UNITED STATES
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 endedJune 30, 2003
OR
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
Commission File Number: 1 -6686
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware | 13 -1024020 |
|
|
1271 Avenue of the Americas, New York, New York | 10020 |
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 by check mark whether the Registrant is an accelerated filer (as defined in Executive Act Rule 12b-2) 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, 2003: 391,399,332 shares.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
I N D E X
PART I. FINANCIAL INFORMATION
Page No. | ||
Item 1. | Financial Statements | |
Consolidated Statement of Operations | 3 | |
Three months ended June 30, 2003 | ||
and 2002 (unaudited) | ||
Consolidated Statement of Operations | 4 | |
Six months ended June 30, 2003 | ||
and 2002 (unaudited) | ||
Consolidated Balance Sheet | 5 | |
June 30, 2003 and | ||
December 31, 2002 (unaudited) | ||
Consolidated Statement of Comprehensive Income | 7 | |
Three months ended June 30, 2003 | ||
and 2002 (unaudited) | ||
Consolidated Statement of Comprehensive Income | 8 | |
Six months ended June 30, 2003 | ||
and 2002 (unaudited) | ||
Consolidated Statement of Cash Flows | 9 | |
Six months ended June 30, 2003 | ||
and 2002 (unaudited) | ||
Notes to Consolidated Financial Statements (unaudited) | 10 | |
Item 2. | Management's Discussion and Analysis of | 25 |
Financial Condition and Results of Operations | ||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 37 |
Item 4. | Controls and Procedures | 38 |
PART II. OTHER INFORMATION
Item 1. | Legal Proceedings | 40 |
Item 2. | Changes in Securities and Use of Proceeds | 42 |
Item 4. | Submission of Matters to a Vote of Securities Holders | 46 |
Item 6. | Exhibits and Reports on Form 8-K | 47 |
SIGNATURES | 49 | |
INDEX TO EXHIBITS | 50 |
Item 1. | |||
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||
CONSOLIDATED STATEMENT OF OPERATIONS | |||
THREE MONTHS ENDED JUNE 30, | |||
(Amounts in Millions, Except Per Share Amounts) | |||
(Unaudited) | |||
2003 | 2002 | ||
REVENUE | $1,499.4 | $1,490.4 | |
OPERATING EXPENSES: | |||
Salaries and related expenses | 878.4 | 839.2 | |
Office and general expenses | 459.6 | 435.9 | |
Amortization of intangible assets | 4.1 | 2.6 | |
Restructuring charges | 94.4 | -- | |
Long-lived asset impairment | 11.0 | -- | |
Total operating expenses | 1,447.5 | 1,277.7 | |
OPERATING INCOME | 51.9 | 212.7 | |
OTHER INCOME (EXPENSE): | |||
Interest expense | (46.1) | (36.9) | |
Interest income | 10.2 | 8.1 | |
Other income | 0.3 | 6.6 | |
Investment impairment | (9.8) | (16.2) | |
Total other income (expense) | (45.4) | (38.4) | |
Income before provision for income taxes | 6.5 | 174.3 | |
Provision for income taxes | 22.4 | 67.3 | |
INCOME (LOSS) OF CONSOLIDATED COMPANIES | (15.9) | 107.0 | |
Income applicable to minority interests | (8.4) | (10.9) | |
Equity in net income of unconsolidated affiliates | 1.3 | 2.5 | |
INCOME (LOSS) FROM CONTINUING OPERATIONS | (23.0) | 98.6 | |
INCOME FROM DISCONTINUED OPERATIONS (NET OF TAXES) | 9.5 | 10.4 | |
NET INCOME (LOSS) | $ (13.5) | $ 109.0 | |
Earnings (loss) per share: | |||
Basic: | |||
Continuing operations | $ (0.06) | $ 0.26 | |
Discontinued operations | $ 0.02 | $ 0.03 | |
Total | $ (0.04) | $ 0.29 | |
Diluted: | |||
Continuing operations | $ (0.06) | $ 0.26 | |
Discontinued operations | $ 0.02 | $ 0.03 | |
Total | $ (0.04) | $ 0.29 | |
Weighted average shares: | |||
Basic | 384.3 | 375.7 | |
Diluted | 384.3 | 382.4 | |
Cash dividends per share | $ -- | $ 0.095 |
The accompanying notes are an integral part of these consolidated financial statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||
CONSOLIDATED STATEMENT OF OPERATIONS | |||
SIX MONTHS ENDED JUNE 30, | |||
(Amounts in Millions, Except Per Share Amounts) | |||
(Unaudited) | |||
2003 | 2002 | ||
REVENUE | $2,815.1 | $2,809.4 | |
OPERATING EXPENSES: | |||
Salaries and related expenses | 1,733.1 | 1,660.9 | |
Office and general expenses | 885.5 | 809.4 | |
Amortization of intangible assets | 7.3 | 4.4 | |
Restructuring charges | 94.4 | -- | |
Long-lived asset impairment | 22.1 | -- | |
Total operating expenses | 2,742.4 | 2,474.7 | |
OPERATING INCOME | 72.7 | 334.7 | |
OTHER INCOME (EXPENSE): | |||
Interest expense | (84.9) | (72.2) | |
Interest income | 18.1 | 15.0 | |
Other income | 0.1 | 6.9 | |
Investment impairment | (12.5) | (16.2) | |
Total other income (expense) | (79.2) | (66.5) | |
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | (6.5) | 268.2 | |
Provision for income taxes | 16.8 | 102.6 | |
INCOME (LOSS) OF CONSOLIDATED COMPANIES | (23.3) | 165.6 | |
Income applicable to minority interests | (9.0) | (14.2) | |
Equity in net income (loss) of unconsolidated affiliates | (1.9) | 3.3 | |
INCOME (LOSS) FROM CONTINUING OPERATIONS | (34.2) | 154.7 | |
INCOME FROM DISCONTINUED OPERATIONS (NET OF TAXES) | 12.1 | 14.1 | |
NET INCOME (LOSS) | $ ( 22.1) | $ 168.8 | |
Earnings (loss) per share: | |||
Basic: | |||
Continuing operations | $ (0.09) | $ 0.41 | |
Discontinued operations | 0.03 | 0.04 | |
Total | $ (0.06) | $ 0.45 | |
Diluted: | |||
Continuing operations | $ (0.09) | $ 0.41 | |
Discontinued operations | 0.03 | 0.04 | |
Total | $ (0.06) | $ 0.44(a) | |
Weighted average shares: | |||
Basic | 383.1 | 374.3 | |
Diluted | 383.1 | 381.1 | |
Cash dividends per share | -- | $ 0.190 |
(a) Does not foot due to rounding.
