Filed by WPP Group Plc
Pursuant to Rule 425 under the Securities Act
Subject Company, Young & Rubicam Inc.
Commission File No. 001-14093
WPP Group plc
Young & Rubicam Inc.
<PAGE>
Private Securities Litigation Reform Act Safe Harbor Statement
===========================================================================
These materials include "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements include financial projections and estimates and their underlying
assumptions; statements regarding plans, objectives and expectations with
respect to future operations, products and services; and statements
regarding future performance.
The forward-looking statements contained in these materials are
subject to various risks and uncertainties, many of which are difficult to
predict and generally beyond the control of WPP Group plc (WPP) and Young &
Rubicam Inc. (Y&R), that could cause actual results to differ materially
from those expressed in, or implied by, the forward-looking statements.
These risks and uncertainties include those discussed or identified in the
public filings with the U.S. Securities and Exchange Commission (SEC) made
by WPP and Y&R ; risks and uncertainties with respect to the parties'
expectations regarding the timing, completion and tax treatment of the
merger, the value of the merger consideration, strategic opportunities,
growth, expansion and sales opportunities, market positions, the conduct of
worldwide operations, earnings accretion, cost savings, earnings targets,
revenue enhancements, synergies, economies of scale, efficiencies and other
benefits anticipated from the transaction, retention of employees, loss of
business as a result of client conflicts and other factors.
<PAGE>
Basis of Preparation of Financial
Information
===========================================================================
All adjustments referred to in this appendix have been made solely on the
basis of publicly available information and the assumptions listed above.
No other adjustments have been made to present the Y&R financial
information on a basis consistent with the accounting policies and
practices of WPP, nor to reflect the fair value of the assets and
liabilities of Y&R to be acquired by WPP. No assurance can be given as to
the fair presentation of the illustrative pro forma combined financial
information nor that all adjustments required have been identified or
properly calculated. Prior to shareholder votes on the transaction Pro
Forma financial information will be prepared as required by both the UK
Listing Authority and the Securities and Exchange Commission which could be
materially different from the illustrative pro forma combined financial
information presented above. The presentation of the illustrative pro forma
combined financial information is based upon the simple underlying
assumptions listed above and is not necessarily indicative of the results
or the financial position that would have been attained had the combined
entities actually operated as a Group for the period presented.
(1) Illustrative pro forma combined pound sterling financial information
has been prepared by aggregating the WPP sterling financial
information and the Y&R dollar financial information (adjusted as
described below) translating the profit and loss account and cash flow
information at the average rate for the year ended 31 December 1999 of
[POUND]1:$1.6178 and translating the balance sheet information at the year
end rate 31 December 1999 of [POUND]1:$1.6182.
(2) WPP figures are sourced from the unaudited preliminary announcement of
results for the year to 31 December 1999 dated February 16, 2000
prepared in accordance with United Kingdom Generally Accepted
Accounting Principles ("UK GAAP").
(3) Except as noted below Y&R figures are sourced from the audited 10-K
filed on March 30, 2000 prepared in accordance with United States
Generally Accepted Accounting Principles ("US GAAP"). The results for
the year to 31 December 1999 do not constitute statutory accounts.
Statutory accounts for the year ended 31 December 1999 will be
delivered to the Registrar of Companies in England & Wales in due
course.
(4) Y&R segmental information and certain cash flow information presented
has not been previously published and has been sourced from
information provided by Y&R.
(5) In the preparation of the illustrative pro forma combined profit and
loss account information the following adjustments have been made in
an attempt to conform Y&R US GAAP financial information to UK GAAP:
- Goodwill amortization ($17.6m/[POUND]10.9m in year ended 31
December 1999) has been eliminated on the basis that the
goodwill is assumed to have an indefinite life and hence is
not amortized but is subject to an annual impairment review;
- Income from associate investments ($7.5m/[POUND]
4.6m in year ended 31 December 1999) has been included within
EBIT in line with UK GAAP (gross of tax at an assumed rate
of 40%);
- Y&R EBIT has been adjusted to exclude exceptional income of
$85m([POUND]52.2m) arising on the disposal of fixed asset
investments.
(6) Illustrative pro forma combined US dollar financial information has
been prepared by aggregating the Y&R dollar financial information
(adjusted as described in the notes above) and the WPP sterling
financial information, translating the profit and loss account and
cash flow information at the average rate for the year ended 31
December 1999 of [POUND]1:$1.6178 and translating the balance sheet
information at the year end rate 31 December 1999 of [POUND]
1:$1.6182.
