)(12) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(b)(13) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(c) Five Year Credit Agreement, dated as of June 27, 2000, among
the Registrant, the Initial Lenders named therein as initial
lenders, Citibank, N.A. as Administrative Agent, Salomon
Smith Barney Inc. as Lead Arranger and Book Manager, Bank
One, NA, Suntrust Bank and HSBC Bank USA as Co-arrangers,
Bank One, NA as Documentation Agent and Suntrust Bank as
Syndication Agent.
<PAGE>
Exhibit 10(d)(1) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $47,500,000.
Exhibit 10(d)(2) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the Principal amount of $37,500,000.
Exhibit 10(d)(3) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000.
Exhibit 10(d)(4) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(d)(5) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(d)(6) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000
Exhibit 10(d)(7) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(d)(8) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000.
Exhibit 10(d)(9) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(d)(10) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(d)(11) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(d)(12) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(d)(13) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(e) Resolutions of the Registrant's Compensation Committee,
amending the Registrant's 1997 Performance Incentive Plan.
Exhibit 10(f) Supplemental Agreement made as of June 1, 2000 to an
Executive Severance Agreement, made as of April 27, 1999
between Interpublic and Sean F. Orr.
Exhibit 10(g) Letter Agreement, dated April 4, 2000 between Registrant and
Philip H. Geier, Jr.
Exhibit 11 Computation of Earnings Per Share.
Exhibit 27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
The following reports on Form 8-K were filed without financial
statements during the quarter ended June 30, 2000:
1) Report, dated April 3, 2000, Item 5 Other Events and Item 7
Exhibits, disclosing an amendment to the Agreement and Plan of Merger and Stock
Option Agreement between Registrant and NFO Worldwide, Inc. ("NFO").
<PAGE>
2) Report, dated April 20, 2000, Item 5 Other Events and Item 7
Exhibits, disclosing the consummation of the merger of NFO and a wholly-owned
subsidiary of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements 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)
Date: August 11, 2000 BY /S/ PHILIP H. GEIER, JR.
-----------------------------
Philip H. Geier, Jr.
Chairman of the Board
and Chief Executive Officer
Date: August 11, 2000 BY /S/ SEAN F. ORR
-----------------------------
Sean F. Orr
Executive Vice President -
and Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
Exhibit 10(a) 364-Day Credit Agreement, dated as of June 27, 2000, among
the Registrant, the Initial Lenders named therein as initial
lenders, Citibank, N.A. as Administrative Agent, Salomon
Smith Barney Inc. as Lead Arranger and Book Manager, Bank
One, NA, Suntrust Bank and HSBC Bank USA as Co-arrangers,
Bank One, NA as Documentation Agent and Suntrust Bank as
Syndication Agent.
Exhibit 10(b)(1) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $47,500,000.
Exhibit 10(b)(2) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the Principal amount of $37,500,000.
Exhibit 10(b)(3) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000.
Exhibit 10(b)(4) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(b)(5) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(b)(6) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000
Exhibit 10(b)(7) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(b)(8) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000.
<PAGE>
Exhibit 10(b)(9) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(b)(10) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(b)(11) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(b)(12) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(b)(13) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(c) Five Year Credit Agreement, dated as of June 27, 2000, among
the Registrant, the Initial Lenders named therein as initial
lenders, Citibank, N.A. as Administrative Agent, Salomon
Smith Barney Inc. as Lead Arranger and Book Manager, Bank
One, NA, Suntrust Bank and HSBC Bank USA as Co-arrangers,
Bank One, NA as Documentation Agent and Suntrust Bank as
Syndication Agent.
Exhibit 10(d)(1) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $47,500,000.
Exhibit 10(d)(2) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the Principal amount of $37,500,000.
Exhibit 10(d)(3) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000.
Exhibit 10(d)(4) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(d)(5) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(d)(6) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000
Exhibit 10(d)(7) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(d)(8) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $30,000,000.
Exhibit 10(d)(9) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(d)(10) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
Exhibit 10(d)(11) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(d)(12) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $37,500,000.
Exhibit 10(d)(13) Revolving Credit Promissory Note of Registrant, dated June
27, 2000, in the principal amount of $17,500,000.
<PAGE>
Exhibit 10(e) Resolutions of the Registrant's Compensation Committee,
amending the Registrant's 1997 Performance Incentive Plan.
Exhibit 10(f) Supplemental Agreement made as of June 1, 2000 to an
Executive Severance Agreement, made as of April 27, 1999
between Interpublic and Sean F. Orr.
Exhibit 10(g) Letter Agreement, dated April 4, 2000 between Registrant and
Philip H. Geier, Jr.
Exhibit 11 Computation of Earnings Per Share.
Exhibit 27 Financial Data Schedule.