The accompanying notes are an integral part of these consolidated financial statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEET | |||
(Amounts in Millions, Except Per Share Amounts) | |||
(Unaudited) | |||
June 30, | December 31, | ||
2003 | 2002 | ||
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 700.1 | $ 933.0 | |
Accounts receivable (net of allowance for doubtful | 4,681.4 | 4,517.6 | |
Expenditures billable to clients | 414.8 | 407.6 | |
Deferred taxes on income | 69.4 | 37.0 | |
Prepaid expenses and other current assets | 452.5 | 427.1 | |
Assets held for sale | 452.2 | -- | |
Total current assets | 6,770.4 | 6,322.3 | |
FIXED ASSETS, AT COST: | |||
Land and buildings | 148.2 | 168.2 | |
Furniture and equipment | 1,063.6 | 1,125.1 | |
Leasehold improvements | 496.8 | 487.8 | |
1,708.6 | 1,781.1 | ||
Less: accumulated depreciation | (968.6) | (955.4) | |
Total fixed assets | 740.0 | 825.7 | |
OTHER ASSETS: | |||
Investment in less than majority-owned affiliates | 352.2 | 357.3 | |
Deferred taxes on income | 516.3 | 509.9 | |
Other assets | 274.9 | 319.8 | |
Intangible assets (net of accumulated | |||
amortization: 2003-$993.3; 2002-$1,038.5) | 3,442.9 | 3,458.7 | |
Total other assets | 4,586.3 | 4,645.7 | |
TOTAL ASSETS | $12,096.7 | $11,793.7 |
The accompanying notes are an integral part of these consolidated financial statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEET | |||
(Amounts in Millions, Except Per Share Amounts) | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
(Unaudited) | |||
June 30, | December 31, | ||
2003 | 2002 | ||
CURRENT LIABILITIES: | |||
Accounts payable | $ 5,282.7 | $5,125.5 | |
Accrued expenses | 1,019.3 | 1,110.8 | |
Accrued income taxes | 17.3 | 33.2 | |
Loans payable | 128.5 | 239.3 | |
Zero-coupon convertible senior notes | 1.0 | 581.0 | |
Liabilities held for sale | 149.0 | -- | |
Total current liabilities | 6,597.8 | 7,089.8 | |
NON-CURRENT LIABILITIES: | |||
Long-term debt | 1,214.1 | 1,253.1 | |
Convertible subordinated notes | 573.0 | 564.6 | |
Convertible senior notes | 800.0 | -- | |
Deferred compensation | 494.1 | 470.5 | |
Accrued postretirement benefits | 53.3 | 55.6 | |
Other non-current liabilities | 75.9 | 189.7 | |
Minority interests in consolidated subsidiaries | 63.0 | 70.4 | |
Total non-current liabilities | 3,273.4 | 2,603.9 | |
Commitments and contingencies (Note 12) | |||
STOCKHOLDERS' EQUITY: | |||
Preferred stock, no par value, | |||
shares authorized: 20.0, shares issued: none | |||
Common stock, $0.10 par value, | |||
shares authorized: 800.0, | |||
shares issued: 2003 - 391.1; 2002 - 389.3 | 39.1 | 38.9 | |
Additional paid-in capital | 1,742.9 | 1,797.0 | |
Retained earnings | 835.9 | 858.0 | |
Accumulated other comprehensive loss, net of tax | (297.5) | (373.6) | |
2,320.4 | 2,320.3 | ||
Less: | |||
Treasury stock, at cost: 2003- 0.1 shares; 2002 - 3.1 shares | (11.3) | (119.2) | |
Unamortized deferred compensation | (83.6) | (101.1) | |
Total stockholders' equity | 2,225.5 | 2,100.0 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12,096.7 | $11,793.7 |
The accompanying notes are an integral part of these consolidated financial statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30,
(Amounts In Millions)
(Unaudited)
2003 | 2002 | ||
Net Income (Loss) | $(13.5) | $109.0 | |
Foreign Currency Translation Adjustments | 47.0 | 107.7 | |
Adjustment for Minimum Pension Liability | |||
Adjustment for minimum pension liability | (0.5) | -- | |
Unrealized Holding Gains (Losses) on Securities | |||
Unrealized holding gains | 5.3 | -- | |
Tax expense | (2.2) | -- | |
Unrealized holding losses | -- | (5.5) | |
Tax benefit | -- | 2.3 | |
Unrealized Holding Gains (Losses) on Securities | 3.1 | (3.2) | |
Comprehensive Income | $ 36.1 | $213.5 |
The accompanying notes are an integral part of these consolidated financial statements.
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30,
(Amounts In Millions)
(Unaudited)
2003 | 2002 | |||
Net Income (Loss) | $(22.1) | $168.8 | ||
Foreign Currency Translation Adjustments | 76.7 | 89.2 | ||
Adjustment for Minimum Pension Liability | ||||
Adjustment for minimum pension liability | (5.2) | -- | ||
Tax benefit | 2.0 | -- | ||
Adjustment for Minimum Pension Liability | (3.2) | -- | ||
Unrealized Holding Gains (Losses) on Securities | ||||
Unrealized holding gains | 5.3 | 0.9 | ||
Tax expense | (2.2) | (0.4) | ||
Unrealized holding losses | (0.8) | (5.5) | ||
Tax benefit | 0.3 | 2.3 | ||
Unrealized Holding Gains (Losses) on Securities | 2.6 | (2.7) | ||
Comprehensive Income | $54.0 | $255.3 |
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS | |||
SIX MONTHS ENDED JUNE 30, | |||
(Amounts in Millions) | |||
(Unaudited) | |||
2003 | 2002 | ||
CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS: | |||
Net income (loss) from continuing operations | $(34.2) | $ 154.7 | |
Adjustments to reconcile net income (loss) to | |||
cash used in operating activities: | |||
Depreciation and amortization of fixed assets | 86.9 | 92.1 | |
Amortization of intangible assets | 7.3 | 4.4 | |
Amortization of restricted stock awards and bond discounts | 39.9 | 39.4 | |
Provision for (benefit of) deferred income taxes | (24.7) | 60.0 | |
Undistributed equity earnings | 1.9 | (3.3) | |
Income applicable to minority interests | 9.0 | 14.2 | |
Restructuring charges - non cash | 5.8 | -- | |
Long-lived asset impairment | 22.1 | -- | |
Investment impairment | 12.5 | 16.2 | |
Other | 4.6 | (9.9) | |
Change in assets and liabilities, net of acquisitions: | |||
Accounts receivable | (72.2) | (39.9) | |
Expenditures billable to clients | (32.0) | (102.1) | |
Prepaid expenses and other current assets | (23.1) | (28.6) | |
Accounts payable and accrued expenses | 34.9 | (185.8) | |
Accrued income taxes | (38.5) | (45.1) | |
Other non-current assets and liabilities | (37.0) | 32.4 | |
Net cash used in operating activities from continuing operations | (36.8) | (1.3) | |
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS: | |||
Acquisitions, net of cash acquired | (141.3) | (199.6) | |
Capital expenditures | (72.1) | (77.8) | |
Proceeds from sales of businesses | 2.0 | 0.2 | |
Proceeds from sales of long-term investments | 21.3 | 39.3 | |
Purchases of long-term investments | (11.0) | (38.5) | |
Maturities of short-term marketable securities | 17.2 | 23.5 | |
Purchases of short-term marketable securities | (27.8) | (9.3) | |
Other investments and miscellaneous assets | (34.6) | (56.4) | |
Net cash used in investing activities from continuing operations | (246.3) | (318.6) | |
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS: | |||
Increase (decrease) in short-term debt | (209.1) | 90.3 | |
Payments of zero-coupon convertible senior notes | (580.0) | -- | |
Proceeds from long-term debt | 22.9 | 1.5 | |
Proceeds from 4.5% convertible senior notes | 778.0 | -- | |
Payments of long-term debt | (1.4) | (132.1) | |
Treasury stock acquired | -- | (7.7) | |
Issuance of common stock | 8.0 | 44.2 | |
Distributions to minority interests | (7.4) | (72.5) | |
Contributions from minority interests | 0.5 | -- | |
Net cash provided by (used in) financing activities from continuing operations | 11.5 | (76.3) | |
Effect of exchange rates on cash and cash equivalents | 52.1 | (9.6) | |
Net cash (used in) provided by discontinued operations | (13.4) | 7.9 | |
Decrease in cash and cash equivalents | (232.9) | (397.9) | |
Cash and cash equivalents at beginning of year | 933.0 | 935.2 | |
Cash and cash equivalents at end of period | $ 700.1 | $ 537.3 | |
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
1. | Basis of Presentation |
2. | Earnings (Loss) Per Share |
Three Months Ended June 30, | ||||
2003 | 2002 | |||
Basic | ||||
Income (loss) from continuing operations | $(23.0) | $ 98.6 | ||
Income from discontinued operations | 9.5 | 10.4 | ||
Net Income (loss) | $(13.5) | $109.0 | ||
Weighted average number of common shares outstanding | 384.3 | 375.7 | ||
Earnings (loss) per share from continuing operations | $(0.06) | $ 0.26 | ||
Earnings per share from discontinued operations | 0.02 | 0.03 | ||
Earnings (loss) per share - basic | $(0.04) | $ 0.29 | ||
Diluted (a) | ||||
Income (loss) from continuing operations - diluted | $(23.0) | $ 98.6 | ||
Income from discontinued operations | 9.5 | 10.4 | ||
Net Income (loss) - diluted | $(13.5) | $109.0 | ||
Weighted average number of common shares outstanding | 384.3 | 375.7 | ||
Weighted average number of incremental shares in connection with | ||||
restricted stock and assumed exercise of stock options | -- | 6.7 | ||
Weighted average number of common shares outstanding - diluted | 384.3 | 382.4 | ||
Earnings (loss) per share from continuing operations | $(0.06) | $ 0.26 | ||
Earnings per share from discontinued operations | 0.02 | 0.03 | ||
Earnings (loss) per share - diluted | $(0.04) | $ 0.29 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Six Months Ended June 30, | ||||
2003 | 2002 | |||
Basic | ||||