(7) In the preparation of the illustrative pro forma combined balance
sheet the following adjustments have been made in an attempt to
conform Y&R US GAAP financial information to UK GAAP:
- Deferred tax assets have been eliminated as it is assumed
that under UK GAAP recognition criteria they would not be
recorded;
- Marketable securities held on a long term basis are stated
at cost by elimination of the revaluation of such
securities;
- Goodwill recorded within Y&R's balance sheet has been
eliminated as this would be subsumed within WPP's goodwill
arising on the acquisition of Y&R. No recognition has been
given to goodwill arising on the acquisition of Y&R by WPP;
- Various balance sheet reclassifications have been made to
conform the US GAAP reporting format to UK GAAP reporting
format. These include the reclassification of overdrafts
which are included within trade creditors under Y&R's US
GAAP format, which increases net debt.
(8) The transaction will be accounted for using purchase accounting and
additional goodwill will arise on the WPP balance sheet. The amount
will be established as at closing of the transaction. Based on recent
stock prices and the assumption that 31 December 1999 book net assets
of Y&R equal fair value it would be in the range of [POUND]
3 to [POUND]4 billion.
(9) In the preparation of the illustrative pro forma combined cashflow
information the Y&R cash flow information has been conformed to a UK
GAAP presentation format. The cash flows presented do not include
working capital movements.
<PAGE>
Investor Information
===========================================================================
WPP and Y&R will be filing a proxy statement/prospectus and other relevant
documents concerning the transaction with the SEC. INVESTORS ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors will be able to obtain the documents free of charge
at the SEC's website (www.sec.gov). In addition, documents filed with the
SEC by WPP may be obtained free of charge by contacting WPP c/o WPP Group
USA, Inc., Worldwide Plaza, 309 West 49th Street, New York, NY 10019-7399,
(212) 632-2200. Documents filed with the SEC by Y&R will be available free
of charge by contacting Young & Rubicam Inc., Legal Department, 285 Madison
Avenue, New York, NY 10017, (212) 210-3000.
INVESTORS SHOULD READ THE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN IT
BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS.
Information regarding the identity of the persons who may, under SEC rules,
be deemed to be participants in the solicitation of stockholders of Y&R in
connection with the merger, and their interests in the solicitation, are
set forth in a Schedule 14A filed on the date of this press release with
the SEC.
<PAGE>
Introduction
===========================================================================
[] Sir Martin Sorrell Group Chief Executive, WPP
[] Tom Bell Chief Executive Officer, Y&R
[] Michael Dolan Chief Financial Officer (CEO Designate), Y&R
[] Paul Richardson Group Finance Director, WPP
<PAGE>
Agenda
===========================================================================
[] Transaction Overview Sir Martin Sorrell and Tom Bell
[] Strategic Rationale Michael Dolan
[] Transaction Benefits Paul Richardson
[] Financial Highlights Paul Richardson
[] Closing Remarks Sir Martin Sorrell and Tom Bell
<PAGE>
Transaction Overview
===========================================================================
<PAGE>
A Combination for the Future
===========================================================================
[] A leader in consolidating industry
[] Complementary Strategic fit
[] Unparalleled breadth and depth of marketing-related service
capabilities for the benefit of clients
[] Premium position to capture digital-age opportunities
[] Enhanced long-term growth prospects
[] Significant financial benefits; accretive to earnings in first full
year
<PAGE>
Transaction Overview
===========================================================================
[] Transaction [RIGHT ARROW] All stock merger with Young & Rubicam
[] Consideration [RIGHT ARROW] 0.835 WPP ADRs or 4.175 WPP common
shares per Y&R share
[] Offer Value [RIGHT ARROW] $4.7 billion (based on 89m FD shares)
[] Ownership [RIGHT ARROW] 2/3 WPP / 1/3 Y&R
[] Board [RIGHT ARROW] 10 WPP / 5 Y&R / 1 independent
[] Tax [RIGHT ARROW] Tax-free to Y&R shareholders
[] Closing [RIGHT ARROW] Expected fall 2000
<PAGE>
Committed Management Team
===========================================================================
[] Tom Bell to be Chairman of Young & Rubicam Inc.
[] Mike Dolan to be Chief Executive Officer of Young & Rubicam Inc.