Income (loss) from continuing operations | $(34.2) | $154.7 | ||
Income from discontinued operations | 12.1 | 14.1 | ||
Net Income (loss) | $(22.1) | $168.8 | ||
Weighted average number of common shares outstanding | 383.1 | 374.3 | ||
Earnings (loss) per share from continuing operations | $(0.09) | $ 0.41 | ||
Earnings per share from discontinued operations | 0.03 | 0.04 | ||
Earnings (loss) per share - basic | $(0.06) | $ 0.45 | ||
Diluted (a) | ||||
Income (loss) from continuing operations - diluted | $(34.2) | $154.7 | ||
Income from discontinued operations | 12.1 | 14.1 | ||
Net Income (loss) - diluted | $(22.1) | $168.8 | ||
Weighted average number of common shares outstanding | 383.1 | 374.3 | ||
Weighted average number of incremental shares in connection with | ||||
restricted stock and assumed exercise of stock options | -- | 6.8 | ||
Weighted average number of common shares outstanding - diluted | 383.1 | 381.1 | ||
Earnings (loss) per share from continuing operations | $(0.09) | $ 0.41 | ||
Earnings per share from discontinued operations | 0.03 | 0.04 | ||
Earnings (loss) per share - diluted | $(0.06) | $ 0.44 (b) | ||
(a) | The computation of diluted EPS for 2003 excludes the assumed conversion of the 1.80% and 1.87% Convertible Subordinated Notes, the conversion of restricted stock and assumed exercise of stock options because they were antidilutive. The computation of diluted EPS for 2002 excludes the assumed conversion of the 1.80% and 1.87% Convertible Subordinated Notes because they were anti-dilutive. | |
(b) | Does not total due to rounding. | |
3. | Stock Option Plans |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended June 30, | ||||
2003 | 2002 | |||
Income (Loss) from Continuing Operations |
| |||
As reported, income (loss) from continuing operations | $(23.0) | $98.6 | ||
Add back: |
| |||
Stock-based employee compensation expense included in |
| |||
reported net income, net of tax | 5.5 |
| 7.4 | |
Deduct: |
| |||
Total fair value of stock based employee |
| |||
compensation expense, net of tax | (16.4) | (16.9) | ||
Pro forma income (loss) from continuing operations | $(33.9) | $89.1 | ||
Earnings (Loss) Per Share From Continuing Operations |
| |||
Basic earnings (loss) per share |
| |||
As reported | $(0.06) | $0.26 | ||
Pro forma | $(0.09) | $0.24 | ||
Diluted earnings (loss) per share |
| |||
As reported | $(0.06) | $0.26 | ||
Pro forma | $(0.09) | $0.23 | ||
For purposes of this pro forma information, the fair value of shares under the ESPP was based on the 15% discount received by employees. The weighted-average fair value (discount) on the date of purchase for stock purchased under this plan was $1.90 and $4.32 in 2003 and 2002, respectively. | |
Three Months Ended June 30, | ||||
2003 | 2002 | |||
Expected option lives | 6 years | 6 years | ||
Risk free interest rate | 2.79% | 4.74% | ||
Expected volatility | 45.75% | 36.63% | ||
Dividend yield | -- | 1.37% | ||
Six Months Ended June 30, | ||||
2003 | 2002 | |||
Income (Loss) from Continuing Operations | ||||
As reported, income (loss) from continuing operations | $ (34.2) | $154.7 | ||
Add back: | ||||
Stock-based employee compensation expense included in | ||||
reported net income, net of tax | 11.3 | 13.2 | ||
Deduct: | ||||
Total fair value of stock based employee | ||||
compensation expense, net of tax | (30.3) | (31.8) | ||
Pro forma income (loss) from continuing operations | $(53.2) | $136.1 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Earnings (Loss) Per Share From Continuing Operations | ||||
Basic earnings (loss) per share | ||||
As reported | $(0.09) | $0.41 | ||
Pro forma | $(0.14) | $0.36 | ||
Diluted earnings (loss) per share | ||||
As reported | $(0.09) | $0.41 | ||
Pro forma | $(0.14) | $0.36 | ||
For purposes of this pro forma information, the fair value of shares under the ESPP was based on the 15% discount received by employees. The weighted-average fair value (discount) on the date of purchase for stock purchased under this plan was $1.70 and $4.38 in 2003 and 2002, respectively. | |
Six Months Ended June 30, | ||||
2003 | 2002 | |||
Expected option lives | 6 years |
| 6 years | |
| ||||
Risk free interest rate | 3.34% | 4.96% | ||
| ||||
Expected volatility | 43.65% | 34.41% | ||
| ||||
Dividend yield | -- |
| 1.29% | |
4. | Restructuring Charges |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Lease termination costs, net of estimated sublease income, relate to the offices that have been or will be vacated as part of the restructuring. Approximately 30 locations are to be vacated with substantially all actions to be completed by December 31, 2003; however, the cash portion of the charge will be paid out over a period of several years. The majority of the offices to be vacated are located in the US with approximately one third in overseas markets principally in Europe. | |
2001 Program | |
Liability at | Total | 2003 | 2003 cash | Liability at June | ||
TOTAL BY TYPE | ||||||
Severance and termination costs | $ 15.9 | $66.0 | $1.0 | $21.6 | $ 59.3 | |
Lease terminations and other exit costs | $ 94.6 | 28.4 | 4.8 | 19.5 | 98.7 | |
Total | $110.5 | $94.4 | $5.8 | $41.1 | $158.0 | |
5. | Long-Lived Asset Impairment |
6. | Investment Impairment |
7. | New Accounting Standards |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
8. | Derivative and Hedging Instruments |
9. | Segment Information |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
At June 30, 2003 the assets of the reportable segments have not changed materially from those levels reported at December 31, 2002. Summary financial information concerning the Company's reportable segments for the three months ended and six months ended June 30 is shown in the following table: | |
IPG | ||||||
(Excl. | Consolidated | |||||
SEG) | SEG | Total | ||||
Three Months Ended June 30, 2003 |
|
| ||||
Revenue | $1,395.9 |
| $103.5 |
| $1,499.4 | |
Operating income (loss) | 76.1 |
| (24.2) | 51.9 | ||
Depreciation and amortization of fixed assets | 40.4 |
| 3.0 |
| 43.4 | |
Capital expenditures | $ 33.2 |
| $ 9.3 |
| $ 42.5 | |
|
| |||||
Three Months Ended June 30, 2002 |
|
| ||||
Revenue | $1,383.2 |
| $107.2 |
| $1,490.4 | |
Operating income (loss) | 216.5 |
| (3.8) |
| 212.7 | |
Depreciation and amortization of fixed assets | 42.6 |
| 4.0 |
| 46.6 | |
Capital expenditures | $ 29.2 |
| $ 15.4 |
| $ 44.6 |
A reconciliation of information between reportable segments and the Company's consolidated pre-tax earnings is shown in the following table: | |
Three Months Ended June 30, | 2003 | 2002 | ||
Total operating income for reportable segments | $ 51.9 | $212.7 | ||
Interest expense | (46.1) | (36.9) | ||
Interest income | 10.2 | 8.1 | ||
Other income | 0.3 | 6.6 | ||
Investment impairment | (9.8) | (16.2) | ||
Income before provision for income taxes | $ 6.5 | $174.3 |
IPG | ||||||
(Excl. | Consolidated | |||||
SEG) | SEG | Total | ||||
Six Months Ended June 30, 2003 |
|
| ||||
Revenue | $2,626.0 |
| $189.1 |
| $2,815.1 | |
Operating income (loss) | 118.0 |
| (45.3) | 72.7 | ||
Depreciation and amortization of fixed assets | 80.5 |
| 6.4 |
| 86.9 | |
Capital expenditures | $ 54.9 |
| $ 17.2 |
| $ 72.1 | |
|
| |||||
Six Months Ended June 30, 2002 |
|
| ||||
Revenue | $2,618.6 |
| $190.8 |
| $2,809.4 | |
Operating income | 332.5 |
| 2.2 |
| 334.7 | |
Depreciation and amortization of fixed assets | 83.9 |
| 8.2 |
| 92.1 | |
Capital expenditures | $ 58.0 |
| $ 19.8 |
| $ 77.8 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
A reconciliation of information between reportable segments and the Company's consolidated pre-tax earnings is shown in the following table: | |
Six Months Ended June 30, | 2003 | 2002 | ||
Total operating income for reportable segments | $ 72.7 | $334.7 | ||
Interest expense | (84.9) | (72.2) | ||
Interest income | 18.1 | 15.0 | ||
Other income | 0.1 | 6.9 | ||
Investment impairment | (12.5) | (16.2) | ||
Income (loss) before provision for income taxes | $ (6.5) | $268.2 |
10. | Acquisitions, Dispositions and Deferred Payments |
2006 and | ||||||||||
2003 | 2004 | 2005 | thereafter | Total | ||||||
Cash | $ 48.8 | $83.9 | $50.4 | $24.4 | $207.5 | |||||
Stock | 9.5 | 13.7 | 18.1 | 11.4 | 52.7 | |||||
TOTAL | $ 58.3 | $97.6 | $68.5 | $35.8 | $260.2 |
The amounts above are estimates based on the current projections as to the amount that will be paid and are subject to revisions as the earn-out periods progress. | ||||
2003 | $35.8 |
| |
2004 | $31.9 |
| |
2005 | $33.0 |
| |
2006 and thereafter | $45.2 |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
The actual amount to be paid is contingent upon the achievement of projected operating performance targets and the satisfaction of other conditions as specified in the relevant agreement. | |
2003 | $15.7 |
| |
2004 | $ 7.1 |
| |
2005 | $15.3 |
| |
2006 and thereafter | $64.1 |
|
The actual amount to be paid is contingent upon the achievement of projected operating performance targets and the satisfaction of other conditions as specified in the relevant agreement. | |
Three Months Ended June 30, | ||||
2003 | 2002 | |||
Pre-tax income from discontinued operations | $16.0 | $17.1 | ||
Tax expense | 6.5 | 6.7 | ||
Income from discontinued operations | $ 9.5 | $10.4 | ||
Six Months Ended June 30, | ||||
2003 | 2002 | |||
Pre-tax income from discontinued operations | $20.4 | $23.5 | ||
Tax expense | 8.3 | 9.4 | ||
Income from discontinued operations | $12.1 | $14.1 |
11. | Debt and Certain Liquidity Matters |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
16, 2002, the Company entered into a revolving credit facility with a syndicate of banks providing for a term of 364 days and for borrowings of up to $500.0 (the "Old 364-Day Revolving Credit Facility"). The Company replaced the Old 364-Day Revolving Credit Facility with a new 364-day revolving credit facility, which it entered into with a syndicate of banks on May 15, 2003 (the "New 364-Day Revolving Credit Facility" and, together with the Five-Year Revolving Credit Facility, the "Revolving Credit Facilities"). The New 364-Day Revolving Credit Facility provides for borrowings of up to $500.0, $200.0 of which are available to the Company for the issuance of letters of credit. The New 364-Day Revolving Credit Facility expires on May 13, 2004. However, the Company has the option to extend the maturity of amounts outstanding on the termination date under the New 364-Day Revolving Credit Facility for a period of one year, if EBITDA for the four fiscal quarters most recently ended was at least $83 1.0 (for purposes of this EBITDA calculation, only $125.0 of non-recurring restructuring charges may be added back to EBITDA). The Revolving Credit Facilities are used for general corporate purposes. As of June 30, 2003, $166.4 was utilized under the New 364-Day Revolving Credit Facility for the issuance of letters of credit and $57.6 was utilized under the Five-Year Revolving Credit Facility. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
2021 (the "Zero-Coupon Notes"). As a result of these transactions, the Company's permitted level of annual cash acquisition spending has increased to $100.0 and the permitted level of annual share buybacks and dividend payments has increased to $25.0. All limitations on dividend payments and share buybacks expire when earnings before interest, taxes, depreciation and amortization are at least $1,300.0 for four consecutive quarters. The Company's permitted level of annual capital expenditures is $175.0. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Other Debt Instruments-- Convertible Senior Notes - 4.5% On March 7, 2003, Standard & Poor's Ratings Services downgraded the Company's senior secured credit rating to BB+ with negative outlook from BBB-. On May 14, 2003, Fitch Ratings downgraded the Company's senior unsecured credit rating to BB+ with negative outlook from BBB-. The remaining senior unsecured credit rating is Baa3 with stable outlook; however, as reported by Moody's Investors Services, Inc., on May 8, 2003, this rating was placed on review for possible downgrade. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
12. | Commitments and Contingencies |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
actions and filed an Amended Consolidated Complaint on January 10, 2003, again alleging breach of fiduciary duties to Interpublic's shareholders. The Amended Consolidated Complaint does not state a specific amount of damages. On January 27, 2003, defendants filed motions to dismiss the Consolidated Amended Complaint, and those motions are currently pending. On June 30, 2003, after the plaintiffs informed the court that they had decided to dismiss the Delaware litigation, the court entered an order dismissing the Delaware action with prejudice to plaintiffs only. | |
13. | Subsequent Events |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
Item 2. RESULTS OF OPERATIONS |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
The following summarizes certain financial information for purposes of management's discussion and analysis: |
Three Months Ended June 30, | |||||||||||||
2003 | 2002 | ||||||||||||
IPG | IPG | ||||||||||||
(Excl. | Total | (Excl. | Total | ||||||||||
SEG) | SEG | IPG | SEG) | SEG | IPG | ||||||||
|
|
|
|
| |||||||||
Revenue | $1,395.9 |
| $103.5 |
| $1,499.4 |
| $1,383.2 |
| $107.2 |
| $1,490.4 | ||
Salaries and related expenses | 829.7 |
| 48.7 |
| 878.4 |
| 790.4 |
| 48.8 |
| 839.2 | ||
Office and general expenses | 392.6 |
| 67.0 |
| 459.6 |
| 375.1 |
| 60.8 |
| 435.9 | ||
Amortization of intangible assets | 3.6 |
| 0.5 | 4.1 |
| 1.2 | 1.4 | 2.6 | |||||
Long-lived asset impairment | -- | 11.0 | 11.0 | -- | -- | -- | |||||||
Restructuring charges | 93.9 | 0.5 | 94.4 | -- | -- | -- | |||||||
Operating income (loss) | $ 76.1 | $(24.2) | $ 51.9 | $ 216.5 | $ (3.8) | $ 212.7 |
Some of the key factors driving the financial results in the second quarter of 2003 were: | ||
- | Higher exchange rates for the second quarter of 2003, primarily the Euro and Sterling, reflected higher U.S. dollar revenue and expenses in comparison to the second quarter of 2002; | |
- | Continued softness in demand for the Company's advertising and marketing services by current clients, particularly in public relations and other project-based businesses in international markets; | |
- | Restructuring charges of $94.4 were recorded in the second quarter. The Company expects that the total cost of its restructuring initiatives underway will be up to approximately $200 over several periods; | |
- | Higher professional fees resulting from litigation matters and the SEC investigation, and the higher costs related to the Company's Motorsports business within SEG including a long-lived asset impairment charge of $11.0; | |
- | Higher debt financing costs resulting from the issuance of the Company's 4.5% Notes and retiring of the Company's Zero Coupon Notes; and, | |
- | An investment impairment charge of $9.8 was recorded in the second quarter related to unconsolidated affiliates. | |
As discussed in Note 10, on July 10, 2003, the Company completed the sale of NFO to TNS. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
International revenue would have decreased 9.6% excluding the effects of changes in foreign currency of $65.7. The increase in worldwide revenue was primarily a result of the effects of higher exchange rates offset by continued softness in the demand for advertising and marketing services by current clients due to the weak economy primarily in international markets. The components of the total revenue change of 0.6% were: impact of foreign currency changes 4.2%, net acquisitions/divestitures (0.6)%, and organic revenue decline (3.0)%. Organic changes in revenue reflect increases or decreases in net new business activity and increases or decreases in activity from existing client accounts. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
Lease termination costs, net of estimated sublease income, relate to the offices that have been or will be vacated as part of the restructuring. Approximately 30 locations are to be vacated with substantially all actions to be completed by December 31, 2003; however, the cash portion of the charge will be paid out over a period of several years. The majority of the offices to be vacated are located in the US with approximately one third in overseas markets principally in Europe. |
Liability at | Total | 2003 | 2003 cash | Liability at June | ||
TOTAL BY TYPE | ||||||
Severance and termination costs | $ 15.9 | $66.0 | $1.0 | $21.6 | $ 59.3 | |
Lease terminations and other exit costs | $ 94.6 | 28.4 | 4.8 | 19.5 | 98.7 | |
Total | $110.5 | $94.4 | $5.8 | $41.1 | $158.0 |
Long-Lived Asset Impairment |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
OTHER ITEMS |
Six Months Ended June 30, | |||||||||||||
2003 | 2002 | ||||||||||||
IPG | IPG | ||||||||||||
(Excl. | Total | (Excl.) | Total | ||||||||||
SEG) | SEG | IPG | SEG | SEG | IPG | ||||||||
|
|
|
|
| |||||||||
Revenue | $2,626.0 |
| $189.1 |
| $2,815.1 |
| $2,618.6 |
| $190.8 |
| $2,809.4 | ||
Salaries and related expenses | 1,633.7 |
| 99.4 |
| 1,733.1 |
| 1,566.0 |
| 94.9 |
| 1,660.9 | ||
Office and general expenses | 774.2 |
| 111.3 |
| 885.5 |
| 717.5 |
| 91.9 |
| 809.4 | ||
Amortization of intangible assets | 6.2 |
| 1.1 | 7.3 |
| 2.6 | 1.8 | 4.4 | |||||
Long-lived asset impairment | -- | 22.1 | 22.1 | -- | -- | -- | |||||||
Restructuring charges | 93.9 | 0.5 | 94.4 | -- | -- | -- | |||||||
Operating income (loss) | $ 118.0 | $(45.3) | $ 72.7 | $ 332.5 | $ 2.2 | $ 334.7 |
REVENUE |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
acquisitions/divestitures (0.2)%, and organic revenue decline (3.8)%. Organic changes in revenue reflect increases or decreases in net new business activity and increases or decreases in activity from existing client accounts. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
INVESTMENT IMPAIRMENT |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