[] Ed Vick to be Chairman and CEO of Y&R Advertising
[] Senior operating heads of Y&R committed to combined group
[] Four person Transition Committee chaired by Tom Bell and including Sir
Martin Sorrell, Michael Dolan and Paul Richardson
<PAGE>
Changing the Landscape
===========================================================================
1999 Revenue Company
------------ -------
$5.2bn*/$6.7bn** WPP & Y&R
$5.1bn*/$5.7bn** Omnicom
$4.4bn*/$5.1bn** Interpublic
$3.5bn*/$4.8bn** WPP
$4.0bn* b/com3
$1.8bn*/$3.0bn** Havas & Snyder
$1.7bn*/$1.9bn** Y&R
* 1999 Net revenue (Source: Annual Reports)
** 1999 revenue including revenues from associates
(Source: Ad Age, April 24, 2000)
<PAGE>
Strategic Rationale
===========================================================================
[] Creates world class leader in global advertising, marketing and
communications services:
- Broadest, deepest range of products & services in the industry
- Pre-eminent combination of brands both in advertising and marketing
services, 3 leading independent agencies
- Highly complementary in terms of clients, disciplines and
geographies
- The leading information and consultancy group in the world
- Broadest internet portfolio in the industry; capturing dotcom
spending and providing the industry's leading digital services
<PAGE>
Strategic Rationale
===========================================================================
[] In a number of areas, success requires investment in tools and
techniques
[] Combination able to amortise investments across a broader base:
- Internet investments
- Media optimisation and planning tools
- Internet panels
- Centrally-driven brand equity research
- Media exchanges and standards
[] In other areas, scale is in itself a competitive advantage:
- Media buying
- Procurement
<PAGE>
Summary Financial Impact
===========================================================================
[] 1999 pro forma net revenues of $5.2 billion, pro forma EBITDA of $826m
and pro forma net cash generation of $657m
[] Accretive to earnings per share in first full year
[] Cost synergies quantified to date in excess of $30 million per annum
[] New cross selling opportunities
[] Continued commitment to EBIT margin improvement of 0.5% per annum
towards 15% objective for 2002
[] Pro forma market capitalization of $14.5 billion
<PAGE>
Strategic Rationale
===========================================================================
<PAGE>
Global Client Solutions
===========================================================================
Global Advertiser
Consumer Advertising North America
Demographic Marketing Europe
Public Relations Latin America
Direct Marketing, Asia
Customer Relationship Mgmt
Database Marketing
KnowledgeBase Marketing
Customer Relationship Marketing
Brand Consultation & Design
<PAGE>
Leading Agency Brands
===========================================================================
[LOGO of Ogilvy]
[LOGO of Y&R Advertising]
[LOGO of J Walter Thompson]
<PAGE>
Leading Marketing Services Brands
===========================================================================
[LOGO of Ogilvy Public Relations WORLDWIDE]
[LOGO of KANTAR]
[LOGO of Cohn & Wolfe]
[LOGO of Burson-Marsteller]
[LOGO of P Millward Brown Precis]
[LOGO of HILL & KNOWLTON]
[LOGO of MindShare]
[LOGO of The Media Edge TME]
[LOGO of Alexander Ogilvy PUBLIC RELATIONS WORLDWIDE]
<PAGE>
Complementary Specialty Branded Services
===========================================================================
[LOGO of Kang & Lee Advertising]
[LOGO of Landor]
[LOGO of MD&A MENDOZA, DILLON & ASOCIADOS, INC.]
[LOGO of CommonHealth]
[LOGO of KnowledgeBase Marketing]
[LOGO of The Bravo Group]
[LOGO of S&H]
[LOGO of OgilvyOne worldwide]
<PAGE>
Highly Complementary Portfolio of Leading Brands
===========================================================================
WPP Young & Rubican
------------ ------------------
Advertising & Media
--------------------------------------------
Global J. Walter Thompson Y&R
Ogilvy & Mather
Conquest
Asetsu-DK*
Batey*
Pan-Regional Chime* Deutsu Y & R
Media Investment
Management MindShare Media Edge
I & C
------------------------------------------------------
Research Millward Brown Harris Interactive*
Kantar Media Research Cyber Dialogue
Research International
Goldfarb
PR
------------------------------------------------------
Public Relations & Hill and Knowlton Burson-Marsteller
Public Affairs Ogilvy PR John and Wolfe
Alexander Ogilvy Robinson Lerer Montgomery
Blanc & Otus
Timmons, Wexler
Specialist Communications
------------------------------------------------------
CRM and Ogilvy One impirie (Wunderman Cato
e-CRM elationship*, Johnson), KnowledgeBase
RTC Direct, JWT Connect Marketing
Healthcare CommonHealth Sudler & Hennessey
Identity Enterprise IG Landor Associates
and Design
Specialist Mendoze Dillon, Einson The Bravo Group, Kang and
Freeman, Management Lee
Ventures, etc.