Investing Activities |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
respect to the impairment of the remaining book value of its Motorsports business. These charges counted toward the $200.0 restructuring charges and $70.0 of non-cash charges relating to Motorsports that, under the loan agreements, are allowed to be added back to the definition of EBITDA and do not adversely affect the ability of the Company to comply with its financial covenants. As explained in Note 4, it is the Company's current expectation that any charges incurred as a result of its restructuring program during periods after September 30, 2003 will be taken into account, rather than added back in the definition of EBITDA in these loan agreements, when determining whether the Company is in compliance with these financial covenants during these periods after September 30, 2003. Nonetheless, despite the incurrence of these restructuring charges after September 30, 2003 the Company expects to be in compliance with both its applicable financial and other covenants without having to obtain any waivers or amendments. As of June 30, 2003, the Company was in compliance with all of the covenants (including the financial covenants, as amended) contained in the Five-Year Revolving Credit Facility and the New 364-Day Revolving Credit Facility. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
The Prudential Agreements contained the same restrictions on the Company's ability to declare or pay dividends, repurchase shares of common stock, make cash acquisitions or investments and make capital expenditures, as well as the ability of the Company's domestic subsidiaries to incur additional debt, as the new terms of the Revolving Credit Agreements described above. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||||||||||
Through December 2002, the Company had paid cash dividends quarterly with the most recent quarterly dividend paid in December 2002 at a rate of $0.095 per share. The determination of dividend payments is made by the Company's Board of Directors on a quarterly basis. However, as previously discussed, the Company's ability to declare or pay dividends is currently restricted by new terms of its Revolving Credit Facilities, and the Company has not declared or paid a dividend in the second quarter of 2003. | |||||||||||
2006 and | |||||||||||
2003 | 2004 | 2005 | thereafter | Total | |||||||
Cash | $ 48.8 | $83.9 | $50.4 | $24.4 | $207.5 | ||||||
Stock | 9.5 | 13.7 | 18.1 | 11.4 | 52.7 | ||||||
TOTAL | $ 58.3 | $97.6 | $68.5 | $35.8 | $260.2 |
The amounts above are estimates based on the current projections as to the amount that will be paid and are subject to revisions as the earn-out periods progress. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
Put and Call Options |
2003 | $35.8 |
| |
2004 | $31.9 |
| |
2005 | $33.0 |
| |
2006 and thereafter | $45.2 |
|
The actual amount to be paid is contingent upon the achievement of projected operating performance targets and to the satisfaction of other conditions as specified in the relevant agreement. |
2003 | $15.7 |
| |
2004 | $ 7.1 |
| |
2005 | $15.3 |
| |
2006 and thereafter | $64.1 |
|
The actual amount to be paid is contingent upon the achievement of projected operating performance targets and the satisfaction of other conditions as specified in the relevant agreement. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
variable interest entities created after January 31, 2003, and to interests held in variable interest entities that existed prior to February 1, 2003 and remain in existence as of July 1, 2003. The application of FIN 46 did not have an impact on, or result in additional disclosure in, the Company's June 30, 2003 consolidated results of operations or financial position. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
Item 3. Quantitative and Qualitative Disclosures about Market Risk |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
Item 4. Controls and Procedures |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
The success of recent or contemplated future acquisitions will depend on the effective integration of newly-acquired and existing businesses into the Company's current operations. Important factors for integration include realization of anticipated synergies and cost savings and the ability to retain and attract new personnel and clients. |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
FEDERAL SECURITIES CLASS ACTIONS
Thirteen federal securities purported class actions were filed against The Interpublic Group of Companies, Inc. (referred to hereinafter as "Interpublic" or the "Company") and certain of its present and former directors and officers by a purported class of purchasers of Interpublic stock shortly after the Company's August 13, 2002 announcement regarding the restatement of its previously reported earnings for the periods January 1, 1997 through March 31, 2002. These actions, which were all filed in the United States District Court for the Southern District of New York, were consolidated by the Court and lead counsel appointed for all plaintiffs, on November 8, 2002. A consolidated amended complaint was filed thereafter on January 10, 2003. The purported class consists of Interpublic shareholders who purchased Interpublic stock in the period from October 1997 to October 2002. Specifically, the consolidat ed amended complaint alleges that Interpublic and certain of its present and former directors and officers allegedly made misleading statements to its shareholders between October 1997 and October 2002, including the alleged failure to disclose the existence of additional charges that would need to be expensed and the lack of adequate internal financial controls, which allegedly resulted in an overstatement of Interpublic's financial results during those periods. The consolidated amended complaint alleges that such false and misleading statements constitute violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The consolidated amended complaint also alleges violations of Sections 11 and 15 of the Securities Act of 1933 in connection with Interpublic's acquisition of True North Communications, Inc. ("True North") on behalf of a purported class of True North shareholders who acquired Interpublic stock. No amount of damages is specified in the consolidated amended com plaint. On February 6, 2003, defendants filed a motion to dismiss the consolidated amended complaint in its entirety. On February 28, 2003, plaintiffs filed their opposition to defendants' motion and, on March 14, 2003, defendants filed their reply to plaintiff's opposition to defendants' motion. On May 29, 2003, the United States District Court for the Southern District of New York denied the motion to dismiss as to the Company and granted the motion, in part, as to the present and former directors and officers named in the consolidated amended complaint. On June 30, 2003, defendants filed an answer to the consolidated amended complaint.
STATE SECURITIES CLASS ACTIONS
Two state securities purported class actions were filed against the Company and certain of its present and former directors and officers by a purported class of purchasers of Interpublic stock shortly after the Company's November 13, 2002 announcement regarding the restatement of its previously reported earnings for the periods January 1, 1997 through March 31, 2002. The purported classes consist of Interpublic shareholders who acquired Interpublic stock on or about June 25, 2001 in connection with Interpublic's acquisition of True North. These lawsuits allege that Interpublic and certain of its present and former directors and officers allegedly made misleading statements in connection with the filing of a registration statement on May 9, 2001 in which Interpublic issued 67,644,272 shares of its common stock for the purpose of acquiring True North, including the alleged failure to disclose the existen ce of additional charges that would need to be expensed and the lack of adequate internal financial controls, which allegedly resulted in an overstatement of Interpublic's financial results at that time. The suits allege that such misleading statements constitute violations of Sections 11 and 15 of the Securities Act of 1933. No amount of damages is specified in the complaints. These actions were filed in the Circuit Court of Cook County, Illinois. On December 18, 2002, defendants removed these actions from Illinois state court to the United States District Court for the Northern District of Illinois. Thereafter, on January 10, 2003, defendants moved to transfer these two actions to the Southern District of New York. Plaintiffs moved to remand these actions. On April 15, 2003, the United States District Court for the Northern District of Illinois granted plaintiffs' motions to remand these actions to Illinois state court and denied defendants' motion to transfer. On June 18, 2003, the Company moved to dismis s and/or stay these actions. The motions are currently pending.