* Associates and minority investments
<PAGE>
Profile - By Discipline
===========================================================================
WPP Net Revenues -- $3.5bn
- ----------------
Advertising Media IM 47% -- $1.6bn
Specialist Communications 26% -- $0.9bn
Info & Consultancy 19% -- $0.7bn
PR 8% -- $0.3bn
Y&R Net Revenues -- $1.7bn
- ----------------
Advertising Media IM 48% -- $0.8bn
Specialist Communications 34% -- $0.6bn
PR 18% -- $0.3bn
Combined Net Revenues -- $5.2bn
- ---------------------
Advertising Media IM 47% -- $2.4bn
Specialist Communications 28% -- $1.5bn
Info & Consultancy 13% -- $0.7bn
PR 12% -- $0.6bn
<PAGE>
Profile - By Geography
===========================================================================
WPP Net Revenues -- $3.5bn
- ----------------
North America -- 44% - $1.5bn
Cont. Europe -- 20% - $0.7bn
UK -- 20% - $0.7bn
ROW -- 16% - $0.6bn
Y&R Net Revenues -- $1.7bn
- ----------------
North America -- 55% - $0.9bn
Cont. Europe -- 25% - $0.4bn
UK -- 9% - $0.2bn
ROW -- 11% - $0.2bn
Combined Net Revenues -- $5.2bn
- ---------------------
North America -- 48% - $2.4bn
Cont. Europe -- 21% - $1.1bn
UK -- 16% - $0.9bn
ROW -- 15% - $0.8bn
<PAGE>
Global Strength in Advertising
===========================================================================
Market Position WPP
(Gross Income) Pro Forma OMC IPG Havas BCom3
- ---------------------------------------------------------------------------
U.S. 1= 3 1= 7 4
Europe 2 1 3 4 7
Asia ex-Japan 1 2 3 9 5
Japan 3 6 7 [LESS THAN]10 14
Latin America 2 3 1 11 6
- ---------------------------------------------------------------------------
Source: Ad Age, April 24, 2000. Based on gross income for agency brands.
All data pro forma for this transaction.
<PAGE>
Media Investment Management
===========================================================================
[ ] Combination creates global
powerhouse with enhanced
margin potential
[ ] Most competitive rates for
clients achieved through scale
[ ] Leverage off WPP market
research capabilities
[ ] Increasingly strategic business
as media costs escalate
1999 Worldwide Billings
- -----------------------
WPP/Y&R $28.1bn
Interpublic $25.7bn
Omnicom $16.1bn
Aegis $10.9bn
Grey $10.0bn
Publics $8.6bn
True North $7.7bn
Saatch: $7.4bn
Leo Burnett $7.3bn
- -----------------------------
Source: Ad Age April 24, 2000
<PAGE>
Information and Consultancy
===========================================================================
[] Significant opportunity to leverage WPP's leading research capabilities
across Y&R's client base:
- Research International
- Millward Brown
- Kantar Media Research
[] High growth, leverable component of the marketing services industry
[] BrandAsset(R) Valuator / BRANDZ
- Industry leading tools
- Migrate from cost center to revenue generator
<PAGE>
CRM and e-CRM
===========================================================================
[] The two leading global brands
- impiric (Wunderman Cato Johnson)
- OgilvyOne
[] CRM and e-CRM will remain a key growth driver in combined group:
- CRM is growing consistently faster than above the line
- Growth rates enhanced further by opportunities in e-CRM which bring
the inherent benefits of the internet to traditional CRM
<PAGE>
Public Relations and Public Affairs
===========================================================================
[] Technology and healthcare sectors driving faster growth in public
relations
[] Joins leading global PR agencies under one roof: Burson-Marsteller
(#1) and Hill & Knowlton (#2 worldwide)
[] Leading capabilities in specialist persuasive disciplines:
- Ogilvy Public - Cohn & Wolfe
- Alexander Ogilvy - Robinson Lerer Montgomery
- Blanc & Otus - Timmons
- Wexler
[] Important entry point for dotcom companies
<PAGE>
Technology Driving Fundamental
Industry Change
===========================================================================
[] WPP and Y&R are both ahead of the curve in recognising the huge
potential of technology within the communications services industry
[] Growing availability of huge amounts of data
- Off-line
- On-line
[] Convergence of media - All media becoming interactive
- Print, TV, Web-linked real time
[] Real time measurement
- More accountability
<PAGE>
Building Brands and Driving
Consumer Behavior
===========================================================================
1. Market Analysis
2. Strategy Development
3. Solution Development
4. Ideation/Creative Development
5. Exceution Across Disciplines/Geography
6. Measurement
7. Modification
<PAGE>
Digital Services
===========================================================================
Increased budgets and Competition-driven
shift in messages Increased spend on branding
Typically, 80% of Dotcoms building
marketing budget is their brands
off-line
Traditional clients
Dotcom building clicks and
spend mortars operations
Dotcom needing
help with their
internet strategy
<PAGE>
Recent Internet Direct Investments
===========================================================================
<TABLE>
<CAPTION>
WPP Y&R
Company Sector Company Sector
- ----------------------------------------- ----------------------------------------
<S> <C> <C> <C>
Syzygy Web development KnowledgeBase Marketing Database/CRM
Concept Web development Luminant e-Commerce
Lightspeed Internet panel Digital Convergence Media convergence
Net King Portal Mediaplex Internet services
e-Rewards Loyalty Harris Interactive Internet research
TWIi B-to-B sports content Cyber Dialogue Internet research
Intraspect Knowledge management Naviant Internet marketing
Broadvision e-Commerce application iWeb Targeted advertising
Visible World Video personalisation Streampipe Internet broadcasting
Big Words College-based e-
Commerce Emotion Digital media
Red Sheriff Internet research management
Metapack e-Fullfilment Gamut Interactive TV
Roundarch e-Commerce consulting
Imagine e-CRM
</TABLE>
<PAGE>
[LOGO of J Walter Thompson]
[LOGO of KANTAR]
[LOGO of THE MEDIA EDGE TME]
[LOGO of Landor]
[LOGO of Cohn & Wolfe]
[LOGO of MD&A MENDOZA, DILLON & ASOCIADOS, INC.]