DERIVATIVE ACTIONS
In addition to the lawsuits above, several shareholder derivative suits have been filed. On October 24, 2002, a shareholder derivative suit was filed in Delaware Court of Chancery, New Castle County, by a single shareholder acting on behalf of the Company against the Board of Directors. The suit alleges a breach of fiduciary duties to Interpublic's shareholders. On November 15, 2002, another suit was filed in Delaware Court of Chancery, New Castle County, by a single shareholder acting on behalf of the Company against the Board of Directors. On December 18, 2002, defendants moved to dismiss these actions. In lieu of a response, plaintiffs consolidated the actions and filed an Amended Consolidated Complaint on January 10, 2003, again alleging breach of fiduciary duties to Interpublic's shareholders. The Amended Consolidated Complaint does not state a specific amount of damages. On January 27, 2003, defe ndants filed motions to dismiss the Amended Consolidated Complaint. On June 30, 2003, after the plaintiffs informed the Court that they had decided to dismiss the Delaware litigation, the Court entered an order dismissing the Delaware action with prejudice to plaintiffs only.
On September 4, 2002, a shareholder derivative suit was filed in New York Supreme Court, New York County, by a single shareholder acting on behalf of the Company against the Board of Directors and against the Company's auditors. This suit alleged a breach of fiduciary duties to Interpublic's shareholders. On November 26, 2002, another shareholder derivative suit, alleging the same breaches of fiduciary duties, was filed in New York Supreme Court, New York County. The plaintiffs from these two shareholder derivative suits filed an Amended Derivative Complaint on January 31, 2003. On March 18, 2003, plaintiffs filed a motion to dismiss the Amended Derivative Complaint without prejudice. On April 16, 2003, the Amended Derivative Complaint was dismissed without prejudice. On February 24, 2003, plaintiffs also filed a Shareholders' Derivative Complaint in the United States District Court for the Southern Di strict of New York. On May 2, 2003, plaintiffs filed an Amended Derivative Complaint. This action alleges the same breach of fiduciary duties claim as the state court actions, and adds a claim for contribution and forfeiture against two of the individual defendants pursuant to Section 21D of the Exchange Act and Section 304 of the Sarbanes-Oxley Act. On July 11, 2003, plaintiffs filed a Second Amended Derivative Complaint, asserting the same claims. The complaint does not state a specific amount of damages. On August 12, 2003, defendants moved to dismiss this action.
The Company intends to vigorously defend the actions discussed above. However, as with all litigation, these proceedings contain elements of uncertainty and the final resolution of these actions could have a material impact on the Company's financial position, cash flows or results of operations.
SEC INVESTIGATION
The Company was informed in January 2003 by the Securities and Exchange Commission staff that the SEC has issued a formal order of investigation related to the Company's restatements of earnings for periods dating back to 1997. The matters had previously been the subject of an informal inquiry. The Company is cooperating fully with the investigation.
The Company is involved in other legal and administrative proceedings of various types. While any litigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition of the Company.
Item 2. Changes in Securities and Use of Proceeds
(a) On May 15, 2003 the Company amended certain provisions of the Five-Year Revolving Credit Facility which have been reflected in the New 364-Day Revolving Credit Facility. The terms of the Revolving Credit Facilities restrict (among other things) the Company's ability to declare or pay dividends and repurchase shares of common stock.The Company's permitted level of annual share buybacks and dividend payments is currently $25.0 million. All limitations on dividend payments and share buybacks expire when earnings before interest, taxes, depreciation and amortization, as defined in the amended Revolving Credit Facilities, are at least $1,300.0 million for four consecutive quarters.
The Prudential Agreements contain the same restrictions on the Company's ability to declare or pay dividends and repurchase shares of common stock, as provided in the Revolving Credit Agreements described above.
(c)
(1) On April 3, 2003, the Registrant issued 121,643 shares of its common stock, par value $.10 per share (the "Interpublic Stock"), and paid $2,296,466.88 in loan notes to the three former shareholders of a company which was acquired in the fourth quarter of 1999. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $1,006,228.62 as of 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 April 7, 2003 the Registrant issued 7,635 of Interpublic Stock and paid $147,000 in cash to one of the four former shareholders of a company as payment for 10.2 % of the shares of the company, 80% of which was acquired in the second quarter 1998 and 2% of which was acquired in the first quarter 2000. The shares of Interpublic Stock had an aggregate market value of $ 99,914 as of the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without registration in an "off shore transaction" and solely to "non US persons" in reliance on Rule 903(b)(3) of the Regulation S under the Securities Act.
(3) On April 9, 2003, the Registrant paid $14,346,937 in cash and issued 1,009,992 shares of Interpublic Stock to the two former shareholders of a company which was acquired in the first quarter of 2000. This payment covered both a purchase of the remaining 20% of the shares held by the two former shareholders and the final deferred payment on the 80% of the shares they previously sold to the Registrant on January 21, 2000. The Registrant acquired the remaining 20% of the shares for $4,705,235 cash and 331,238 shares of Interpublic Stock, which had an aggregate market value of $3,136,823 as of the date of issuance. The portion of the payment representing the final deferred payment of the purchase price, was paid $9,641,702 in cash and 678,754 shares of Interpublic Stock, which had an aggregate market value of $6,427,802 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 acquired company's former stockholders. The shareholders had access to all the documents filed by the Registrant with the Securities and Exchange Commission (the "SEC"), including (i) the Company's Annual Report on Form 10-K for the year ended 2002, (ii) Quarterly Reports on Form 10-Q for 2002, (iii) Reports on Form 8-K for 2002 and 2003, and iv) Proxy Statement for the 2002 Annual Meeting of Stockholders.
(4) On April 15, 2003, the Registrant issued an aggregate of $250,000 in cash and 5,252 shares of Interpublic Stock to two shareholders of a company that the Registrant acquired in the second quarter of 2001. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $50,000 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 shareholders. The shareholders had access to all the documents filed by the Registrant with the SEC, including the Company's (i) Annual Report on Form 10-K for the year ended December 31, 2002, (ii) Quarterly Report on Form 10-Q for the period ended September 30, 2002, (iii) Current Reports on Form 8-K for 2002 and 2003, and iv) Prox y Statement for the 2002 Annual Meeting of Stockholders.
(5) On April 16, 2003, the Registrant issued 408,000 shares of Interpublic Stock, on April 17, 2003 paid $4,752,127.73 in cash and on June 18, 2003 paid $758,163.48 in cash to a company the assets of which were acquired in the fourth quarter of 2000. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $5,157,113.29 as of 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.
(6) On April 23, 2003, the Registrant paid $770,009 in cash and issued 9,527 shares of Interpublic Stock to the four former shareholders of a company that was acquired by a subsidiary of the Registrant in the first quarter of 2000. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had a market value of $85,557 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 former shareholders of the company. The former shareholders had access to all the documents filed by the Registrant with the SEC, including the Company's (i) Annual Report and Form 10-K for the year ended 2002, (ii) Reports on Form 8-K for 2003, and (iii) Proxy Statement for the 2003 Annual Meeting of Stockholders.
(7) On April 23, 2003, the Registrant paid $368,349 in cash and issued 66,528 shares of Interpublic Stock to the former sole shareholder of a company that was acquired by a subsidiary of the Registrant in the third quarter of 1998. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $1,117,083 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 former sole shareholder of the company. The former sole shareholder had access to all the documents filed by the Registrant with the SEC, including the Company's (i) Annual Report and Form 10-K for the year ended 2002, (ii) Reports on Form 8-K for 2003 and (iii) Proxy Statement for the 2003 Annual Meeting of S tockholders.
(8) On April 24, 2003 and May 8, 2003, respectively, the Registrant paid $300,000 in cash and issued 9,560 shares of Interpublic Stock to the former owner of a company substantially all of the assets of which were acquired by the Registrant in the third quarter of 1999. The shares of Interpublic Stock had a market value of $100,000 as of the date of issuance. This represented a deferred payment of the purchase price. 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 former owner who received Interpublic Stock. The former owner had access to all the documents filed by the Registrant with the SEC, including the Company's (i) Annual Report and Form 10-K for the year ended 2002, (ii) Reports on Form 8-K for 2003, and (iii) Proxy Statement for the 20 03 Annual Meeting of Stockholders.
(9) On and as of April 24, 2003, the Registrant paid $86,312 in cash and issued 8,682 shares of Interpublic Stock to the former owner of a company substantially all of the assets of which were acquired by the Registrant in the first quarter of 2000. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $86,000 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 former owner who received the Interpublic Stock. The former owner had access to all the documents filed by the Registrant with the SEC, including the Company's (i) Annual Report and Form 10-K for the year ended 2002; (ii) Reports on Form 8-K for 2003; and (iii) Proxy Statement for the 2003 Ann ual Meeting of Stockholders.
(10) On May 2, 2003, the Registrant issued 156,937 shares of Interpublic Stock and on April 17, 2003 paid $3,711,434.45 in cash to the eighteen former shareholders of a company which was acquired in the fourth quarter of 1999. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $1,485,246.52 as of 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 9, 2003, the Registrant issued 11,945 shares of Interpublic Stock to the two former stockholders of a company that was acquired in the first quarter of 1998. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of approximately $74,000 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 acquired company's former stockholders. The former stockholders had access to all the documents filed by the Registrant with the SEC, including the Registrant's (i) Annual Report and Form 10-K for the year ended 2002, (ii) Reports on Form 8-K for 2003, and (iii) Proxy Statement for the 2003 Annual Meeting of Stockholders.
(12) On May 16, 2003, the Registrant issued an aggregate of $4,584,087.90 in cash and 166,889 shares of Interpublic Stock to eight former shareholders of a company that the Registrant acquired in the third quarter of 2001. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $1,964,609.10 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 status of seven of the former shareholders as accredited investors and the sophistication of the other former shareholder. The former shareholders had access to all the documents filed by the Registrant with the SEC, including the Company's (i) Annual Report and Form 10-K for the year ended December 31, 2002, (ii) Current Reports on Fo rm 8-K for 2003, (iii) Quarterly Report on Form 10-Q for the period ended March 31, 2003, and (iv) Proxy Statement for the 2003 Annual Meeting of Stockholders.
(13) On May 29, 2003, the Registrant issued 185,118 shares of Interpublic Stock to one former shareholder of a company that was acquired by the Registrant in the fourth quarter of 2000. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $1,948,556 as of 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.
(14) On June 5, 2003, the Registrant paid $283,560 in cash and issued 123,807 shares of Interpublic Stock to the two former shareholders of a foreign company that was acquired by the Registrant in the second quarter of 2000. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $1,060,900 as of 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.
(15) On June 16, 2003, the Registrant issued 109,320 shares of Interpublic Stock and on May 8, 2003 paid $1,296,000 to the former shareholder of a company as a first deferred payment in respect of 65% of the company acquired in the second quarter of 2002. The Shares of Interpublic Stock had a market value of $1,283,636 as of the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without registration in an "off shore transaction" and solely to "non US persons" in reliance on Rule 903(b)(3) of the Regulation S under the Securities Act.
(16) On June 17, 2003, the Registrant issued 118,888 shares of Interpublic Stock and on June 18, 2003 paid $4,840,644.26 in cash to the twelve former shareholders of four related companies which were acquired in the third quarter of 2000. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $1,414,254.09 as of 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.
(17) On June 25, 2003, the Registrant paid an aggregate of $409,101 in cash and issued an aggregate of 14,284 shares of Interpublic Stock to four former shareholders of a company that the Registrant acquired in the first quarter of 1999. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had an aggregate market value of $136,367 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 former shareholders of the acquired company. The former shareholders had access to all the documents filed by the Registrant with the SEC, including the Company's (i) Annual Report and Form 10-K for the year ended December 31, 2002, (ii) Quarterly Report on Form 10-Q for the period ended March 31, 2003, (iii) Current Reports on Form 8-K for 2003, and (iv) Proxy Statement for the 2003 Annual Meeting of Stockholders.
(18) On June 26, 2003, the Registrant issued 50,705 shares of Interpublic Stock and on June 13, 2003 paid $1,330,000 to the former shareholder of a company as a deferred payment in respect of 100% of the company acquired in the fourth quarter of 2000. The shares of Interpublic Stock had an aggregate market value of $672,196 as of the date of issuance.
The shares of Interpublic Stock were issued by the Registrant without registration in an "off shore transaction" and solely to "non US persons" in reliance on Rule 903(b)(3) of the Regulation S under the Securities Act.
(19) On June 30, 2003, the Registrant issued 122,300 shares and on July 7, 2003 paid $5,039,000 to two former shareholders of a company acquired in the fourth quarter of 2000. This represented a deferred payment of the purchase price. The shares of Interpublic Stock had a market value of $1,731,000 as of 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.
Item 4. Submission of Matters to a Vote of Securities Holders
(a) | This item is answered in respect of the Annual Meeting of Stockholders held on May 20, 2003 (the "Annual Meeting"). | |||||||
(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: | |||||||
BROKER | ||||||||
NOMINEE | FOR | WITHHELD | NONVOTES | |||||
David A. Bell | 310,447,612 | 5,755,365 | 0 | |||||
Frank J. Borelli | 308,517,006 | 7,685,971 | 0 | |||||
Reginald K. Brack | 310,578,739 | 5,624,238 | 0 | |||||
Jill M. Considine | 308,463,826 | 7,739,151 | 0 | |||||
John J. Dooner, Jr. | 299,861,995 | 16,340,982 | 0 | |||||
Richard A. Goldstein | 310,513,365 | 5,689,612 | 0 | |||||
H. John Greeniaus | 310,583,149 | 5,619,828 | 0 | |||||
Sean F. Orr | 300,225,986 | 15,976,991 | 0 | |||||
Michael I. Roth | 310,523,942 | 5,679,035 | 0 | |||||
J. Phillip Samper | 308,459,272 | 7,743,705 | ||||||
-- Proposal to approve the amendment to the Registrant's Restated Certificate of Incorporation. | ||||||||
BROKER | ||||||||
FOR | AGAINST | ABSTAIN | NONVOTES | |||||
287,806,899 | 25,437,080 | 2,958,998 | 0 | |||||
-- Proposal to approve confirmation of independent accountants. | ||||||||
BROKER | ||||||||
FOR | AGAINST | ABSTAIN | NONVOTES | |||||
304,158,674 | 9,894,711 | 2,149,592 | 0 | |||||
-- Approval of Stockholder's Resolution on Adoption of MacBride Principles for Northern Ireland Subsidiaries. | ||||||||
BROKER | ||||||||
FOR | AGAINST | ABSTAIN | NONVOTES | |||||
17,712,681 | 234,606,375 | 24,425,342 | 39,458,579 |
Item 6. Exhibits and Reports on Form 8-K.
(a) EXHIBITS
EXHIBIT NO. | DESCRIPTION | |||
2 | Stock Purchase Agreement by and between Taylor Nelson Sofres PLC and The Interpublic Group of Companies, Inc. ("Interpublic"), dated as of May 14, 2003 ((The "SPA"), is incorporated by reference to Exhibit 2.1 to Interpublic's Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 18, 2003.* | |||
3(ii) | By-Laws of Interpublic, amended through July 31, 2003. | |||
10(iii)(A)(i)(a) | Executive Special Benefit Agreement, made as of April 1, 2003, by and between Interpublic and David A Bell. | |||
10(iii)(A)(i)(b) | Memorandum dated May 1,2003, from David A. Bell, providing for Cancellation of Certain Stock Options. | |||
10(iii)(A)(ii)(a) | Supplemental Agreement, made as of April 7, 2003, to an Employment Agreement, made as of November 18, 2002, between Interpublic and Brian J. Brooks. | |||
10(iii)(A)(ii)(b) | Supplemental Agreement, made as of May 20, 2003, to an Employment Agreement, made as of November 18, 2002, by and between Interpublic and Brian J. Brooks. | |||
10(iii)(A)(ii)(c) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of November 14, 2002, by and between Interpublic and Brian J. Brooks. | |||
10(iii)(A)(iii)(a) | Supplemental Agreement, made as of January 1, 2003 and executed as of June 23, 2003 to an Executive Severance Agreement, made as of January 1, 1998, by and between Interpublic and Nicholas J. Camera. | |||
10(iii)(A)(iii)(b) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of January 1, 1998, by and between Interpublic and Nicholas J. Camera. | |||
10(iii)(A)(iv)(a) | Supplemental Agreement, made as of March 31, 2003 and executed as of April 15, 2003, to an Employment Agreement, made as of January 1, 1994, by and between Interpublic and John J. Dooner, Jr. | |||
10(iii)(A)(iv)(b) | Supplemental Agreement, made as of January 1, 2003 and executed as of June 17, 2003, to an Executive Severance Agreement, made as of January 1, 1998, by and between Interpublic and John J. Dooner, Jr. | |||