[LOGO of Ogilvy Public Relations WORLDWIDE]
[LOGO of P Millward Brown Precis]
[LOGO of Y&R Advertising]
[LOGO of Burson-Marsteller]
[LOGO of HILL & KNOWLTON
[LOGO of MindShare]
[LOGO of CommonHealth]
[LOGO of KnowledgeBase Marketing]
[LOGO of Ogilvy]
[LOGO of impiric (SM)]
[LOGO of ALexander Ogilvy PUBLIC RELATIONS WORLDWIDE]
[LOGO of BRAND DIALOGUE]
[LOGO of S&H]
[LOGO of The Bravo Group]
[LOGO of Kang & Lee Advertising]
[LOGO of OgilvyOne worldwide]
<PAGE>
Transaction Benefits
===========================================================================
<PAGE>
Revenue Synergy Opportunities
===========================================================================
[] Cross-sell business above the line and below the line
[] Cross-sell all services to an enlarged global client base
[] Significant strength in key high growth activities:
- Information and Consultancy
- CRM and e-CRM
- Public Relations and Public Affairs
- Digital Services
[] Pre-eminent position in Media Investment Management
<PAGE>
Cost Synergy Opportunities
===========================================================================
[] Media buying "economies of scale"
[] Leverage media research tools
[] Combine brand equity measurement skills
[] Treasury, tax and real estate planning opportunities
[] Reduction in public company expenses
[] Currently quantifiable annual operating cost savings of $30 million
by 2001
<PAGE>
Financial Highlights
===========================================================================
<PAGE>
Illustrative Pro Forma Combined Financial Information
Profit and Loss Account ([POUND}m)
===========================================================================
<TABLE>
<CAPTION>
Y&R Y&R Combined
WPP As Reported UK GAAP UK GAAP
- -------------------------------------------------------------------------------------------------------------
Year Ended Dec 1999
- -------------------
<S> <C> <C> <C> <C>
Revenues [POUND]2,172.6 [POUND]1,061.4 [POUND]1,061.4 [POUND]3,234.0
EBITDA 333.0 172.6(a) 177.3(a)(b) 510.3
EBIT 290.8 128.6(a) 144.1(a)(b)(c) 434.9
EBIT Margin % 13.4% 12.1% 13.6% 13.4%
- -------------------------------------------------------------------------------------------------------------
<FN>
(a) Excludes other income of [POUND]52.5m
(b) Adjusted to include [POUND]4.6m of equity income, gross of tax at
assumed 40% rate
(c) Adjusted to eliminate [POUND]10.9m goodwill amortization
</FN>
</TABLE>
<PAGE>
Illustrative Pro Forma Combined Financial Information
Profit and Loss Account ($m)
===========================================================================
<TABLE>
<CAPTION>
Y&R Y&R Combined
WPP As Reported UK GAAP UK GAAP
- ------------------------------------------------------------------------------------------------------
Year Ended Dec 1999
- -------------------
<S> <C> <C> <C> <C>
Revenues $3,514.8 $1,717.2 $1,717.2 $5,232.0
EBITDA 538.8 279.3(a) 286.8(a)(b) 825.6
EBIT 470.5 208.1(a) 233.2(a)(b)(c) 703.7
EBIT Margin % 13.4% 12.1% 13.6% 13.4%
- -------------------------------------------------------------------------------------------------------------
<FN>
(a) Excludes other income of $85m
(b) Adjusted to include 7.5m of equity income, gross of tax at
assumed 40% rate
(c) Adjusted to eliminate $17.6m goodwill amortization
</FN>
</TABLE>
<PAGE>
Illustrative Pro Forma Combined Financial Information
Profit and Loss By Discipline ([POUND]m)
===========================================================================
<TABLE>
<CAPTION>
WPP Y&R Combined
- ---------------------------------------------------------------------------------------------------------
Revenues For Year Ended Dec 1999
- --------------------------------
<S> <C> <C> <C>
Advertising, Media Investment Management [POUND]1,013.1 [POUND] 513.2 [POUND]1,526.3
Information & Consultancy 419.7 -- 419.7
Public Relations & Public Affairs 178.9 195.9 374.8
Branding & Identity, Healthcare &
Specialist Comm. 560.9 352.3 913.2
-------------- -------------- --------------
[POUND]2,172.6 [POUND]1,061.4 [POUND]3,234.0
UK GAAP EBIT For Year Ended Dec 1999
- ------------------------------------
Advertising, Media Investment Management 155.9 81.7 237.6
Information & Consultancy 42.1 -- 42.1
Public Relations & Public Affairs 23.9 19.8 43.7
Branding & Identity, Healthcare
& Specialist Comm. 68.9 42.6 111.5
-------------- -------------- --------------
290.8 144.1 434.9
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Illustrative Pro Forma Combined Financial Information
Profit and Loss By Discipline ($m)
===========================================================================
<TABLE>
<CAPTION>
WPP Y&R Combined
- -------------------------------------------------------------------------------------------------
Revenues For Year Ended Dec 1999
- --------------------------------