10(iii)(A)(iv)(c) | Letter Agreement, dated May 8, 2003, between Interpublic and John J. Dooner, Jr., providing for Cancellation of Certain Stock Options. | |||
10(iii)(A)(v)(a) | Executive Special Benefit Agreement, made as of May 1, 2003, by and between Interpublic and Bruce S. Nelson. | |||
10(iii)(A)(v)(b) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of April 18, 2002, by and between Interpublic and Bruce S. Nelson. | |||
10(iii)(A)(vi)(a) | Confidential Separation Agreement and General Release, dated June 26, 2003, between Interpublic and Sean F. Orr. | |||
10(iii)(A)(vi)(b) | Supplemental Agreement made as of March 31, 2003 and executed as of April 11, 2003, to an Employment Agreement, made as of April 27, 1999, by and between Interpublic and Sean F. Orr. | |||
10(iii)(A)(vii) | Letter Agreement, dated May 28, 2003, between Interpublic and J. Brendan Ryan providing for the Cancellation of Certain Stock Options. | |||
10(iii)(A)(viii)(a) | Supplemental Agreement, made as of April 8, 2003, to an Employment Agreement, made as of January 28, 2002, by and between Interpublic and Philippe Krakowsky. | |||
10(iii)(A)(viii)(b) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of November 14, 2002, by and between Interpublic and Philippe Krakowsky. | |||
10(iii)(A)(ix)(a) | Executive Special Benefit Agreement, made as of November 1, 2002 and executed as of June 23, 2003, by and between Interpublic and Richard P. Sneeder. | |||
10(iii)(A)(ix)(b) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of November 14, 2002, by and between Interpublic and Richard P. Sneeder. | |||
10(iii)(A)(x) | Supplemental Agreement, made as of June 16, 2003 to an Executive Severance Agreement, made as of November 14, 2002, by and between Interpublic and Susan Watson. | |||
10(iii)(A)(xi) | Letter Agreement, dated June 27, 2003, between Interpublic and Gunnar Wilmot providing for the Cancellation of Certain Stock Options. | |||
10(iii)(A)(xii) | Letter Agreement, dated May 15, 2003, between Interpublic and Barry Linsky providing for the Cancellation of Certain Stock Options. | |||
31.1 | Certification, dated as of August 14, 2003 and executed by David A Bell under Section 302 of the Sarbanes Oxley Act of 2002 ("S-OX"). | |||
31.2 | Certification, dated as of August 14, 2003 and executed by Sean F. Orr, under Section 302 of S-OX. | |||
32 | Certification, dated as of August 14, 2003 and executed by David A Bell and Sean F. Orr, under Section 906 of S-OX. | |||
* | The schedules to the SPA have been omitted. The Registrant agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request. | |||
(b) | REPORTS ON FORM 8-K. | |||
The following Reports on Form 8-K were filed or furnished during the quarter ended June 30, 2003: | ||||
1) | Report, filed April 9, 2003. Item 5 Other Events and Regulation FD Disclosure and Item 7 Financial Statements and Exhibits. Exhibit 99.1. | |||
2) | Report, filed May 8, 2003. Item 5 Other Events and Regulation FD Disclosure, Item 7 Financial Statements and Exhibits and Item 12 Results of Operations and Financial Condition. Exhibit 99.1. | |||
3) | Report, furnished May 14, 2003. Item 7 Financial Statements and Exhibits, Item 9 Regulation FD Disclosure and Item 12 Results of Operations and Financial Condition. Exhibit 99.1. This report has merely been "furnished" to the SEC. The Registrant does not intend for the report to be deemed "filed." | |||
4) | Report, filed June 18, 2003. Item 5 Other Events and Regulation FD Disclosure and Item 7 Financial Statements and Exhibits. Unaudited proforma condensed consolidated statement of operations for the periods ended December 31, 2002, 2001 and 2000 and March 31, 2003 and unaudited proforma condensed consolidated balance sheet as of March 31, 2003. Exhibit 2.1. |
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 14, 2003 | BY/S/ DAVID A. BELL |
DAVID A. BELL | |
Chairman of the Board, President | |
and Chief Executive Officer | |
Date: August 14, 2003 | BY/S/ SEAN F. ORR |
SEAN F. ORR | |
Executive Vice President and |
INDEX TO EXHIBITS
EXHIBIT NO. | DESCRIPTION | |
2 | Stock Purchase Agreement by and between Taylor Nelson Sofres PLC and The Interpublic Group of Companies, Inc. ("Interpublic"), dated as of May 14, 2003 (The "SPA"), is incorporated by reference to Exhibit 2.1 to Interpublic's Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 18, 2003.* | |
3(ii) | By-Laws of Interpublic, amended through July 31, 2003. | |
10(iii)(A)(i)(a) | Executive Special Benefit Agreement, made as of April 1, 2003, by and between Interpublic and David A Bell. | |
10(iii)(A)(i)(b) | Memorandum dated May 1,2003, from David A. Bell, providing for Cancellation of Certain Stock Options. | |
10(iii)(A)(ii)(a) | Supplemental Agreement, made as of April 7, 2003, to an Employment Agreement, made as of November 18, 2002, between Interpublic and Brian J. Brooks. | |
10(iii)(A)(ii)(b) | Supplemental Agreement, made as of May 20, 2003, to an Employment Agreement, made as of November 18, 2002, by and between Interpublic and Brian J. Brooks. | |
10(iii)(A)(ii)(c) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of November 14, 2002, by and between Interpublic and Brian J. Brooks. | |
10(iii)(A)(iii)(a) | Supplemental Agreement, made as of January 1, 2003 and executed as of June 23, 2003 to an Executive Severance Agreement, made as of January 1, 1998, by and between Interpublic and Nicholas J. Camera. | |
10(iii)(A)(iii)(b) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of January 1, 1998, by and between Interpublic and Nicholas J. Camera. | |
10(iii)(A)(iv)(a) | Supplemental Agreement, made as of March 31, 2003 and executed as of April 15, 2003, to an Employment Agreement, made as of January 1, 1994, by and between Interpublic and John J. Dooner, Jr. | |
10(iii)(A)(iv)(b) | Supplemental Agreement, made as of January 1, 2003 and executed as of June 17, 2003, to an Executive Severance Agreement, made as of January 1, 1998, by and between Interpublic and John J. Dooner, Jr. | |
10(iii)(A)(iv)(c) | Letter Agreement, dated May 8, 2003, between Interpublic and John J. Dooner, Jr., providing for Cancellation of Certain Stock Options. | |
10(iii)(A)(v)(a) | Executive Special Benefit Agreement, made as of May 1, 2003, by and between Interpublic and Bruce S. Nelson. | |
10(iii)(A)(v)(b) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of April 18, 2002, by and between Interpublic and Bruce S. Nelson. | |
10(iii)(A)(vi)(a) | Confidential Separation Agreement and General Release, dated June 26, 2003, between Interpublic and Sean F. Orr. | |
10(iii)(A)(vi)(b) | Supplemental Agreement made as of March 31, 2003 and executed as of April 11, 2003, to an Employment Agreement, made as of April 27, 1999, by and between Interpublic and Sean F. Orr. | |
10(iii)(A)(vii) | Letter Agreement, dated May 28, 2003, between Interpublic and J. Brendan Ryan providing for the Cancellation of Certain Stock Options. | |
10(iii)(A)(viii)(a) | Supplemental Agreement, made as of April 8, 2003, to an Employment Agreement, made as of January 28, 2002, by and between Interpublic and Philippe Krakowsky. | |
10(iii)(A)(viii)(b) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of November 14, 2002, by and between Interpublic and Philippe Krakowsky. | |
10(iii)(A)(ix)(a) | Executive Special Benefit Agreement, made as of November 1, 2002 and executed as of June 23, 2003, by and between Interpublic and Richard P. Sneeder. | |
10(iii)(A)(ix)(b) | Supplemental Agreement, made as of June 16, 2003, to an Executive Severance Agreement, made as of November 14, 2002, by and between Interpublic and Richard P. Sneeder. | |
10(iii)(A)(x) | Supplemental Agreement, made as of June 16, 2003 to an Executive Severance Agreement, made as of November 14, 2002, by and between Interpublic and Susan Watson. | |
10(iii)(A)(xi) | Letter Agreement, dated June 27, 2003, between Interpublic and Gunnar Wilmot providing for the Cancellation of Certain Stock Options. | |
10(iii)(A)(xii) | Letter Agreement, dated May 15, 2003, between Interpublic and Barry Linsky providing for the Cancellation of Certain Stock Options. | |
31.1 | Certification, dated as of August 14, 2003 and executed by David A Bell under Section 302 of the Sarbanes Oxley Act of 2002 ("S-OX"). | |
31.2 | Certification, dated as of August 14, 2003 and executed by Sean F. Orr, under Section 302 of S-OX. | |
32 | Certification, dated as of August 14, 2003 and executed by David A Bell and Sean F. Orr, under Section 906 of S-OX. | |
* | The schedules to the SPA have been omitted. The Registrant agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request. |