<S> <C> <C> <C>
Advertising, Media Investment Management $1,639.0 830.3 2,469.3
Information & Consultancy 679.0 - 679.0
Public Relations & Public Affairs 289.4 316.9 606.3
Branding & Identity, Healthcare &
Specialist Comm. 907.4 570.0 1,477.4
-------- ------- --------
$3,514.8 1,717.2 5,232.0
UK GAAP EBIT For Year Ended Dec 1999
- ------------------------------------
Advertising, Media Investment Management 252.2 132.3 384.5
Information & Consultancy 68.1 - 68.1
Public Relations & Public Affairs 38.7 32.0 70.7
Branding & Identity, Healthcare
& Specialist Comm. 111.5 68.9 180.4
-------- ------- --------
470.5 233.2 703.7
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Illustrative Pro Forma Combined Financial Information
Profit and Loss By Geography ([POUND]m)
===========================================================================
<TABLE>
<CAPTION>
WPP Y&R Combined
- ---------------------------------------------------------------------------------------------------------
Revenues For Year Ended Dec 1999
- --------------------------------
<S> <C> <C> <C>
North America [POUND] 954.0 [POUND] 579.6 [POUND]1,533.6
UK 434.7 94.5 529.2
Continental Europe 426.2 265.4 691.6
Asia Pacific, Latin America,
Africa & Middle East 357.7 121.9 479.6
-------------- -------------- --------------
[POUND]2,172.6 [POUND]1,061.4 [POUND]3,234.0
UK GAAP EBIT For Year Ended Dec 1999
- ------------------------------------
North America [POUND] 141.7 93.8 235.5
UK 51.5 4.9 56.4
Continental Europe 55.8 31.9 87.7
Asia Pacific, Latin America,
Africa & Middle East 41.8 13.5 55.3
-------------- -------------- --------------
[POUND] 290.8 [POUND] 144.1 [POUND] 434.9
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Illustrative Pro Forma Combined Financial Information
Profit and Loss By Geography ($m)
===========================================================================
<TABLE>
<CAPTION>
WPP Y&R Combined
- -------------------------------------------------------------------------------------------------
Revenues For Year Ended Dec 1999
- --------------------------------
<S> <C> <C> <C>
North America $1,543.3 $ 937.7 $2,481.0
UK 703.3 153.3 856.6
Continental Europe 689.5 429.0 1,118.5
Asia Pacific, Latin America,
Africa & Middle East 578.7 197.2 775.9
-------- ------- --------
$3,514.8 $1,717.2 $5,232.0
UK GAAP EBIT For Year Ended Dec 1999
- ------------------------------------
North America $ 229.3 151.8 381.1
UK 83.3 8.0 91.3
Continental Europe 90.3 51.6 141.9
Asia Pacific, Latin America,
Africa & Middle East 67.6 21.8 89.4
-------- ------- --------
$ 470.5 $ 233.2 $ 703.7
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Illustrative Pro Forma Combined Financial Information
Cashflow ([POUND]m)
================================================================================
Y&R Combined
WPP UK GAAP UK GAAP
- --------------------------------------------------------------------------------
Operating Profit [POUND]263.5 [POUND]139.5 [POUND]403.0
Depreciation 42.2 33.1 75.3
Interest Paid (32.7) (9.1) (41.8)
Tax Paid (58.4) (18.3) (76.7)
Other Cashflows 21.4 25.2 46.6
------------ ------------ ------------
Net Cash Generation [POUND]236.0 [POUND]170.4 [POUND]406.4
- --------------------------------------------------------------------------------
<PAGE>
Illustrative Pro Forma Combined Financial Information
Cashflow ([POUND]m)
================================================================================
WPP Y&R Combined
UK GAAP UK GAAP
- --------------------------------------------------------------------------------
Net Cash Generation [POUND]236.0 [POUND]170.4 [POUND]406.4
Capital Expenditure (64.6) (53.3) (117.9)
------------ ------------ ------------
FREE CASH FLOW 171.4 117.1 288.5
------------ ------------ ------------
Acquisition Payments (209.8) (133.5) (343.3)
Share Repurchases (17.9) (90.2) (108.1)
Dividends (21.1) (3.3) (24.4)
------------ ------------ ------------
NET CASH OUTFLOW [POUND](77.4) [POUND](109.9) [POUND](187.3)
- --------------------------------------------------------------------------------
<PAGE>
Illustrative Pro Forma Combined Financial Information
Cashflow ($m)
================================================================================
WPP Y&R Combined
- --------------------------------------------------------------------------------
Operating Profit $426.3 $225.7 $652.0
Depreciation 68.3 53.6 121.9
Interest Paid (52.9) (14.8) (67.7)
Tax Paid (94.5) (29.7) (124.2)
Other Cashflows 34.6 40.7 75.3
------ ------ ------
NET CASH GENERATION $381.8 $275.5 $657.3
- --------------------------------------------------------------------------------
<PAGE>
Illustrative Pro Forma Combined Financial Information
Cashflow ($m)
================================================================================
WPP Y&R Combined
- --------------------------------------------------------------------------------
Net Cash Generation $ 381.8 $ 275.5 $ 657.3
Capital Expenditure (104.5) (86.2) (190.7)
------- ------- -------
Free Cash Flow 277.3 189.3 466.6
------- ------- -------
Acquisition Payments (339.4) (216.0) (555.4)
Share Repurchases (29.0) (146.0) (175.0)
Dividends (34.1) (5.3) (39.4)
------- ------- -------
Net Cash Outflow $(125.2) $(178.0) $(303.2)
- --------------------------------------------------------------------------------
<PAGE>
Illustrative Pro Forma Combined Financial Information
Balance Sheet ([POUND]m)
================================================================================
<TABLE>
<CAPTION>
Y&R Y&R UK GAAP Combined
WPP US GAAP Adjustments UK GAAP
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tangible Assets [POUND] 196.7 [POUND] 120.3 -- [POUND] 317.0
Intangible Assets (a) 760.3 218.7 [POUND] (218.7) 760.3
Investments (b) 356.9 248.8 (146.8) 458.9
Other Long-Term Assets (c) -- 55.1 (55.1) --
-------------- -------------- -------------- -------------
Fixed Assets 1,313.9 642.9 (420.6) 1,536.2
-------------- -------------- -------------- -------------
Current Assets (d) 1,892.5 849.2 2.4 2,744.1
Current Liabilities (2,148.0) (1,050.2) -- (3,198.2)
Long-Term Liabilities (731.7) (170.9) -- (902.6)
-------------- -------------- -------------- -------------
Net Assets 326.7 271.0 418.2 179.5
-------------- -------------- -------------- -------------
Net Funds/(Debt) (e) [POUND] 91.9 [POUND] (9.1) [POUND] (54.8) [POUND] 28.0
- -----------------------------------------------------------------------------------------------------------
<FN>
(a) Adjusted to eliminate [POUND]218.7m goodwill
(b) Adjusted to reverse a [POUND]146.8m unrealized gain on marketable
securities gross of tax
(c) Adjusted to eliminate [POUND]21.6m long term deferred tax assets and
to reclassify [POUND]33.5m accounts receivable [LESS THAN] 1 year
from long term assets to current assets
(d) Adjusted to eliminate [POUND]31.1m current deferred tax assets and to
reclassify [POUND]33.5m accounts receivable [LESS THAN] 1 year from
long term assets to current assets
(e) Adjusted to reclassify [POUND]54.8m of overdrafts from accounts payable
</FN>
</TABLE>
<PAGE>
Illustrative Pro Forma Combined Financial Information
Balance Sheet ($m)
================================================================================
<TABLE>
<CAPTION>
Y&R Y&R UK GAAP Combined
WPP As Reported Adjustments UK GAAP
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tangible Assets $ 318.3 $ 194.6 -- $ 512.9
Intangible Assets (a) 1,230.3 353.9 (353.9) 1,230.3
Investments (b) 577.5 402.6 (237.6) 742.5
Other Long-Term Assets (c) -- 89.1 (89.1) --
-------- -------- ------- --------
Fixed Assets 2,126.1 1,040.2 (680.6) 2,485.7
Current Assets (d) 3,062.5 1,374.1 3.9 4,440.5
Current Liabilities (3,475.9) (1,699.5) -- (5,175.4)
Long-Term Liabilities (1,184.0) (276.4) -- (1,460.4)
-------- -------- ------- --------
Net Assets 528.7 438.4 (676.7) 290.4
-------- -------- ------- --------
Net Funds/(Debt) (e) $ 148.6 $ (14.8) $ (88.6) $ 45.2
- -----------------------------------------------------------------------------------------------------------
<FN>
(a) Adjusted to eliminate $353.9m goodwill
(b) Adjusted to reverse a $237.6m unrealized gain on marketable
securities gross of tax
(c) Adjusted to eliminate $34.9m long term deferred tax assets and
to reclassify $54.2m accounts receivable [LESS THAN] 1 year
from long term assets to current assets
(d) Adjusted to eliminate $50.3m current deferred tax assets and to
reclassify $54.2m accounts receivable [LESS THAN] 1 year from
long term assets to current assets
(e) Adjusted to reclassify $88.6m of overdrafts from accounts payable
</FN>
</TABLE>
<PAGE>
Closing Remarks
===========================================================================
<PAGE>
A Combination for the Future
===========================================================================
[] A leader in consolidating industry
[] Complementary strategic fit
[] Unparalleled breadth and depth of marketing-related service capabilities
for the benefit of clients
[] Premium position to capture digital-age opportunities
[] Enhanced long-term growth prospects
[] Significant financial benefits; accretive to earnings in first full year
<PAGE>
Expected Timing
===========================================================================
[] Announcement May 2000
[] Shareholder Documents July/August 2000
Dispatched
[] Shareholder Votes Fall 2000
[] Regulatory Approvals Fall 2000
[] Expected Closing Fall 2000
<PAGE>
[LOGO of J Walter Thompson]
[LOGO of KANTOR]
[LOGO of THE MEDIA EDGE TME]
[LOGO of Landor]
[LOGO of Cohn & Wolfe]
[LOGO of MD&A MENDOZA, DILLON & ASOCIADOS, INC.]
[LOGO of Ogilvy Public Relations WORLDWIDE]
[LOGO of P Millward Brown Precis]
[LOGO of Y&R Advertising]
[LOGO of Burson-Marsteller]
[LOGO of HILL & KNOWLTON]
[LOGO of MindShare]
[LOGO of CommonHealth]
[LOGO of KnowledgeBase Marketing]
[LOGO of Ogilvy]
[LOGO of impiric (SM)]
[LOGO of Alexander Ogilvy PUBLIC RELATIONS WORLDWIDE]
[LOGO of BRAND DIALOGUE]
[LOGO of S&H]
[LOGO of The Bravo Group]
[LOGO of Kang & Lee Advertising]
[LOGO of OgilvyOne worldwide]
<PAGE>
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
This document includes forward-looking information and statements about
WPP, Y&R and the combined company after completion of the transaction that
are intended to be covered by the safe harbor for "forward-looking
statements" provided by the Private Securities Litigation Reform Act of
1995. Forward-looking statements are statements that are not historical
facts. These statements include financial projections and estimates and
their underlying assumptions; statements regarding plans, objectives and
expectations with respect to future operations, products and services; and
statements regarding future performance. Forward-looking statements are
generally identified by the words "expect," "anticipates," "believes,"
"intends," "estimates" and similar expressions.
The forward-looking information and statements contained in this document
are subject to various risks and uncertainties, many of which are difficult
to predict and generally beyond the control of WPP and Y&R, that could
cause actual results to differ materially from those expressed in, or
implied by, the forward-looking information and statements. These risks and
uncertainties include those discussed or identified in the public filings
with the U.S. Securities and Exchange Commission (SEC) made by WPP and Y&R ;
risks and uncertainties with respect to the parties' expectations regarding
the timing, completion and tax treatment of the merger, the value of the
merger consideration, growth and expansion opportunities, market positions,
conducting worldwide operations, earnings accretion, cost savings, revenue
enhancements, synergies and other benefits anticipated from the
transaction, retention of employees, loss of business as a result of client
conflicts, reductions in clients' budgets for services offered by WPP or
Y&R and changes in management or ownership of clients; and the effect of
foreign exchange rate fluctuations, and general economic conditions such as
changes in interest rates and the performance of the financial markets,
changes in domestic and foreign laws, regulations and taxes, changes in
competition and pricing environments, the occurrence of significant natural
disasters and general market and industry conditions.
ADDITIONAL INFORMATION
- ----------------------
Information regarding the identity of the persons who may, under SEC rules,
be deemed to be participants in the solicitation of stockholders of Y&R in
connection with the merger, and their interests in the solicitation, are
set forth in a Schedule 14A filed on the date of this document with the
SEC.
WPP and Y&R will be filing a proxy statement/prospectus and other relevant
documents concerning the transaction with the U.S. SEC. INVESTORS ARE URGED
TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors will be able to obtain the documents free
of charge at the SEC's website (www.sec.gov). In addition, documents filed
with the SEC by WPP may be obtained free of charge by contacting WPP c/o
WPP Group USA, Inc., Worldwide Plaza, 309 West 49th Street, New Y&R, NY
10019-7399, (212) 632-2200. Documents filed with the SEC by Y&R will be
available free of charge by contacting Young & Rubicam Inc., Legal
Department, 285 Madison Avenue, New York, NY 10017, (212) 210-3000.
INVESTORS SHOULD READ THE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN IT
BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS.
